Integrated Report2023

Contents
Message from the CEO
04

Message from the CEO

Background of value creation

2030 Management Vision

08

History of value creation

10

Business domains

12

At a Glance

Toyo Tansoʼs value creation story“Creating products with unprecedented potential”

Becoming a leading company throughEarth-friendly products andtechnologies

14

Value creation process

On the publication of the Integrated Report 2023

16

Medium-Term Management Plan
(2023 to 2027)

Embracing the challenge of even greater accomplishments in accordancewith our 2030 Management Vision

18

Business strategies based on the Groupʼsbusiness portfolio

20

Materialities and contributions to theresolution of social issues

22

Sustainability structures

23

Roundtable Discussion involving Group
Heads of Sustainability Committee

The Toyo Tanso Group began publishing an integrated report in 2022 so that customers,
shareholders, investors, and other stakeholders can better understand its contributions
to resolving social issues and increasing its corporate value through its businesses. This
marks the second publication of our integrated report.
The Toyo Tanso Group has established a robust foundation built atop its aspirationsfor Manufacturing completely unique products.
This foundation was built based on our extensive pursuit of added value, and thisstance will remain unchanged for many years to come.
Our management vision for 2030 of Creating products with unprecedented
potential and Becoming a leading company through Earth-friendly products andtechnologies speaks to this commitment. This integrated report highlights a numberof the Toyo Tanso Groupʼs initiatives, detailing what we can do to give back to society
while also pursuing our own growth.

Editorial policy

Company Policies

Become a global company
For the world, for society
Become a strong company

The Integrated Report 2023 provides a concise summary of the mostimportant aspects of the Groupʼs value-creating operations. Moredetailed information can be found on Toyo Tansoʼs sustainability
website and on its IR website. In compiling the report, we havedrawn on the recommendations of the International Integrated
Reporting Councilʼs International Integrated Reporting Frameworkand on Guidance for Collaborative Value Creation, a publicationof the Ministry of Economy, Trade and Industry.

Pursuing product development andmanufacturing technologies to resolve
social issues and customer needs
26

Pursuing added value and promoting
globalization through improved
competitiveness27

Developing products and improving
manufacturing processes to help realize a
recycling-based society

28

Complying with increasingly sophisticatedquality requirements

29

Developing new products and improving
services in partnership with stakeholders

30

Policies and initiatives for intellectual
properties

31

Column: Double winner of Monodzukuri
Nippon Grand Awards

Contribution to reducing climate change
risk and environmental protection
32

Reducing greenhouse gas emissions,
including through energy savings andcreation

33

Contributing to the reduction ofgreenhouse gas emissions throughproducts

35* Some non-consolidated information pertaining to Toyo Tanso Co., Ltd. alone is provided in notes.

Complying with various countriesʼ
environmental laws and regulations andreducing environmental impacts

Dates of coverage

Using Earth-friendly raw materials andavoiding procurement risk

Scope of coverage
The report covers Toyo Tanso Co., Ltd. and its domestic and overseas consolidated subsidiaries.

FY2022 (January 1 to December 31, 2022)

36

Environmental policies and management
systemPrecautionary note concerning forward-looking statements

37

Compliance with TCFD recommendations

Forward-looking information contained in this report, for example forecasts of future
performance, represent judgments made on the basis of information that was available at thetime of their disclosure. Such information by its nature includes numerous sources of uncertainty,
and actual performance may vary due to factors including changes in business conditions.

Creating safe, secure workplaceenvironments where all employees canflourish* The report also includes some information about activities undertaken during or after January 1, 2023.

Information disclosure structures

Medium-Term
Management Plan

* Documents disclosed in accordance with legal requirements
Documents disclosed in a timely manner

Brevity38

Improving safe, healthy workplaceenvironments and increasing productivity

39

Ensuring the human rights of all
stakeholders

40

Offering human resources development,
training, and education programs

41

Respecting workforce diversity

Undertaking corporate activities thatinspire trust

P.16

Integrated ReportNon-financial
content

Sustainability/ ESG information• Corporate Governance
Report*• Sustainability website
www.toyotanso.com/
sustainability/

Information for shareholders
and investors• Securities Report*• Financial Results*• IR website
www.toyotanso.com/IR/

Comprehensiveness

Financial
content

42

Compliance

43

Strengthening crisis management
capabilities

44

Undertaking community service activities

45

Corporate governance

51

Roundtable discussion among outside
directors

Financial and non-financial information
54

Financial and non-financial highlights

56

11-year financial and non-financialsummary

58

Consolidated financial statements

Corporate information
63

02

Company profile/Stock information

Message from the CEO

Message from the CEO
Message from the CEO

Fostering a corporate culture with dynamic frontline operations
aimed at high value added manufacturing and sustainable growth
Naotaka Kondo
Representative Director
Chairman & President, CEO

Looking Back on FY2022 When We Posted
Higher Profit on Increased Revenue
The business environment remains uncertain as a result of
geopolitical risks, economic downturns, and surging resource
prices. Against this backdrop, in FY2022, we recorded net salesof 43,774 million yen (up 16.0% year-on-year), operating profitof 6,667 million yen (up 17.7%), ordinary profit of 7,369 million
yen (up 17.6%), and profit attributable to owners of parent of
5,181 million yen (up 16.0%). In particular, net sales and net
income profit reached record highs. The driver of the increase inrevenue was the semiconductor sector, especially products for SiC
semiconductors, which are indispensable for electric vehicles (EVs)and communication networks such as 5G. We saw the potential ofand focused on this segment before any other company did, and thishas led to customer satisfaction, which, I believe, produced theseresults. Within this segment, components for epitaxial growth* arebuilding more than 50% of high market share.
As we build a stronger global supply chain, our extensive
improvements to our production capacity in Japan and overseas also
led to this dramatic progress in revenue and profit. We reviewed
various aspects of production such as automation, changing tomulti-tasking machines, and consolidating processes. In addition,
our utmost focus has been on human resource development. One of
the bottlenecks in manufacturing is machine breakdown, and if one
operation stops, work cannot move on to the next process. Therefore,
we provided detailed technical guidance on how to maintainmachines so that they do not break down, what to pay attention to,and how to keep records and manage them. Another focus has been
increasing multi-skilled operators. This refers to a single employee
having the ability to operate multiple different machines, and once
this is possible, we can manufacture with a smaller number of04

selected people. We are already working on this in Japan, but weare also promoting multi-skill development overseas by developing
human resources who has multi tasks. We believe that developing
human resources and enhancing productivity in this manner, as
well as producing products of stable quality globally, is essential for
maintaining and improving the Toyo Tanso brand.
*Refers to the process for growing single crystal thin film on wafers.

Three Company Policies under the 2030
Management Vision and Their Aims
Last year, the Toyo Tanso Group formulated its Management
Vision of “Creating products with unprecedented potential” and“Becoming a leading company through Earth-friendly products
and technologies,” and set out its vision and general directions
characterizing the challenges it will embrace for sustainablegrowth. In addition, we defined three company policies:“Become a global company,” “For the world, for society,” and“Become a strong company,” each of which has a different aim.
First, one of the aims of “Become a global company” isto strengthen communication with overseas subsidiaries. In
providing the aforementioned technical guidance, as well as
improving product quality and understanding customer needs,
the key is close communication. The Head Office is responsible
for any problems that arise overseas, so we must always keep
grasping the latest information. Therefore, we are working
to strengthen our governance system globally by using amanagement book for all subsidiaries (containing the Groupʼscommon management standards) and enhancing the checking
function of the Head Office. We are also looking to strengthen
our cohesion globally and increase sales in overseas markets.

TOYO TANSO Integrated Report 2023

05

Message from the CEO“For the world, for society” involves, as it says, contributing
to society. This refers to product manufacturing, but in order tofurther increase employee motivation, it also includes activities
to inform employees about where and how the products they are
involved with benefit society. In addition, we are working on
measures to address the declining birthrate and aging population,
which is a social issue. In order to increase productivity even with asmall head count, we will first promote automation from physicallydemanding work and nighttime work. Furthermore, we are creatinga workplace where everyone can work comfortably, making theworkbench at a height that is easy for women to reach and changing
the design of uniforms.
“Become a strong company” means becoming a company thatcan generate a solid profit. With these increased profits, we intend
to increase the compensation paid to our employees. To this end, it
is necessary to create high value-added products that can only bemade by the Toyo Tanso Group. There is much work to be done,such as promoting selection and concentration, acquiring advanced
technical skills, and lowering costs by increasing productivity.
To promote understanding of these policies and to share
information, we have created an in-house monthly newsletter
called C dash Kawara Edition, which distributed to all employees.
Personally, I plan to visit our overseas subsidiaries and listen to thevoices of those on the frontline of our operations.

Initiatives and Targets in Our Medium-Term
Management Plan (2023-2027)
Management targets are net sales of 66.5 billion yen, operating
profit of 13.5 billion yen, operating profit ratio of 20.3%, andROE of 10%. In addition to net sales, profits are important forincreasing employee compensation and making the next roundcapital investments. Toward this end, we must establish a system
06

Message from the CEO

for value-added manufacturing that is only possible by the Toyo
Tanso Group. We are constantly developing isotropic graphite(special graphite products), which is our main product, to makebetter products, and although we are taking a long-term perspective,
we are also starting to promote recycling technology and take on thechallenge of creating new material sources such as making carbon(C) from CO2. We aim to more quickly develop materials that canmeet more stringent conditions such as durability, heat resistance,and cost for C/C composite products, graphite sheet products,
mechanical carbon, and carbon brush.
Capital investment is expected to total 51.5 billion yen, with
30% of this planned to be used for the renewal and maintenanceof existing facilities, and the remaining 70% for expansion and theintroduction of new equipment and technologies. Since this plan ison a rolling basis every year, the amount of investment may change
in the future, but we will establish a solid strategy for what kind of
business we will develop in the large markets of the United States,
China, and Europe, and make the necessary investments.
An important role in the initiatives of this Medium-Term
Management Plan is played by task force teams established byproduct and application. Leaders present and discuss informationcompiled by the team, such as how the size of the worldwide
market, what is happening now, and how much demand will occur
in the medium to long term, at the Groupʼs global meetings. We
consider various resources such as what is necessary to achieve
the goal, how much investment is required if equipment isrequired, and what recruitment and education plans to implement
if human resources are needed, in formulating our Medium-Term
Management Plan.
The important thing is to determine market timing. Our
products should not arrive to market too early or too late.
Therefore, in order to listen to the voices of our customers, notonly our sales representatives but also I hold regular interviews
with our customers to confirm the direction and timing ofinvestment. In addition, we inform our suppliers of trends for the
next year and the year after, and ask them to secure raw materials.
In order to procure products as desired, our customers also focus
on our manufacturing capacity, in addition to whether there are
any problems with our raw material sourcing. Therefore, wehave established a department called the Global Supply Chain
Promotion Department, in which key persons from related
functional departments participate across organization lines.
The aim is to grasp the operating status of facilities in Japan andoverseas, manage delivery time, quality, and cost throughout theGroup, and maximize the use of limited capacity. For example,
if there is not enough capacity in Japan, we will use the available
capacity in the United States to meet customer requests andimprove productivity.
From a longer-term perspective, relying solely on existingproducts could inhibit our business growth. Therefore, we must
make tireless efforts to create new products, including continue todevelop with an eye on the future while aligning our efforts withour customers. Moreover, we must lower costs in order to increase
profits. I believe that this is a very important initiative not only

from the perspective of profits, but also from the perspective of
population decline. In order not to fall into the situation where wecannot make products due to labor shortages, improving production
efficiency through automation is the most important task.

Performance Forecast for FY2023
and Strategies
For FY2023, we plan to achieve net sales of 48.5 billion yen (up10.8% year-on-year), operating profit of 8.5 billion yen (up 27.5%),
ordinary profit of 9.3 billion yen (up 26.2%), and profit attributableto owners of parent of 7.0 billion yen (up 35.1%). Rapidly
growing SiC semiconductor applications will be the driving
force, and demand for metallurgical applications is expected to beresilient. Although the silicon semiconductor market is entering
an adjustment phase, the impact on our earnings performance is
expected to be relatively minor. In terms of profits, electricity, rawmaterial and fuel prices are still soaring, and fixed costs, mainlylabor costs, are on the rise. On the other hand, raw material andfuel prices are expected to be absorbed to a certain extent byprogress in our efforts to pass these on in price increases, and weare aiming for record high net sales and profits by increasing sales
volume. In particular, we plan to increase capacity of SiC-coatedgraphite products by 1.5 times by FY2024, and operating someof the equipment this fiscal year will also contribute to earnings
performance from the third quarter onward. As a result, ouroperating profit ratio is expected to increase 2.3 percentage points
year on year to 17.5%, and ROE is expected to be 8.8%.

Strengthening and Evolving Sustainability
Management
With the establishment of the Sustainability Committee in FY2021,
it became clear that there are many things that need to be addressed
for the sustainable development of society, the maintenance ofthe global environment, and the further growth of the Toyo Tanso
Group. To ensure that these are realized, we are allocating issues
to the ESG Value Creating and Promoting Group, the Sustainable
Consumption and Production Group, and the People andOrganizational Vitalization Group, which make up the committee,
and to carry out initiatives.
Our materiality as it relates to sustainability is divided into four
categories. In the area of “Contribution to reducing climate change
risk and environmental protection,” we have set targets of reducing
greenhouse gas emissions per unit of production by 30% by 2030
and achieving a 35% ratio of environmentally friendly products to
net sales, and we are working to achieve these targets. In addition,
we have implemented measures to develop products and improve

manufacturing processes for a recycling-oriented society in the areaof “Pursuing product development and manufacturing technologies
to resolve social issues and customer needs” and to enable womenand the elderly to play an active role in “Creating safe, secure
workplace environments where all employees can flourish.” With
regard to “Undertaking corporate activities that inspire trust,” weare striving to establish a stronger governance system throughout
the Group.
In addition to these team-based initiatives, we believe that thethinking and execution of each and every employee is very important
in initiatives and transformations to achieve our targets. This isbecause it is the frontline employees who know best, what is reallyneeded and what can be done in their day-to-day work. We also
expect that these challenges will lead to the fulfillment of our work.

Becoming a Stronger Group with Greater
Employee Satisfaction
As various events occur in Japan and overseas and society continues
to become more complex, companies must always have a sustainable
perspective and look ahead to survive. In doing so, we believe that
we should present a vision and direction that is convincing to ourstakeholders, especially our employees, and I actively send out
messages, hold roundtable discussions, and conduct interviews. We
are also promoting initiatives to increase employee satisfaction, suchas improving openness by increasing opportunities for exchanges
between departments and updating the workplace environment bylistening to the voices of our people on the frontline of our operations.
How can we make work more comfortable for employees? I believe
the answer can be found in making sure employees that are occupied
but also having fun. At any rate, a company is only able to operatebecause of its people. I believe that the Toyo Tanso Group will
become even stronger by increasing the number of people who want
to work here and who believe the company will be better if they takethese actions. We will continue to make efforts so that our strength
could be a key to resolve social issues.

President Kondo pictured at center of the front row with members of domestic and overseas affiliates
at the Toyo Tanso Group Global Conference

TOYO TANSO Integrated Report 2023

07

Background of value creation

Background of value creation(Millions of yen)

45,000

History of value creation

40,000At the time of its founding, the Toyo Tanso Group was a processor. We started material development with the founderʼs strong
35,000commitment to offer first-class materials, and have taken on the challenge of pursuing original and innovative carbon
particularly in high-performance fields, creating a number of long-selling products. Even today, we continue to pursue products

30,000with unprecedented potential while keeping up our diligent work.

25,000Trend in net sales■ Net sales (consolidated)■ Net sales (non-consolidated)

20,00015,00010,000

5,000

2022

2020

2015

2013.12*2013.5

2010

2005

2000

1995

1990

1985

1980

1975

1970

1965

1960

1955

1950

1945

1941

0

* The end of the fiscal year changed from May 31 to December 31 starting with the fiscal year ended December 2013. Consequently, the fiscal year ended December 2013 is anirregular fiscal year insofar as it consisted of only seven months of operations (for some subsidiaries, nine months).

1941

1950

1960

1970

1980

1990

2000

2010

2020

BinderFoundedElectrical carbon
History of technologies created and Toyo Tanso's product lineup
08

We developed resin binder, a carbon
brush material that combines carbon
and synthetic resin. This carbon brush
was highly evaluated not only inJapan but also in Korea, Taiwan, andthe United States, and was adopted
one after another as an automobile
part against the backdrop of the
spread of automobiles.

(carbon brush)

DC graphitization
furnace

LS materials/
LA materials

KC materials
Resin impregnation

Metal impregnationHigh
purification
We improved the carbon brush material and developed afull-scale carbon KC material for machines, and the material
developed through further improvements was used for genuine
parts such as piston rings and rod packing for compressors
manufactured by major heavy industry manufacturers.

In 1974, we established the industry's first mass production technology for isotropic graphite.
It has been successively adopted as a component of single crystal silicon manufacturing
equipment, and has become the cornerstone of our business expansion.

Ultra highpurification

Isotropic graphite

Isotropic
Massgraphite production

We decided to enter the SiC-coated graphite products business in order to build bridgehead
protection for semiconductor applications. We successfully commercialized and establisheda mass production system after four years of trial and error. Our pursuit of added value
accelerated from here, and now we provide a variety of surface treatment materials withhigh added value according to the characteristics required by our customers.

Mechanical carbon

PERMA-KOTETM(SiC-coated graphite products)

In order peripheral domains to graphite materials, we entered the C/Ccomposite products business. We have reached practical application
by bringing together elemental technologies accumulated in-house,such as manufacturing methods and coating technologies.

PYROGRAPHTM(pyrolytic carbon coatedgraphite products)

GLASTIXTM
KOTE

EVEREDKOTETM(TaC-coated products)

Surface treatment material(glass carbon)

New products

C/C composite
products

Graphite sheets are made mainly from natural graphite insteadof artificial graphite that we had offered previously. This attracted
attention as an alternative to asbestos, and the Toyo Tanso
Group sold imported products. Focusing on this high added
value, we decided to take on the challenge of natural graphite.
After numerous failures, we created a product that is a latecomer
but of a quality that surpasses our competitors.

PERMAFOILTM(graphite sheet products)

Based on the idea that“it will definitely be useful to the world,”wecreated CNovelTM from the spirit of taking on challenges passed down
since our founding. CNovelTM is a powder material that is different fromconventional products, and since the pore size inside it can be freely
controlled from 2 nm to 50 nm, it is used for adsorption of various
substances, energy storage, and chemical catalysis.

CNovelTM

TOYO TANSO Integrated Report 2023

09

Background of value creation

Business domains

Background of value creation

E l e c tro nic s

Since its founding, the Toyo Tanso Group has expanded its

Semiconductors

operations into a wide range of businesses, including social
infrastructure, mobility, life sciences, electronics, and energy.

Electronics

As we have journeyed together with customers, ourElectronic components

Components for crystal growthComponents for wafer processing
Jigs for electronic component
manufacturing

technologies have encountered numerous needs, giving riseto new products and spurring the expansion of our operations
into new business domains.
Having been created in this manner, our product portfolio
is helping solve social issues from a variety of perspectives,
including saving energy, creating energy, and electrifying
automobiles. Going forward, we will continue to focus

E ne rgy
Grounding brushes for power
generatorson creating products with unprecedented potential andPower generation

technologies and embracing the challenges of new domains
while valuing our partnerships with customers.

EnergyComponents for manufacturing solar
power generation systems
Core structure for next-generational
nuclear power reactors

Fuel cells

Catalyst carriers

Railcars

Pantograph sliders

Aerospace

Engine parts manufacturing(Electrodes for EDM, jigs for heat
treatment)

M o b il ity

Mobility

Automobiles

Parts for various types of pumps
Gaskets

So c ia l inf ra s truc ture
Telecommunications

Social infrastructure

General industry

Components for manufacturing
optical fiber
Components for manufacturingcablesPackings
Seal rings and bearings

L ife s c ie nc e
Healthcare

CT machine target materials
Analysis column fillers
Components for manufacturing LED

Life science

10Home appliances

Carbon brushes for vacuum cleaners
Components for compressor

TOYO TANSO Integrated Report 2023

11

Background of value creation

Background of value creation

Worldwide

At a Glance
The Toyo Tanso Group operates by manufacturing carbon materials primarily at plants in Japan and processing them at facilities indestination markets.
By consolidating the production of materials, we can pursue economies of scale and cost competitiveness while maintaining
stable quality. In order to listen to the voices of customers and reflect their needs in our products, we process our products in

Net sales

43,774 million yen
Employees

locations close to our customers.

Locations

Manufacturing capital (property, plant and equipment)

Customers

1,690 19 31,138 million yen Around 3,700★ Head Office (material manufacturing, processing, and sales)● Processing/sales facility

Asia
Employees

469● Production site
● Sales facility

Top market share for graphite materials used to manufacture single-crystal silicon
Top market share in graphite materials used to manufacture silicon/SiC epitaxial

Locations10

North America
Composition of
net sales

Employees

取引先構成比

116

34 %

40.7%

Italy

China

U.S.
Manufacturing capital(property, plant and equipment)

Head Office

134

LocationsTaiwan3

ThailandJapan
Employees

Composition of
net sales

8.9 %取引先構成比17%Singapore971

Mexico932 million yen

Locations

4

Indonesia

Composition of
net sales
Manufacturing capital(property, plant and equipment)

5%South Korea

EuropeEmployees

取引先構成比8.1%

4,301million yen

France2Composition of
net sales

Manufacturing capital(property, plant and equipment)

Germany

Locations41.7%

1,420 million yen

取引先構成比44 %OtherCompositionof net sales

0.6%

Manufacturing capital(property, plant and equipment)

24,483 million yen
12(FY2022 results)

TOYO TANSO Integrated Report 2023

13

Toyo Tansoʼs value creation story

Toyo Tansoʼs value creation story
Value creation process
A variety of social issues, including increasingly serious environmental issues and a shrinking, aging population, are giving rise to a

Toyo Tanso Grouptransformation in society and industry. The shift to a recycling-based society and digitalization are examples of innovations inspired bythese issues, indicating that we stand on the verge of an era of significant change. The Toyo Tanso Group sees changes like these in the2030 Management
Visionexternal environment as opportunities, and we are working to contribute to the realization of a sustainable society while increasing ourcorporate value through the deployment of an extensive portfolio of management resources and a robust program of business strategies.

Global megatrends“Creating products with unprecedented potential”

Inputs (FY2022 results)

Becoming a leading company
through Earth-friendly products
and technologies

Extensive pursuitof added value

Manufacturing capital

Production sites

Japan:

7/ Overseas:

13Intellectual capital

1.1
437

¥

R&D spending:

Strategies
Planning and execution ofstrategies by product andapplication by task force teams

billionDevelopment

Number of patents acquired:

Human capital

Consolidated employees:
Of which, employees atoverseas sites:

1,690
719

Robust partnership
across the value chain,including customers andbusiness partners● Product development thatprovides clues for resolving
customers’issues● Research and developmentwith an eye toward future
market trends¥

Cash flows fromoperating activities:

77.2
¥5.6

123

14

90

66.5

¥

Helping realize a recycling-based society

billionRealizing industrial development
and a rich, satisfying society
Realizing diversity & inclusion

billionOperating profit ratio

20.3● Provision of products andtechnologies that carefully address
customer needs%● Identifying the next issues
and compiling seeds and needs

ROE

10

%

GovernanceRatio of direct sales

More than

Reducing greenhouse gas emissions

13.5

Solutions

Number of sales and sales engineers

Net sales¥billionbillionOutcomes

Operating profit

Financial capital

Total assets:

Outputs (FY2027 plan)％

Promotion of stronger management groupwide using category leaders(Processing technology, quality assurance, development, sales, procurement,
legal, accounting, personnel, and information systems, etc.)

ＣＡＧＲ

by function

8.7%

TOYO TANSO Integrated Report 2023

15

Toyo Tanso's value creation story

Toyo Tansoʼs value creation story

Medium-Term Management Plan (2023 to 2027)

Net sales targets by product and application

The semiconductor market is entering a short-term adjustment phase, but strong growth is expected over the medium to long term.

Strong demand for SiC semiconductor applications has led to significant growth in special graphite products, electronics applications, andcompound material SiC-coated graphite products.

Based on the latest market forecasts and demand trends, the Toyo Tanso Group has formulated a Medium-Term Management Plan

(100 millions of yen)covering the period from 2023 to 2027 with semiconductor applications as a growth driver.
Under the 2030 Management Vision, the entire Group will work as one to achieve business growth.

FY2022 Net Sales

FY2027 Net Sales Targets

Special graphite products

202

322

9.8%

Carbon products for general industries(for mechanical applications)

39

54

6.6%

Carbon products for general industries(for electrical applications)

48

72

8.6%

Three major products of compound materials

99

192

14.2%

Other
(other products of compound materials and related goods)

47

24

Down 12.2%

Summary
POINT 1Raised the previous target (announced in 2022) due to the upward swing in the growthforecast for the SiC semiconductor market
Semiconductor applications account for 50% of net sales (FY2022 result: 40%)
There are no major changes in other market/demand forecasts, and only minor adjustments were made to the plansfor each product and application

CAGR (2022 to 2027)< SiC semiconductor applications >●●POINT 2For SiC wafers: special graphite product electronics applications
For SiC epitaxials: compound material SiC-coated graphite products

Capital investments

Capital investment of 51.5 billion yen over five years centered on semiconductor
applications

We will increase capacity and strengthen production structures to reliably capture demand for semiconductor applications in each process of
isotropic graphite material, machining, adding high value, and processing capacity of our subsidiaries.

Strengthening the global production system in anticipation of strong demand exceeding existing capacity

Total capital investment amount(FY2023 to FY2027)▼

FY2022

FY2023 (Forecast)

FY2027 (Target)(Ref.) FY2026*1 (Previous Target)

Net sales¥43.7 billion¥48.5 billion¥66.5 billion¥54.5 billion

Operatingprofit¥6.6 billion¥8.5 billion¥13.5 billion¥11.0 billion

Operatingprofit ratio

15.2 %

17.5 %

20.3 %

20.2 %ROE

6.9 %*1 Medium-Term Management Plan announced in February 2022 (covering 2022 to 2026)*2 Operating profit plus depreciation

SiC-coated graphite products: completion in 2024
High purification processing: completion in 2025

9%

■ Silicon wafer market
CAGR of5%

from 2022 to 2027

Expected to increase consistently, almost unchanged from theprevious plan
Semiconductor manufacturers are planning large-scale capital
investments, and the wafer market is expected to grow at a CAGR
of 5% as a result.
● In particular, Epi wafers are expected to grow even higher amid
increased demand for logic semiconductors.
●▼●

Policy on shareholder returns■ SiC device market
CAGR of40%

from 2022 to 2027

The market size has expanded at an accelerated pace, reaching a CAGR
of 20% in the previous plan, and in the latest plan this is expected to
grow to a CAGR of 40%, representing a significant increase.
●

In anticipation of the growing adoption of semiconductors in EVs andhigh-voltage devices, wafer and device manufacturers are planningto make aggressive and large-scale capital investments, and the SiC
semiconductor device market is expected to grow at a CAGR of 40%.

Increasing global production capacity in highvalue-added businesses● Strengthening competitiveness in corebusinesses and stable businesses● Deploying labor and energy savings, process
innovations, etc.
●

From 2024 onward, we plan to steadily complete investment projects, and we will strive to maximize supply by optimizing and streamlining
our global production structures to meet demand that exceeds our capacity in the short term.

Foreign exchange rates: 124 yen to one US dollar, 136 yen to one euro, and 18 yen to one renminbi
EBITDA*2 in FY2027 of approx. 21.0 billion yen (EBITDA margin of approx. 30%)

10 %

▼

Direction of capital investments basedon the strategies of the Medium-Term
Management Plan

Examples of strategic investments

Increasing production capacity for highpurification processing and SiC-coatedgraphite products
Total amount of ¥7.0 billion
1.5x increase in capacity eachMarket environment surrounding semiconductors

16

¥

●

8.8 %

Steadyinvestment

7:3

51.5 bn

Management targets

Strategic
investment

Dividend payout ratio●

Increasing production capacityof isotropic graphite materials
We are considering increasing
production capacity to ensure a
supply volume that meets demand.

90

182.4%
70

Our policy is to deliver stable increases
in dividends while maintaining a balance
between returning profits to shareholders
and making growth-oriented capital
investments against a backdrop ofsustained growth in profits.
■ Dividend

Strengthening global
production structures
Strengthening value-added
processes at each subsidiarywith a focus on semiconductor
applications

60

128.9%
50

22
11.5

25

25

50

50

35.6%

39.4%

FY2019Dec.

FY2020
Dec.

30
21.3%

28.2%

28.3%

27.0%

FY2021Dec.

FY2022Dec.

FY2023
Dec.

34.4%
20.6%

FY2013Dec.

FY2014Dec.

FY2015Dec.

FY2016Dec.

FY2017Dec.

FY2018Dec.

*Since net income for the fiscal year ended December 2013 was negative, the dividend payout ratio is not listed.

TOYO TANSO Integrated Report 2023

17

Toyo Tansoʼs value creation story

Toyo Tansoʼs value creation story

Business strategies based on the Group'sbusiness portfolio

Business strategies

General direction of business strategies■ Special graphite products

The Toyo Tanso Group classifies its products into three business types

Business development focused on the highvalue-added domain

based on market growth potential and business volatility and implements
appropriate and well-balanced business strategies.

●

Under the current Medium-Term Management Plan (2023 to 2027),
semiconductor applications will be the driver, and special graphite products
and compound material SiC-coated graphite products show increase in
growth businesses.

●

Current revenueHigh

Growth businesses

Future revenue

SiC-coatedgraphiteproducts

Main productsTrend in performance■ Electronics applications / ■ General industry applications / ■ Other(Millions of yen)

Growing market share in the highvalue-added domain, for example insemiconductors, which are characterized bydemanding quality requirements

17,143● EDM electrodes

6,751

5,266

Working to strengthen cost flexibility
and reduce the domestic manufacturing
burden in the general-purpose domain, forexample by outsourcing manufacturing

Market growth potential

2020

2,527

2,013

1,616
● Continuous casting dies

9,598

8,377

7,024

● Single-crystal silicon manufacturing
equipment parts

Graphite
sheet
products

8,104

13,907

C/C
composite
products

Specialgraphiteproducts

20,2302021

2022

Mechanicalapplications

Electricalapplications

MediumStable businesses

Differentiated businesses

MediumHigh

Volatility

●

●

▼

Differentiated businesses
Conduct business development focused on the high-value-added domain
Special graphite products (general industry applications)

Main productsTrend in performance■ Mechanical applications / ■ Electrical applications

Contributing to the stability of the Group'sbusinesses with few fluctuations in demandand profitability▼

Growth businesses
Profit drivers
Special graphite products (electronics applications and other, etc.)
Three major composite products (SiC-coated graphite products, C/C
composite products, and graphite sheet products)■ Carbon products for general industries

Mechanical application: Increasing costcompetitiveness and strengthening sales
in automotive applications and overseas
markets
Electrical application: Working to increase
share in growth markets (Asia, household
appliances, and power tools) by leveraging
strengths (lead times and service) in order
to increase the extent of the segment's
contribution

9,465

8,464
● Carbon brush
3,763

4,701

● Bearings● Pantograph sliders

2020

8,809

3,738

3,985

5,727

4,823

2021

2022

▼

Stable businesses
Contributing to the stability of the Group's businesses with few
fluctuations in demand and profitability
Carbon products for general industries (for mechanical and electricalapplications)(Millions of yen)

Related goods

6.8%■ Compound materials and other productsTrend in performance

Ratio ofNet Sales

26 .9%

Special graphite
products(FY2022)

11.0%
9 .1%

●

46 .2%

SiC-coated graphite products: Reliably
capturing demand by boosting production
capacity●

C/C composite products: Increasing sales
through technical services like design●

Graphite sheets: Improving customer
satisfaction through customization● Crucibles(C/C composite products)● Graphite sheet products(Millions of yen)

9,306
7,835
9,944
6,743

(for electrical applications)

Carbon products forgeneral industries(for mechanical applications)18

11,765■ Three major products / ■ Other

A high-growth business that drives profit

Compoundmaterials andother products

Carbon products forgeneral industries

Main products● MOCVD susceptors(SiC-coated graphite products)

1,092● Three-layered trays (C/C composite products)

2020

7,808

1,497
2021

1,820
2022

TOYO TANSO Integrated Report 2023

19

Toyo Tanso's value creation story

Toyo Tansoʼs value creation story

Materialities and contributions to the resolution of social issues
The Toyo Tanso Group has identified materialities (key issues) related to sustainability and classified them into four categories.
By accelerating initiatives to address these materialities, we are seeking both to increase our own sustainability and to expand ourcontributions to society and the environment.

Materialities
The Toyo Tanso Group has identified 14 key issues that

Category

it should address as a global material manufacturer asmaterialities and classified them into four categories.
Products developed, manufactured, and sold in linewith society's and customers' needs in markets such as
semiconductors and other electronics, mobility, life science,and clean energy have particularly high potential tocontribute to the realization of a sustainable society.
In FY2022, we decided on the following targets forContribution to
reducing climatechange risk andenvironmental
protection

FY2030 as part of our materialities. Going forward, we

Key issues

we can respond flexibly to changes in the management

Related SDGs

E

S

G

Environment

SocialGovernance

○

○

○

○

Reducing greenhouse gas emissions, including
through energy savings and creation

30% reduction*1 (compared to FY2019; nonconsolidated basis)○

Contributing to the reduction of greenhousegas emissions through products

Ratio of environmentally-friendly products*2 to net
sales 35％（consolidated basis）○○

Using Earth-friendly raw materials and avoiding
procurement risk
Complying with various countries’
environmental laws and regulations andreducing environmental impacts

plan to periodically review these materialities so that

FY2030 Target

Number of violations of environmental laws andregulations: 0 (non-consolidated basis)○

environment and society while studying key performanceindicators (KPIs) and targets and continuing dialog withstakeholders.
FY2030 Target● Reduction of greenhouse gas emissions, including throughenergy savings and creation: 30%(compared to FY2019; non-consolidated basis)*1● Contribution to the reduction of greenhouse gas emissions

Pursuing productdevelopment andmanufacturing
technologies toresolve social issues
and customer needs

through products: Ratio of environmentally friendly
products*2 to net sales: 35% (consolidated basis)

Developing products and improving
manufacturing processes to help realize a
recycling-based society
Complying with increasingly sophisticatedquality requirements
Developing new products and improving
services in partnership with stakeholders○
Number of serious complaints: 0 (consolidated basis)○● Compliance with environmental laws and regulations in eachcountry and reduction of environmental impacts: Numberof violations of environmental laws and regulations: 0 (nonconsolidated basis)● Response to increasingly sophisticated quality requirements:

Number of serious complaints: 0 (consolidated basis)

Materiality identification process

STEP 1
Identification of issues

STEP 2
Evaluation of the importanceof issues

We evaluated the importanceof issues from external(impacts on society and theenvironment) and internal(impact of society and theenvironment on Toyo Tanso)
perspectives.

Prioritizing issues

We prioritized issues basedon our evaluation of theirimportance. We held
exchanges of views with
Outside Directors and Audit &Supervisory Board Members
to ensure our decisions would
incorporate outside opinions.

Identification ofmaterialities

Following study by the
Sustainability Committee, thematerialities were approved by
the Board of Directors.

STEP 320

We identified our own
sustainability issues alongeach value chain while making
reference to internationalguidelines provided byprograms and entities such as
the GRI, SASB, and SDGs.

Creating safe,
secure workplaceenvironments where
all employees canflourish

Undertaking
corporate activities
that inspire trust

Improving safe, healthy workplace environments
and increasing productivity○

Ensuring all stakeholders’human rights arerespected○

Offering human resources development,
training, and education programs○

Respecting workforce diversity○

Compliance○○

Strengthening crisis management capabilities○○

Undertaking community service activities○○*1: Greenhouse gas emissions per unit of net sales (Scope 1 and Scope 2) *2: For information on environmentally friendly products, please see page 33.

TOYO TANSO Integrated Report 2023

21

Toyo Tanso's value creation story

Toyo Tansoʼs value creation story

Roundtable Discussion involving

Sustainability structures

Group Heads of Sustainability Committee

Sustainability policy
At the Toyo Tanso Group, all employees shall carry out their duties

Based on this policy, we will conduct all business activities

with independence and a sense of responsibility based on thethroughout our value chain with a basic approach that is strongly

governance policy established by the Board of Directors. They

focused on contributing to society while achieving continued

shall strive to provide the value that is expected by all stakeholders

growth. This includes technological innovations and creation of(customers, suppliers, local communities, shareholders and investors,

value for society and customers through our products, as well as

and employees). So that we can be a company that continuallyconsideration for the global environment, ensuring safety andcontributes to improving sustainability (sustainable societal growth

health, compliance and risk management, fair business practices,and preservation of the global environment), our policy is to achieve

respect for human rights and diversity, and harmony with society

continual advancements through our business activities while

through social contribution activities.

increasing the sustainability of corporate growth.

Sustainability structures
Environment, social and governance (ESG)

Sustainability Committee

IssuesMissionFundamental philosophy /Management policies

VisionManagement

Communicating our sustainability policies

Value

Management strategies /Growth strategies

Resolve social issues through business(Materiality identification and KPIs)
Growth strategies
and businesses

Production

Quality andprocurement

1. ESG Value Creating and Promoting Group
Head : Tatsuro Hamada, Director, Executive Officer Directorof Division, Corporate Planning Division
2. Sustainable Consumption and Production Group
Head: Shunsaku Hiraga, Director, Executive Officer
Director of Division, Production Division
3. People and Organizational Vitalization Group
Head: Hiroshi Hashigami, Executive Officer Director of
Division, General Administration Division

Developing and selling ESG-compatible products
Reducing CO2 and environmental impacts
Saving energy, creating energy, and saving resources
Improving productivity through automation

Committee structure
Sustainability Committee
Chairman: Naotaka Kondo, Representative Director,
Chairman & President, CEO

Communicating our corporate philosophy, vision,and policies

Reducing waste
Ensuring product quality and complying withenvironmental regulations
Promoting sustainable procurement
Utilizing human capital and improving productivity
Promoting health and safety and practicing healthoriented management
Respecting human rights, preventing harassment,
and boosting morals

Environment,
safety, humanresources/generalaffairs, and legal
affairs

ESG Value Creating andPromoting Group

Sustainable Consumption and
Production Group

People and Organizational
Vitalization Group

Tatsuro Hamada

Shunsaku Hiraga

Hiroshi Hashigami

Director, Executive Ofﬁcer,
Director of Division,
Corporate Planning Division

Director, Executive Ofﬁcer,
Director of Division,
Production Division

Promoting diversity and female employees’
participation in the workplace
Strengthening corporate governance
Practicing risk management and business continuity
planning (BCP)Can you explain the structure of the Sustainability
Committee and the roles of each group?

Ensuring compliance and protecting information
assets and intellectual property
Practicing community service

Principal activities of the Sustainability Committee

Number of meetings in FY2022: 5● Deliberation on greenhouse gas emission reduction targets● Consideration of KPIs and targets for materiality (key issues)● Response to TCFD (examining the financial impact of major risks and opportunities

related to climate change response)● Implementation of third-party verification of GHG protocols

22

Executive Ofﬁcer,
Director of Division,
General Administration Division

Hashigami: The Sustainability Committee is comprised of threegroups, and the three of us, as group heads, formulate
policies together with the CEO and report to the Boardof Directors. Each group has a different role. The“People
and Organizational Vitalization Group,”which I am incharge of, is working to foster a corporate culture full oftrust and co-creation and to create a work environment
where growth can be felt, based on a basic stance ofemphasizing human capital. In addition, by strengthening
and promoting corporate governance, we aim to create
a company that is trusted by society.
Hamada: The ESG Value Creating and Promoting Group, which I

Hiraga:am in charge of, has two main roles. One is to focus on
expanding sales and development activities of productsthat contribute to solutions to environmental and social
issues, and setting medium- to long-term managementtargets. The other is to respond to the needs andissues of customers around the world through newtechnologies and products, and to contribute to therealization of a sustainable society.
I am in charge of the Sustainable Consumption and
Production Group. Its main role is to formulate targets
and plans for energy-saving and energy-creation
activities, such as the reduction of greenhouse gases
including CO2, and resource-saving activities, such as
the reduction of industrial waste, and to oversee theachievement of companywide targets.

TOYO TANSO Integrated Report 2023

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Toyo Tansoʼs value creation story

Toyo Tansoʼs value creation story

What were the main activities in FY2022?
Hashigami: The People and Organizational Vitalization Promotion
Group focused on human rights initiatives. This includes
respect for the human rights of employees, health,working environment, and fair transactions with business
partners. We formulated a declaration on human rights
centered on these issues and proceeded with activities inthe direction of its publication.
Hiraga:In the Sustainable Consumption and Production Group,
members of the Facilities Department in the Production
Division took the lead in creating a detailed annual
plan and promoting various measures such as energy
conservation with the goal of reducing greenhouse gas
emissions per unit of production by 30% and energy
creation through the introduction of green electricity.
Hamada: The ESG Value Creating and Promoting Group iscomprised of members from a wide range of fields,
including development, marketing, sales, and sales
engineering. In order to contribute to society and theenvironment through our products, we made ourmateriality (key issues) clearer while making use of ourrespective perspectives.
Hashigami: Since our products are not finished goods, it was very
difficult to see how they were contributing.
Hamada: That is why we worked on visualization. Products linked
to the three pillars of energy saving, energy creation,and electrification are defined as environmentally friendly
products. We have set a target for these environmentallyfriendly products to account for 30% of our total products
by 2026 and 35% by 2030. Although, Mr. Hiraga asked
me,“Isn’t the contribution ratio higher?”(laughs).
Hiraga:There was a lot of discussion within the company
about what constitutes an environmentally friendly
product. However, we are steadily making progress

What is important for the future of the Toyo Tanso
Group?

for sure in manufacturing products that contribute tosociety and the environment. One of the indicationsof this is that our porous carbon CNovelTM won the
Minister of Economy, Trade and Industry Award and
our C/C composites received the Excellence Awardat the 9th Monodzukuri Nippon Grand Awards,
representing a commendation by the Prime Minister.

Hamada:What activities to do you plan to pursue inFY2023?
Hamada:In recent years, due to the drastic changes in the businessenvironment, we have been revisiting the MediumTerm Management Plan every year, and we are doing
the same this year. Against this backdrop, the ESG
Value Creating and Promoting Group is focusing on
responding to changes in the supply chain and demandin the semiconductor field to increase the number ofenvironmentally friendly products. In particular, SiC power
semiconductors, for which the market is expanding
rapidly, have a high energy-saving effect due to low
power loss, and there is no doubt that our products usedin their manufacture contribute to energy savings.
Hiraga:With the growth in demand for semiconductors, I
believe that in the future, there will be demand forlarger products and products with higher purity, as wellas increased production. Although not limited to theactivities of the Sustainable Consumption and Production
Group, in addition to what kind of capital investment
we will make and how to improve production efficiency,
we believe that we must respond to the needs of ourcustomers while steadily implementing production
programs that lead to energy savings.
Hashigami: The People and Organizational Visualization Grouphas been working on human capital management forseveral years now, and there are no changes in this policy
for FY2023. In addition to further instilling awarenessthat human resources are the most important formof capital for the Toyo Tanso Group and the source ofsustainable growth and innovation, we will also focus
on fostering a fair and equitable corporate culture, suchas our declarations on human rights and partnerships.
Furthermore, we would like to strengthen governancethrough compliance training and other means.

materials be in 2030. We will not always get the same
quality, and may have fewer suppliers. I think it will beeven more difficult to plan for 2050 in the future. One
thing that can be said is that carbon is an absolutely
necessary material to realize a carbon-neutral world. It
is important for more people to understand this, andwe must determine the future direction while exploring
various possibilities.
Hamada: In fact, we have begun to take on the challenge offinding new material sources. It sounds like a dream, butdevelopment team members are currently researchinga technology to synthesize fine powdered solid carbon
from low-molecular-weight carbon compounds
synthesized from atmospheric CO2 in collaboration with
the National Institute of Advanced Industrial Science andTechnology. In other words, this would make it possible
to create C (carbon) from CO2. We don’t know how
many years this may take, but we aim to contributeto the environment by both reducing CO2 emissions
and manufacturing products that contribute to energy
savings, such as power semiconductors.
Hashigami: As for my group, I believe that how to maintain employee
motivation will be a major challenge in the future. I think
employees will be happy if wages go up, and whilethat is important, we have to make efforts to create acomfortable working environment and make employees
feel glad to be a part of the company. In addition, since
our generation is about to retire, we must nurture our
successors through education and training that looks
ahead to the next 10 or 20 years.

The pioneering spirit of manufacturing completely uniqueproducts that has been cultivated since the Toyo Tanso
Group's founding has always been passed on to thenext generation. I feel keenly aware of this through our2030 Management Vision of“Creating products with
unprecedented potential”and“Becoming a leading
company through Earth-friendly products and technologies.”
These words came from a vision camp attended by
employees, rather than instilled top-down. Becoming
a world leader in manufacturing that creates productswith unprecedented potential. I am reminded that this isextremely important to us.
Hiraga:Along with the 2030 Management Vision, we have threepolicies:“Become a global company,”“For the world,
for society,”and“Become a strong company.”Above
all, the part of“For the world, for society”is important,
and we believe that understanding how the products wemake are useful to the world will lead to a rewarding andexciting work.
Hashigami: After all, it's our people who are important. I think
we need to promote this in our corporate culture
more. Although we still have a long way to go, weare committed to supporting career advancement,
promoting diversity and inclusion, and enhancing
benefits programs and various systems, and the rate offemale employees returning to work after childcare leaveis 100%. I would like to continue to create a comfortable
work environment where our people can be proud of thecompany, and I would like to convey the appeal of the
Toyo Tanso Group to as many people as possible.

What are some initiatives and challenges from a
medium- to long-term perspective?
Hiraga:24

For example, the question of what will the state of raw

TOYO TANSO Integrated Report 2023

25

Pursuing product development and manufacturing
technologies to resolve social issues and customer needs
Promoting globalization with pursuing added value and strengthening
competitiveness
Manufacturing that pursues added value born from close-knit relationships with customers
Since its founding, the Toyo Tanso Group has continuously pursued
manufacturing with a commitment to creating products with
unprecedented potential. This involves creating something that does
not exist anywhere, products with high added value. The first step
toward achieving this is to listen to the voices of customers. Because
it values direct communication with customers, the Toyo Tanso
Group’
s direct sales ratio stands at over 90%, having expanded
its business sites to Europe and Asia following the United States
established 1987. Today, we operate 19 sites around the world.
Sales staff at each site sometimes visit customers and end users
with sales engineers to ask about their manufacturing requirements,
requests, and issues. Based on this, we carefully consider how we
can meet their needs while involving other parts of the Groupas necessary. In addition to proposing the selection, design, andprocessing of graphite materials, we also develop new graphite
materials if there are no graphite materials that meet the customer's
requirements for manufacturing. In this way, the Toyo Tanso Group
has always been close to its customers and has been able tomanufacturing completely unique products and provide a number ofsolutions. Furthermore, we look beyond the customer's point of viewand focused on research and development that search for seeds andanticipates market trends.
The Toyo Tanso Group's manufacturing in pursuit of added value
is the result of strong relationships with customers.

Developing products and improving manufacturing processes tohelp realize a recycling-based society

Joint research on resource recycling technologies
The Toyo Tanso Group is working to help reduce CO2 emissions
by realizing a circular economy, for example by developing
material recycling technology for reusing cuttings and other waste
products from the machining of materials in the carbon material
manufacturing process as raw materials and by developing chemical
recycling technology to allow such byproducts to be used as raw
materials for non-carbon products through chemical treatment.

Recently, in order to realize this circular economy, we have beenpromoting joint research with a number of research institutions andcompanies in Japan and overseas. Although still in the basic research
stage, we will actively incorporate basic knowledge on resource
recycling from outside the Group and respond to the needs ofsociety while capitalizing on every opportunity.

Managing the development of environmentally friendly products
We have introduced the technique of environmental assessment
into the management of product development. The need toreduce environmental impacts and conserve resources is consideredduring the screening at each“gate”so that we can better develop
environmentally friendly products. From the perspective of raw
material procurement, we are working to manage supply risks fromthe initial development stage and consider alternative raw materials
in parallel. The principal assessment items are as follows:

Strengthening the competitiveness of the entire Group
With an eye toward globalization since its founding, today around
60% of the Toyo Tanso Group's net sales originate from outside ofJapan and an important element of its corporate policy is to“Become
a global company.”For this reason, the functional divisions of
production, sales, development, and administration engage in avariety of initiatives, and at the same time, we are also promoting
initiatives throughout the organization and at affiliates to strengthen
the competitiveness of the entire Group.
First, the key to the implementation and achievement of our
Medium-Term Management Plan is the task force teams formed foreach market, application, and product. Team members selected fromwithin the Group across departments are responsible for formulating
overall and area strategies based on market analysis for each area,
creating various plans for production, sales, investment, personnel
and development, and implementing actual strategies. In order toalign the Group's perspectives and implement growth strategies as
one, these initiatives are shared with key members of affiliates at theannual global meeting to discuss important policies and strategies.
Additionally, the key to achieving our Medium-Term Management
Plan is to secure the supply capacity to meet strong demand,
especially for semiconductor applications. The Toyo Tanso Groupmanages production activities, including facility operation, delivery,
quality, and cost, in a timely and appropriate manner throughout
the Group. For example, we promote supply chain management
throughout the Group characterized by harnessing the surplus
production capacity of other sites when a certain site is experiencing
a busy period.

Pursuing product development and manufacturing technologies to resolve social issues and customer needs

Illustration of gate screenings
Phase 0Phase 1

Phase 2Phase 3Phase 4Phase 5

Idea

Technology
assessment

Productivity
assessment

Businessviability
verification

Massproduction
prototype

Initialproduction

TOYO
product• Use of environmentally harmful substances (REACH regulations, RoHS
Directive, etc.)• Energy savings (power consumption, production efficiency, etc.)• Resource savings• Life cycle (raw materials, product production, distribution/
consumption, disposal/recycling, etc.)• Risk assessment of raw materials

Gate-0Gate-1Gate-2Gate-3Gate-4Gate-5The need to reduce environmental impacts and conserve resources is considered during thescreening at each gate.

Developing products with high resource efficiency

Toyo Tanso Taiwan Co., Ltd. (Taiwan)

Because we provide products that have been machined into theshapes based on customer requests, portions cut from blocks
inevitably end up as waste. To address this issue, we are working to
reduce waste from machining wherever possible by forming shapes
in which carbon materials are closer to the final product rather thana block shape. Since changing the block shape yields secondary

benefits in the form of shortened baking and graphitization times, italso helps reduce CO2 emissions.
In this way, we are working to reduce waste by increasing thepercentage of resources that are incorporated into products bymaking improvements to manufacturing processes.

Toyo Tanso Europe S.p.A. (Italy)

26

TOYO TANSO Integrated Report 2023

27

Pursuing product development and manufacturing technologies to resolve social issues and customer needs

Complying with increasingly
sophisticated quality requirements

2030 target

Number of serious
complaints:

0(

Pursuing product development and manufacturing technologies to resolve social issues and customer needs

consolidated
basis

)

The Toyo Tanso Group is building groupwide quality control mechanisms around international standards such as ISO 9001,
including establishing policies on quality and quality management systems. Recognizing the need to satisfy quality requirementsthat will become increasingly sophisticated in the future, ”we will improve customer satisfaction,”“deliver the highest standardof quality,”and“manufacturing completely unique products”by carrying out quality improvement activities in every process,from design and development to production, sales, and service.

Promoting automation in quality inspections
As a manufacturing company, quality management activities are
extremely important in order to continue to be a“strong company”
as stated in the Company Policies, and we are making various
efforts to evolve our operations on a daily basis. One of these is
the automation of measurement and inspection operations. In
addition to the use of state-of-the-art measuring equipment, weshare our wisdom with the entire workforce in order to improve
work efficiency and accuracy, including fabricating and operating
automation facilities designed in-house, which will also create
a comfortable working environment that reduces the workload
placed on employees. We are advancing quality control activities by
allocating resources created by promoting automation into humanresource development such as global quality control activities andemployee skills improvement.

Data-driven manufacturing
Manufacturing requires the accumulation and utilization of dataobtained in the manufacturing process to ensure that we always
produce products of a certain standard. We utilize data obtain fromeach process to fine tune manufacturing conditions in subsequent
processes. In this manner, we are working to maintain and improve
quality by using the quality characteristic data of the final productto set the requirements for the next round of manufacturing.
Furthermore, we are promoting the greater use of data to see how
quickly we can discuss and adjust work and judgment of eachprocess based on this data with the relevant departments. Our
database centrally housing quality information is always containing
the latest data, and by analyzing and analyzing this data while
collating it with information and data provided by customers, weare able to achieve a high level of quality assurance and customer
satisfaction.

Promoting globalization
In order to deliver products of stable quality globally as the Toyo
Tanso brand, we provide operational support for production andquality assurance led by Head Office staff to our affiliates. In addition
to understanding the situation and resolving issues at affiliates
through regular web conferences, we provide comprehensive
support for manufacturing, processing and quality control fromthe perspective of our quality management system so that productquality can be maintained through appropriate production. This
includes sending Head Office staff to provide technical guidance orinviting local staff to the Head Office plant for training. By expanding
improvement activities with confirmed benefits to affiliates, thesebenefits are in turn spread throughout the Group. We are promoting
activities to eliminate gaps between affiliates and maintain andimprove quality on a global basis.

28

Developing new products and improving services
in partnership with stakeholders

Developing products that anticipate needs while satisfying customers’expectations
As a pioneer of carbon products, the Toyo Tanso Group has led theindustry in technology, building a solid technological foundation thatallows it to introduce products that align with society's requirements
in a timely manner while embracing the challenge of R&D that
focuses on new applications and of developing carbon products thatexceed the characteristics of past offerings.
In addition to digging deeper into customers' needs and verifying
raw material and product characteristics, we have succeeded increating products that comply with regulations on environmentallyhazardous substances and establishing a level of quality that aligns
with requirements in the clean energy market by searching forinnovative manufacturing technologies that lie beyond the trajectoryof existing technologies. The unique, high-quality, high-value-added
products that are the result of these efforts have earned high praisefrom customers.

Customers

Want to control
costs

Long life

Dependable if aproblem occurs

Careful technicalfollow-up

End user haspeace of mind

Extensive trackrecordExpectation

Fit

Value proposal

Product/service

Evaluating and researching graphite components for SiC crystal growth furnaces in response tomarket demand
Cover(graphite material)

As the world moves toward carbon neutrality, industry-relatedcompanies are increasing the position of SiC semiconductors in theirbusiness as power semiconductors that lead to energy savings, suchas reducing power loss, and are focusing on their development andmanufacture. Currently, the sublimation method is the mainstream
method for manufacturing SiC wafers, and graphite materials areused as components of manufacturing furnaces, while graphite
components of the Toyo Tanso Group also have a strong presence.
As a graphite material manufacturer, the Group is involved in
the Tsukuba Power Electronics Constellation (TPEC), and evaluatesgraphite materials against the required characteristics of graphite
components, which are indispensable for the manufacture of SiC
semiconductors. We hope to utilize these results in our products andtechnologies to deliver better products and services.

GrowthcrystalCrucible(graphite material)
SiC2、Si、Si2C

SiC crystal powder

Products made from partnerships with customers
Various ideas and solutions are born from the problems andpotential issues that we have identified through direct dialogue
with customers. Crucibles and heaters for the manufacturing of
single-crystalline silicon, one of our main products, are examples.
After succeeding in the mass production of isotropic graphite in1974, the Toyo Tanso Group was one of the first to identify issues
in silicon wafer manufacturing, and through repeated trial anderror as well as customer proposals, we were able to adopt theindustry’s first isotropic graphite component. Today, we continue
to work together with our customers.

Improving film quality of
SiC-coated products

Examples of solutions

TOYO TANSO Integrated Report 2023

29

Pursuing product development and manufacturing technologies to resolve social issues and customer needs

Pursuing product development and manufacturing technologies to resolve social issues and customer needs

C O L U M N

Policies and initiatives for intellectual properties

Double Winner of Monodzukuri Nippon Grand Awards
Basic policy on intellectual properties
The Toyo Tanso Group has established and is implementing an
intellectual property strategy based on the following basic policies.

Support businesswith intellectual
properties

1. Support business development through intellectual
property activities
By strategically utilizing the patents and other rights we haveacquired, we support the challenge of business development forthe sustainable growth of the company.
2. Appropriate protection of intellectual property and knowhow results in products, technologies and services
In order to secure a competitive advantage for the Toyo Tanso
Group, we appropriately judge and manage the intellectual
property rights necessary for our business activities and know-how
related to manufacturing, etc., and ensure that they are protected.

The Monodzukuri Nippon Grand Awards is a system under the Prime Minister that recognizes particularly outstanding humanresources among each generation who are active on the frontline of manufacturing in order to steadily pass down and further
develop manufacturing, which has supported the development of Japan's industry and culture and greatly contributed toprosperity for the people of Japan. At the ninth Monodzukuri Nippon Grand Awards, employees of the Toyo Tanso Group
received both the METI Minister's Prize and the Excellence Prize.

The METI Ministerʼs Prize

Exerciselegitimate rights

Toyo Tanso GroupIntellectual
Property Policy

3. Respect the intellectual property rights of others
When developing and deploying products and technologies, we
conduct necessary investigations to avoid infringement of rights.
In addition, we examine the status of trademarks registered byothers before using them.

Protect
intellectual
properties
appropriately(Enlarged view)

Respect the
intellectual
properties ofothersRespect for the rights of others and avoidance of infringement●

Identify rights of others linked to R&D management system●

Avoid barriers to entry by negotiating cross licensing, etc.

● Respect for the rights of others and avoidance of their infringement● Use intellectual properties to build barriers to entry for othercompanies
Toyo Tanso and its major domestic and overseas affiliates strategically use
patent applications, acquisition of rights and concealment of know-how tobuild barriers to entry for other companies.

Use intellectual properties to build barriers to entry for other companies●

Build the patent portfolio through strategic approach to applications●

Secure first rights through concealment of know-how● Increase motivation to invent through the employee invention

incentive system
We evaluate patents that have contributed to the business annually inaccordance with the Employee Invention Regulations, and provide inventors
with a relative share of profits.

30

Recipients: five employees of the Global R&D Division(at the time)

Development of products and applications for carbon fiber
reinforced carbon composites (C/C composite products) for
industrial furnace applications that solved difficult problems
in manufacturing

CNovel™ is a porous carbon material characterized by astructure called“interconnected pores”in which pores
known as mesopores of 2 to 50 nm, which could not
be produced in a controlled manner using conventional
processes, are artificially incorporated into carbon powder,and the mesopores are connected. This makes it possible tofreely design and control pore structures and carbonaceous
materials, and chemically designed pore spaces can be used
for a variety of applications.
This advanced feature nearly doubles the life of thecatalyst in fuel cells and contributes to the cost reductionof battery systems. As a material for devices that reduce
environmental impact, CNovel™ is expected to contribute tosolutions to issues such as carbon neutrality.

Metal jigs used in industrial furnace applications have a large
mass and deform due to repeated use. The Toyo Tanso Groupdeveloped a lightweight, high-strength, non-deforming evenafter repeated use, and a metal heat treatment jig made of
C/C composite that is suitable for transport by robot.
Furthermore, in order to control the infiltration of oil into
C/C composite jigs, which has been an issue in oil quenching(cooling with oil) in the heat treatment process, wedeveloped a technology for sealing voids in C/C composite
materials by combining the resin infiltration method and thechemical vapor infiltration method (CVI method). As a result,
we were able to reduce oil infiltration by around 70%.

Initiatives in the IP landscape●

Develop human resources responsible for the IP landscape including IP
analysts, etc.

●

Analyze intellectual properties and propose their utilization in ways that
benefit the company's businesses

Use of internal systems to encourage inventions● Initiatives in the IP landscape

In order to formulate intellectual property strategies, we are cultivating
human resources (such as IP analysts) who can execute the IP landscapeand developing research tools. Our objective is to analyze the businessenvironment, analyze new and enhanced themes, and search foropportunities to utilize our patents.

Industrialization of CNovel™, a porous carbon withchemically designable pore spaces

Metal jig (left) and C/C composite jig (right)
each used for one year

Recipients: three employees of the Production Division(at the time)

Systems and initiatives for execution of intellectual property strategy

We operate mechanisms that ensure we do not infringe upon the rights ofothers. This includes using the stage-gate method of R&D management,
in which the intellectual property department participates from the initialstage of R&D and checks the status of each step from commercialization
to market launch. These mechanisms also enable us to form appropriate
alliances with other companies and external research institutions, i.e., suchas cross-licensing and joint research, and leads to results that cannot be
achieved with our own technology and know-how alone.

CNovel™

Catalyst carriers for fuel cells (enlarged image of CNovel™)

4. Exercise legitimate rights
In addition to requesting the cessation of infringements of ourrights, the Toyo Tanso Group will take measures to maximize theuse of its intellectual property rights depending on the situation,such as reaping financial benefits through licensing out rights
and acquiring technology through cross-licensing.

The Toyo Tanso Group implements its intellectual property strategy
in line with its intellectual property policy through the following
systems and initiatives.

Conventional carrier

The Excellence Prize●

Provide incentives to inventors (at time of invention and linked to sales)

METI Minister Nishimura(center) with CNovel™
development team members

Director-General Hara of the
Shikoku Bureau of Economy,
Trade and Industry (far left)
pictured with members of
the C/C composite products
development team of the
Production Division(METI Prize presentation ceremony
held on January 23, 2023)(Shikoku region presentation ceremony
held on March 23, 2023)

In this manner, CNovel™ is a breakthrough industrial material that can contribute to the improved functionality of fuel cell
catalysts, and C/C composite products can contribute to solving problems in manufacturing.
The Toyo Tanso Group will continue to contribute to solutions to social issues and the realization of a sustainable society
through its ongoing research and development.

TOYO TANSO Integrated Report 2023

31

Contribution to reducing climate change risk andenvironmental protection
Reducing greenhouse gas
emissions, including throughenergy savings and creation

2030 target

Greenhouse gas emissions
per unit of net sales:

30%

Contribution to reducing climate change risk and environmental protection

Contributing to the reductionof greenhouse gas emissions
through products

reduction(non-consolidated)(compared to 2019)

Energy savings initiatives
In addition to promoting the use of LED lighting, our deployment ofhigh-efficiency compressors has led to significant energy savings andreductions in our greenhouse gas emissions.
In the baking process, we have completed the conversion to
furnaces that use fuels with low greenhouse gas emissions, reducing
environmental impacts and increasing energy efficiency.
For each of our existing furnaces, we are continuously working
to shorten operating time and optimize packing efficiency.
Looking ahead, we will make efforts to further lower energy
consumption by promoting automation and predictive maintenanceof existing facilities.

Ratio of environmentallyfriendly products to net sales:(2022 results: 21.3%)

35%(consolidated)

Definition of“environmentally friendly products”

Reducing greenhouse gas emissions in production activities
The Toyo Tanso Group has formulated a roadmap for reducing
greenhouse gas emissions including the following:(1) deploying energy saving equipment, (2) introducing energy
with a low CO2 emission coefficient, (3) transitioning to firing furnaces
that have low energy intensity, (4) optimizing furnace operatingtimes, and (5) optimizing furnace loading efficiency. The roadmap sets
forth measures for reducing greenhouse gas emissions (Scope 1 andScope 2) per unit of net sales in 2030 by 30% compared to FY2019.
As a result of working on various measures that will lead to more
efficient and labor-saving energy use in our production activities, wewere able to achieve our target, although the emission intensity in
2022 increased slightly from the previous year due to changes in the
product mix. In 2023, we will continue to promote various initiatives
and work to further reduce the intensity.

2030 target

Greenhouse gas emissions (non-consolidated)

The Toyo Tanso Group aims to contribute to the reduction of greenhouse gas emissions through its products in the areas of energy savings,
energy creation, and electrification defined as“environmentally friendly products.”The scope of each area is explained below.

■Scope 1 / ■Scope 2 / ●Greenhouse gas emissions per unit of net sales(t-CO2)(t-CO2/millions of yen)

120,000

3.79
3.45

100,000

3.36

3.43

80,00060,00040,000● Energy savings: Products for use with power semiconductors (Si semiconductor and SiC semiconductor manufacturing materials, etc.) and LEDs

3.5

● Energy creation: Products for use in wind power, hydropower, geothermal power, solar power, nuclear power, and fusion power

3.0*For some products and applications that are used in multiple end markets, we have set constituent sales percentages corresponding to the areas above for each application based on a range of statisticalinformation and then multiplied those percentages by each product or application’s net sales to calculate the above values.

(compound semiconductor manufacturing materials); industrial furnaces (C/C composite products)● Electrification: Pump parts for use in electric vehicles, products for use in fuel cells (Catalyst-supported CNovelTM)

2.5

20,000
0

4.0

2019

2020

2021

2022

2.0
(FY)

Energy-creating initiatives
Continuing from the previous year, we will supply all of the electricity
used at the Head Office building with electricity generated fromrenewable energy, and source approximately 30% of the electricity
used at our plants in Kagawa Prefecture also from renewable energy.
As a result, we will work to reduce greenhouse gas emissions byapproximately 21,000 t-CO2 per year, or approximately 20% of
our total emissions. In order to achieve our target for 2030, we will
gradually increase the ratio of the electricity we use that is generated
from renewable energy.
The Toyo Tanso Group is accelerating its review of the expansionof new solar power generation facilities while continuing to generateones, and is actively promoting the installation of solar power
generation facilities at affiliates.
Furthermore, through the use of the Kagawa Smart Green
Bank's J-Credit system, we achieved a reduction in greenhouse gas
emissions of 1,046 t-CO2/year in FY2022, a significant reduction
from 281 t-CO2/year in FY2021.
We will continue to engage in environmental conservation
activities.

Contributing to the reduction of greenhouse gas emissions through products
In response to the global trend toward decarbonization, theJapanese government has declared that it will reduce the country's
greenhouse gas emissions to net zero by 2050, and has set a target
of increasing the ratio of renewable energy to between 36% and
38% by FY2030, which is about double that of FY2019. In orderfor renewable forms of energy such as wind, hydroelectricity,

geothermal, and biomass to sustain stable power generation
at low cost, high-quality carbon brushes (carbon product for
general industries/carbon product for electrical applications) areindispensable. Below, we will introduce the Toyo Tanso Group's
efforts to achieve carbon neutrality by 2050 focusing on carbon
brushes.

Wind power generation
Wind power generates electricity by rotating wind turbines that drive
generators. This form of renewable energy is attracting attention
in terms of preventing global warming and energy security, andis spreading in Europe, China, the United States, India, and othercountries. In the future, demand is expected to grow further as costs
are reduced due to technological advances and government support
policies, and it is believed that the development of energy-saving
technologies in addition to technological advances will enable amore efficient and sustainable energy supply.
Japan’s Ministry of Economy, Trade and Industry (METI) is
looking to increase the domestic procurement ratio of components
for offshore wind power projects to 60% by 2040, and wind power
is attracting particular attention among other renewable energies
due to the recent rise in thermal power generation costs caused bysoaring fuel prices.
Against this backdrop, the Toyo Tanso Group has developed
high-quality carbon brushes for wind turbines. Actual equipment
tests using this carbon brush have shown positive results, and it

has been adopted by major renewable energy companies and wind
power generation maintenance companies in Japan.
Carbon brushes are used in wind power generators and are
consumables that provide electricity stably and intermittently while
making sliding contact with the rotating body. The Toyo Tanso Grouphas continued to develop carbon brushes with an emphasis on
improving brush life and reducing damage to the slip rings, which
are the adjacent material, and as a result, we have succeeded indeveloping carbon brushes that are highly durable and significantly
reduce damage to the slip rings. In real world testing, we found thatthe life of our carbon brush was increased by about 85%, which
reduced the frequency of replacement and led to a reduction in
power generation costs.
To contribute to the reduction of soaring power generation
costs, the Toyo Tanso Group will work to establish a supply systemfor carbon brushes with a view toward expansion into international
markets.

Baking furnace at Plant No. 1. Takuma Division
We are carrying out a variety of initiatives to reduce environmental impacts at production
sites, for example by saving energy and reducing energy consumption.

Initiatives in offices
To help realize a sustainable society, we are giving priority toenvironmentally friendliness in terms of recycling, energy savings,
resource savings, and other considerations including paperless
initiatives when purchasing supplies for both production processes
and administrative work. These efforts include both actively adopting
parts and materials that are free of hazardous chemical substancesand promoting green procurement that helps reduce environmental
impacts.

32

Solar panels at C/C composite products plant of Takuma Division

Carbon brush used in a
generator

TOYO TANSO Integrated Report 2023

33

Contribution to reducing climate change risk and environmental protection

Contribution to reducing climate change risk and environmental protection

Complying with various countries’
environmental laws and regulations
and reducing environmental impacts
Hydroelectric power generation
Hydroelectricity is a power generation method that uses the energy
generated when water flows from high places to low places. Itemits zero CO2 and plays an important role in terms of energy selfsufficiency. Due to the large scale of hydroelectricity plants and theenormous initial investment, there is growing interest and need forsmall- and medium-sized hydroelectric facilities and the maintenanceof existing facilities, which is expected to increase the demand forcarbon products in this market.
The Toyo Tanso Group supplies carbon brushes, which are acomponent that supplies power to generators in hydroelectric power
generation facilities. Carbon brushes must offer high performance,such as abrasion resistance and low damage to slip rings. In addition,
since power generation is an important infrastructure, it is also
important to be able to provide a stable supply of these products. In
response to these issues and needs, the Toyo Tanso Group is working
to develop products in line with the needs of hydroelectricity
business operators and to establish a resilient supply chain. In thisway, we hope to provide a stable supply of high-quality and highly
reliable products and contribute to the electric power infrastructure,
which is an important form of social infrastructure.

Geothermal power generation
Geothermal power generation is a method of generating electricity
using the thermal energy of magma found deep underground.
Although the market size is smaller than that of solar and wind
power, which are representative forms of renewable energy,
Japan, a country with many volcanoes, has abundant geothermal
resources, and the introduction of geothermal power generation isprogressing in Hokkaido and the Tohoku region. Since the amountof power generated is more stable than other forms of renewableenergy, geothermal is a renewable energy that is expected to growas technological innovation progresses and more efficient power
generation is realized in the future.
In turbine generators and electric motors of geothermal power
generation facilities, grounding brushes are used to release electricity
externally in order to avoid problems caused by electricity induced by
the rotor. The Toyo Tanso Group supplies grounding brushes with highcustomer satisfaction in terms of quality, price, delivery, and service.

Biomass power generation
Biomass power generation is a way of generating electricity using
various biological resources such as animal and plant remains as fuel.
This fuel can also include wood, crop residues, and waste. Although
it faces various challenges such as the stable procurement of fuel,biomass power generation does not result in resource depletion
because the fuel is a biological resource, and it has the advantage
of being carbon neutral since CO2 emissions and absorption arebalanced. It is also seen as a circular-type energy. For these reasons,this form of renewable energy is expected to play an important rolein the future.
For both biomass power generation as well as geothermal power
generation, grounding brushes are required for turbine generatorsand electric motors, and the Toyo Tanso Group is responding tothese needs for woody biomass power generation in particular.

34

Global management of products' chemical
content
The need to manage chemical substances in products is increasing
as international laws and regulations governing chemical substances,including the European RoHS Directive and REACH regulations
and the U.S. TSCA are strengthened with each passing year, alongwith industry standards like IEC 62474 and GADSL and customer
requirements.
The Toyo Tanso Group put in place a series of management
standards for environmentally controlled substances following
an effort led by its environmental management departments tocollect and organize the latest information about related laws andregulations, industry standards, and customer standards. In addition
to applying those standards to our Green Procurement Guidelines,
we are building product chemical management structures thatare integrated into our quality management system, for example
by collecting related information into a product chemical content
management list.
In FY2022, there were no violations of environmental laws andregulations at Toyo Tanso.
Sales departments serve as a point of contact for information
about chemical substances contained in individual products at thetime of order contracts, investigation requests, etc., and responds
and answers to such requests.

2030 target

Violation ofenvironmental laws:0(non-consolidated)

Reducing environmental impacts
The Toyo Tanso Group strives to design products with low
environmental impacts and to save energy, save resources, andreduce and reuse waste. We are also working to monitor emissionsof environmentally harmful substances from manufacturing
processes in accordance with applicable environmental laws andregulations and to reduce environmental impacts. Going forward,
we will work actively to reduce emissions of greenhouse gases.

Example investigations● Certificate of non-use for substances prohibited by the RoHS

Directive● Certificate of SVHC non-use under REACH regulations● chemSHERPA*1*1 A data authoring and support tool administered by the Joint Article Management
Promotion-Consortium with the goal of com
municating information about the chemical substances contained in products throughout
the supply chain in a smooth and efficient manner.

Using Earth-friendly raw materials andavoiding procurement risk
Using recyclable raw materials
Since carbon materials use a large amount of raw materials derived
from fossil resources such as petroleum and coal, the developmentof raw materials that do not depend on fossil resources is an
important issue not only for lowering CO2 but also for our business
continuity.
Currently, efforts are underway around the world for thecommercialization of CO2 separation and capture technology, whichis considered important for the realization of a carbon-neutral
society by 2050. In addition, many businesses related to turquoisehydrogen (hydrogen obtained by methane pyrolysis such as naturalgas) have been launched to realize a hydrogen society, and a large
amount of solid carbon is generated as a by-product to this process
for hydrogen production.
Against this backdrop, the Toyo Tanso Group is advancing thedevelopment of technology to produce finely powdered solid carbon

produced together with hydrogen from hydrocarbon gas generated
by methanation from CO2 as a raw material for carbon materials.
In a joint research project with the National Institute of Advanced
Industrial Science and Technology (AIST) in FY2022, we researched
the effects of temperature and reaction time on the morphologicalobservation and structural analysis of the generated carbon and theeffects of temperature and reaction time on the carbon formation
mechanisms with the aim of elucidating the formation mechanismsof various forms of fine carbon powders in reactions produced bycatalytic pyrolysis of light hydrocarbons. We have since reported theresults of this research at academic conferences in Japan.
In this manner, the circular economy is becoming a reality, andwe expect that the company will secure a competitive advantage by
establishing this technology ahead of others.

TOYO TANSO Integrated Report 2023

35

Contribution to reducing climate change risk and environmental protection

Contribution to reducing climate change risk and environmental protection

Environmental policies and management system

Compliance with TCFD recommendations

Compliance with TCFD recommendations

Environmental Policies
The Toyo Tanso Group recognizes that a business operating as partof 21st century industry must take environmental considerations
into account. Carbon (C) is the second-most common element on
Earth after silicon (Si), but resources are finite, and we believe it isimportant to develop our businesses in line with a constant focus onreuse.
In manufacturing technologies as well as research anddevelopment, we focus on how waste products emitted bymanufacturing processes can be eliminated or reduced.

1. Protecting the global environment
We practice environmentally friendly manufacturing in order tosafeguard the children of the future and our beautiful planet.
2. Reducing environmental impacts
We strive to design products with low environmental impacts and tosave energy, save resources, and reduce and reuse waste.
3. Complying with laws and regulations
We comply with applicable environmental laws, ordinances, andother requirements to which we have agreed.

Departments responsible for environmental and safety issues
at the Group monitor the volume of waste produced by otherdepartments as well as the reduction measures they implement
in an effort to maintain the global environment. In addition, theGroup is working to address the issue of how graphite waste canbe effectively used in its research and development program whileraising all employees’environmental awareness.
The Group sees its mission as pursuing environmental
friendliness in its corporate activities day in and day out.

4. Realizing continuous improvements
We precisely assess all environmental impacts of our businessactivities, and we continually strive to prevent and reduce them tothe extent that is technologically and economically feasible.
5. Raising environmental awarenessTo implement these Environmental Policies smoothly and efficiently,
we work to educate all employees on the environment and raise
their environmental awareness.
6. Disclosing environmental information
We communicate information about these Environmental Policies
and related initiatives to all employees and interested parties,
including by disclosing them to the public.

In July 2021, the Toyo Tanso Group affirmed its support for the recommendationsof the Task Force on Climate-related Financial Disclosures (TCFD), and we areworking to disclose information in line with the TCFD’s disclosure framework.
This time, we have identified the financial impact of major risks and opportunities
related to climate change response. Going forward, we will address each risk andopportunity.
1. Governance
The TCFD Compliance Project, which was established to support the Sustainability Committee, studies scenarios related to climate change action, analyzes
risk and opportunities, and formulates measure in response while reporting on those activities to the Sustainability Committee.
Discussions held by the Sustainability Committee are reported to the Board of Directors for approval and instruction. Sustainability-related resolutions
that are reported to and approved by the Board of Directors are propagated to business departments and group companies via the Sustainability
Committee and applied to their respective business plans and operational management. Cooperation may be sought from business partners dependingon the nature of the resolutions.
2. Strategies
In keeping with guidance recommended by the TCFD, we use techniques for applying scenario analysis to the business environment through 2040 toanalyze and evaluate the impacts of climate change on Toyo Tanso.
Overview of scenario analysis
Scope

Consolidated subsidiaries of the Group

Anticipated timeframe

Scenario-building

Present to 2040 (for CO2 reduction targets, 2050)(1) 1.5°
C scenario
Scenario in which the average global temperature increase is kept within 1.5°
C fromlevels prior to the Industrial Revolution(2) 4°
C scenario
Scenario in which the average global temperature rises 4°
C from levels prior to the Industrial
Revolution

Reference information
IEA WEO2020 SDS scenario; SSP1-1.9 and 2.6 from the 1st Working Group Reportof the IPCC 6th Assessment Report; others

Reference information
IEA WEO2020 STEPS scenario; SSP2-4.5, SSP3-7.9, SSP5-8.5 from the 1st Working Group
Report of the IPCC 6th Assessment Report; A-PLAT S8 climate RCP 8.5; others

WEO: IEA’s World Energy Outlook 2020
IPCC: Intergovernmental Panel on Climate Change
A-PLAT: Climate Change Adaptation Information Platform

Environmental management system
The Toyo Tanso Group has integrated ISO 14001 certified environment
management system with other business processes as part of its
business management system as it seeks to help realize a sustainable
society by working to reduce environmental impacts, for example bylimiting energy consumption.
As of 2022, six domestic facilities and overseas subsidiaries haveobtained environmental management system certification.

Environmental management system organization and structures

Policies andregulations

Top management

Chairman
Administrator

Changes in markets/
customers

Responsible person in the Administrative Division
Maintenance management staff

Changes in theindustry, for example
in other companies inthe same industry

Secretariat
Responsible
parties at sites

Responsible
parties at sites

Head Office site

Departments Departments

Responsible
parties at sites

Plant sites

Sales sites

4 domestic
plantsDepartment
managers

Procurement

6 domestic
sales offices

Departments Departments

Departments Departments
Manufacturing

ISO 14001 initiatives
Legalcompliance

We are working to reduce energy
use by boosting process capacity inconcert with our ISO 9001 activities.

To coexist with the local communities we serve, we undertake
production activities while ensuring compliance with laws andregulations.
By moving forwards with energy savings
activities and working to reduce energy
consumption, we are limiting emissions of
CO2 and other greenhouse gases.

ISO
14001
Safe, secure workplaces makepossible coexistence with employees,
marking a step forward in our drive
to realize a sustainable society.

Health andsafetyActivities toreduce industrial
waste

36

6
5
4

5S activities

We are striving to realize a society without
energy losses by actively practicing the 5S
methodology (sorting, setting in order,
shining, standardizing, and sustaining thediscipline) to improve operations.

Reducing industrial waste is a global issue, and the
Toyo Tanso Group is also working actively to address it.

3
2
1
0

– 2005– 2010– 2015– 2022

Strict greenhouse gas emission reduction standards will be
put in place, necessitating investments and technologicalimprovements in order to reduce emissions.

Short tolong term-

Demand for engine-related products will shrink due to theelectrification of automobiles.

Medium tolong term

Small

Widening adoption of next-generation solar panels will cause
demand for products to shrink.

Long term

Small

Competition with competitors will intensify due to a reviewof the production system in consideration of the changing
environment of the industry.

Medium to Medium
long term

Disruption in the balance between supply and demand
for raw materials (coke and pitch) may cause prices to rise
substantially.

Short tolong term

MediumThe prices of procured products that comply with theintroduction of a carbon tax and other environmental
requirements may rise substantially.

Short tolong term

Small

Costs may increase due to factors such as stoppages infacility operations due to intensifying natural disasters.

Medium tolong term

Small

Principal opportunities

Emergence
timeframe

Financial
impacts

Policies andregulations

Demand for environment-related products such as renewableenergy may rise.

Medium tolong term-

Demand for graphite parts and materials, for example products
related to power semiconductors, will rise as a result of theelectrification of automobiles.

Medium tolong term

Large

Demand for brushes used in power supply and grounding
equipment will rise due to growing demand for wind power.

Medium tolong term

Small

Demand for graphite for use in nuclear power applications may
rise as CO2 emissions are reduced.

Medium tolong term

Small

Changesin markets/
customers

Financial impacts (small: 0 to less than 1.0 billion yen; medium: 1.0 billion yen to less than 10.0 billion yen;large: 10.0 billion yen or more)

The cost of manufacturing process improvements required in Medium to Medium
order to comply with environmental requirements will rise.
long term

4. Indicators and targets
The indicators and targets needed to manage risks and business
opportunities are determined after formulating measures to address
each.
Greenhouse gas emissions (Scopes 1 to 3, FY2022) have beenverified by a third-party.
Greenhouse gas emissions for Toyo Tanso Co., Ltd. (FY2022)

ISO 14001: Cumulative number ofobtained certifications(Sites)Energysavings
activities

ISO
9001

Emergence Financial
timeframe impacts

Principal risks(FY)

3. Risk management
In keeping with its Basic Rules on Risk and Compliance, the Toyo Tanso
Group has established the Risk and Compliance Committee (RCC) andgiven it responsibility for ensuring compliance with laws, regulations,
Toyo Tanso’s Articles of Incorporation, and corporate ethical guidelines
and establishing risk management structures. The committee discusses
important issues and makes decisions about policies related to risk andcompliance. Principal departments are responsible for managing andaddressing individual risks, and the RCC oversees those efforts.
Climate-related risks are managed by the Sustainability Committee,
while the results of assessments and studies by the RCC are reported
to the Board of Directors as part of Toyo Tanso’s companywide risk
management efforts.

(Greenhouse gas emissions)
Scope 1 (consolidated):
33,846 t-CO2e
Scope 2 (consolidated): location based: 83,136 t-CO2e; market based: 87,853 t-CO2e
Scope 3 (non-consolidated):
79,529 t-CO2e
Breakdown (t-CO2e)
Category 1： 45,995
Category 5： 703
Category 15： 80

Category 2： 8,258
Category 6：132

Category 3： 15,599
Category 7： 398

Category 4： 8,253
Category 13： 112

Third-party verification report

Scope 1 and 2https://www.toyotanso.com/sustainability/pdf/assurance_report_2023.pdf
Scope 3https://www.toyotanso.com/sustainability/pdf/assurance_report_2023_scope3.pdf

TOYO TANSO Integrated Report 2023

37

Creating safe, secure workplace environment
where all employees can flourish
Improving safe, healthy workplaceenvironments and increasing productivity

Health and safety initiatives
In accordance with its Environmental, Health and Safety Policy, Toyo
Tanso provides a wide range of education and training activities,
including safety education and dust education at the time of hiring,as well as the knowledge, skills, and mindset necessary to prevent
accidents and injuries in order to prevent occupational accidents andpromote the creation of a comfortable work environment in which
each employee can work in good health with peace of mind.
The department in charge of occupational safety plays a central
role in deploying activities in accordance with the Environmental,
Health and Safety Action Plan and striving to improve the level ofhealth and safety.
Occupational accident frequency rate
Manufacturing industry
Toyo Tanso

Creating safe, secure workplace environment where all employees can flourish

Ensuring all stakeholders’human rights are respected

Toyo Tanso Environmental, Health and Safety
Policy1. New year zero accident initiatives and making known the healthand safety plan for the current fiscal year
2. Promoting health maintenance3. Thorough environmental, health, and safety training andincreasing safety awareness4. Thorough measures to reduce industrial waste
5. Preventing heat stroke by raising awareness of its dangers
6. Improving work environments
7. Year-end zero accident initiatives
8. Reviewing current fiscal year health and safety activities andplanning activities for the next fiscal year

Carbon/graphite product manufacturing industry

We established the Toyo Tanso Group Human Rights Policy to further clarify our stance on and initiatives for human rights. We
understand that our corporate activities may have an impact on human rights. We will fulfill our responsibility to respect thehuman rights of all stakeholders involved in the corporate activities of the Toyo Tanso Group.

Basic approach to human rights
Our fundamental philosophy of“Contribute to the world throughthe pursuit of the possibilities inherent in carbon (C)”is in itself acontribution to the advancement of a sustainable society. Under
this philosophy, we carry out numerous initiatives, which include
supporting the SDGs through our products and business activities,
aimed at resolving social issues.
Our initiatives are aimed at realizing a society that provides a safeand enriching lifestyle to people around the world. Indispensable tothese initiatives is a respect for human rights.

With a sincere understanding of the impacts that the Toyo
Tanso Group's business activities have on human rights, we makeit our social mission to deal appropriately with these impacts. The
Toyo Tanso Group Human Rights Policy was created as the ultimate
guidelines towards fulfilling this mission.
Acting on this policy, we seek to work with our stakeholders tomake society even more sustainable.

Toyo Tanso Group Human Rights Policy

2.5

Activities of the Environmental, Health and
Safety Committee

2.0
1.5
1.0
0.5
0

2018

2019

2020

2021

2022 (FY)

Occupational accident severity rate
Manufacturing industry
Toyo Tanso

Carbon/graphite product manufacturing industry

0.20

At Toyo Tanso, employer, labor union, and employees participate
in Environmental, Health and Safety Committee meetings held
once a month at each site. The committee deliberates and sharesinformation on health and safety activities, including efforts toprevent hazards to workers and prevent health problems, as wellas measures to prevent the causes and recurrence of occupational
accidents. There were five occupational accidents in 2022, which isan increase from the previous fiscal year. As a result, we will further
enhance our safety education efforts to prevent occupational
accidents.

https://www.toyotanso.com/sustainability/society/respect.html

Human rights due diligence
Based on the UN Guiding Principles on Business and Human
Rights, the Toyo Tanso Group has built human rights due diligencemechanisms. Through these, we strive to spot negative impacts on
individuals’rights, or risks of such, and then prevent or alleviatethese.

Offering education on human rights
The Toyo Tanso Group is striving to create employee-friendly
workplaces by gaining deeper understanding, through offering
year-round education, including workplace management training
for employees in management positions, human rights awarenessraising training for all employees, and case studies examining avariety of harassment issues in the workplace.

0.15
0.10

Establishment of human rights helpline

0.05
0

38

2018

2019

2020

2021

2022 (FY)The Toyo Tanso Group has established an internal helpline to serve
as a point of contact for questions and problems involving humanrights. In addition to providing multiple points of contact, including
by creating both internal and external helplines for the Group
companies, we accept anonymous reports. Information submitted
via these helplines is treated in a strictly confidential manner, andconduct that could identify people using the helpline is prohibited.
We also work to ensure that no employee is subject to disciplinary
action or disadvantageous treatment because they contacted one ofthese helplines.

Supply chain initiatives
To contribute to the realization of a sustainable society whilebuilding trusting relationships with suppliers through fair andimpartial transactions and offering opportunities to participate in its
procurement activities to would-be suppliers worldwide, the Toyo
Tanso Group has adopted procurement policies that are designed
to ensure its ability to protect the environment and fulfill its social
responsibility across the supply chain.
In addition, our Sustainable Procurement Guidelines, which
suppliers are required to follow, set forth various requirements
concerning human rights and labor, including prohibitions on childlabor and forced labor. We conduct regular audits to verify suppliercompliance.

TOYO TANSO Integrated Report 2023

39

Creating safe, secure workplace environment where all employees can flourish

Creating safe, secure workplace environment where all employees can flourish

Offering human resources development, training,and education programs

Respecting workforce diversity

Managing human capital

Diversity & inclusion－Basic approach to human resource development
Based on the recognition that human resources are our most important
asset and that the growth of people is the driving force behind
our development, the Toyo Tanso Group provides opportunities forcross-cultural exchange through overseas assignments to foster a
global perspective based on the Company Policies deeply linked to ourmanagement philosophy. We also provide training to improve teamwork
and communication skills on a global scale to develop human resources
adept at cross-border work.
Next, we focus on employee skills development to build aresilient organizational foundation. We provide opportunities
for continuous learning and skills development, develop humanresources who can flexibly deal with a rapidly changing businessWe consider the pursuit of diversity and inclusion to be a key priority,
and we believe that a diversity of ideas from a diverse workforce isthe source of sustainable growth for both the company and society.
The Toyo Tanso Group fundamentally prohibits discrimination on

environment with fresh thinking, support the enhancement ofleadership and problem-solving skills, and create an environmentthat encourages autonomous career development. Moreover, by
valuing innovation and promoting new ideas and creations, we aim
to develop human resources with a powerful competitive edge.
Finally, we will foster an awareness of ethics and social
responsibility among our employees in order to develop humanresources who are highly motivated to contribute to society. We
place importance on sustainability and advance initiatives to addressenvironmental and other social issues.
Based on these three policies, the Toyo Tanso Group strives tocreate social value and grow together with its employees as a trusted
company.

Female empowerment
Toyo Tanso has formulated an action plan based on the Act on the
Promotion of Female Participation and Career Advancement so that it
can put in place an employment environment in which female employees
can flourish professionally while ensuring that employees are assigned
throughout the company so as to make the best use of their abilities.
The company has consistently worked to help employees balance
the demands of their jobs and families. We have formulated an action
plan based on the Act on Advancement of Measures to Support
Raising Next-Generation Children, and we have acquired the next
generation certification mark (Kurumin mark).
In addition, we hand out a Toyo Tanso original“Parenting
Enjoyment Handbook”to male employees with newborn children andmeet with them to explain available programs as part of our efforts
to build an environment in which fathers can participate in parenting.
We have expanded eligibility for our paid-time-off savings program(which lets employees accumulate expiring annual paid time off), andwe have established a program that lets employees take up to threedays off after their spouse gives birth. We also encourage employees
to utilize available time off.
Moreover, we are working to create an environment in which
employees can continue to work with peace of mind, for example byhosting group meetings for employees who are using our parenting
programs so that they can share parenting concerns, anxiety about how
to balance work with family responsibilities, and useful information
while building relationships that will help them support each other.
Going forward, we will continue to help employees balance
their work and parenting responsibilities while working to realize an
employment environment in which a diverse workforce can make themost of their abilities.

Educational system diagram
Management positions
Level-based
training

Management position
training

Selective training

Supervisor positions
Leadership training

General positions
New-hire training

Department-based
training

Supervisor positions

General positions

Specialized training at each department
OJT

Manufacturing training

Seminars

Plant training for mid-career hires
Compliance training

Training for all
employees

Management positions

Online English lessons

Self-developmenttraining

Correspondence courses

Information security training

e-learning

ISO training
Security export control training

ESG data collection

https://www.toyotanso.com/sustainability/esg-data.html

Increasing employee engagement
Based on the belief that increasing employee engagement willlead to their growth together with the company, we have been
conducting an employee awareness survey for Toyo Tanso employees
since 2008, and a global engagement survey for all employees of the
Toyo Tanso Group since 2022.
The Toyo Tanso Group regards job satisfaction as an important
indicator of sustainable growth, and is working on various measures
to increase it.

Overall indicators
Stakeholders(customer-first)

5.00
4.00

Motivation

3.00

Top management

2.00

Percentage of female employees and management positions filled byfemale employees

Work styles● Female employees ● Management positions filled by female employees

1.00
0.00

Workplace dynamism(vitality)

Compliancemanagement

15

（%）

10.8

12.5

13.0

12
Workplace communication

Systems, evaluationand treatment
Workplace management

Results for the entire
Toyo Tanso Group
Benchmarks

Benchmark: Average score of listed companies in the manufacturing industry among companies
participating in the engagement survey (by Nikkei Research)

9

4.4

3.6

5.1

14.2

7.1

14.4

8.3

2018

3

Evaluation and promotion of employees are based on the same
criteria regardless of nationality, or status as new graduate or midcareer hire. So we do not set targets for the promotions of foreign
nationals or mid-career hires.
March 25, 2021

Toyo Tanso Co., Ltd. Action Plan
Toyo Tanso Co., Ltd. has formulated this action plan so that it can put in place an
employment environment in which female employees can flourish professionallyand ensure that employees are assigned throughout the company so as to makethe best use of their abilities.
1. Plan dates:
April 1, 2021, to March 31, 2024 (3 years)
2. Issues:(1) Promoting women empowerment: We have put in place an environment
in which male and female employees alike can work for a long period oftime, but female employees tend to make up a smaller percentage of ourworkforce and of management positions (leaders).
(2) Putting in place a favorable employment environment: The paid-time-off
utilization rate is falling even as the number of annual paid-time-off days
granted to employees has risen due to changes to our internal programs.
3. Objectives, initiatives, and timing
Objective (1): Increasing the percentage of female hires to an average ofat least 20%[Initiatives]
From
June 2021:

Assess the status quo by identifying positions (departments)
where there is imbalance in assignments of male and female
employees.

From
August 2021:

Investigate the issues that would be anticipated if female
employees were assigned and study measures to resolve them.

From
October 2021:

Share examples of activities of female role models withdepartments that have few female employees and have them
actively consider assigning female employees.

Objective (2): Increasing the percentage of management positions filled
by female employees to at least 7%[Initiatives]
From
September 2021:

Offer training to male and female employees who are likely to
become candidates for management positions in the future toincrease their role awareness and management skills.

From
October 2021:

Survey female employees’awareness of their current jobs andfuture career plans and identify related issues.

From
January 2022:

Study measures to address the issues identified in the survey
and undertake initiatives to put in place a more favorable
environment and improve the organizational culture.

Objective (3): Increasing the paid-time-off utilization rate to at least 60%

6
2019

2020

2021

2022

ESG data collection

https://www.toyotanso.com/sustainability/esg-data.html
We have formulated a personnel plan linked to the business strategiesof the Medium-Term Management Plan, and hire personnel (newgraduates and mid-career hires) in accordance with this plan.
Additionally, we ensure diversity in our workforce by hiring talented
human resources regardless of nationality; thereby building afoundation for our Company Policy of“Become a global company.”40

the basis of gender, nationality, religion, age, disability, or any othercharacteristic, and we are striving to cultivate an organizational culture richin trust and creative collaboration so that employees with different values
and ideas will respect one another and feel motivated by their jobs.

[Initiatives]
From
June 2021:

Assess employees’utilization of paid time off, identify
issues, and study the introduction of a program encouraging
employees to utilize their paid time off in a systematic manner.

From
December 2021:

Spread awareness of the target paid-time-off utilization
rate throughout the company and introduce a program
encouraging employees to utilize their paid time off in asystematic manner.

From
March 2022:

Encourage employees to utilize their paid time off, for example
by raising awareness.

From
December 2023:

Verify the results of the newly introduced program and study
and implement measures to address any issues.

TOYO TANSO Integrated Report 2023

41

Undertaking corporate activities that inspire
trust

Undertaking corporate activities that inspire trust

Compliance

Strengthening crisis management capabilities

Basic approach to compliance

Basic approach to risk management

The Toyo Tanso Group considers compliance activities to consist
not only of obeying the law but also accommodating requirements
imposed by society, including in the form of social and ethical norms.
Our approach to compliance activities lies in encouraging individual
employees to reform their conduct so that awareness of compliance
percolates through our corporate culture.
In addition to enacting a Compliance Guidebook to foster
compliance awareness, the Group works to spread that awarenessby undertaking a variety of initiatives such as daily education andawareness-raising so that employees unconsciously reflect theseprinciples in their conduct.
The Risk & Compliance Committee also surveys the risk ofcompliance violations by the company and its affiliate companies ona quarterly basis as part of an ongoing monitoring program.

Toyo Tanso’s Risk Management & Compliance Committee serves
as the promotion organization for sharing risk management issues
and foreseen risks, identifying, calculating, and assessing importantrisks for management, determining priority risks, and creating a“risk map”based on the results. In this manner, we are promoting
activities to mitigate risks globally under the groupwide basic policy
on compliance and risk management.

Sustainability
GovernanceInternal controls

Compliance

Global business continuity plan (BCP)

Compliance awareness-raising and education
To foster compliance awareness, we have declared October“Compliance Enhancement Month,”and we regularly offer
education and awareness-raising programs based on our Compliance
Guidebook.
The Compliance Guidebook has been translated into multiple
languages and distributed to affiliate companies’employees aswell so that all of the Group’s employees can do their jobs witha proper awareness of the central importance of compliance.
Education and awareness-raising activities include group readings of
the Compliance Guidebook, group discussions on topics related tocompliance, and other programs developed for employees in specificranks and fields of work.

Educational and awareness-raising activities (2022)

Participants

Number of trainees

1. New-hire training

Newly hired graduates18

2. Training to prepare employees for overseas
postings

Prospective employees to beposted overseas

1

3. Training for newly assigned managers

New managers

17

4. Regular compliance training

Employees who have been withthe company for less than one year68

5. Compliance Enhancement Month

Employees at Toyo Tanso and its
domestic affiliate companies

Compliance Guidebook

https://www.toyotanso.com/sustainability/pdf/compliance_guidebook_en.pdfOverseas Group companies
Improvement
orders

Improvement
reports

Improvement
reports

Internal Group contact

Information security management structures
Reflecting our belief that confidential information from customers,
personal data, internal technical data, and other sensitive
information constitute an important asset for the company, we
are working to prevent system interruptions due to infection bycomputer viruses or cyberattacks and to avoid external leaks. In
addition to formulating internal standards such as basic policies andrules on information security management to augment relevant laws
and regulations and putting in place information security structures
based on standards and rules, we strive to review structures in lightof advances in IT and changes in information security risks and tostrengthen countermeasures.

Helpline/Audit & Supervisory Board Members
Notifications

ReportingStrengthening cybersecurity

External Group contact
External Helpline (law office)Notifications

Reporting

ReportingExternal Helpline for affiliatecompanies
Reporting

ReportingOverseas whistleblowers

42

Each department and domestic
Group company
Improvement
ordersWith regard to the suspension of business activities due to disasters
and infectious diseases, the Toyo Tanso Group has formulated abusiness continuity plan (BCP) to minimize the impacts from any
suspension of manufacturing of major products due to largescale disaster. We have also established the concept of all-hazard
BCP shared across the entire Group, and are taking action such as
ensuring the seismic resistance and safety of buildings and production
equipment, backing up information systems, and maintaining supply
with inventory. In addition, to prepare for an infectious disease
pandemic, we have formulated a basic plan for the entire Group as
well as an action plan corresponding to warning phases based on
guidance from organizations including the Cabinet Office; Ministryof Heath, Labour and Welfare; Ministry of Foreign Affairs; local
governments; and the World Health Organization (WHO).

All employees

Internal reporting system
The Toyo Tanso Group has established internal helplines to serve as
points of contact for consultations and tips related to complianceviolations and corporate ethics issues. To encourage broad utilization,
multiple points of contact have been established in the form ofinternal and external helplines for the Group companies, andanonymous reporting is accepted.
Information received via these helplines is kept confidential, andthe results of any investigations are relayed to whistleblowers. It is
prohibited to engage in conduct that would identify or scrutinize
whistleblowers, who are protected against disciplinary action
and other disadvantageous treatment as a result of their having
contacted the helpline.

Additionally, the Risk Management & Compliance Committee
conducts quarterly surveys on the occurrence of risks at Toyo Tanso
and its affiliates. In the event of unforeseen circumstances thathave a significant impact on the Toyo Tanso Group, we will fulfill
our corporate social responsibilities by safeguarding customer value
through the continuation of business activities.

Reporting

ReportingDomestic whistleblowers

ReportingPrivacy policy
Toyo Tanso is deeply aware that appropriately safeguarding thepersonal information of all people involved with Toyo Tanso,
including customers, is an important social responsibility. With theprotection of individual rights and interests our number one priority,
we comply with Japan’s Personal Information Protection Act andother laws and guidelines, and have established the following basic
privacy policy to protect personal information.

1. We comply with the Personal Information Protection Act
and other related laws and regulations, and use personal
information appropriately.
2. In addition to establishing management structures
related to the protection of personal data, we work to
spread awareness of the Personal Data Protection Rules
among officers and employees and to ensure that therules are followed.
3. We use personal data within the scope of the indicatedpurpose of use. In addition, we do not disclose orprovide personal data provided by customers to any
third parties unless the owner of that information
has given their consent or it is permitted by law or
regulation.
4. We strive to prevent unauthorized access to personal
data as well as the loss, corruption, alteration, andunauthorized disclosure of personal data.
5. We accommodate inquiries and requests for disclosure orother action quickly and in a spirit of good faith.

We consider the growing risk posed by cyberattacks targetingcompanies to be a serious management challenge, and we areworking to strengthen associated structures. In order to strengthen
cybersecurity, we are conducting information security assessments forthe entire group and stepping up monitoring of servers, computers,
networks, and others. We are also strengthening our structures by
putting into place a computer security incident response team (CSIRT)
that can respond quickly in the event of an information security
incident.

TOYO TANSO Integrated Report 2023

43

Undertaking corporate activities that inspire trust

Undertaking corporate activities that inspire trust

Undertaking community service activities

Corporate governanceCorporate governance structures

Community service policy
The Toyo Tanso Group values interactions and communications withpeople in the countries and communities where it operates.
We hope that by voluntarily engaging in community service as amember of the local community, each and every one of our employees will
feel that they are contributing not only to the development of the local
community but also to resolving social issues, and that the awareness andsense of fulfillment they gain will lead to an increase in their own sense of
purpose in life and work.

1. Through our business activities, we create a society
in which the local community and the company cancoexist.
2. We work with the local community to promote
ongoing activities based on an understanding ofrequests, expectations, and needs.
3. We raise a sense of volunteering among our
employees and encourage and support their activities
in the community.

In order to respond to the trust placed in us by our stakeholders including shareholders, customers, employees and society, and to achievesustainable growth and medium- to long-term corporate value, while following the fundamental philosophy and management policies below
as our basic principle, the Toyo Tanso Group has built a structure of corporate governance aiming to make transparent, fair, quick and decisivedecisions while keeping a balance between management supervision and the execution of duties.
Overview of corporate governance
Shareholders Meeting
Nomination /Consultation
Remuneration Committee
ReportingGovernance Committee

Social welfare
We are working to address issues related to social welfare through the
Red Feather Central Community Chest, for example by encouraging
employees to donate blood and by providing food and other necessities topeople who require assistance in their daily lives, for example economicallydisadvantaged people, elderly people without relatives, and people withphysical disabilities.

Environmental conservation
We work to raise employee awareness and conserve the environment
through a variety of programs, including by orchestrating clean-up activities
near our plants, planting trees at our facility sites, and participating in riverand beach cleanup events hosted by local governments and volunteer
organizations.

Appointment /Dismissal

Board of Directors

Consultation

Audit &
Supervisory
Board
MemberAudit

Appointment/ Dismissal

Audit & Supervisory Board

Representative Director

Cooperation

Reporting
Advice /Proposal

Risk & Compliance
Committee

Sustainability
Committee

Approval /Instruction● Clean-up (beautification) activities near business sites● Participating in volunteer

Advice /ProposalReporting

Cooperation

Reporting
ReportingManagement Meeting● Clean-up activities at rivers and beaches

Accounting Auditor
ReportingSelection /RemovalApproval /Instruction

Appointment/ Dismissal
Cooperation

Internal Audit Department

ReportingInternal
auditing

Each Departments / Affiliate Companies

activities● Offering food assistance topeople in economic need
● Providing masks to social

welfare councils

Global management
Natural disaster assistanceIn the event of natural disasters like earthquakes and flooding due toextreme weather, we work with local governments to open our facilities(canteens, parking lots, etc.) to the public and provide emergency food,drinking water, and other necessities that we have stockpiled for thispurpose to affected local residents.

Developing human resource
By traveling to schools to offer classes, we help facilitate the growth of
the young people who underpin local communities as well as humanresources development while building interest in local companies and loveof the local community. We also strive to build character among the next
generation by operating Kondo Zaidan, a public interest foundation.

The Toyo Tanso Group assigns category leaders to functional departments in the Head Office; centralizes processing technologies, quality
assurance, and development worldwide; and integrates operations through function-specific horizontal management in areas such as legal
affairs, human resources, procurement, and information systems. We have built a strong management structure that takes charge of central
management of the management and governance of all bases in Japan and overseas. Also we standardize subsidiary management inaccordance with the Management Book (Global Common Management Standards).

● Providing space for storing

supplies for use in the eventof a natural disaster● Providing shelter facilities foruse in the event of a natural
disaster● Providing supplies for use in

the event of a natural disaster
Takuma Division
The plant’s parking lot can be used as a temporary shelter for local residents in the eventof a natural disaster.

Creating safe, secure communities
We are helping build safe, secure communities, for example by contributing
people to improve local disaster preparedness, including by encouraging
employees to join local volunteer fire departments and by participating in
traffic safety and crime prevention initiatives to protect children from traffic
accidents and crime.
● Encouraging employees to join local volunteer fire departments● Organizing anti-crime patrols on roads along which students

commute to school● Posting crossing guards

44● Traveling to local technicalhigh schools to teach classes

Visiting lectures at school:
Providing opportunities tolearn about carbon

GermanySouth Korea
China (5 bases)

FranceItaly

Contributing to local communities
We work with local partners to realize better communities, for example
by sponsoring and supporting local events and revitalization programs,
contributing actively to the resolution of local issues as a corporate citizen,
and offering tours of our plants for local residents.

Head Office
ThailandSingapore

TaiwanFunctional
departments

U.S.
MexicoCategory leaders

Indonesia● Sponsoring local eventsand revitalization
programs● Corporate version of

the hometown tax
system● Central management of processing technologies, quality assurance, and development● Function-specific management in areas such as production, sales, procurement, legal affairs,

human resources, accounting, and information systems

Presentation ceremony for donations
under the corporate version of thehometown tax system

TOYO TANSO Integrated Report 2023

45

Undertaking corporate activities that inspire trust

Undertaking corporate activities that inspire trust

Principal meeting structures

Officer remuneration

Board of Directors
The Board of Directors, which consists of three Internal Directors(Naotaka Kondo, Shunsaku Hiraga, and Tatsuro Hamada) and three
Outside Directors (Shusuke Matsuo, Keiko Kosaka, and Makio Naito),is chaired by Representative Director, Chairman and President, and
CEO Naotaka Kondo.
The Board meets once a month in regular session and in extraordinary
sessions as necessary to make decisions concerning important matterssuch as our management policies. We have adopted an Executive
Officer structure in which daily operational matters are entrusted
Executive Officers to speed decision-making and clarify responsibility.
Executive Officers, who are appointed by the Board of Directors, carryout operations by directing the internal organization under their control
and are responsible for ensuring that those operations are carried out
in accordance with the company’s management policies. In addition
to overseeing Directors’execution of their responsibilities, the Board of
Directors oversees Executive Officers’implementation of operations.

corporate governance structures. In addition, the Nomination /Remuneration Committee deliberates and examines its policies androles, as well as the criteria for the appointment and dismissal of
Directors, as appropriate.

Governance Committee
The Governance Committee, a voluntary advisory body that serves
the Board of Directors consisting of one Internal Director (Naotaka
Kondo) and two Outside Directors (Shusuke Matsuo and Makio
Naito), is chaired by Representative Director, Chairman and President,
and CEO Naotaka Kondo.
The body, whose purpose is to increase the transparency andfairness of management while enhancing the Group’s corporate
governance in an ongoing manner from the perspective of all
stakeholders, deliberates important matters related to corporate
governance and reports to and advises the Board of Directors.

Risk & Compliance Committee

Audit & Supervisory Board
The Audit & Supervisory Board, which consists of one Internal
Auditor (Toshimi Boki) and two Outside Auditors (Kazuhiro Imai and
Junko Uemura), is chaired by Auditor Toshimi Boki.
The body, which meets in regular session once a month and in
extraordinary session as necessary, receives reports on the status ofAuditors’execution of their responsibilities, shares information, and works
to ensure the effectiveness of audits. An alternate Auditor is appointed toensure the company has enough Auditors as required under the law.

Management Meeting
The Management Council, which consists of officers (Directors andAudit & Supervisory Board Members), Executive Officers, and related
executives, is chaired by Representative Director, Chairman andPresident, and CEO Naotaka Kondo.
The body, which in principle meets once a month, works
to accelerate decision-making and strengthen the company’s
operational functions by deliberating important management
matters and discussing matters that should be reported to the Boardof Directors. It also ensures that decision-making on importantmatters is informed by good judgment.

Nomination / Remuneration Committee
The Nomination / Remuneration Committee, a voluntary advisory
body that serves the Board of Directors, consists of one Internal
Director (Naotaka Kondo) and two Outside Directors (Shusuke
Matsuo and Keiko Kosaka) and is chaired by Outside Director
Shusuke Matsuo.
The body deliberates human resources and remuneration
matters concerning directors and other officers and reports to
the Board of Directors in order to ensure the transparency of the
discussion process related to human resources (appointments anddismissals) and compensation for Directors, Executive Officers, andAudit & Supervisory Board Members and strengthen the company’s

The Risk & Compliance Committee consists of members appointed
by the Representative Director from among Group directors andexecutive officers. It is chaired by Naotaka Kondo, Representative
Director, Chairman and President, and CEO.
Under the supervision of the Board of Directors, the Risk
Management & Compliance Committee deliberates on important
issues related to risk and compliance and determines policies forboth with the purpose of ensuring that the Group is in compliancewith laws, regulations, the Articles of Incorporation, and corporate
ethics and establishing risk management.

Sustainability Committee
The Sustainability Committee is comprised of three promotion
groups (ESG Value Creating and Promoting Group, Sustainable
Consumption and Production Group, and People and Organizational
Vitalization Group) that work on business activities related to thecommittee and that they are responsible for, production activities,
as well as activities in various fields related to human resourcesand organizations. The chair of the committee, Naotaka Kondo,
Representative Director, Chairman and President, and CEO, appoints
the head of each promotion group.
The Sustainability Committee deliberates on important issues related
to sustainability and determines policies for the purpose of establishing
the Group’s sustainability promotion structures, maintaining thesustainable development of society and the global environment, andadvancing the sustainable growth of the Group itself.

Internal Audit Department

46

MethodContents

Results

Questionnaire
formatParticipants

Directors and Audit& Supervisory Board
Members

Survey forms including the following principal evaluation items were handed out:
1. Responsibilities and roles of the Board of Directors
2. Scale, composition, and structures of the Board of
Directors
3. Administration of the Board of Directors
4. Relationships with stakeholders• The Board of Directors was found to be carryingout its roles and responsibilities in line with the
Corporate Governance Code and to be functioning
in a generally effective manner.

performance-based compensation are chosen with the goal of
ensuring that those components of officers’remuneration moreclosely track the company’s performance during the business year
in question as well as its medium- and long-term performance. The
compensation of Non-Executive Officers, who are responsible foroversight functions, consists exclusively of a monthly salary as basic
compensation, determined on the basis of their job responsibilities.
Audit & Supervisory Board Members compensation consists
exclusively of basic compensation.

Total compensation and other remuneration by officer classification, total compensationand other remuneration by type, and number of officers (FY2022)
Total compensation and other remuneration by type(Millions of yen)

Total compensationand other
remuneration(Millions of yen)

Basic remuneration

Performance-linked remuneration

Directors (Excluding Outside Directors)

215

102

113

4

Outside Directors

21

21

－

4

Audit & Supervisory Board members(Excluding Outside Audit & Supervisory
Board Members)

15

15

－

2

Outside Audit & Supervisory Board
Members

10

10

－

4

Officer classification

Number of
eligible officers

Notes: 1. The personnel and total amount at left includes two Directors(including one Outside Director) and three Audit & Supervisory Board
Members (including two Outside Audit & Supervisory Board Members)
who retired at the end of their terms of office at the conclusion of theOrdinary General Meeting of Shareholders held on March 29, 2022.
Since Keiko Kosaka was appointed as a Director after retiring as an
Audit & Supervisory Board Member at the conclusion of the Ordinary
General Meeting of Shareholders, the number of members and theamount paid are included in the period when she was an Audit &Supervisory Board Member and the period when she was a Director.

Total amount of remuneration of persons receiving more than 100 million yen in
total remuneration (FY2022)
Name (officer classification)

Naotaka Kondo (Representative Director,
Chairman & President, and CEO)

Total compensation and other remuneration by type(Millions of yen)Companyclassification

Total compensationand other
remuneration(Millions of yen)

Basic remuneration

Performance-linked remuneration

Submitting
company

115

50

64

2. ROE and achievement rate of the operating profit target, which
serve as indicators for evaluating performance, were 6.9% and91%, respectively, during the business year under review.
3. Financial compensation for Directors was capped at 540 million yen peryear by the 77th Ordinary General Shareholders Meeting held on March
28, 2019. As of the closing of that meeting, the company had eight
Directors (of whom three were Outside Directors).
4. Financial compensation for Audit & Supervisory Board Members wascapped at 36 million yen per year by the 77th General Shareholders
Meeting held on March 28, 2019. As of the closing of that meeting,the company had three Auditors (of whom two were Outside
Auditors).

Officer training policyof their appointment and to update this knowledge on an ongoingbasis while they serve in their positions. As an example of specificinitiatives, in addition to Directors, Audit & Supervisory Board
Members, and Executive Officers, we plan to regularly conduct
training for executive candidates as necessary.

Toyo Tanso Co., Ltd. provides, facilitates, and funds training
opportunities designed to allow Directors, Audit & Supervisory Board
Members, and Executive Officers to acquire necessary knowledge
concerning the Group’s businesses, finances, organization, andother characteristics and to develop a sufficient understanding of
the roles and responsibilities they are expected to fulfill at the time

Efforts to strengthen corporate governancethat end, we are working, first, to strengthen awareness-raising
structures to ensure that all executives and employees maintain highawareness in this area, and second, to further enhance corporate
governance by taking feedback from shareholders and otherstakeholders seriously.

Recognizing that robust corporate management is a responsibility
as well as a perennial topic of the highest importance for any
corporation, the Toyo Tanso Group works to put in place andstrengthen structures and initiatives to further enhance its corporate
governance, and in doing so it considers the top priority to beensuring that corporate governance functions more effectively. To
Initiatives to strengthen corporate governance

The Internal Audit Department, under the direct supervision of the
President, conducts audits on the appropriateness of the Group’soperations, the reliability of financial reporting, management
efficiency, and compliance. Audit & Supervisory Board Members andthe Accounting Auditor exchange information as appropriate, andstrive to conduct effective audits in cooperation with each other bysharing information and other means.

Evaluating the effectiveness of the Board of Directors
Toyo Tanso’s Governance Committee
plays the lead role in evaluating andanalyzing the effectiveness of theBoard of Directors as a whole andundertaking initiatives to address
the issues identified as a result. An
overview of the FY2022 evaluation
follows.

Our basic policy concerning the determination of officer
compensation is that such remuneration should comprise a systemthat functions adequately as a robust incentive to encouragesustained improvement of corporate value and contributions to thesustainable development of society, reflects shareholder profits, andaligns with the Medium-Term Management Plan. Compensation for
Executive Officers consists of a monthly salary as basic compensationand short- and medium-/long-term incentive compensation as aperformance-based component. The indicators used to determine

2016

2017

2018

2019

2020

2021

2022

2023～

Directors

8

7

7

8

8

7※

6

6

(Outside Directors)

3

3

3

3

3

3

3

3

(Female Directors)

0

0

0

0

0

0

1

1

Audit & Supervisory Board
Members(Outside Audit & Supervisory
Board Members)(Female Audit & Supervisory
Board Members)

3

3

3

3

3

3

3

3

2

2

2

2

2

2

2

2

0

0

1

1

1

1

1

1

Voluntary committees

Areas where we will work to make improvements based on an awareness of the need forenhancements and additional development

Areas to be targeted by initiatives in 2023
and beyond(1) Enhancing deliberation of topics such as
the direction of corporate strategy and theMedium-Term Management Plan by the
Board of Directors• Progress and reassessment of theMedium-Term Management Plan
• Consideration of M&As
• Deepening of discussions on management strategies (overseas business,
capital investments, personnel, etc.)(2) Formulating successor plans• Progress in successor plans(3) Development and active use of sustainability-promoting structures• Assurance of diversity in the promotionof core human resources, etc.

Evaluating the effectiveness of
the Board of Directors
Compensation programs
Business strategies
Development of governancestructures

Established the Nomination / Remuneration Committee (chaired by an Outside Director and consisting of 2/3 Outside Directors)
Established the Governance Committee (chaired by the CEO and consisting of 2/3 Outside Directors)
Evaluated the effectiveness of the Board of Directors
Introduced compensation program in theform of shares with restrictions on transfers
Undertook business structure reforms

Formulated a new
Medium-Term
Management Plan

Revamped compensation programs (based on
medium- and long-term performance)

Revamped compensation policies

Fleshed out growth strategies and formulated action plans

Transitioned to a functional headquarters system andstrengthened global governance structures

New Medium-Term
Management Plan

Rolling review
of Medium-Term
Management Plan

Established the Sustainability Committee

Note: 1 Director headcount as of August 1, 2021 (reflecting one resignation effective July 31, 2021).

TOYO TANSO Integrated Report 2023

47

Undertaking corporate activities that inspire trust

Undertaking corporate activities that inspire trust

Officers
Directors

Audit & Supervisory Board Member
Apr. 1980
Dec. 1985
Mar. 1994
Nov. 2000
Aug. 2001
Mar. 2002
Jul. 2003
Sep. 2003
Jan. 2007
Aug. 2007
Mar. 2008
Aug. 2009
Jun. 2012
Jan. 2013
May 2013
Nov. 2013
Dec. 2014
Mar. 2015
May 2017

Naotaka Kondo
Representative Director
Chairman & President, CEO

Mar. 2018
Apr. 2018
May 2018

Joined MITSUI & CO., LTD.
Joined the Company
Director
Managing Executive Officer
Director
Managing Director
Senior Managing Director
Senior Managing Executive Officer
Representative Director, NT Corporation (incumbent)
Representative Director, the Company, Senior Vice President,
Executive Vice President, Assistant to President
Director of Division, Sales Division
President, Executive President
Senior Advisor
Director, Shizen Energy Inc.
Retired from the Company
Representative Director, Chief Executive Officer, Via
Mechanics, Ltd.
Chairman, Via Mechanics, Ltd.
Board Director, Japan Investment Adviser Co., Ltd.
Audit & Supervisory Board Member, Shizen Energy
Inc.
Chairman, the Company (incumbent)
Representative Director (incumbent), Chairman
and Executive Officer (incumbent), Chief Executive
Officer (CEO) (incumbent)
President (incumbent), Executive President(incumbent)

Shunsaku Hiraga
Director
Director of Division,
Production Division
In charge of Global R&D Division● Number of the Companyʼs shares held: 1,218,970

Jul. 1971 Joined Mitsubishi Kasei Corporation (current
Mitsubishi Chemical Corporation)
Sep. 2003 Joined the Company
Managing Executive Officer
Jan. 2004 Director of Division, Production Division
Aug. 2004 Director
Aug. 2005 General Manager, Machining Department
Jan. 2006 General Manager, Production Department
Apr. 2007 General Manager, Mechanical Carbon
Development & Production Department
Jun. 2007 General Manager, Planning Department
Dec. 2007 General Manager, Planning Division
Aug. 2009 Retired from the Company
Oct. 2011 Established CARBON ONE Co., Ltd.
Representative Director
Apr. 2013 Established Carbon Material International
Corporation
Executive Director (incumbent)
Jul. 2018 Joined the Company
Executive Officer (incumbent)
Business Unit Management Officer
Sep. 2018 Director of Division, Production Division(incumbent)
Mar. 2019 Director (incumbent)
Nov. 2021 In charge of Global R&D Division (incumbent)

Nov. 1996
Feb. 2002
Jun. 2005
Aug. 2006
May 2015
Jul. 2017

Jan. 2020
Mar. 2020
Mar. 2022

Jul.

2007

Jul.

2009

Jul.

2010

May 2011
Jan. 2015
Jan. 2017
Sep. 2017
Apr. 2018

Tatsuro Hamada
Director
Director of Division,
Corporate Planning Division
In charge of Global Sales DivisionSep. 2018
Feb. 2019
Mar. 2019
Aug. 2021

Nov. 2021

2003
2011

Jul.

2012

Aug. 2012

Mar. 2022● Number of the Companyʼs shares held: 0● Status of attendance at Board of Directors● Number of the Companyʼs shares held: 2,200

Meetings: 13/13● Status of attendance at Board of Directors● Status of attendance at Audit & Supervisory

Meetings: 13/13● Status of attendance at Audit & Supervisory
Board Meetings: 10/10

Board Meetings: 10/10

Toshimi Boki

Kazuhiro Imai

Audit & Supervisory Board Member

Audit & Supervisory Board Member(Outside, Independent)● Number of the Companyʼs shares held: 3,797

Dec. 2008

Apr. 2004

Jul.
Jul.

Joined Osaka Regional Taxation Bureau
Chief Examiner, First Corporation Taxation Group,
Oyodo Tax OfficeDistrict Director, Tanabe Tax Office
General Manager, Revenue Management andCollection Department, Osaka Regional Taxation
BureauRetired as General Manager, Revenue Management
and Collection Department, Osaka Regional
Taxation Bureau
Registered as certified public tax accountant
Established Imai Certified Tax Accountant Office (tothe present)
Certified public tax accountant (incumbent)
Audit & Supervisory Board Member,the Company (incumbent)

Meetings: 17/17

Meetings: 17/17

Joined Bridgestone Corporation
Lead Advisor, Akron Central Research Center,
BRIDGESTONE/FIRESTONE, INC(current BRIDGESTONE AMERICAS, INC.)
General Manager, Tire Materials Development
Department, Tire Materials Development Division,
Bridgestone Corporation
Director, Tire Materials Development Division,
Bridgestone Corporation
Director, Internal Manufacturing Management
Division, Bridgestone Corporation
Vice President and Officer, In charge of Internal
Manufacturing Management, Bridgestone Corporation
In charge of Tire Research and Material
Development, Bridgestone Corporation
Assistant to Chief Technology Officer, Bridgestone
Corporation
In charge of Central Research, Bridgestone Corporation
Joined the Company
Executive Officer (incumbent)
In charge of Technical Development Division
General Manager, Materials Development
Department, Technical Development Division
Director of Division, Global R&D Division
Director of Division, Corporate Planning Division(incumbent)
Director (incumbent)
In charge of Global R&D Division
Chairman, SHANGHAI TOYO TANSO CO., LTD.
(incumbent)
Chairman, SHANGHAI TOYO TANSO INDUSTRIAL
CO., LTD. (incumbent)
Chairman, TOYO TANSO (ZHEJIANG) CO., LTD.
(incumbent)
In charge of Global Sales Division, the Company(incumbent)

Apr. 1970
Jul. 1995● Status of attendance at Board of Directors● Status of attendance at Board of Directors

Apr. 1983
Feb. 1995

Joined the Company
Director of Finance & Administration,
TOYO TANSO USA, INC.
General Manager, Accounting Department, theCompany
Executive Officer
Registered as U.S. certified public accountant
Vice President, SHANGHAI TOYO TANSO CO., LTD.
Vice President, SHANGHAI TOYO TANSOINDUSTRIAL CO., LTD.
Vice President, TOYO TANSO (ZHEJIANG) CO., LTD.
Deputy Director General, General Administration
Division, the Company
Administration Officer, Deputy Director General,
General Administration Division
Audit & Supervisory Board Member, the Company(incumbent)

Apr. 1971
Apr. 1996
May 2001
May 2003
Jun. 2004
Jul.

2009

Apr. 2010
Apr. 2011
Jun. 2012
Apr. 2013
Apr. 2014
Jun. 2015
Jun. 2017
Mar. 2020

Shusuke Matsuo
Director(Outside, Independent)

Joined Marubeni-Iida Co., Ltd.
(current Marubeni Corporation)
Vice President, Marubeni Germany plc
Vice President, Marubeni Europe plc
President, Marubeni Germany plc
Joined RIKEN TECHNOS CORPORATION
Director, General Manager of Film Business, RIKENTECHNOS CORPORATION
Joined KUREHA CORPORATION
Deputy General Manager of Advanced Materials
Division
Vice President, General Manager of Advanced
Materials Division, KUREHA CORPORATION
Senior Vice President, KUREHA CORPORATION
Director, KUREHA CORPORATION
General Manager of PGA Division, KUREHA
CORPORATIONManaging Director of Advanced Materials and PGA
Businesses, KUREHA CORPORATION
Special Advisor, KUREHA CORPORATION
Retired from KUREHA CORPORATION
Director, the Company (incumbent)● Number of the Companyʼs shares held: 771

Oct. 2011
Jan. 2018
Mar. 2022

Registered as lawyer
Joined City-Yuwa Partners
Joined Kansai Law & Patent OfficePartner, Kansai Law & Patent Office(incumbent)
Audit & Supervisory Board Member,the Company (incumbent)● Number of the Companyʼs shares held: 0● Status of attendance at Board of Directors

Meetings: 13/13● Status of attendance at Audit & Supervisory

Board Meetings: 10/10

Junko Uemura
Audit & Supervisory Board Member(Outside, Independent)● Status of attendance at Board of Directors

Meetings: 17/17*1 Numbers of shares held by Directors and their status of attendance at Board of Directors Meetings are accurate as of December 31, 2022.
*2 The attendance of Keiko Kosaka includes her attendance at Board of Directors Meetings as an Audit & Supervisory Board Member prior to her appointment as a Director on March 29, 2022.
*3 No information concerning the status of attendance at Board of Directors Meetings is provided for Makio Naito as he was newly appointed at the 81st Ordinary General Shareholders Meeting held on March 30, 2023.
*4 No information concerning the status of attendance at Board of Directors Meetings and Audit & Supervisory Board Meetings during FY2022 are provided for Toshimi Boki, Kazuhiro Imai, and Junko Uemura since their
appointment as Audit & Supervisory Board Members on March 29, 2022.

● Number of the Companyʼs shares held: 2,376● Status of attendance at Board of Directors

Executive Officers (as of September 1, 2023)

Meetings: 17/17

Oct. 2002
Jan. 2009
Jun. 2016
Jun. 2017

Mar. 2018
Jun. 2018
Jun. 2021
Mar. 2022

Registered as lawyer
Joined Irokawa Law Office (current Irokawa Legal
Professional Corporation)
Partner, Irokawa Law Office (current Irokawa Legal
Professional Corporation) (incumbent)
Audit & Supervisory Board Member, Nihon
Yamamura Glass Co., Ltd.
Director, Nihon Yamamura Glass Co., Ltd.
(incumbent)
Audit & Supervisory Board Member, Asia and PacificTrade Center Co., Ltd. (incumbent)
Audit & Supervisory Board Member, the Company
Audit & Supervisory Board Member, FALCOHOLDINGS Co., Ltd.
Director, FALCO HOLDINGS Co., Ltd.
(incumbent)
Director, the Company (incumbent)

Apr. 1982
Mar. 1993
Aug. 1993
Apr. 2001
May 2002
Jun. 2022
Apr. 2005

Dec. 2005
Apr. 2007● Number of the Companyʼs shares held: 266● Status of attendance at Board of Directors

Meetings: 17/17

Nov. 2007
Apr. 2009

Keiko Kosaka

Makio Naito

Director(Outside, Independent)

Director(Outside, Independent)

Mar. 2023

Joined Powder Technology Research Institute(current HOSOKAWA MICRON CORPORATION)
Retired from Powder Technology Research Institute(current HOSOKAWA MICRON CORPORATION)
Joined Japan Fine Ceramics Center
Vice Director, Japan Ceramics Center
Retired from Japan Fine Ceramics Center
Professor, Endowed Research Division of Nanoparticle
Joining Technology, Joining and Welding ResearchInstitute, OSAKA UNIVERSITY
Professor, Smart Processing Research center (current
Research Center for Additive Joining Application),
Joining and Welding Research Institute, OSAKAUNIVERSITY (incumbent)
Joined Kurimoto, Ltd.
Director, Nanomaterials Research Institute,
Kurimoto, Ltd.
Director, HOSOKAWA MICRON CORPORATION
Director, Smart Processing Research center (current
Research Center for Additive Joining Application),
Joining and Welding Research Institute, OSAKAUNIVERSITY
Retired from Kurimoto, Ltd.
Vice Director, Joining and Welding ResearchInstitute, OSAKA UNIVERSITY
Director, the Company (incumbent)● Number of the Companyʼs shares held: 0

Position

Name* Chairman and Executive
Officer Executive President

Naotaka Kondo

Chief Executive Officer (CEO)*Executive Officer

Shunsaku Hiraga

Director of Division, Production Division
In charge of Global R&D Division*Executive Officer

Tatsuro Hamada

Director of Division, Corporate Planning Division
In charge of Global Sales Division

Executive Officer

Hiroshi Hashigami

Director of Division, Administration Division
General Manager, Office of the Executive Secretariat

Executive Officer

Akira Sasaki

Director of Division, Global Sales Division
General Manager of Domestic Sales Department

Executive Officer

Hideki Kiku

Deputy Director of Division, Corporate Planning Division
General Manager of Market Strategy Department
Deputy Director of Division, Global Sales Division

Executive Officer

Manabu Takata

Deputy Director of Division, Corporate Planning Division
General Manager of Planning Department

Executive Officer

Tadashi Shimada

In Charge of Chinese Business

Executive Officer

Megumu Doi

Deputy Director of Division, Production Division

Executive Officer

Kiyofumi Sone

Deputy Director of Division, Production Division

Executive Officer

Hiroshi Machino

Deputy Director of Division, Production Division● Status of attendance at Board of Directors

Meetings: -/-Area of responsibility

Executive Officers whose position is preceded by an asterisk also serve as Directors.

48

TOYO TANSO Integrated Report 2023

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Undertaking corporate activities that inspire trust

Undertaking corporate activities that inspire trust

Reasons for the appointment of officers

Roundtable discussion among Outside Directors

List of reasons for which officers were appointed
Position

Officer

Reason for appointment

Representative Director
Chairman & President,
CEO

Naotaka Kondo

Naotaka Kondo has a wealth of experience and knowledge serving in management positions, exercising strong leadership since being appointed to theoffice of Representative Director of the Company in 2018, and he has driven initiatives to reinforce corporate governance and to implement the Company’sgrowth strategy. Considering the above, the Company appointed him as a Director because he is expected to appropriately execute duties as a Director of
the Company and contribute to the increase of corporate value.

Director

Shunsaku Hiraga

Shunsaku Hiraga has a wealth of knowledge and experience related to carbon production, and he has contributed to improving production technology andbusiness development initiatives after being appointed as Executive Officer of the Company in 2018. Considering the above, the Company appointed him
as a Director because he is expected to appropriately execute duties as a Director of the Company and contribute to the increase of corporate value.

Director

Tatsuro Hamada

Tatsuro Hamada was involved for many years in the development division of a tire manufacturer and has experience as both an Executive Officer and thehead of a management division. Since joining the Company, he has contributed to reforms of technical development, business development and promoting
management strategy. Considering the above, the Company appointed him as a Director because he is expected to appropriately execute duties as a
Director of the Company and contribute to the increase of corporate value.

Director (Outside)

Shusuke Matsuo

Shunsuke Matsuo has experience serving on the management at chemicals manufacturers, experience as a manager at the overseas subsidiaries of ageneral trading company, as well as extensive experience and a wealth of knowledge concerning management from a global perspective. For this reason,
the Company determined that he will appropriately fulfill the role of overseeing the execution of business and contribution to the strengthening of theCompany’s corporate governance.

Director (Outside)

Keiko Kosaka

Keiko Kosaka has knowledge and experience with corporate law cultivated over many years as a lawyer in the area of corporate law. Furthermore, basedon her experience of contributing to auditing at the Company as an Outside Audit & Supervisory Board Member since March 2018 and her experience asan Outside Director and Outside Audit & Supervisory Board Member at other companies, the Company expects that she will appropriately fulfill the role ofoverseeing the execution of business and contribute to the strengthening of the Company’s corporate governance.

Director (Outside)

Makio Naito

Makio Naito has a wealth of academic experience as a specialist, serving in research and management at industrial machinery manufacturers, and withmany years of engagement in research relating to powder engineering at OSAKA UNIVERSITY, where he serves as a professor. The Company determinedthat he can provide useful advice for the development of the Company’s businesses because he is expected to appropriately fulfill the role of overseeing theexecution of business from an objective standpoint regarding the Company’s overall management, and contribute to the discussion and review of overallmanagement.

Audit & Supervisory
Board Member(Full time)

Toshimi Boki

The Company expects that Toshimi Boki will appropriately execute his duties as an Audit & Supervisory Board Member based on his extensive knowledge
and experience accumulated through his many years of experience in key positions in the finance and accounting divisions since joining the Company.

Audit & Supervisory
Board Member(Outside)Kazuhiro Imai

Kazuhiro Imai has diverse knowledge and experience in finance and accounting as a certified public tax accountant. Moreover, it is considered that he will
be able to execute duties as an Outside Audit & Supervisory Board Member appropriately.

Audit & Supervisory
Board Member(Outside)Junko Uemura

Junko Uemura has extensive knowledge and experience regarding law, with a focus on corporate law, gained as a lawyer. She is expected to appropriately
execute duties as an Outside Audit & Supervisory Board Member of the Company.

Areas of specialization of Directors and Audit & Supervisory Committee members

Outside Director

Outside Director

Outside Director

Makio Naito

Keiko Kosaka

Shusuke Matsuo

Skills matrix of the areas of expertise/experience of Directors and Audit & Supervisory Committee members

Position

50

Area of responsibility

Name

Overallmanagement

Key business/
industry
GlobalSales/
experience management
marketing(Materials
industry)

Representative Director
Chairman & President,
CEO

Chief Executive Officer (CEO)Naotaka Kondo

〇

〇

〇

Director

Director of Division,
Production Division
In charge of Global R＆D Division

Shunsaku Hiraga

〇

〇

〇

Director

Director of Division,
Corporate Planning Division
In charge of Global Sales Division

Tatsuro Hamada

〇

〇

〇

〇

Director (Outside)

Shusuke Matsuo

〇

〇

〇

〇

Director (Outside)

Keiko Kosaka

Director (Outside)

Makio Naito

Audit & Supervisory
Board Member(Full time)

Toshimi Boki

Audit & Supervisory
Board Member (Outside)

Kazuhiro Imai

Audit & Supervisory
Board Member (Outside)

Junko Uemura〇

R&D/
production
technology〇

Qualitycontrol/
Sustainability/ IT/AI/
procurement
ESG
IoT/DXand logistics

〇

〇

〇

〇

〇

〇

〇

〇

Legal affairs/
personnel/riskmanagement,
etc.

Finance/institutional
accounting/management
accounting/taxation

〇

〇

〇
〇

〇

〇

〇
〇

〇

〇
〇
〇

What are your thoughts on the atmosphere at
Board of Directors Meetings and the nature of
discussions?
Matsuo: It's easy to express my opinions in a cordial and frankatmosphere. I think this is a very good thing. If I were toraise an issue, I would say that there are many questions
from Outside Directors, so discussions can be invigorated if
more Internal Directors asked questions. Since the content
of discussions is mainly related to daily business activities,
it would be even better if the Board of Directors could also
discuss themes from a medium- to long-term perspective.
Also, I think it's really wonderful that the process ispresented in detail regarding investment decisions. I thinkthat a review of what happened after investments are madewould help to deepen the discussions.
Kosaka: The meeting materials are very well organized, and it

Naito:

seems that extensive discussions on agenda items havebeen conducted within the company in advance. Thismay be the reason why there are few questions fromInternal Directors, but if there were more voices at Board of
Directors Meetings, it would be easier to understand each
person's thoughts. As Mr. Matsuo said, the atmosphere isreally relaxed and inviting. Based on our opinions, Internal
Directors may reconsider the matter, and I feel that they are
sincere in considering our views carefully.
I have only been an Outside Director for a short time, but thefirst thing I felt when I attended Board of Directors Meetings
was that the number of products was extremely large. In
addition to expanding globally, each department has its own
products and technologies, and they are moving in a timely
manner, so it's all very fast paced (laughs), but departments
explain matters in detail using meeting materials. In addition,in the course of discussions, I again feel that there is a bright
future for carbon is a material and for Toyo Tanso.

TOYO TANSO Integrated Report 2023

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Undertaking corporate activities that inspire trust

Undertaking corporate activities that inspire trust

Do you have any requests or advice with regard tomeeting materials and the sharing of information?
Matsuo: Everyone is very serious, so the amount is enormous. For
example, I would be grateful if explanations can feature themain points in a simple way, such as defining the assumed
risk and what the result was.
Kosaka: I think it involves a lot of work because the meeting materials
are very carefully crafted down to the smallest detail. It's
certainly a little difficult to grasp the most important points
from just a glance. There are active discussions within thecompany, and information is updated each time, so I think
the content will be more and more detailed.
Naito: Before a detailed discussion, it may be easier to understand
if a discussion is held from a slightly larger perspective.
However, since Outside Directors only participate twice amonth in Board of Directors Meetings and the Management
Meeting, I think there is a limit to how much we can review
and determine based on that alone.
Matsuo: We also need to study more to understand the Company's
products and technologies, and we also need to visit
frontline operations.

Naito:

While they are open to us, I think there are some barriers
within the company between departments such as sales, R&D,
and production. It's important to demonstrate uniqueness andplay an active role within these walls and to work diligently
beyond those barriers. One of the roles of Outside Directors is
to connect departments in a well-balanced manner.

How do you assess Toyo Tansoʼs corporate
governance and sustainability?

I agree. As Chairman Kondo said,“You can study our products
and technologies at any time; be sure to keep up yourlearning.”Board of Directors Meetings are always open andupfront about everything. They are transparent and fair, discussproblems, and result in accurate and prompt decisions. I feelthat Toyo Tanso is a company with a great approach in place.
Kosaka: When I served as an Outside Audit & Supervisory Board
Member, I had the opportunity to visit the Company's
plants several times, as well as its subsidiaries in the U.S. andChina, and I gained a great understanding of the Company.
I realized that it is really important to see the Company's
operations firsthand.
Naito:

52

Kosaka: First, with regard to governance, the Company is actively
working to strengthen and improve it, and I feel that there
is a very high level of awareness. Based on the results of theevaluation of the effectiveness of the Board of Directors, theCompany has set up a venue for discussion separately fromthe Board of Directors, providing the opportunity to discuss
the company's issues from various angles. This is an effective
initiative in a situation where it is necessary to discuss amatter from a broad perspective.
Matsuo: The Governance Committee, of which Mr. Naito and I are
members, also engages in in-depth discussions, and I believethat the Company has built a system that is superior to thatof other companies.
Naito: The Board of Directors has a one-to-one composition
consisting of three Internal Directors and three Outside
Directors, while the Governance Committee and theNomination / Remuneration Committee both have one
Internal Director and two Outside Directors. Now that thestructures are in place, the only question is how effective theCompany can make them. I look forward to their further
enhancement for our employees and other stakeholders.
Matsuo: When both the Governance Committee and the Nomination/ Remuneration Committee were first established, there
were many formal discussions, but the situation has

improved greatly in the past one or two years. We [Outside
Directors] are gradually accumulating information, and as
Internal Directors become accustomed to operations, we areable to flexibly transition from the previous structures. All
told, I feel that the Company is on track.
Kosaka: In terms of sustainability, it takes a lot of time to change
quality-related materials and manufacturing methods. This
is not something that can be resolved overnight. Of course,
this is an important issue that is being examined withgreat interest, and I believe that the Company is making
steady progress starting with what is possible now, such as
improving the efficiency of daily operations.
Matsuo: One specific measure is the establishment of the
Sustainability Committee. The leaders of the three groups,
the ESG Value Creating and Promoting Group, theSustainable Consumption and Production Group, and thePeople and Organizational Vitalization Group, have set theirown goals and are evaluating the effectiveness of how wellthey have been achieved. I believe that they are working
with a high level of awareness.
Naito: I think that Toyo Tanso's business aligns nicely with conceptof sustainability. Since carbon is a key material underpinningadvanced and fundamental technologies, these materials areuseful in wide range of fields such as social infrastructure,energy savings, and energy creation; not to mention thatthey are contributing to the realization of the SDGs. In thisway, I feel that the major appeal of Toyo Tanso is that it hasa clear social significance.

How do you view Toyo Tansoʼs future ambitions
and challenges?
Matsuo: I used to be involved in the business operations andmanagement of chemical manufacturers, and I used to often
say,“Let's move operations downstream or the mouth of
the river, not midstream.”In short, we wanted to increase
added value and aim for areas with little competition. This
describes Toyo Tanso quite accurately. What direction will
Toyo Tanso take as it expands its business globally? Toyo
Tanso supports the semiconductor industry, which drives
the global economy, and demand for power semiconductor
applications is growing, but the Company must also explore
the next big thing. It is difficult to create new businesses
and materials from scratch, so I, along with other Outside
Directors, would like to make recommendations for the
next 10 or 15 years. One example would be taking on thechallenge of further growth through M&A.
Naito: I think it's important to consider whether the company canremain successful with carbon materials alone. Toyo Tanso
has been able to generate strong profits by adeptly targetingthe niche needs of its customers. I feel that there is still roomfor growth, such as combining carbon materials with othermaterials and expanding the technology cultivated in carbon
materials to other materials. I specialize in powder engineering,so I would like to use my knowledge to give various advice
to the Company's experts in technology development andproduction technology. Actually, I would like to be directly
involved in innovation, not indirectly (laughs). In addition, inorder to survive in cutting-edge and global markets, Toyo Tanso
will need to anticipate needs and develop businesses quickly;
not to mention have a sense of urgency that allows it to go ina different direction when other companies catch up. Even in
the age of AI, human connections will still be important. Mr.
Matsuo and Ms. Kosaka have a diverse network of contacts,
and I also have connections with various researchers overseas.
I believe that Toyo Tanso will grow by building and utilizing
a network of talented human resources, and I would like tocontribute to this in some way.
Kosaka: Toyo Tanso is focusing on global management to unlock
greater growth, so I believe that global governancemanagement will become even more important in the future.
About five years ago, a group-wide management book (Global
Common Management Standards) was created, and when I
went overseas for an audit, I was briefed on the operational
status of each overseas subsidiary. At the time, there wassome confusion due to cultural differences, but now I feelthat such management standards are being utilized much
more widely across the Group. While the efforts made thus
far are gradually creating new successes, I believe that one of
the issues that Toyo Tanso needs to focus on next is securing
and developing human resources. How do we attract talented
researchers and engineers, and how do we secure theworkers who will support manufacturing? It is also importantto cultivate them in each region of the world. In addition,
there are many other issues that need to be discussed, suchas countermeasures against natural disasters and supply chain
risks, and the development of new technologies. I would liketo gain a wide range of knowledge and work together with
the Company to explore these topics.

TOYO TANSO Integrated Report 2023

53

Financial and non-financial information

Financial and non-financial information
Financial and non-financial highlights
Net sales

Operating profit and operating profit ratio

Capital investment / Depreciation

R&D expenses / Ratio of R&D expenses to net sales(Millions of yen)■■Operating profit (millions of yen) / ●Operating profit ratio (%)■■Capital investment (millions of yen) / ■■Depreciation (millions of yen)■■R&D expenses (millions of yen) / ●Ratio of R&D expenses to net sales (%)

43,774

41,132

7,009

6,667

37,73436,402
31,226

17.0

6,312

14.2

3,422

15.0

5,110

5,082

5,666

5,175

15.2
2,653

2,959

2,831

2,784

11.0

2018

2019

2020

2021

2022

Net income / Earnings per share

2019

2020

2021

2022

ROE / ROA■■Net income (millions of yen) / ●Earnings per share (yen)212.94

2,944

2018

2019

7.8

126.95
4.6

2021

2021

2022

2022

2018

2019

1,106

2.6

1,390

1,121

2018

2019

2020

2021

2022

Number of employees* / Number of female employees* /Ratio of female employees*
824

8.5
89

5.1

2,662

1,126

■■Number of employees / ■■Number of female employees /●Ratio of female employees (%)

8.0

4,465

2020

2020

1,165

3.1

3.7

2,952

9.5

5,181
140.40

2019

3,153

Number of R&D employees

6.9
4,910

2018

3,004

●ROE (%) / ●ROA (%)

247.08234.52

2018

2.8

3.5

6.4

6.9

80

72

4.0

2021

2022

2018

2019

828

831

857

85

44

2020

832

2020

2021

2022

12.5

13.0

14.2

14.4

10.8
89

104

108

118

123

2018

2019

2020

2021

2022

* Toyo Tanso Co., Ltd., non-consolidated basis.

Total assets / Equity ratio■■Total assets (millions of yen) / ●Equity ratio (%)

74,951
84.5

76,082
85.4

76,07587.5

83,655

Dividends per share / Payout ratio

Number of patents held

Greenhouse gas emissions*1 and 2■■Dividends per share (millions of yen) / ●Payout ratio (%)(Certifications)■■Scope1 and Scope2 (t-CO2) /●GHG emissions per unit of sales (t-CO2/ million yen）

89,432

100,987
89,10970
86.3

78,280

60

86.3
50

50

50

493

495

492
406

35.6

2018

2019

2020

2021

2022

2018

2019

437

3.79

39.4

21.3

2020

28.2

28.3

2021

2022

106,206

2018

2019

2020

2021

2022

2019

3.45

3.36

3.43

2020

2021

2022

*1 Toyo Tanso Co., Ltd., non-consolidated basis.
*2 Calculation began in FY2019.

54

TOYO TANSO Integrated Report 2023

55

Financial and non-financial information

Financial and non-financial information

11-year financial and non-financial summary
Performance(millions of yen)

2013*1

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023 (forecast)

Net sales

20,542

34,06635,55832,46435,24041,13236,402

31,22637,734

43,77448,500Operating profit

1,035

1,140

790

652

3,708

7,009

5,175

3,422

5,666

6,667

8,500

Ordinary profit

1,303

1,501

917

759

3,719

7,057

5,207

3,877

6,264

7,369

9,300

Profit attributable to owners of parent

(111)

1,327

402

284

3,020

4,910

2,944

2,662

4,465

5,181

7,000

Financial position(millions of yen)

Total assets

74,22975,831

72,99069,79774,22374,951

76,082

76,07583,65589,432

Net assets

58,552

60,91859,48758,18260,98664,09665,706

66,622

72,256

77,200Cash flows(millions of yen)

Cash flows from operating activities

3,496

7,374

6,797

5,120

6,972

5,759

5,149

7,020

7,328

5,625

Cash flows from investing activities(1,442)(2,314)(5,235)(4,127)(5,951)(4,318)(4,017)

1,011(6,252)(5,253)

Cash flows from financing activities(1,464)(3,406)(3,167)(1,270)(1,216)(1,169)(1,372)(2,099)(1,261)(1,388)Cash and cash equivalents at end of period

6,871

9,061

7,147

6,424

6,361

6,414

6,101

12,093

12,47011,773

2,733.13

2,850.98

2,803.69

2,741.06

2,884.66

3,019.47

3,097.00

3,174.52

3,442.80

3,678.50(5.39)

64.02

19.40

13.71

145.52234.52140.40126.95212.94247.08333.77

－

63.90

19.38

－

145.25

－

－

－

－

－

－

Dividend

11.50

22.00

25.00

25.00

30.00

50.00

50.00

50.00

60.00

70.00

90.00

Equity ratio

77.0%

79.5%

80.2%

81.9%

81.6%

84.7%

85.4%

87.1%

85.7%

86.3%

－

Return on equity (ROE)(0.2)%

2.3%

0.7%

0.5%

5.2%

8.0%

4.6%

4.0%

6.4%

6.9%

8.8％

Return on Assets (ROA)

1.8%

2.0%

1.2%

1.1%

5.2%

9.5%

6.9%

5.1%

7.8%

8.5%

Operating profit/net sales

5.0%

3.3%

2.2%

2.0%

10.5%

17.0%

14.2%

11.0%

15.0%

15.2%

D/E ratio

0.13

0.08

0.04

0.03

0.02

0.01

0.00

0.00

0.00

0.00

－

34.4%

19.2%

182.4%

20.6%

21.3%

35.6%

39.4%

28.2%

28.3%

27.0％

855

2,591

2,958

2,662

2,221

2,653

5,082

6,312

5,110

3,004

6,596

Depreciation

2,251

3,935

3,673

3,414

3,223

2,959

2,831

2,784

2,952

3,153

3,378

R&D expenses

718

1,790

1,490

1,458

1,233

1,165

1,126

1,106

1,390

1,121

1,205

3.5%

5.3%

4.2%

4.5%

3.5%

2.8%

3.1%

3.5%

3.7%

2.6%

2.5％

1,959

1,969

1,986

1,903

1,710

1,678

1,700

1,658

1,640

1,690

164

167

176

153

214

230

254

275

282

288

Percentage of female employees*2

9.7%

10.2%

9.5%

9.8%

10.3%

10.8%

12.5%

13.0%

14.2%

14.4%

Average years of service

13.8

14.6

14.5

15.4

17

17.7

17.1

17.1

18.1

18.0

Percentage of Outside Independent Directors

0.0%

12.5%

25.0%

37.5%

42.9%

42.9%

37.5%

37.5%

42.9%

50.0%

50.0%

Percentage of female officers*3

14.3%

9.1%

9.1%

0.0%

0.0%

10.0%

9.1%

9.1%

10.0%

22.2%

22.2%

Number of R&D employees

87

99

142

111

91

89

80

85

72

44

Number of patents held

455

491

549

573

502

493

495

492

406

437

64

61

93

52

51

62

54

46

17

23

100,987

78,28089,109106,206

3.79

3.45

3.36

3.43

Per-share data

Net assets
ProfitDiluted earnings

Indicated

Percentage of overseas sales

Payout ratio
Capital investments,
Depreciation,
R&D expenses

Capital investments

Ratio of R&D expenses / net sales
Non-financial
information

Number of Employees(average number of temporary employees)*2

Number of newly acquired patents
Greenhouse gas emissions (Scope 1 and Scope 2)*2
Greenhouse gas emissions per unit of sales (Scope 1 and Scope 2)*2

17.5％

*1 The end of the fiscal year changed from May 31 to December 31 starting with the fiscal year ended December 2013. Consequently, the fiscal year ended December 2013 is an irregular fiscal year insofar as it consisted of only sevenmonths of operations.
*2 Non-consolidated basis.
*3 Directors and Audit & Supervisory Committee members.

56

TOYO TANSO Integrated Report 2023

57

Financial and non-financial information

Financial and non-financial information

Consolidated financial statements
Consolidated balance sheet(Millions of yen)Previous consolidated fiscal year

Current consolidated fiscal year

Previous consolidated fiscal year

Current consolidated fiscal year

(As of December 31, 2021)(As of December 31, 2022)(As of December 31, 2021)(As of December 31, 2022)

AssetsLiabilities

Current assets

Current liabilities

Cash and deposits

15,364

15,437

Notes and accounts payable - trade

2,225

2,328

Notes and accounts receivable - trade

14,19816,606

Electronically recorded obligations - operating

968

1,004

Securities

2,999

2,999

Short-term loans payable

191

285

Merchandise and finished goods

7,477

8,121

Accounts payable - other

2,041

1,890

Work in progress

5,722

7,127

Income taxes payable

852

1,734

Raw materials and supplies

2,823

3,167

Provision for bonuses

602

772

Other

526

502

Provision for directors’bonuses

29

113

Allowance for doubtful accounts

(103)

(101)

Other

3,233

3,018

49,00953,861

Total current liabilities

10,145

11,147Long-term loans payable

8－

Total current assets
Non-Current assets

Non-current liabilities

Property, plant and equipment
Buildings and structures

23,38424,010

Deferred tax liabilities

124

125

Accumulated depreciation(12,155)(12,988)

Net defined benefit liability

150

147

Buildings and structures, net

11,22911,022

Asset retirement obligations

269

272

Machinery, equipment and vehicles

53,10855,534

Other

700

538

Accumulated depreciation(43,819)(45,540)

Total non-current liabilities

1,252

1,084

9,289

9,993

11,398

12,231

Land

5,891

5,931

Leased assets

1,543

1,592

Shareholders' equity

Accumulated depreciation

(309)

(424)

Capital stock

7,947

7,947

Leased assets, net

1,233

1,167

Capital surplus

9,609

9,609

Construction in process

2,181

1,773

Retained earnings

51,74855,672

Other

5,125

5,489

Treasury shares

(60)

(60)

Accumulated depreciation(3,904)(4,240)Total shareholders’equity

69,24573,168Other, net

1,221

1,248

31,046

31,138

159

117

283

289

Foreign currency translation adjustment

2,833

3,944

Remeasurements of defined benefit plans

(33)

(83)

2,959

3,978

52

53

72,256

77,20083,65589,432

Machinery, equipment and vehicles, net

Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities

384

350

Deferred tax assets

977

1,490

Net defined benefit asset

618

566

Other

1,476

1,896

Allowance for doubtful accounts

(141)

(160)

Total investments and other assets

3,316

4,143

34,64535,571

83,65589,432

Total non-current assets
Total assets

58(Millions of yen)

Total liabilities
Net assets

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

TOYO TANSO Integrated Report 2023

59

Financial and non-financial information

Financial and non-financial information

Consolidated financial statements
Consolidated statement of income and consolidated statement of comprehensive income(Millions of yen)Previous consolidated fiscal year

Current consolidated fiscal year

(From January 1, 2021 to December 31, 2021)(From January 1, 2022 to December 31, 2022)

Consolidated statement of changes in equity Previous consolidated fiscal year (From January 1, 2021 to December 31, 2021)
Capital stock

Net sales

37,734

43,774

Balance at beginning of period

Cost of sales

25,352

29,346

Changes of items during period

Gross profit

12,382

14,427

Selling, general and administrative expenses

6,716

7,759

Operating profit

5,666

6,667

Non-operating income

4,465

79

92
67

Total changes of items during period

Foreign exchange gains

248

282

Share of profit of entities accounted for using equity method

83

158
－
42

Other

122

127

Total non-operating income

671

770

Balance at end of period

Interest expenses

28

33

16

16

Contracted research expenses

18

9

Other

9

8

Total non-operating expenses
Ordinary profit

72
6,264

68
7,369

Extraordinary income
Gain on sales of non-current assets

411Gain on sale of investment securities－

1

Subsidy income

1442

Settlement income－

73

Total extraordinary income

18

129

65,828(1,048)
4,465
(0)

(0)

－

－

3,417

(0)

3,416

7,947

9,609

51,748(60)

69,245(Millions of yen)
Accumulated other comprehensive income
Valuation difference
Foreign currency
Remeasurements ofon available-for-sale translation
adjustment defined benefit planssecurities

Non-operating expenses

Depreciation

Total shareholders’equity(60)

Purchase of treasury shares

53

42

Treasury shares

48,331(1,048)Interest income

41

Retained earnings

9,609

Profit attributable to owners of parent

Dividend income

Subsidies for employment adjustment

Capital surplus

7,947

Dividends of surplus

Net changes of items other thanshareholders’equity

Revenue from sales of electric power(Millions of yen)

Shareholders’equity

Balance at beginning of period

131

628

Total accumulated
other comprehensive
income(9)Non-controllinginterests

Total net assets

43

66,622

749

Changes of items during period
Dividends of surplus(1,048)

Profit attributable to owners of parent

4,465

Purchase of treasury shares(0)

Net changes of items other thanshareholders’equity

28

2,204

(23)

2,209

8

2,217

Total changes of items during period

28

2,204

(23)

2,209

8

5,634

Balance at end of period

159

2,833

(33)

2,959

52

72,256Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets

0

1

152

112

Consolidated statement of changes in equity Current consolidated fiscal year (From January 1, 2022 to December 31, 2022)

－

87

153

200

Profit before income taxes

6,130

7,298

Balance at beginning of period

Income taxes - current

1,278

2,503

Changes of items during period

Loss on suspension of operations
Total extraordinary losses

Income taxes for prior periods

189－

Income taxes - deferred

192

(391)

Total income taxes

1,660

2,112

Profit

4,470

5,186

Profit attributable to non-controlling interests
Profit attributable to owners of parent

Shareholders’equity
Capital stock

Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using equity method
Total other comprehensive income
Comprehensive income

Non-controlling interests

60

Treasury shares

51,748

5,181

4
5,181

Total changes of items during period

Total shareholders’equity(60)

69,245(1,258)5,181

Purchase of treasury shares

4

(0)

(0)

－

－

3,923

(0)

3,923

7,947

9,609

55,672(60)

73,168(Millions of yen)Previous consolidated fiscal year

Current consolidated fiscal year

(From January 1, 2021 to December 31, 2021)(From January 1, 2022 to December 31, 2022)

4,470

5,186

28

(42)

2,102

1,065

(23)

(49)

(Millions of yen)
Accumulated other comprehensive income
Valuation difference
Foreign currency
Remeasurements ofon available-for-sale translation
adjustment defined benefit planssecurities
Balance at beginning of period

108

47

2,833

(33)

2,959

Non-controllinginterests

Total net assets

52

72,256

Dividends of surplus(1,258)

Profit attributable to owners of parent

5,181

1,021

6,685

6,207

Net changes of items other thanshareholders’equity

6,675

6,201

10

6

2,215

159

Total accumulated
other comprehensive
incomeChanges of items during period

Purchase of treasury shares

Comprehensive income attributable to
Owners of parent

Retained earnings

9,609(1,258)

4,465

Other comprehensive income
Valuation difference on available-for-sale securities

7,947

Profit attributable to owners of parent

Balance at end of period

ProfitCapital surplus

Dividends of surplus

Net changes of items other thanshareholders’equity

Consolidated statement of comprehensive income(Millions of yen)

(0)
(42)

1,111

(49)

1,019

1

1,021

Total changes of items during period

(42)

1,111

(49)

1,019

1

4,944

Balance at end of period

117

3,944

(83)

3,978

53

77,200TOYO TANSO Integrated Report 2023

61

Corporate information

Financial and non-financial information

Consolidated financial statements
Consolidated statement of cash flows(Millions of yen)Previous consolidated fiscal year

Current consolidated fiscal year

(From January 1, 2021 to December 31, 2021)(From January 1, 2022 to December 31, 2022)

Cash flows from operating activities

Company profile
Name

Toyo Tanso Co., Ltd.

FoundedFebruary 11, 1941

Incorporated

July 31, 1947

Profit before income taxes

6,130

7,298

Depreciation

2,952

3,153

Share of (profit) loss of entities accounted for using equity method

(83)

(158)

Capital stock

7.9 billion yen (as of June 30, 2022)

Increase (decrease) in net defined benefit asset or liability

(116)

(43)

Representative

Increase (decrease) in provision for bonuses

Naotaka Kondo
Representative Director
Chairman & President, CEO

Fiscal year end

December 31

196

152

Increase (decrease) in provision for directors’ bonuses

983

Increase (decrease) in allowance for doubtful accounts

(63)

(9)

Interest and dividend income

(132)

(159)

28

33

(229)

(324)

Interest expenses
Foreign exchange losses (gains)
Loss (gain) on sale of non-current assets

(4)

(10)

Loss on retirement of non-current assets

152

112

(2,093)(2,021)

Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories

221(1,959)

Increase (decrease) in notes and accounts payable - trade

465

(127)

Other, net

769

1,131

Subtotal

8,203

7,150

Interest income and dividend income received

151

201

Interest expenses paid

(28)

(34)

Income taxes (paid) refund(997)(1,692)

Net cash provided by (used in) operating activities

7,328

5,625

Cash flows from investing activities

Stock data

20,992,588
100 shares(8,334)

Share unit

Proceeds from withdrawal of time deposits

5,832

7,722

Number of shareholders(5,076)(4,219)

5

13

(101)

(91)

Purchase of treasury shares of subsidiaries and associates

－

(269)

Other, net

(51)

(76)

(6,252)(5,253)Purchase of intangible assets

Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable

(30)

101

Repayments of long-term loans payable

(32)

(34)

Repayments of finance lease obligations
Purchase of treasury shares
Cash dividends paid
Dividends paid to non-controlling interests
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

Major shareholders

Number ofshares held

Percentage
of total

Custody Bank of Japan, Ltd.
(trust account)

2,410

11.49

The Master Trust Bank of Japan, Ltd.
(trust account)

2,150

10.25

1,560

7.44

Shareholder name(Thousands of shares)(0)

Naotaka Kondo

1,218

5.81

(1,048)(1,259)Kondo Holdings Co., Ltd.

1,165

5.55

Kondo Zaidan Public Interest Foundation

834

3.98

NT Corporation, Ltd.

626

2.98

(2)

(4)

(1,261)(1,388)

561

320

Takako Kondo

620

2.96

Junko Morita

600

2.86

THE BANK OF NEW YORK 133652

575

2.74

(696)
12,470Cash and cash equivalents at end of period

12,47011,773

Employees

Consolidated: 1,690(fiscal year ended December 31, 2022)
Non-consolidated: 857(fiscal year ended December 31, 2022)

Distribution of shares by owner(As of June 30, 2023)

Private individuals/
other6,451,330
30.73%(As of June 30, 2023)

(190)

376

Consolidated: 43.7 billion yen(fiscal year ended December 31, 2022)
Non-consolidated: 30.9 billion yen(fiscal year ended December 31, 2022)

Foreign private
individuals
4,497,579
21.42%(0)

12,093

Annual net sales

5,250

(146)

Net increase (decrease) in cash and cash equivalents

Domestic facilities: 13
Domestic subsidiaries: 3
Overseas subsidiaries and affiliates: 15(U.S.A., Italy, France, Germany, China,
Taiwan, South Korea, Thailand, Singapore,
Indonesia, Mexico)

Financial business
instrument operators
468,584
2.23%

Tomoko Kondo

Cash and cash equivalents at beginning of periodBusiness sites(As of June 30, 2023)

Number of shares outstanding(6,861)

Proceeds from sales of property, plant and equipment

Manufacture and sale of high-function
carbon products and related processing

Stock information

Payments into time deposits
Purchase of property, plant and equipment

Principal businesses

Financial institutions
6,543,000
31.17%

Other Japanese
corporations
3,032,095
14.45%

Distribution of shareholders by type(As of June 30, 2023)

Financial institutions
25
0.48%

Financial business
instrument operators26
0.50%
Foreign private
individuals
179
3.41%

Other Japanese
corporations
56
1.06 %

Private individuals/other
4,964
94.55%

Note: Treasury stock (20,128 shares) has been excluded in calculations of share ownership
percentages.

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TOYO TANSO Integrated Report 2023

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