About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessManagement
Foundation

Higher Productivity

Management Foundation

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Data

Corporate
Governance

Risk
Management

P.31

P.36

Respect for
Human Rights

Human
Resources

Diversity andInclusion

P.40

P.42

P.42

TEL Values

Employee
GrowthWork-life Balance

P.43

P.43

Health and
SafetyEnvironment

P.45

Compliance
P.39

P.44

Supply Chain
Management

P.46

P.55

SDGs Initiatives■

Create a work environment where employees
can work in good health and with peace of
mind

■

■

■

■

■

■

■

■

Build a highly effective corporate governance system to realize medium- to long-term growth,strengthen risk management and thoroughly enforce compliance to ensure that operational
decision-making and supervisory functions are exercised sufficiently
Maintain high ethical standards and expand human rights due diligence (impact assessment andremediation) and grievance processes based on the Group-wide Human Rights Policy to practicerespect for human rights
Strive to create new value by respecting the individuality and values of each employee and cultivating
their individual capabilities, and encourage work styles in sync with their respective lifestyles
Strive to achieve medium- and long-term environmental goals for products, plants and offices
and promote E-COMPASS through partnerships with suppliers to reduce environmental impact
throughout the value chain

■

■

■

Promote gender equality and ensure equal
opportunity and fairness of outcomes■

Enhance engagement and build a work
environment that respects human rights anddiversity while maximizing individual abilities■

Practice motivation-oriented management
based on the idea that “Our corporate growthis enabled by people, and our employees bothcreate and fulfill company values.”
Ensure equal opportunity and fairness ofoutcomes through the appropriate promotionof relevant laws and regulations, etc.

■■

Promote activities to reduce environmental
impact through our business and contribute to
the preservation of the global environment
Reduce toxic chemicals and air, water and soil
pollution
Strengthen resilience and adaptability to
climate-related and natural disasters
Build a highly effective corporate governancesystem while strengthening risk management
and thoroughly enforcing compliance in orderto build a strong and sound managementfoundation
Prevent all forms of bribery and corruption

Build a management foundation that
underpins business activities by strengthening
global partnerships

Develop sustainable operations in accordance with global standards throughout the entire supply chain

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

Corporate GovernanceCorporate Governance System
Basic StanceTokyo Electron regards building corporate governance structures as important for achieving success in global
competition, realizing sustainable growth. To that end, we have built a structure for utilizing to the maximum
the worldwide resources we possess and have worked to incorporate a wide range of opinions to strengthen
our management foundation and technology base, establishing a governance structure capable of ensuringthat we attain global-level earnings power. We established the Corporate Governance Guidelines* and outlined
the corporate governance structures that we have developed and reinforced ahead of other companies.
*

Corporate Governance Guidelines

Further Development of Corporate Governance
We use the Audit & Supervisory Board System, which consists of a Board of Directors and an Audit &Supervisory Board, and have achieved effective governance based on the supervision of management by the
Audit & Supervisory Board.
In April 2022, we transited to the Prime Market of the Tokyo Stock Exchange and took the following actions

Management Foundation

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Data

reinforcing corporate governance to respond to the expectations of capital markets including compliance with
the Corporate Governance Code and to enhance corporate value even further.
(1) Changed the composition of the Board of Directors to three inside directors and three outside directors(2) Appointed a majority of outside directors to the Nomination Committee and Compensation Committee,
including their respective chairpersons(3) Introduced a Corporate Officers system, under which corporate officers, as the highest decision-making
body on the executive side of the Group, are responsible for the entire Group management and businessexecution(4) Established the Corporate Officers Meeting and appropriately delegated authority from the Board of
Directors to the executive side to conduct prompt decision-making and agile operational execution(5) Corporate officers attend Board of Directors meetings and apply the details of Board deliberations tobusiness execution in an appropriate and speedy manner
By establishing a Board of Directors that performs its supervisory functions and a robust business execution
system in the semiconductor production equipment industry, where technological innovation is rapid andmarket changes are active, we will further promote growth-oriented group management on a global basis,
expand short-, medium- and long-term profit and achieve continuous corporate value enhancement.

Changes in Corporate Governance (Since CY1998)
1998
Outside Directors(ratio)

1999

2000

One

2001

2002

2003

Two

Term of Office
Changed from Two Years
to One Year

Discretionary
Committees

Nomination
Committee

2019

2020

Two

2022

Four of Twelve Directors(One-third)

Three of Six Directors(One-half)

Three

Two
Corporate Officers
System Introduced

Chairperson:
Outside Director

Compensation
Committee Established
Stock Option System
Introduced

2021

Executive Officer
System Introduced

Nomination Committee
Established
Chairperson:
Outside Director
Disclosure ofCompensation ofIndividual Representative
Directors

Medium-term
Performance-linked
Compensation System
Introduced

Evaluating theEffectiveness of theBoard of Directors
Sustainabilityrelated Disclosures

2018

One

Corporate Directors& Executive Officers

Director
Compensation

2017

Three

Diversity(Female & Foreign
Nationals)

Compensation
Committee

2016

Start of Evaluation(Self-evaluation)
Environmental andSocial Report Issued

Majority of Members are
Outside Directors
Majority of Members are
Outside Directors

Stock-based Compensation
System for Outside
Directors Introduced

Clawback Policies, Stock
Ownership Guidelines
Introduced

Involvement ofThird-party
Organizations

Sustainability
Report Issued
Integrated Report
IssuedTOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

Management Foundation

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Data

Corporate Governance Framework

Shareholders' Meeting
Appointment or Dismissal of Corporate Directors

Management& Supervision

Nomination Committee
Compensation Committee

Appointment or Dismissal of Audit & Supervisory Board Members

ReportAudit

Board of Directors

Audit
Audit & Supervisory Board

Cooperate

Appointment
or Dismissal

Independent Auditors

ReportProposal & ReportSupervision

Audit

Report Cooperate

Cooperate

Business Execution
Corporate Senior Staff (CSS)

Representative Director, President & CEO

ReportGlobal Audit Center

Corporate Officers Meeting

Audit

Business Ethics Committee
Sustainability Committee

Audit

Risk Management Committee
Information Security Committee
Export Trade Control Committee

Business Execution Organization (All Divisions/All TEL Group companies)

Nomination
Committee

Composition: One inside director and two outside directors
Chairperson: Outside director
Number of Meetings: 12 in FY2022
Deliberation Topics: A ppointment and dismissal of corporate directors and the CEO,candidates of independent outside directors, status of successor
development, other topics

Corporate
Officers
Meeting

The highest decision-making body on the executive side; established in June 2022
Composition: Six corporate officers
Inside directors who are not corporate officers and inside Audit & Supervisory Board
members also participate
Chairperson: CEO
Meeting Frequency: Once a month in principle

Compensation
Committee

Composition: One inside director and two outside directors
Chairperson: Outside director
Number of Meetings: 10 in FY2022
Deliberation Topics: P olicies concerning determination of individual compensation forcorporate directors and others and the details of compensation,compensation of individual remuneration, etc. of representative
directors, other topics

Corporate
Senior Staff(CSS)

Reviews progress management and implementation of management plans from a global
perspective
Composition: Executive officers, management executives of overseas subsidiaries and others
Meeting Frequency: Once a quarterly

Committees
on theExecutive SideBusiness Ethics Committee
Investigates the revision and revocation of the Code of Ethics and verifies the status of practicein accordance with the Code of Ethics
Proposes and supports training and educational programs relating to business ethics

Board ofDirectors

Composition: Three inside directors and three outside directors
Corporate officers also attend meetings to give explanations and reports, etc.
Chairperson: Inside director (non-executive)
Number of Meetings: 12 in FY2022■■

Sustainability Committee
Sets sustainability goals (short-, medium-, and long-term) and implements measures toachieve themImplements company-wide projects (the environment, human rights, RBA, etc.)■■

Audit &
Supervisory
Board

Composition: T wo full-time Audit & Supervisory Board Members and three outside
Audit & Supervisory Board members
Chairperson: Full-time Audit & Supervisory Board member
Number of Meeting: 9 in FY2022

Risk Management CommitteePerforms and shares information on company-wide risk management
Promotes initiatives to address individual risk items in collaboration with risk owners■■

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessEstablishment of the Director Compensation System
Basic Policy on Director Compensation
The entire Group emphasizes the following points in its basic policies on compensation for corporate directors
and Audit & Supervisory Board members.
1. Levels and plans for compensation to secure highly competent management personnel with global
competitiveness2. High linkage with business performance in the short term and medium-and-long term increase of
corporate value aimed at sustainable growth
3. Securement of transparency and fairness in the decision process of compensation and appropriatenessof compensation

Higher Productivity

Management Foundation

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Advanced Initiatives Relating to Director Compensation■ Shareholding Guidelines
We have established the Shareholding Guidelines (effective July 1, 2021) to further ensure that management’s
interests align with those of stakeholders in pursuit of sustainable enhancement of corporate value. We have
set targets for management to hold Company shares equal to the following within five years after the effective
date of the guidelines or appointment.
Directors

Goals

CEO

3 times

Inside Directors, Corporate Officers

Fixed basic compensation(annual amount)

Outside Directors
Executive Officers

2 times
1 time1 time■ Clawback Policy

Role of the Compensation Committee
To secure transparency and fairness in management and the appropriateness of compensation, the Compensation
Committee, which is chaired by an independent outside director, utilizes advice from an external expert who attends
all meetings, compares compensation levels with companies in Japan and overseas and analyzes the latest trends
and best practices in Japan and overseas (such as reflecting ESG in compensation). The committee then proposes tothe Board of Directors a compensation system that is the most appropriate for the Group and individualcompensation amounts for the representative directors based on the basic policies on compensation.

We have enacted a clawback policy (effective July 1, 2021) whereby we can demand a refund of annual
performance-linked compensation and medium-term performance-linked compensation if financial figures arefound to be in need of major correction due primarily to the willful misconduct of an executive director or
corporate officer.
The amount of compensation subject to refund is the excess portion of the performance-linked
compensation received in the fiscal year in which such misconduct was found as well as the three preceding
fiscal years.

Overview of Compensation
The table below provides an overview of the composition of compensation and policies and decision-making
for each type of compensation.
Recipient
Inside Directors

OutsideDirectors

Audit &
Supervisory
Board Members

●

●

●

Cash Bonuses

●

—

—

Stock Compensation-based Stock Options

●

—

—

Medium-term
Performance-linked
Compensation

Performance Share(stock-based compensation)

●

—

—

Non-performancelinked Compensation

Restricted Stock Units(stock-based compensation)

—

●

—

Type of Compensation

Fixed Basic Compensation

Overview of Compensation■■

Determine within the limit of total fixed basic compensation, which has been resolved at the Meeting of Shareholders
For executive directors, amounts are determined according to the scale of job responsibilities by making reference to the job grade frameworks of external expert organizations

Amount is linked to business performance in the relevant fiscal year to raise awareness of enhancing performance in each fiscal year
Consists of cash bonuses and stock compensation-based stock options; the composition ratio is approximately 1:1
Specific amounts and the number of stock options granted are commensurate with the corporate business performance and the results of individual performance evaluations in the relevant
fiscal year
(Indicators of the corporate business performance)
Net income attributable to owners of parent and consolidated ROE are adopted, and the results of comparisons of operating margin and operating margin growth ratio with competitors arereflected on the amount of payment(Individual performance evaluation items)
Contribution to short- and medium-term management strategy targets including ESG■ Profit-sharing type compensation paid commensurate with business performance in each fiscal year, therefore no policy is in place for the payout proportion of fixed basic compensation■ Stock compensation-based stock options are subject to a three-year exercise restriction period to motivate recipients to share a shareholder perspective while contributing to increasing
corporate value over the medium to long term■

Annual Performancelinked Compensation■■

Paid to motivate recipients to contribute to medium- to long-term business performance improvement
If the payout rate is 100%, the payment amount is set at about 30% to 100% of the fixed basic compensation, commensurate with the scale of job responsibilities
The number of shares delivered is determined depending on the level of achievement of performance goals for the covered period (three fiscal years)■ Consolidated operating margin and consolidated ROE have been adopted as the indicators for evaluating business performance■■■

The remuneration system is designed to be more consistent with the expected role of giving advice to management from the perspective for increasing corporate value over the medium to longtermStandard amounts are set at about 50% to 60% of the fixed basic compensation to ensure an adequate balance between cash compensation and stock-based compensation■ Provided in the form of share delivery after the covered period (three fiscal years) has passed■■

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessEvaluating the Effectiveness of the Board of Directors
Overview of Evaluations of EffectivenessTo further enhance our governance and the effectiveness of the Board of Directors, we have conducted annual
evaluations of the effectiveness of the Board since fiscal year 2016 and have disclosed summaries of the results.
Since fiscal year 2019, we have used external experts as a third-party organization to verify the status ofinitiatives relating to issues identified in the preceding fiscal year, identify future issues and work toward
continuous improvement.

Higher Productivity

Management Foundation

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The status of activities of the Compensation Committee, discussion points concerning review ofcompensation systems, the status of progress of successor development plan and other matters arereported to the Board of Directors.
■ Overview of FY2022 Evaluation Results

We recognize that the Board of Directors appropriately performs its roles and obligations, generally with a highlevel of effectiveness, and the Board, including the Nomination Committee and the Compensation Committee,functions effectively (the analysis and evaluation by external experts resulted in a similarly high evaluation).
■ Future Initiatives■ Evaluation of the Effectiveness of the Board of Directors for FY2022

Scope of Evaluation Board of Directors Overall (including details of the activities of the Nomination Committee

and Compensation Committee)

Based on the results of the most recent evaluation, we will continuously take action regarding the following
items and work to enhance effectiveness even further.

Process
Survey administered to all
corporate directors andAudit & Supervisory Board
members
Interviews of all corporate
directors and Audit &Supervisory Board members
by external experts

Deliberations atinternal meetings
Report by external
experts

Meetings for exchangesof opinions by outside
directors and outside
Audit & Supervisory
Board members

Discussion andself-evaluation by the
Board of Directors

Evaluation Items

The main evaluation items for evaluating effectiveness are as follows.
Overall effectiveness of Governance System andthe Board of Directors- Roles and functions of the Board of Directors- Size and composition of the Board of Directors- Operational status of the Board of Directors■Composition, roles and operational status of theNomination Committee
Composition, roles and operational status of theCompensation Committee
Further support to outside directors
Roles of Audit & Supervisory Board members

■

■

■
■

Relationship with investors and shareholders■■ FY2022 Initiatives
■

■

■

■

Reinforcement of continuous deliberation concerning medium- to long-term management strategies
Two off-site meetings were held for in-depth discussions on growth strategies, Medium-termManagement Plan, the future governance system and other issues.
Promoting diversity and developing and appointing global human resources
Initiatives and the status of disclosure regarding human capital are reported to the Board of Directors, andwith respect to diversity, the Board discusses, sets and discloses targets for the ratio of female managers
and implement specific measures.
Reinforcement of the internal audit system and collaboration between the Internal Audit Department andthe Board of Directors
The status of implementation of internal audits is reported to the Board of Directors. Also, risk-based audits
are conducted pursuant to the audit map.
Enhancement of information sharing by the Nomination Committee and the Compensation Committeewith the Board of Directors(1) Measures to enhance the effectiveness of the Board of Directors in the 60th fiscal year
Clarify the division of roles and decision-making authority and ensure appropriate checks andbalances between the executive side and the Board of Directors
Conduct appropriate operations of the newly established Corporate Officers Meeting to ensure
effectiveness(2) Continuous deliberation by the Board of Directors to achieve growth over the medium to longterm and continuously enhance corporate value
After clarifying specific timeframes (short-, medium- and long-term), organize targets and strategic
themes and risk issues (deepen discussion relating to medium- to long-term growth strategies)
Continuously address diversity and inclusion(3) Investigate optimal information sharing among members of the Board of Directors and withthe voluntary committees
Ideal state of information sharing on the activities of the Nomination Committee with theBoard of Directors
Establish venues for exchanges of opinions among outside directors and outside Audit &Supervisory Board members
■

■

■

■

■

■

Main Topics for the Board of Directors and Off-site Meetings in FY2022
CEO
Medium- tolong-term growthstrategies
Risks

■

■

■

■
■

Reports on status of business execution by CEO(each meeting)Market environments over the medium to long termand our growth plans
New Medium-term Management Plan and future
growth strategies
Improvement of risk management processes
Legal affairs and compliance

■

■

■

■

■
■

■

Governance■■Future governance system and decision-making
processes
Action policies concerning sustainability anddiversity
Reports on investment in human capital andintellectual property activities
Reports on internal audits■■■

Sharing of CEO missions
Expansion and reinforcement of development andproduction facilities in Japan and overseas
Business innovation projects
Procurement risks
Status of investment targets and crossshareholdings and status of IR activities
Status of the activities of the Compensation
Committee
Status of progress of successor development plan
Closed session on evaluation of representative
directors (corporate directors, excluding
representative directors, and Audit & Supervisory
Board members; once a year)
TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

Management Foundation

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Data

Skills Matrix
We define Product Competitiveness, Customer Responsiveness, Higher Productivity and Management Foundation, which supports our overall business activities, as material issues.
We will address priority themes relating to each material issue and achieve expansion of medium- to long-term profit and continuous corporate value enhancement by each corporate director and Audit & Supervisory Board
member demonstrating their skills in global business, governance, sustainability and in particular, the areas listed below.
Definition of Expected Skills

Expected Skills
Name

Corporate
Directors

Corporate
Management

Semiconductor/
FPD

Manufacturing/
Development

Sales/
MarketingToshiki Kawai

●

●

●

●

Sadao Sasaki

●

●

●

●

●

●

●

●

●

Yoshikazu Nunokawa
Michio Sasaki

Outside●Makiko Eda

Outside●Sachiko Ichikawa

Outside●Kazushi Tahara
Kyosuke Wagai

OutsideMasataka Hama

OutsideRyota Miura

OutsideLegal Affairs/
RiskManagement

■

■

■

●
■

●

●

Yoshiteru Harada

Audit &
Supervisory
Board
Members●

Finance,
Accounting/Engagement with
Capital Markets

●

●

●

●

●

●

●

■

●
●

■

●

Corporate Management
Experience of corporate management (experience serving as a representative
director or chairperson/president)
Semiconductor/FPD
Knowledge of semiconductor/FPD-related industries
Manufacturing/Development
Knowledge/experience in manufacturing and development at Tokyo Electron andother manufacturers
Sales/Marketing
Knowledge/experience in sales and marketing at Tokyo Electron and othermanufacturers
Finance, Accounting/Engagement with Capital Markets
Knowledge in financial accounting and M&A, or knowledge/experience inengagement with capital markets
Legal Affairs/Risk Management:
Knowledge in legal affairs, compliance and risk management●●

Diversity of Board Members
Expected Skills of Corporate Directors and Audit & Supervisory Board Members

Independence and Diversity of Corporate Directors

Change in Independent Outside Directors (Unit: persons)

Independent Outside Directors

From June 2019

From June 2021

From June 2022

3
11

4
12

3
6

(27%)

(33%)

(50%)

(Unit: persons)(Unit: persons)

Corporate Management

6

Semiconductor/FPD

6

Manufacturing/Development

5

Sales/Marketing

6

Finance, Accounting/Engagement with Capital Markets
Legal Affairs/Risk Management

54Female Corporate Director

3
6
2
6

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessEngagement with Capital Markets
Our management actively engages in investor relations (IR) andshareholder relations (SR) activities to contribute to our sustainablegrowth and increase corporate value over the medium to long term.
For IR activities, in addition to quarterly earnings conferences, the CEOand each company's executive appear at Medium-term Management Planannouncement and IR Day events to share our business strategies andgrowth story. Simultaneous interpretation and subtitles are used tobroadcast briefings in Japanese and English in an effort to provide fairdisclosures to overseas investors. The IR Department, which was established under the direct control of theCEO, also supplements explanations as appropriate through individual interviews and regularly reports opinionsfrom investors to management and the Board of Directors so that feedback can be of use in management. In
addition, we actively participate in IR and ESG conferences in Japan and overseas and encourage dialogue withcapital markets through the cooperation of company executives and the IR Department to gain a deeper
understanding of the Group. In fiscal year 2022, we received a Best IR Award from Japan Investor Relations
Association and were selected as a "Most Honored Company" by Institutional Investor magazine in the U.S. forthe seventh consecutive years.
As a part of our SR activities, company executives play a central role in constructive dialogue with our major
investors and proxy advisory firms. In addition to explaining the Shareholders’ Meeting agenda in advance, we
engage in repeated dialogue throughout the year on a wide range of topics including corporate governance, ourpolicies about sustainability-related initiatives, the environment, human rights, and diversity and deepen
mutual understanding.
To encourage active discussion and facilitate smooth and efficient voting at Shareholders’ Meetings, we send
convocation notices at an early stage, and also post notices in both Japanese and English on our website prior
to sending notices and take other measures to provide information to shareholders in a timely manner. In
addition, we analyze the results of the exercise of voting rights, report to the Board of Directors, and use theresults to further enhance engagement with investors.

Risk Management

Higher Productivity

Management Foundation

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We believe accurately understanding the risks and impacts that we may face in our businesses with an eye
on the future, viewing them as opportunities for business growth and appropriately addressing them areessential to sustainable growth as a company that is trusted by society.

Risk Management System
We have established the organization to oversee the entire Group at our headquarters and carry out enterpriserisk management1 to promote more effective risk management. This organization, together with the respective
departments responsible for each operation, comprehensively identifies a wide range of risks associated withour business activities, such as compliance, human resource, labor and business continuity risks, and classifies
those with high impact and probability as our material risks.
In addition to holding management workshops and training for employees and raising awareness companywide, we are also working to strengthen the PDCA cycle and improve the effectiveness of risk management by
formulating and executing measures to mitigate material risks, monitoring the effect of said measures andholding discussions at major internal meetings. Specifically, we review the response status of the Executive
Department and each of the Group companies regarding the identified material risks at the BUGM Meeting,quarterly meetings and the CSS, etc., and decide a response policy at the Corporate Officers Meeting. We ensure
the operating rhythm of this procedure and also report periodically to the Board of Directors.
Additionally, we are continuing to focus on the revision and operation of our BCP, including responses to
COVID-19, and are rapidly executing business continuity measures.
In fiscal year 2021, we introduced CSA2, with each risk owner of the Group further strengthening risk managementin the 13 defined categories. We will continue to implement autonomous and highly effective risk management.
1Enterprise risk management: Group-wide systems and processes related to risk management activities

2

CSA: Control Self-Assessment. Internal risks and controls are evaluated and monitored by those who are actually performing the duties with the goal ofbuilding and maintaining an autonomous risk management system.

Auditing by the Internal Audit Department
The Global Audit Center serves as the internal audit department for the entire Group, conducts audits based onplans, provides instructions and support for making improvements to issues and confirms the progress of these
improvements.
The Group’s internal control over financial reporting during fiscal year 2022 was evaluated as effective by the
independent auditors, the same as in the previous fiscal year.

Approach to Risk Management

Tokyo Electron is building and developing a risk management system to respond appropriately and promptly torisks that are growing increasingly complex and diverse as society and the business environment change. We
identify cross-division and comprehensive risks across the entire Group to build a solid financial foundation
based on the new Medium-term Management Plan that is competitive globally. We make decisions andsupervise particularly material risks at the Corporate Officers Meeting and the Board of Directors, andimplement countermeasures without fail alongside each of the Group companies and related departments.

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About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

Management Foundation

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37

Risk Management Initiatives
We have begun to address emerging risks from a medium- to long-term perspective, going a step further than its conventional approach of assessing the current risk management state, identifying known and unknown risks that may
surround the Company in the future and examining mitigation measures.
In fiscal year 2022, the 13 risks identified to date were reviewed and reevaluated from the perspective of their potential to have a significant impact on our operating results, financial condition and cash flow. We then pushed forward
risk management initiatives for each identified risk even further.
Item

Main Potential Risks■

1. Market Fluctuation■■

2. Geopolitics

A rapid contraction of the semiconductor market could lead to overproduction or an increase in deadinventory
A sharp increase in demand could lead to an inability to supply customers with products in a timely manner,
resulting in lost opportunities
Geopolitical tensions could undermine the international order and global macroeconomic conditions, affecting
national and regional security, foreign, industrial or environmental policy. This could in turn lead to supply chain
disruptions or deterioration of the macroeconomic environment, restricting the Company’s ability to operate business

Main Risk Management Initiatives
■

■

■
■

■

3. Research and Development■

4. Procurement, Production and■

Supply5. Safety■

6. Quality■

Delays in the launch of new products or the mismatch of such products with customer needs could lead to a
decline in the competitiveness of productsInterruptions in the Company’s production due to a natural disaster or delays in component procurement due
to deterioration in the business conditions of a supplier or an increase in demand that exceeds the supplier’s
supply capacity could lead to delays in the supply of products to customers
Safety problems with the Company’s products could lead to damage to customers, liability for damages and a
decline in the Company’s credibility

■

■

■

■

■

The occurrence of a product defect could lead to liability for damages, costs for countermeasures and a
decline in the Company’s credibility■■■

7. Laws and Regulations■■

8. Intellectual Property Rights

9. Information Security

■

■

■

10. Human Resources■

11. Environmental Issues

Violations of the laws and regulations of the countries and regions where the Company operates could lead todiminished public confidence in the Company, fines, liability for damages or restrictions on business activities
The inability to obtain exclusive rights to proprietary technologies could lead to reduced productcompetitiveness.
Infringement of the intellectual property rights of third parties could lead to restrictions on production andsales as well as liability for damages
Breaches of information or the suspension of services due to unauthorized access by cyberattack, natural
disasters or other factors could lead to diminished public confidence in the Company or liability for damages
The inability to recruit and retain necessary human resources on an ongoing basis or the inability to create anenvironment where people with diverse values and expertise can play an active role could lead to diminishedproduct development capability or customer support quality
The inability to respond appropriately to each country’s climate change policies, environmental laws andregulations, and customer needs could lead to additional related costs such as for developing new products orchanging specifications, as well as to reduced product competitiveness and diminished public confidence in
the Company

■
■

■

■

■

■

■

■

13. Other Risks
1
2

■

■

Carefully watch the international situation as well as the diplomatic and security measures and industrial policy trends in each country and region
Anticipate the impact of macroeconomic fluctuations and regulations related to product imports/exports or technological development on
the Company’s business and consider countermeasures in advance
Establish the Corporate Innovation Division and build a Group-wide development framework that integrates innovative technology
development with the technologies of each development division
Provide highly competitive next-generation products ahead of competitors by collaborating with research institutions and sharing atechnology roadmap spanning multiple generations with leading-edge customers
Formulate business continuity plans, develop alternate production capabilities, promote the seismic reinforcement of plants, level production,enhance the backup capabilities for information systems, use multiple sources of important parts and maintain appropriate inventory levels
Share forecasts based on demand projections with suppliers and build a system for the stable supply of products
Based on the “Safety First”1 approach, place the highest priority on the safety and health of all people, implement essential safety design with anawareness of risk reduction at the product development stage, promote safety training and establish a reporting system in the event of an accident, etc.
Establish a quality assurance system and a world-class service system
Resolve technical issues from the product development and design stage
Investigate the cause of any defects and implement measures to prevent the same or similar defects from occurring
Monitor the quality status of suppliers, conduct audits and provide support for improvement
Monitor compliance activities at key sites in and outside Japan under the direction of the Chief Compliance Officer
Have assessments conducted by external experts and report identified issues to the CEO, the Board of Directors and the Audit & Supervisory
Board for swift and effective action
Advance the intellectual property strategy, business strategy and R&D strategy in an integrated manner to build an appropriate intellectual
property portfolio
Launch a dedicated security organization and establish an information security system that conforms to international standards by having
security assessments conducted by external experts, etc.
Establish globally standardized rules and regulations for information management and implement response guidelines
Make continuous improvements to work environments and promote diverse work styles as well as health and productivity management(e.g., sharing our visions by management, establishing training plans for human resource who will lead the future, visualizing career paths for
employees and offering attractive remuneration and benefits)
To achieve industry-leading medium- to long-term environmental goals2 that include the net zero target, implement measures such as
reducing greenhouse gas emissions from the use of our products, increasing the ratio of renewable energy usage at plants and offices,
reducing overall power consumption, reviewing packaging materials and promoting modal shift
Provide technologies, etc., that contribute to higher performance and energy efficiency of semiconductor devices through implementation of
our E-COMPASS initiative

The spread of COVID-19 could slow the Company’s business activities or lead to a global economic downturn■

Establish an Emergency Task Force headed by the CEO
Restrict travel to high infection-risk countries and regions, maintain supply chains and thoroughly implement infection prevention measures atplants and offices

Business could be influenced by the global and regional political landscape, economic environment, financial
and stock markets, foreign exchange fluctuations and other factors■

Take appropriate measures to counter such risks■

12. Novel Coronavirus (COVID-19)

Periodically review market conditions and orders received at the Board of Directors and other important meetings, and appropriately adjust
capital investments, personnel/inventory planning and other aspects of business
The Account Sales Division and the Global Sales Division strengthen the sales framework and customer base by grasping investment trendsof customers and responding to a wide range of customer needs

Safety First: Refer to p.45
Medium- and Long-term Environmental Goals: Refer to p.50

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessInformation Security
As the data-driven society advances and the importance of information security increases, we aim to achieveboth data utilization and information security by promoting digital transformation and other measures, andactively promote measures that protect the entire supply chain from the risk of cyberattacks that target
companies.

Higher Productivity

Management Foundation

TEL FOR GOOD

38

Data

■ Responses to Security Threats

We have proactively introduced advanced technology and established a dedicatedsecurity organization to build a robust monitoring system in order to respond tosecurity threats such as cyberattacks and information leaks.

Main Activities■ Information Security Systems

The Vice President and General Manager, Information Security, run the Security
Committee and implement measures on a global scale. We hold the TEL Group
Information Security Committees twice a year, and Information Security Committees
at each company more than twice a year.

■ Increasing Resilience24

We operate a system that can detect the occurrence of security incidents. We
confirm pre-determined procedures so that we can do the right actions for a swift
response and recovery by implementing incident response training. We also
implement a penetration test* once a year to verify system vulnerabilities.
* Penetration test: A test method for verifying vulnerabilities in networks, PCs, servers and systems.

■ Security at Manufacturing Sites

We implement security measures at each manufacturing site to ensure that the
manufacturing systems that support our business activities are operating safely andstably while maintaining QCD*.

Overview of Information Security
Mechanisms that support
information security activities
Vice President andGeneral Manager,
Information Security* QCD: Quality, Cost, Delivery
TEL Group
Information Security
Committees

Tokyo Electron

Security Monitoring Organization

Information Security Management
Responses to security threats

Information Security
Committees at eachcompany

Early detection ofsigns of potential
attacks

Incident Response Organization■ Information Security Management

We established global information security rules, and conduct security education
twice a year and phishing email training every month for all executives andemployees. We hold seminars twice a year to share the latest situation to all Group
members. In addition, we implement risk assessments and internal audits for eachdepartment of the entire Company to identify risks and strengthen technological,
human, organizational and physical security measures.

Systems established in
preparation for emergencies

Day-to-day activities implemented globally

Human/
Organizations

Technology

Strengthen/Improve
Plan
Do
Act

Check

PhysicalMinimization ofdamage when an
incident occurs

Supply Chain
Security

Customers

24

Suppliers■ Supply Chain Security

We respond to customer requests for security and monitor the security status of our
suppliers to ensure that confidential information and information on our customers
and suppliers that is shared in the course of business activities can be used safely
without a loss of convenience.

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessCompliance

To practice Tokyo Electron’s Corporate Philosophy, it is vital that each employee performs their daily duties with strong
interest in and a deep understanding of compliance. We established “Tokyo Electron’s Code of Ethics” as a code of
conduct to ensure that our employees are aware of the risks around them and conduct themselves appropriately.
We have built a global system that can directly raise questions and concerns about compliance and business ethics toquickly address potential problems.

TEL FOR GOOD

Data

39

Compliance Initiatives

Implementation
rate for training &pledge of Code of
Ethics (FY2022)

Business Ethics

We have established the Business Ethics Committee to promote
and raise awareness of compliance and business ethics more
effectively together with establishing “Tokyo Electron’s Code of
Ethics” as the standard of conduct for all executives and employees.
In addition, through regular meetings with each of the Group
companies, we discuss and implement measures to promotecompliance.
Our Code of Ethics, which is available in five languages* including Japanese, is distributed not only indownloadable PDF formats but also in the form of a booklet to all executives and employees to ensure
awareness.
In fiscal year 2021, the Code of Ethics was revised and provisions such as personal data protection,
information security and money laundering were added. We are also striving to raise awareness of complianceand business ethics by regularly obtaining pledges from all executives and employees that they understand andcomply with the content.
We have also set up the Disciplinary Committee as a subordinate organization of the Business Ethics
Committee for the purpose of ensuring the implementation of reasonable and appropriate disciplinary action
and proper procedures.

91.6%

Compliance System
Representative Director, President & CEO
GM of Legal, Compliance Unit
Chief Compliance Officer
Compliance Department (Headquarters)

Europe/Israel

Management Foundation

In fiscal year 2022, a third-party evaluation of our global compliance system was conducted by an external
law firm, and we made efforts to further strengthen compliance by identifying items that require improvement.

Approach to Compliance

U.S.

Higher Productivity

Korea

TaiwanChina

Singapore/
Malaysia

Regional Compliance Controllers* Five languages: Japanese, English, Korean, Traditional Chinese and Simplified Chinese

Initiatives for Anti-Bribery and Corruption and for Competition Laws
In order to effectively promote a compliance program that is expected of a global company, we have appointed
a Chief Compliance Officer (CCO) and established a dedicated Compliance Department at our headquarters. The
primary role of the Compliance Department is to formulate and review our practical compliance programs,
establish and implement business ethics, plan and implement education and training, establish and operateinternal reporting systems, and provide advice and support on compliance to each department. It also
cooperates with our Risk Management Department, regularly confirms the observance of laws and regulations
in each country as well as internal company rules at each of the Group companies, and assesses compliancerisks.
Additionally, the persons responsible for compliance who are called Regional Compliance Controllers havebeen appointed at key overseas sites, establishing a system for direct reporting to the COO and ComplianceDepartment.
We engage in improvement activities with the relevant departments as appropriate for the items identified
in yearly operational audits conducted by the Internal Audit Department.

We have established the Group-wide Basic Policy on the Prevention of Bribery and Corruption and regularly
conducts training to promote understanding and awareness. Based on this policy, we have prepared the
Guidelines for Gifts, Hospitality, and Entertainment, which stipulate specific, practical procedures and standards
on monetary amounts, and we have established a thorough process requiring prior approval for cases where
there is a deviation from these standards.
Using questionnaires that we have prepared, we regularly check the status of our suppliers' efforts to prevent
corruption and provide them with feedback on the results and areas for improvement.
We have also established the Group-wide Basic Policy on Competition Law Compliance, and have prepared,
disseminated and enforced guidelines for executives and employees that summarize different types ofviolations in an easy-to-understand format, based on applicable laws and regulations in the countries andregions in which we operate.

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessCompliance Training
We conduct online and face-to-face training adapted to different levels, for all employees*. We will
systematically expand our comprehensive training program and multilingual support, and reinforce efforts tofoster compliance awareness and practice in the Company.
* Training and seminar topics include basics of business ethics and compliance, anticorruption, export compliance, insider trading prevention, the Act for
Subcontracting, and the prevention of harassment. Some training is limited to certain employees such as department managers or new employees.

Internal Reporting System
Preventing problems from occurring and resolving them quickly when they occur requires a system that allows
employees to raise questions and concerns about business ethics and compliance without reservation or
hesitation and to discuss them fully. We have established an internal reporting system that ensures complete
confidentiality, anonymity and the prohibition of retribution, so that employees can safely and reassuringly
provide information and seek redress outside the chain of command about behavior that is, or may be, inviolation of laws, regulations or business ethics.
Specifically, we have established and are operating the Tokyo Electron Group Ethics & Compliance
Hotline—a global common internal point of contact that uses a third-party system that is also accessible toour suppliers—as well as an external point of contact that allows direct consultation with an outside law firm.
The internal point of contact can be accessed via phone or a dedicated website 24 hours a day, 365 days a year,
and accommodates all languages used by employees.

Higher Productivity

Management Foundation

TEL FOR GOOD

In fiscal year 2022, a total of 95 cases were received via the internalreporting system, of which 19 were recognized as compliance violations.
The reports and requests for advice primarily related to harassment andthe workplace environment. Based on this result, we have conducted
regular education programs for our employees with the goal of preventing
harassment and have provided thorough follow-up with those concernedor involved.
There were no reports or cases of non-compliance that could have
had a serious impact on our business or on local communities.

40

Data

Breakdown of Consultation/
Report Contents
Gift/Entertainment 2%

Other
27%

Workplaceenvironment
29%
Abuse ofauthority
24%* A leniency system has been introduced whereby any disciplinary action may be reduced or exemptedin the event the employee involved in a compliance violation has made a report or sought advice on
their own volition.

Safety/Environment 8%
Information security/Intellectual
property 5%
Sexual harassment 3%
Company asset 2%

Respect for Human Rights
Approach to Human Rights

Global Response to Internal Reports
Board of Directors, Audit & Supervisory
Board Member

Third-party System
Report/Consult

Information Providers

Progress/Results Report

Internal Point ofContact

Progress/Results Report

Follow-up
Redress

Report/Consult

Progress/Results Report
Follow-up

External Point ofContact(Outside Law Firm)

Report

NoticeReport/Consult

Report/Consult

ComplianceDepartment/
Legal,
Compliance
Division of each
Overseas
Subsidiary

ReportRepresentative Director, President & CEO
GM of Legal, Compliance Unit
Chief Compliance Officer

Request for Investigation / Corrective
and Preventative Action

Progress/Results Report

Relevant Divisions,etc.

Reports and consultations received via these points of contact are handled with sincerity and investigations areundertaken in accordance with internal regulations. If a compliance violation is found, disciplinary action is taken inaccordance with the Rules of Employment*, and preventive measures and corrective measures, such as
improvements to the workplace environment, are implemented as necessary.

We at Tokyo Electron are conscious of our corporate social responsibility, and we recognize that it is important
to conduct ourselves with a strong sense of integrity. Based on this recognition, we have firmly upheld humanrights since our founding, as reflected in the spirit of our Corporate Philosophy and Management Policies. Forus, respecting human rights means a significant undertaking, not only to fulfill our responsibility for eliminating
adverse impacts on people caused by business activities but also to respect those people who support ourbusiness activities, and contribute to the realization of a sustainable, dream-inspiring society. We incorporate
the concept of respect into every aspect of our business activities, and strive to nurture a dynamic corporate
culture where each person can realize their full potential.

Human Rights Initiatives
Our Human Rights Policy1, summarizing our approach to human rights specifies five focus areas: Freedom, Equality &Non-Discrimination; Freely Chosen Employment; Product Safety & Workplace Health and Safety; Freedom of
Association; and Appropriate Working Hours & Breaks/Holidays/Vacations.
In preparing the Human Rights Policy, we referred to the United Nations’ Guiding Principles on Business and Human
Rights and the International Bill of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work
referred to therein, the Ten Principles of the United Nations Global Compact, and the RBA Code of Conduct2.

1
2

Learn more about Human Rights Policy
RBA Code of Conduct: A set of standards established by the RBA for supply chains in the electronics industry for a safe labor environment, to ensure thatworkers are treated with respect and dignity, and that companies take responsibility for environmental impact in the manufacturing process

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessWe ensure that our executives and employees, as well as suppliers, are fully aware of this content.
Specifically, we publish the Human Rights Policy on our website and also implement online training targeting allof our executives and employees.
We identify human rights risks and conduct human rights due diligence to develop remediation actions every
year. In fiscal year 2022, we unified the survey contents with reference to the RBA auditing standards, andsurveyed 12 companies out of the entire Group in Japan and overseas, including the head office, andapproximately 650 business partners involved in materials, staffing, customs services, packaging, etc.

Higher Productivity

Management Foundation

TEL FOR GOOD

Percentages of Conformance and Potential/Actual Risks (Priority/Major/Minor)1

Internal

Ethics 1%
Management
Systems 1%

Breakdown ofpotential/
actual risks

Priority 1%
N/A 3%
Major

Healthand
Safety
48%

Labor
50%

Suppliers

Initiatives which Align with the United Nations’ Guiding Principles on Business and Human Rights
Minor
10%

Major
6%

Assessment

Remediation

ReportCommitment to respecting
human rights

Assessment of human rights risks
in business and supply chains

Actions to reduce risks basedon assessment results

Regular disclosure of
information

■

■

■

Human Rights Policy
publication
Awareness andimplementation
Education■■

Human rights risk assessment
Human rights impact
assessment■■

Feedback sheet publication
Program development andreview according to issues■■

Conformance 80%

N/A
9%Ethics 1%
Management
Systems 4%

Breakdown ofpotential/
actual risks

Priority 1%

6%Commitment

41

Data

Healthand
Safety
51%

Labor
44%

Minor
11%

Conformance 73%

Publication of the Integrated
Report and Sustainability
ReportPostings on the website

Consequently, potential/actual risks (Priority/Major/Minor)1 turned out to be 17% of our Group companies and
18% of suppliers, with labor- and health and safety-related risks comprising the majority of the risk breakdown.
In the area of labor, items including the formulation of policies and procedures pertaining to thoroughmanagement of working hours and the employment of student workers, interns and trainees were identified asrisks. In the area of health and safety, items including the implementation of evacuation drills for all workers
and deployment of trained emergency response personnel were identified as risks.
With regard to these identified risks and their impact, inside our Group companies we are conducting
checks at each of our sites based on feedback sheets, and implementing a remediation program to review
the execution of working hours management, formulate various policies and procedures, carry out
evacuation drill initiatives, and address ethics and management systems. To our suppliers, using feedback
sheets we provide reports on the potential/actual risks identified in the survey and are working on
remediation activities to reduce these risks.
In addition, the percentage of companies where no potential/actual risks are considered to exist(conformance) was 80% for our Group companies and 73% for our suppliers.

Furthermore, we recognize the importance of having highly effective grievance mechanisms related tohuman rights and are working to establish reporting systems2 for employees and suppliers in Japan and abroad,and to further strengthen the operation of those mechanisms. By adopting highly justified and fair grievancemechanisms, we are identifying adverse human rights impacts at an early stage and building mechanisms tohelp remediate them.
Going forward, in addition to proactively deploying human rights-related initiatives and further enhancing theirefficacy and transparency, we will work to reduce human rights risks in our companies and in our supply chain.
12

Our classifications and definitions of conformance as well as potential/actual risks based on RBA auditing standards are as follows.
Priority: Issues considered particularly serious, which are at significant risk and require immediate priority remediation
Major: High-urgency issues which are at significant risk and require immediate remediation
Minor: Minor issues and risks recognized in each area which require remediation
Conformance: No issues were recognized in each area and requirements are being met
N/A: Indicates that “listed options do not resemble actual circumstances, or that the question is not applicable."
Reporting Systems: Refer to Internal Reporting System on p.40

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Human ResourcesTokyo Electron believes that its corporate growth is enabled by people, and its employees its create and fulfill
company values. Based on this approach, we practice motivation-oriented management. We actively invest in our
employees and implement a variety of measures while also providing many opportunities for employees tochallenge themselves to achieve high-level goals by making the most of their individual potential.
These initiatives have led to continuous improvement of employee engagement scores and the maintenance ofhigh retention rates. This has also helped us earn the trust of our customers by ensuring reliable technology.
Our global uniform human resource platform discloses information such as job duties and career opportunities toall employees. Through this, we are implementing autonomous career development and visualizing career paths.
In addition, to promote career development, we are investing in capability development through TEL UNIVERSITY*.
Furthermore, we differentiate employee evaluations based on Company performance as well as employee’s
individual responsibilities and contributions to the Company. Through this, we achieve fair and competitive global
level compensation while striving to attract and retain the best human resources.
TEL UNIVERSITY: Refer to Human Resource Concept at TEL UNIVERSITY on p.43. An in-house education platform that helps employees independently
build their careers and realize their personal goals for their growth and development

Improving employee engagement is essential to maximize corporate performance and achieve sustainablegrowth. Recognizing that employees both create and fulfill company values for us, we have been regularly
conducting engagement surveys since fiscal year 2016 to assess the current state of employee engagement andidentify issues. Based on the results of the surveys, we make improvements to foster a better workplaceenvironment and culture by increasing opportunities for dialogue between management and employees as wellas continuously communicating messages that emphasize safety, quality, and compliance. These initiatives
resulted in an increase in the overall employee engagement score of 12 points from fiscal year 2016 to fiscal
year 2021. In addition, the retention rate* in fiscal year 2022 was 96%, a high level even on a global scale.
* Retention rate is calculated using data on turnover rate.

Score

Reviewingofcircumstances

Implementationof measures■■

Confirmationof effects

Data

42

Diversity and Inclusion System and Initiatives
At Tokyo Electron, diversity and inclusion are management pillars that lead to the continuous generation of
innovation and increased corporate value. We are actively promoting them with the strong commitment ofour management. We have taken on gender, nationality and generation as major themes and set thefollowing goals based on the characteristics of each region. We are implementing various initiatives at eachGroup company.

■

■

■

■

1
2

Regular engagement survey process

Planning formeasuresTEL FOR GOOD

Diversity and Inclusion

Employee Engagement

Improvementof measures

Management Foundation

We will continue these initiatives, such as clarifying career paths and improving operational efficiency
through digital transformation, since we believe that improving employee engagement is important toproviding increase value to our stakeholders.

Human Resource Management*

Higher Productivity

Opportunities for dialogue
between management
and employees
Communication of
messages emphasizing
safety, quality andcompliance

In terms of succession planning, we conduct a diversity-conscious talent pipeline (plan for developing
human resources), and are implementing initiatives to achieve the goal of increasing the ratio of
female in management1 to 8.0% globally and 5.0% in Japan by fiscal year 2027 (as of March 31, 2022:
globally 5.5% and in Japan 2.6%)
Taking into consideration that many of our employees are engineers, we actively invest in the use ofrecruiters and branding to hire female engineers at a level that is equal to or greater than the general
ratio of female engineers2 in each region
We create an organizational structure where even those from outside of Japan can take on corporate
roles through the use of technology and shared global human resources systems
We organize events such as “Diversity and Inclusion Day” and other events with internal promotion
leaders and external experts, create networking opportunities for employees with similar
characteristics and experience, and hold roundtable discussions regarding careers before and after
taking maternity/paternity leave and childcare leave
Include experts in the number of managers
The ratio of females majoring in science or engineering

UP 12 points
Fostering a better
workplaceenvironment andcultureImplementationof measures

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Diversity and Inclusion Day
Diversity and Inclusion Day, an online event withsimultaneous streaming for Group companies
worldwide, was held in February 2022.
In his opening speech, the CEO stated “We need toincorporate all wisdom and diverse ideas to maximize
the growth potential of the entire Group. In order to do
this, it is essential to promote diversity and inclusion.” In
addition, members from the U.S. including theDiversity and Inclusion Day
president of Tokyo Electron America spoke about theimportance of diversity and inclusion at a talk session.
From Japan, two outside directors participated in a panel discussion regarding the roles of the Company in a
rapidly changing global society. Through this event, the importance of embracing and making the most ofdiversity was once again confirmed.

Higher Productivity

Management Foundation

TEL FOR GOOD

Data

43

Employee Growth
Global Human Resources System

Tokyo Electron operates in 77 sites in 18 countries and regions. We believe it is important for human resources withdifferent cultural backgrounds, experiences and attributes to share values and work together as one toward value
creation.
In addition to implementing a common global job-based human resource system (GTC: Global TEL Careerpaths) and this system, we are also focusing on global human resource management to promote careeradvancement under a common platform without biases against any country or the Group companies affiliation.
This allows us to respond to changes in business environments and allocate resources in an agile and optimal
manner.

Human Resource Development Concept at TEL UNIVERSITYTEL Values

Systems and Initiatives for TEL Values
A total of 15,634 employees are working at Tokyo Electron, which operates worldwide. We believe that each ofthem maintaining a high level of engagement and demonstrating their full potential will lead directly to our
growth as a company.
By sharing with our employees the direction toward which management is aiming and providing platforms
for direct dialogue through the employee meetings and discussions held at each site, we are striving to build
mutual trust between the organization and individuals. Furthermore, to realize our Corporate Philosophy, weestablished TEL Values, which delineate Tokyo Electron’s values, the mindset that each employee must possess
and the codes of conduct to be passed on to the future. The TEL Values—pride, challenge, ownership,
teamwork and awareness—are being put into practice by our employees all over the world.

We have established TEL UNIVERSITY as an in-house
educational establishment, helping employees toindependently build their careers and realize theirpersonal goals for their growth and development.
Our aim is to create a foundation that enables theorganization and individuals to trust each other andgrow by standing shoulder to shoulder with each
employee and supporting their self-growth andfruitful career development throughout their
Karuizawa Training Centerworking life.
In order to realize our Vision of “A company filledwith dreams and vitality that contributes to technological innovation in semiconductors,” we are focusing on
the development of human resources who are essential to our development and promoting the following
initiatives.

Provision of Global and On-demand Learning Opportunities

TEL Values
PrideWe take pride in providing high-value products and services.

Challenge	
We accept the challenge of going beyond what others are doing in pursuing our goalof becoming number one globally.

Since each employee’s growth is different, we are implementing on-demand education* that allows employees
to learn when they want according to their own needs. In addition to group training, we are proactively utilizing
e-learning programs and providing a common platform from learning from any location in the world.
* On-demand education: Education programs that allow employees to learn at their own convenience, anywhere, anytime

Ownership	We will keep ownership in mind as we think things through, and engage in thoroughimplementation in order to achieve our goals.
Teamwork

We respect each other’s individuality and we place a high priority on teamwork.

Awareness

 e must have awareness and accept responsibility for our behavior as respectfulWmembers of society.

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessSupport for Career Development
We are expanding our education programs to help employees quickly acquire basic skills. We also provide
information and tools so that employees can gain a more concrete image of their own learning, experience andcareer development.

Leader Programs
In order to nurture the next generation of leaders to support our future, we identify and systematically nurture
staff to take on the role of realizing medium- to long-term corporate value enhancement. We provide nextgeneration management candidates with opportunities to build networks through participation in events suchas external training, to develop a broader perspective, and to receive 360-degree feedback1. In addition,
management, including outside directors, conduct systematic assignment considerations and reviews.

Corporate Education System (TEL UNIVERSITY)
Management

Executives

Leaders

Junior Employees
New Employees

OJT2 programs (new graduates, mid-career recruits)
Manager programs

Mid-level employee programs

Junior employee programs

Leader programs
Compulsory web-based training
Goalbased
Programs

Business skills
Global communication
Employee life support
Technical programs (seminars, workshops)

12Management Foundation

TEL FOR GOOD

Data

44

Work-life Balance
Work Styles

Tokyo Electron has established a work system that enables highly flexible work styles that respond to lifestyles
and social situations, such as the introduction of a flextime system and teleworking to help employees achievea better work-life balance.
In addition, we have created a new workplace by expanding and renovating the office space at theheadquarters in order to realize more productive work styles. We have created an office environment tailoredto each activity, including focus booths for immersing oneself in work by blocking out surrounding lines of sightand sound, spaces dedicated to communication and spaces suitable for online meetings, in order to improve
employee productivity and creativity.

Leave System
Mid-level
Employees

Introductory programs (new graduates, mid-career recruits)
Levelbased
Programs

Higher Productivity

360-degree feedback: Process for collecting feedback from the subordinates, peers and supervisors of employees, as well as self-evaluations by theemployees themselves
OJT: On the job training

Based on the belief that taking appropriate leaveand properly managing work hours also contributes
Refreshment leave
to better employee productivity, we strive toenhance the leave system and promote taking
leave.
Since fiscal year 2019, we have set an annual
sustainability goal of 70% annual paid leave use andhave been conducting promotional activities for employee awareness for planned use of leave.
We are also promoting regular monitoring of leave use status and urging management to improve leave use
rates, ensuring that five days of compulsory annual leave are taken as required by law since April 2019. In fiscal
year 2022, the leave use rates were 64.6% in Japan and 73.1% overseas.
Refreshment leave system aims to provide refreshment for employees and thereby boost their motivation towork, granting special (paid) leave from two weeks to one month per five years of service to employees who
have worked for more than 10 years. This is our unique leave system, and in fiscal year 2022, 512 employees inJapan and 846 employees overseas took this leave.
In addition to the system made available by existing laws, we have an independently built system that allows
employees to adopt a flexible approach to work that accords with diverse life events such as raising children or
caring for family members. Regarding the situation in Japan, we have acknowledged the maximum extension of
the childcare leave period to the day a child reaches three years of age, as well as expanding our provision of areduced working-hours program for childcare to include employees rearing children as far as graduation fromelementary school. In addition to nationally mandated leave to care for a sick or injured child, we haveestablished our own childcare support leave and nursing care leave to support a better balance between workand childcare/nursing care.

1,358 employees

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Health and Safety

Health and Productivity Management
For Tokyo Electron to continue to grow, it is important for every employee to lead a fulfilling life and maximize
their performance. Based on the understanding that our employees are the driving force of our business, we
strive to create a healthy and safe work environment.
Besides conducting various medical checkups in accordance with the law, we offer face-to-faceconsultations by designated occupational health physicians for employees who work long hours. We also offer
counseling opportunities supported by external industrial counselors for those who request them.
Furthermore, we are organizing regular line-care1 seminars aimed at management, and, where necessary,
holding liaison meetings with the health officers and health professionals at each Group company in Japan.
Based on the collaborative health2 concept, in cooperation with the Tokyo Electron Health Insurance Society,
we are actively expanding data health3 initiatives, providing employees health guidance and effective
prevention and health promotion according to their individual circumstances while utilizing the examination
data from medical checkups.
As a result of these efforts, the percentage of employees receiving specific health guidance4 remained high infiscal year 2022.
Furthermore, the entire Group in Japan has collectively received recognition as top 500 companies under the2022 Certified Health & Productivity Management Outstanding Organizations Recognition Program5 for thethird consecutive year from fiscal year 2020.
We will continue to promote various initiatives at the global level to maintain and improve our employees' health.
1
2
3
4
5

Line-care: A workplace measure for mental health, in which managers and supervisors take a lead role in responding to requests by workers for advice,with the aim of improving the workplace environment
Collaborative health: Situation where a company actively cooperates with an insurer, such as a health insurance society, to effectively and efficiently
promote the health of its employees and their families
Data health: Refers to a more effective and efficient health care program that is implemented in line with the health status of insured persons, by utilizing
and analyzing the health and medical information held electronically by the medical insurer
Specific health guidance: Health guidance provided for reducing the number of people with metabolic syndrome (visceral fat syndrome) or at risk ofmetabolic syndrome, and for the early detection and early treatment of lifestyle diseases and cancer, etc.
Certified Health & Productivity Management Outstanding Organizations Recognition Program: The program publicly recognizes particularly outstandingorganizations that are practicing health-oriented business management, based on initiatives attuned to local health-related challenges and on healthpromotion initiatives led by the Nippon Kenko Kaigi.

Higher Productivity

Management Foundation

TEL FOR GOOD

Data

45

Safety Management Framework
Based on a culture of “Safety First1,” we continuously carry out activities to promote safety. Specifically, we use
a management system based on OHSMS2 to manage safety and occupational health and implement the PDCA
cycle to reduce the potential risk of work-related incidents and raise the overall level of safety and occupational
health. Moreover, by sharing incident information and information on measures to prevent reoccurrence at the
Global Safety Council and the Manufacturing Companies Presidents’ Council, we promote safety management
as a company-wide initiative.
Safety Management Framework

CEO

Manufacturing
Companies
Presidents’ Council

Development & Production Group

Global Safety Council

Field Safety Promotion
Council
1
2

TEL Group Safety and
Health Committee

Incident Investigation
Committee

Equipment Safety
Working Group Council

Safety First: Refer to Initiatives for Higher Productivity on p.26
Occupational Health and Safety Management System (OHSMS): A management system to improve the overall level of safety and occupational health

Incident Reporting System
In the event of an incident, we operate the TEL Incident Report System (TIRS) to quickly share information withall parties involved and follow up with the relevant department to confirm the incident response as well as toimplement measures to prevent reoccurrence. Through the operation of this system, we will continue to strive
for speedy information sharing and incident response.

Initiatives to Safety
On-site Safety Patrols
We conduct monthly health and safety committee meetings at each plant and office to discuss measures for
any workplace safety or employee health issues and to conduct safety patrols. In addition, at least once amonth, a representative from each department conducts safety inspections at manufacturing sites to establish
a system to solve problems on their own initiative.

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Risk Assessment and Stop Work Authority
Before we start to work , the work details and the risks are shared with all workers involved, and they eachincrease their safety awareness in an effort to prevent incidents. In addition, effort is also being directed toproviding guidance to safety managers as well as making workers stop work and take corrective action in theevent of an unforeseen incident while on the job.

Safety Education
To help create a safe workplace, we have put in place two education
programs globally.
Basic safety education is basic safety training targeting all
TCIR
employees. It is provided as introductory training for new hires, andthereafter, employees are required to take refresher training once
every three years. Advanced safety education is a more specialized
type of safety training targeted at workers on production lines and incleanrooms. Those who are eligible for this training are required totake refresher training every year. For overseas transferees, the laws and regulations in their previous and future
places of employment are compared, and additional safety education is added as necessary.
Also, to ensure the concept of safe equipment design permeates from design, manufacture and service
operations, we hold a semiannual safe equipment design* seminar at our manufacturing sites in Japan, inviting
an external guest to speak. We also promote our initiatives to prevent incidents, by providing our suppliers andcustomers with safety information as circumstances demand. As a result of having maintained a high priority
on creating safe work environments, TCIR has been maintained at less than the goal of 0.50, with 0.30 in fiscal
year 2022.

0.30

*

Safe equipment design: Refer to Safe Design of Equipment on p.24

Higher Productivity

Management Foundation

TEL FOR GOOD

Data

46

Environment
E-COMPASS Initiative

Pursue Digital × Green change throughout the supply chain

In June 2021, we introduced E-COMPASS (Environmental
Co-Creation by Material, Process and Subcomponent
Solutions) as a new initiative for building sustainable supply
Environmental Co-Creation by Material, Process andSubcomponent Solutions
chains. Under this initiative, we share goals such as reducing
ProvideBest
Products・Best
Technical Service
the environmental burden of procurement and logistics,
Environmental
eliminating environmentally hazardous materials, andPerformanceproactive environmental R&D for equipment with our
suppliers, developing activities accordingly. Furthermore,
we will also openly seek proposals on reducing environmental burden in relation to the environmental
performance of our equipment, manufacturing processes and procurement and logistics, by proactively
adopting superior technology and initiatives we are promoting to achieve these goals.
In fiscal year 2022, we held the E-COMPASS briefing session for suppliers where, in addition to informing
them of the status of our initiatives, we also shared measures for mutual growth through co-creation with our
suppliers. We also conducted the “E-COMPASS Survey” to confirm matters including the state of suppliers’
environmentally conscious product development and the status of their products’ compliance withenvironmental laws and regulations. Based on these results, we will discuss response measures with our
suppliers and aim to further enhance the green performance of the industry as a whole.
We believe that reinforcing partnerships with our suppliers and leadership in the industry are key to thedevelopment of a data-driven society and preservation of the global environment. By utilizing every
management resource at our disposal to promote E-COMPASS, we will actively endeavor to preserve the global
environment throughout the entire supply chain.

Examples of Web-based Education Materials

Environmental Risks and Opportunities
Various environmental issues affect our daily lives and corporate activities. Physical risks, such as rising average
global temperatures, strong winds, disasters and water shortages caused by climate change and abnormal
weather, are expected to damage assets, increase operating costs and impact the supply chain. In addition, legalrisks including stronger environmental laws and regulations, more stringent regulations on greenhouse gas
emissions and the introduction of carbon taxes are expected to lead to higher costs for associated measures.

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessAt the same time, promoting environmental initiatives leads to more opportunities to sell environmentallyfriendly products and reduce operating costs. We also recognize that providing high-value-added products that
contribute to higher performance and lower power consumption of semiconductors and FPDs leads to thebuilding of an energy-saving society that makes the most of information technology, and thus provides anopportunity to improve corporate value.
Based on the requirements of ISO 14001, we identified and analyzed internal and external issues in relation to
the environment, namely, our relationship with the climate, air quality and water quality. We also clarified theenvironmental needs and expectations of customers, suppliers, governments and employees and identified ourcompliance obligations as an organization. In addition, we define risks and opportunities to address as: (1)environmental management by reducing the environmental impact of our business activities, (2) compliance withapplicable laws and (3) enhancing product competitiveness with the environmental contribution of products.

Higher Productivity

Company Name

Function

Meeting
Frequency

Global Environment
Council

Appointed members by the executives at
headquarters and the Group companies

Set individual goals related to environmental issues,monitor progress, work to achieve our goals

Twiceannually

TEL Corporate
Environment Council

The GM in charge of the environment anddepartment heads, etc.

The promotion of environmental activities across theentire Group, set company-wide goals

Appropriately

Council for the Regular
Reporting ofEnvironmental Activities(Since FY2022)

CEO, corporate directors in charge of theenvironment

Report on matters discussed at the Global Environment
Council and the TEL Corporate Environment Council andreview items for approval

Quarterly

Manufacturing
Companies Presidents’Council*

Corporate directors in charge of theenvironment, etc.

Environment promotion department (Fuchu technology
center)Tokyo Electron Technology Solutions

Fujii Office/Hosaka Office/Tohoku Office

Tokyo Electron Kyushu

Koshi Office/Ozu Office

Tokyo Electron Miyagi

Taiwa Office

Tokyo Electron (Kunshan)
TEL Manufacturing and Engineering of America

May 1998—

March 2013

Chaska Office

March 2013

North Chelmsford Office

May 2018

TEL Technology Center Korea, Balan Plant

July 2014

CO2 Emissions across the Value Chain
Based on our environmental slogan “Technology for Eco Life,” we aim to resolve environmental problems
through leading technology and reliable services, understand the environmental impact generated throughout
our entire value chain and promote business activities to reduce that impact.
Our total CO2 emissions of Scope 1 and Scope 2 is 90 kilotons, while Scope 3 as the sum of upstream anddownstream activities accounts for a total of 29,020 kilotons, approximately 99.7% of the total. Of this, CO2
emissions when using products is 28,254 kilotons, about 97% of the total. This is why we consider thedevelopment of products with low CO2 emissions during operation to be important.
Upstream

Downstream

498 kilotons

Quarterly* At the Manufacturing Companies Presidents’ Council, information is shared on business affairs and issues regarding environment, safety, quality, supply chain
management, etc.

To continuously promote our environmental activities, we began operation of an environmental
management system based on ISO 14001 since fiscal year 1998, primarily at our manufacturing subsidiaries. In
March 2017, the entire Group obtained ISO 14001 certification together, which had previously been obtained ateach plant and office in Japan. In accordance with this certification, we have identified environmental impact
assessments and useful environmental aspects and are executing a standardized group format forenvironmental management programs and internal audit checklists.
In fiscal year 2022, as part of environmental management across the entire Group, we established a total of
approximately 100 environmental goals for different levels and carried out these improvement activities. Any
issues identified through these activities are reviewed by the Global Environment Council and reported to the
Manufacturing Companies Presidents’ Council. We were once again free from environmental incidents,
accidents, violations and legal proceedings in fiscal year 2022.

Certification
Date

Tokyo Electron

90 kilotons

Scope 3 upstream Not from our Group

Monitor and supervise progress related toenvironmental issues

47

Data

Plant/Office NameTokyo Electron Korea

Environmental measures are growing even more crucial. We have established the Environment Promotion
Department at our headquarters, headed by a corporate director in charge of the environment, which oversees
multiple meetings to promote efforts to address medium- to long-term environmental issues across the entire
Group. The details are as follows.
Participants

TEL FOR GOOD

ISO 14001 Certified Plants and Offices

Environmental Management System

Conference NameManagement Foundation

28,522 kilotons

Scope 1, 2 Own emissions

Fuel- and energy-related activities

15 kilotons

Capital goods

172 kilotons

Purchased goods and services

282 kilotons

Employee commuting

Scope 3 downstream Not from our Group

Scope 1

Direct emissions from fuel and gas use

End-of-life treatment ofsold products

12 kilotons

Scope 2

Use of sold products

Business travel

1 kiloton

Indirect emissions from electricity
use and heat purchase

Waste generated in operations

1 kiloton

16 kilotons

74 kilotons

Downstream transportationand distribution

3 kilotons
28,254 kilotons
265 kilotons

Upstream transportation and distribution 15 kilotons

Scope 1: TDirect greenhouse gas (GHG) emissions from use of fuel and gas we owned or controlled
Scope 2: Indirect GHG emissions from use of electricity, steam and heat we purchased
Scope 3*: Emissions from corporate value chains (excluding Scope 1 and 2 emissions), such as producttransportation, employee business travel and major outsourced production processes■■■* S cope 3 is divided into upstream activities, which include emissions associated with purchased or procured products and services, and downstream activities, which
include emissions associated with sold products and services.

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

TCFD

Higher Productivity

Data

48

We utilize enterprise risk management* to identify a wide range of risks arising in business activities, andclassify “Environmental Issues” including climate change as a key risk having high impact and probability ofmanifestation. We formulate and execute measures to minimize this risk, monitor the effect of said measures
and work to understand the status of risk control, and implement the PDCA cycle for management.
Short-, medium- and long-term company-wide risk management initiatives that related divisions andcouncils recommend are deployed to the facilities and divisions of the Group companies after approval by
the Manufacturing Companies Presidents’ Council, which includes the corporate director in charge of theenvironment.
For Scope 1 and 2 CO2 emissions, in addition to implementing measures to reduce CO2 emissions at our
key manufacturing sites in Japan with high emissions, we are pursuing the adoption of renewable energy on
a global scale. For Scope 3 emissions, we recognize the importance of providing products that generate
fewer CO2 emissions because about 97% of the emissions in our entire value chain are generated during useof products after sale, so we are focusing on development of a range of environmental technologies.
We also formulate business continuity plans (BCPs) in anticipation of natural disasters caused by abnormal
weather and other factors, and take measures with our suppliers to ensure that business operations can be
maintained.

Based on the TCFD recommendations, we examine the risks and opportunities that climate change poses to ourbusiness and take various response measures as we endeavor to make ongoing disclosures.
In fiscal year 2022 , in addition to the previous fiscal year's study, we examined the 1.5°C scenario, which
limits the average global temperature increase to less than 1.5°C above pre-industrial levels.

Status of Initiatives Related to Recommendations of the TCFD
■ Governance
We have established the Environment Promotion Department and the Corporate Sustainability Management
Department at our headquarters, and the entire Group is pursuing initiatives for the TCFD recommendations.
Under the supervision of the CEO, the corporate director and executive officer in charge of theenvironment and sustainability give reports to the Board of Directors on our responses to climate changerelated risks and opportunities and progress toward our goals and conduct reviews.
At the Global Environmental Council, comprised of members appointed by executives of headquarters andthe Group companies, goals are set, progress is monitored and the achievement of these goals is promoted.
We are conducting analysis that takes into account the following points in order to identify medium- tolong-term risks and opportunities that climate change poses for our business.
Location of plants and offices
Occurrence of natural disasters caused by climate change and status of damages
Demands from customers, industries and investors
Government policies and regulations and taxation
Technological trends relating to renewable energy and energy saving
Climate change scenarios predicted by external agencies and research results
Under the 1.5°C scenario we identified transition risks including rising energy costs associated with fuel andenergy taxes, and under the 4°C scenario we identified physical risks such as the impact of abnormal weather.
Also, on the opportunity side we identified proactive initiatives to address climate change through R&D. In
response to these risks and opportunities, we will implement the findings from our scenario analysis into ourbusiness strategies and establish medium- and long-term environmental goals, while also pursuing the
adoption of renewable energy and the reduction of greenhouse gas emissions strategies across the entire
supply chain.
We will increase our resilience (responsiveness to climate change) as a company by periodically reviewing theidentified risks and opportunities and our responses thereto, and ensure that response measures are
implemented.

TEL FOR GOOD

■ Risk Management

Initiatives Related to Recommendations of the Task Force on Climate-related Financial Disclosures(TCFD)■ Strategy

Management Foundation*

Risk Management: Refer to p.36

■ Metrics and Targets

We are pursuing the following initiatives for the development of a data-driven society and preservation of
the global environment.
With our semiconductor production equipment technology, we will contribute to enhancing theperformance and reducing power consumption for semiconductor devices being used around the world
Initiatives for our medium- and long-term environmental goals1
In order to achieve our long-term environmental goal of realizing net zero by 2050, we have establishedthe following medium-term environmental goals and are carrying out various activities
・ Reducing our emissions: Reduce total CO2 emissions at plants and offices by 70% (by fiscal year 2031,
compared with fiscal year 2019), a rate of 100% renewable energy usage at plants and offices (by fiscal
year 2031), and reduce energy consumption by 1% YoY at each plant and office (per-unit basis)・ Reducing other emissions: Reduce per-wafer emissions of CO₂ by 30% (by fiscal year 2031, comparedwith fiscal year 2019)・ Reducing the volume of water resources used2 and the environmental burden of logistics3, etc.
We launched “E-COMPASS4” in June 2021 as an initiative to build sustainable supply chains, and arepromoting technological innovations for semiconductors, and reducing environmental impacts

■
■

■

■
■

■

■
■

■

1
2
3
4

Medium- and Long-term Environmental Goals: Refer to p.50
Initiatives to Reduce Water Consumption: Refer to p.52
Logistics Initiatives: Refer to p.54
E-COMPASS: Refer to E-COMPASS Initiative on p.46

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

Management Foundation

TEL FOR GOOD

Data

49

Anticipated Risks and Opportunities of Climate Change Impact and Our Response■■■

Timeline: Short-term = five years or less; Medium-term = 2030; Long-term = 2050
Scenarios used: 1.5°C scenario (1.5°C temperature increase), 4°C scenario (4°C temperature increase)
Scope: The entire Group as well as the entire value chain including upstream and downstream
Type (Scenario)

Timeline of Risk
Manifestation

Anticipated Risks and Opportunities■

Short- to medium-term
Transition Risks(1.5°C scenario)■

Increased energy costs due to taxes levied on fuel and energy: Assuming our greenhouse gas(GHG) emissions and use of renewable energy remain at fiscal year 2022 levels, if a carbon tax*
were applied, we estimate our energy costs would increase by 700 million yen/year by fiscal
year 2026 (assuming a carbon tax of 8,625 yen per ton of CO2) and 2.1 billion yen/year by fiscal
year 2041 (assuming a carbon tax of 23,575 yen per ton of CO2)
Reduced reputation among investors, NGOs and local communities if a response to climatechange and other environmental issues is delayed

Our Response
■

■

■
■

■

Medium- to long-term■

Decreased net sales if we are unable to meet customers’ requirements and demands toaddress the environment

■
■

■
■

Short- to long-term
Physical Risks(4°C scenario)

Impacts on us, our suppliers and customers from abnormal weather (net sales decrease as aresult of supply chain disruptions, operation stoppages, production/shipping delays, and otherfactors)■■■■

Medium- to long-term

Short- to long-term

■

■

■

Opportunities (Common)
Medium- to long-term■■

Increased costs associated with increased air-conditioner and chiller usage due to higher
temperatures
Higher productivity due to environment-related operations streamlining, thus reducing energy
costs
Accelerated drive to create new value, including innovation toward development of low-GHG
products and services, and equipment and technologies that contribute toward the
manufacture of low-power consumption devices
Engaging in proactive initiatives for climate change and creating added-value in products andservices supplied to the market to gain superiority and business opportunities
Securing a competitive advantage and contributing to improved corporate value by building
resilience (responsiveness to climate change) into global operations

■
■

■

■

■

■
■

Promote energy-saving and adopt renewable energy at plants and offices in order to achieve medium-term environmental goals. Furthermore,as a result of adopting renewable energy, the increased burden from fiscal year 2022 levels due to the introduction of a carbon tax will be
reduced by 800 million yen for fiscal year 2026 and 2.2 billion yen for fiscal year 2041 compared to the amounts originally estimated in fiscal
year 2021
Through the activities of our supply chain initiative, “E-COMPASS,” we are promoting energy-saving and the adoption of renewable energy in the
supply chain
We publish the progress of efforts to achieve the medium-term environmental goals in the Integrated Report and Sustainability Report
By expressing our approval of the TCFD and utilizing its framework, we are conducting risk management and promoting information disclosures
Develop semiconductor production equipment technology that contributes to enhanced performance of semiconductor devices and lower
power consumption
R&D for future technology markets
Product development to achieve the medium-term environmental goals (reduce per-wafer emissions of CO2 when products are in use)
Promote our business continuity plans (BCPs) and business continuity management (BCM)
Deploy procurement BCPs to suppliers, and implement BCP assessments
Periodic implementation of training, drills, etc.
Maintain a database of suppliers’ production sites
Enroll in insurance in preparation for disasters resulting from abnormal weather
Promote energy saving at plants and offices
Adopt the use of renewable energy from our own power generation
Promote energy saving and adopt renewable energy at plants and offices in order to achieve medium-term environmental goals
Develop semiconductor production equipment technology that contributes to enhanced performance of semiconductor devices and lower
power consumption
Globally promote the latest in R&D with a focus on the future of semiconductors and electronics to continually supply the high-value-added
Best Products with innovative technology in a timely manner
Develop technology to achieve reduced per-wafer emissions of CO2 when products are in use
Through the activities of our supply chain initiative, “E-COMPASS,” address climate change as it pertains to supply chains, respond toenvironmental regulations and innovate environmental technology* Carbon tax: We referred to the International Energy Agency (IEA) Net Zero Emissions by 2050 Scenario for the increase in tax associated with GHG emissions. 1 U.S. dollar was converted as 115 yen

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessMedium- and Long-term Environmental Goals
In order to further strengthen its initiatives toward the environment in its products, plants and offices, we have
set the following medium-term environmental goals for fiscal year 2031.
Goals and Initiatives to Achieve Net Zero1
CY2018(Base year)

CY2020CY2026

CY2030CY2040CY2050

Scope 1 & 22 Own emissions

100

Net Zero120

100

1% YoY at each plant and office (per-unit basis)
Main initiatives: Energy saving/creation, recycling, alternative energy, renewable energy use, emissions trading, etc.

90

174

150

60

100

90

Scope 32 Emissions other than own
Products

50% reduction

4

0

90

60

30

45

50
4

50

(%)

250
200

Products

Data

In fiscal year 2022, we identified CO2 emissions during the use of our reference products and set a roadmap
for each product with goals for fiscal year 2031. In addition to the status of electricity, process gases andchemicals, water and other resources used in the production and use of each product, factors such as theeffects of plans to reduce their use and the reduction effects of productivity improvements were also
considered in setting this roadmap. The CO₂ emissions per wafer for products shipped in fiscal year 2022 werereduced by 11% compared to the base year.

Reduce energy consumption by

30% reduction

TEL FOR GOOD

(Kilotons of CO2)

3

Rate of% renewableenergy usage

Management Foundation

Reduction in CO2 Emissions and Rate of Renewable Energy (Electricity) Usage through the Introduction of Renewable Energy

Plants and offices

70% reduction

Higher Productivity

25

Total CO2 emissions for Scope 1 and 2

2
2019

2022

2023

2031

0

Rate of renewable energy (electricity) usage(FY)

Greenhouse gas (GHG)

20% reduction

Ratio of environmentally-sensitive packaging
materials used

50%

10% reduction

5

through modal
shift/joint delivery

Main initiatives: Collaboration with customers and suppliers (improvement of energy efficiency, energy saving
in utility equipment and process development with an awareness of GHG emissions reduction)

1
2
3
4
5

The notation of each calendar year in the figure indicates the fiscal year (e.g., CY2020 is from April 1, 2020 to March 31, 2021)
CO2 Emissions across the Value Chain: Refer to p.47
Total CO2 emissions (compared with fiscal year 2019)
CO2 emissions per wafer (compared with fiscal year 2019)
CO2 emissions

Net Zero

We have started to introduce renewable energy (electricity) at plants and offices in Japan, U.S. and China. As aresult, the ratio of company-wide renewable energy use in fiscal year 2022 was 60%, and CO₂ emissions werereduced by 49% from the base year. In fiscal year 2023, we plan to complete the introduction of renewableenergy at all of our manufacturing sites in Japan, as well as at other overseas plants and offices. Through these
efforts, we expect to achieve a 90% rate of renewable energy usage and a 74% reduction in CO2 emissions forfiscal year 2023. We will continue to develop activities that contribute to the achievement of our medium-term
environmental goals by fiscal year 2031 for our products, plants and offices.
In January 2022, we applied for SBT* certification of our greenhouse gas emission reduction goals, and weplan to receive certification within fiscal year 2023. We are working together as one on initiatives to achieve thefollowing long-term goal by 2050: “As a leading company in environmental management, Tokyo Electron works
actively to conserve the global environment. We strive to contribute to the development of a dream-inspiring
society by proactively promoting the reduction of environmental burden of both our facilities and products. We
strive to contribute to the development of a dream-inspiring society by promoting evolutionary manufacturing
technologies that effectively reduce the power consumption of electronic products.”* Science Based Targets (SBT): The Paris Agreement aims to limit global warming to well below 2°C, preferably to 1.5°C, compared to pre-industrial levels. SBT
is an international initiative to certify greenhouse gas emission reduction targets set by companies for the next five to 15 years, consistent with the levels
required by the Paris Agreement.

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Plant and Office Initiatives
Renewable Energy Initiatives

Higher Productivity

Management Foundation

Total Reduction Amount(t-CO2)(Million yen)

4,814

■ Example initiative

At Tokyo Electron Miyagi (Taiwa) and Tokyo Electron Technology Solutions (Fujii, Hosaka), monitors displaying
the energy profile of renewable energy generated from solar panels have been set up at the entrances to theplants. At Tokyo Electron Kyushu (Koshi), renewable energy generation initiatives are being promoted, such as
the sale of generated energy. In fiscal year 2022, a total of 3,890 MWh of renewable energy was generated inJapan.

166

150

2,307

84

100

1,507

60
50

1,000
0

226
198

200

3,350

3,000
2,000

250

3,805

4,000

51

Data

Total Reduction Effect5,000

We have set a medium-term environmental goal of 100% renewable energy sources at our plants and offices by
fiscal year 2031. In fiscal year 2022, we began introducing renewable energy (electricity) at our sites in Japan,
U.S. and China, bringing our use of renewable energy company-wide to 60%. As a result, CO2 emissions dropped
by 49% from the base year of fiscal year 2019.

TEL FOR GOOD

2018

2019

2020

2021

2022

(FY)

0

2018

2019

2020

2021

2022

(FY)

■ Example initiative 1

Initiatives to Prevent Global Warming and Save Energy
We have brought in a number of initiatives to achieve our medium-term environmental goal at plants and offices,
including energy-saving cleanroom operation, setting office air-conditioning at appropriate temperatures,
introducing devices that offer superior energy-saving performance and bringing in renewable energy.
In fiscal year 2022, the introduction of renewable energy (electricity) in Japan, U.S. and China made asignificant contribution, and the CO2 emitted by our energy sources1 was 86 kilotons (49% decrease YoY). In
addition, we managed to reduce by 26% YoY the amount of energy used at our plants and offices per net sales.
An increase in the amount of energy used to develop and evaluate products and increase production meantthat our power consumption was 377 GWh (6% increase YoY).
In fiscal year 2019, we revised2 and shared the per-unit basis for plants and offices in Japan to more
appropriate levels based on the correlation between business operations and energy. As a result, the annual
sustainability goal has been achieved at 7 of the 11 total plants and offices in Japan and overseas.
1

2

The emission coefficient for power consumption in Japan in fiscal year 2022 uses the post-adjustment emission coefficient on a per-electricity supplierbasis, while the emission coefficients for power consumption overseas uses the emission coefficients in Emissions Factors 2019 edition issued by theInternational Energy Agency (IEA).
The per-unit basis is calculated by compound weighting using data on the number of development and evaluation machines, production volume, floor
space, and man-hours in each region.

Energy Consumption and Energy Consumption per Net Sales(KL crude oil
equivalent)

120,000

The introduction of a system to visualize clearly how much energy is saved at our plants and offices wascompleted at our major manufacturing sites in Japan in fiscal year 2022. Previously, energy consumption data
had to be manually extracted and changes graphed by hand, but integrated management on the cloud has
made it possible to check changes at any time. This has made it easier to check the deployment and effects
of BKM* at each plant as well as study or implement measures.
* BKM: Best Known Method■ Example initiative 2Tokyo Electron Technology Solutions (Fujii) has installed equipment to reduce electrical resistance in thesubstation equipment of some production buildings and saved energy by reducing current loss. As a result,the power consumption of the production buildings where this equipment is installed is expected to be
reduced by approximately 7% per year, and the energy-saving effect for the office as a whole is expected tobe equivalent to approximately 1%.
Changes in Power Consumption(100,000 kWh)

3,500
2,800

2,267

(KL/sales (billion yen))

0.75
85,07480,0000.68
94,746

2,509

2,653

2,947

3,133

2,100

0.8

100,265

1,400

0.6
700

0.5
0.4

0

555

549

523

603

641
Japan
Overseas

2018

2019

2020

2021

2022

(FY)

40,0000.2

Energy consumption (KL crude oil equivalent)
0

2020

2021

2022

(FY)

0

Energy consumption per net sales (KL/sales (billion yen))

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

Management Foundation

TEL FOR GOOD

Data

52

Initiatives to Reduce Water Consumption

Initiatives to Reduce Waste

With the growing importance of water resource preservation, we use WRI Aqueduct1 and freshwater resource
quantity indicators to conduct water risk assessments in Japan and overseas. In addition, we confirm the statusof water resource use in the supply chain, rainwater and wastewater management and goal setting with
suppliers once a year.
We have established an annual sustainability goal of maintaining the same water consumption level of thebase year (fiscal year 2012 for plants and offices in Japan and a fiscal year of their choosing for each overseas
operation). Our ongoing efforts to achieve these goals include reusing pure water from our manufacturing
operations, installing water-saving devices, watering lawns with rainwater and implementing the intermittent
operation of cafeteria faucets.
During fiscal year 2022, as a consequence of the operation of new buildings and an increase in water
consumption associated with product development and evaluation, water consumption amounted to 1,417,000
m3, up 1% YoY. However, water consumption per net sales was down 29% YoY. Moreover, in terms of our goals
at each plant and office in Japan and overseas, we achieved 7 of the 14 goals.
In recognition of these efforts, we were selected as a prestigious A List company in the CDP2 Water Security
Category of the survey in December 2021.

As part of its initiatives to reduce waste, we are striving to limit the amount of waste generated and recycle. In
addition to participating in the electronic manifest system1 to ensure proper waste management, we promote
maintaining an appropriate amount of parts inventory, reusing cushioning material and waste separation
activities. Furthermore, we are working to reduce waste processing costs by modifying space used for storing
waste to increase storage capacity and reduce the frequency of collection.
As a result of these initiatives, in fiscal year 2022, we generated 270 tons of incinerated and landfill waste,
and the recycling rate2 was 98.1%, achieving our goal of maintaining a recycling rate of 97% or higher for the
16th consecutive year since fiscal year 2007. In addition, we have also maintained a high level of recycling of
91.0% at our overseas plants and offices.

1
2

WRI Aqueduct: A water risk assessment tool developed by the World Resources Institute
CDP: An international environmental non-profit organization (NPO) founded in the United Kingdom that conducts surveys on climate change and water
security measures on private companies and municipalities and publishes the results

Water Consumption and Water Consumption per Net Sales(thousand m3)(thousand m3/sales (billion yen))

15

1,800

11.6
1,350

1,305

1,397

2

Electronic manifest system: A system for electronically tracking the flow of industrial waste instead of using paper-based manifests (i.e., paper
forms for tracking industrial waste). The system uses a communications network of data processing centers, businesses that generate waste, andwaste collection/disposal companies.
Recycling rate: (Recycled amount / Amount of waste generated) × 100■ Example initiative

Tokyo Electron Technology Solutions (Tohoku) is working to recycle materials from resin pallets used during
the transportation as cargo as well as reduce the CO2 emissions associated with the processing of thesepallets.
Previously, damaged resin pallets were crushed and recycled as the heat energy generated during theprocessing. However, in fiscal year 2022, the material from 20 tons of waste resin pallets was recycled byoutsourcing to a processing company capable of recycling the resin pallets as raw materials. In addition, by
outsourcing the recycling to a processing company closer to the office, the CO2 emissions used to transport
these materials were limited.

1,417

10.0

900

1

10

7.1
5

450

Water consumption (thousand m3)
0

2020

2021

2022

(FY)

0

Water consumption per net sales(thousand m3/sales (billion yen)

■ Example initiative

Tokyo Electron Taiwan has been actively implementing water conservation activities as a countermeasureagainst droughts in Taiwan in fiscal year 2022. We reduced the amount of water consumption at faucets oneach floor (toilets and office kitchenettes) and for watering lawns, as well as setting air-conditioners in offices
at higher temperatures and using automatic on/off functions to reduce the amount of water used for cooling.
As a result, we managed to reduce the amount of water consumption by an estimated 20 m3/day. These
activities resulted in an 11% reduction in water consumption in fiscal year 2022 compared to fiscal year 2021.

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Product Initiatives

Initiatives for Product Environmental Laws and Regulations

Products that Contribute to a Sustainable Society

In order to comply with each country’s environmental laws and regulations pertaining to products, we promptly
collect information and promote proactive responses. An example of our response to EU REACH1 is that we
conduct surveys with our suppliers as appropriate on the presence of any chemical substances in articles anddisclose that information to customers. In addition, we have been introducing the chemSHERPA2 format since
fiscal year 2021 and collected information from suppliers on chemical substances in concentrations in the parts
per billion (ppb3). As a response toward GHS4 requirements, we provide the necessary safety data sheets (SDS5)
and labels when supplying chemical products to customers, in addition to promoting the local procurement ofchemical products.
To comply with the frequently revised environmental laws and regulations, we continue to offer “ProductEnvironment Compliance” training to all employees, and provide suppliers with information related to therelevant environmental laws and regulations.
We will continue to grasp each country’s environmental laws and regulations rapidly and strive to respond
appropriately.

FY2031 goal
Of the CO2 emissions from our value chain, emissions during
Product CO2 Emission Reduction
product use account for about 97%. We believe that the low（％）%
energy consumption of products is important as part of our
30
social responsibility as a semiconductor production
equipment manufacturer and are working on
20
environmentally friendly product design. In fiscal year 2022,
we promoted activities based on guidelines for calculating
10.7
CO2 emissions* and a roadmap for key models to reach our10annual sustainability goal of reducing per-wafer CO2
4.6
emissions by 30% by fiscal year 2031 (compared with fiscal
year 2019) for the key models of each business unit. As a
0
2021
2022
2031 (FY)
result, the CO2 emissions of equipment shipped werereduced by 10.7% compared to baseline equipment.
In addition, we use the Green Transformation (GX) Monitor, which captures information on energy use including
electricity, water and nitrogen, as well as equipment operating status, and turns it into a database, to visualize energy
consumption information during product use. Specifically, we have introduced a system that allows us to checkequipment operating status and energy consumption information in chronological order through our intranet, andare planning to expand the scope of this system going forward.
We will continue to work to further raise environmental awareness and incorporate environmental technologies
as important added value in our technological strategies, thus contributing to the reduction of the environmental
impact of society as a whole.

30* In addition to energy and water, the amounts of process gases and chemical substances to use, as well as footprint, volume and weight of products, are now
included.

■ Example initiative

At the TFF Engineering Division of Tokyo Electron Technology Solutions, development is conducted with thelife cycle perspective in mind. Specifically, we define product life cycle costs and clarify relationships with theeffects of development elements. Additionally, we share an environmental technology roadmap with related
divisions and monitor progress while developing environmental products based on this roadmap.

1
2
3
4
5

EU REACH: An EU regulation pertaining to the Registration, Evaluation, Authorisation and restriction of Chemicals
chemSHERPA: A data entry support tool for appropriately communicating information on chemical substances in products across the entire supply
chain, and a common system for communicating information on chemical substances contained in products
ppb: parts per billion (1 × 10-9)
GHS: Globally Harmonized System of Classification and Labelling of Chemicals
SDS: Safety Data Sheet. Refers to the document containing hazard information about chemical substances that is issued when a company transfers orprovides chemical substances, or products containing chemical substances, to another company

Biodiversity
Our business activities are supported by the benefits yielded from biodiversity. We recognize that our businessactivities have not an insignificant impact on biodiversity and thus carry out initiatives to conserve biodiversity.
We set a single fiscal year goal of conducting ecosystem tours or conservation activities at our plants andoffices in Japan at least twice a year. Results in fiscal year 2022 show that events were held a total of 16 times,
attracting a total of 87 participants.
■ Example initiative

Tokyo Electron Technology Solutions (Tohoku) conducts surveys of the natural environment in the areasurrounding the office. In fiscal year 2022, we conducted a survey to determine the impact on the growthand habitats of plants and animals caused by factors such as changes in the surrounding environment due tothe construction of a new building, as well as tree-planting activities and other activities conducted by plants
and offices. As a result, we confirmed that a mountain foothill-like environment with a mixture of trees,
grasslands and ponds is expanding. We also confirmed that many species of plants, mammals and birds arepresent, and that there have been no major changes since the previous survey (2016–2017).
We will continue to maintain the rich natural environment that is home to a diverse range of organisms aswell as contribute to the preservation of plants and animals throughout the entire region.

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Management of Chemical Substances

Logistics Initiatives

We constantly monitor and manage our use and release of any chemical substances used in productdevelopment and manufacturing subject to the Japanese PRTR* law. Whenever we introduce a new chemical
substance or change the way an existing substance is used, we check for environmental, health and safety risks
beforehand and conduct appropriate processing after use such as by contracting expert vendors and using
in-house processing facilities. In response to the Fluorocarbons Recovery and Destruction Law, we conduct
simple checks, regular inspections and so on based on law in an effort to monitor the amounts of fluorocarbons
filled and recovered. In fiscal year 2022, none of our plants or offices had fluorocarbon leakages requiring
notification.

As logistics regulations are tightened fromFY2024 goal(%)
the perspective of preventing global
60%
warming and addressing climate change,
there is a growing demand to reduce the40environmental impact of businessactivities. We have been actively
implementing measures such as a modal
20
13.2
shift* in transportation in Japan and
7.8
7.8
5.0
overseas and the adoption of packaging
methods that reduce environmental
0
FY2022
FY2022
FY2022
FY2022
FY2031
impact, as well as promoting activities(Goal)
1Q
2Q
3Q
4Q
designed to reduce the environmental
impact of its logistics.
For logistics in Japan, we calculate and clarify CO2 emissions within the scope defined by the Act on the
Rational Use of Energy. For logistics overseas, we calculate and clarify CO2 emissions for both our Group
companies and also for logistics in which our customers are serving as the shippers.
In fiscal year 2022, CO2 emissions increased relatively both in Japan and overseas due to an increase inproduction and shipments. However, in logistics in Japan, we actively deployed a modal shift which resulted in a
CO2 emissions reduction of approximately 317 tons.
In fiscal year 2022, we promoted the use of reinforced corrugated cardboard packaging to achieve ourannual sustainability goal set in fiscal year 2021. Reinforced corrugated cardboard is lighter in weight, which is
expected to reduce CO2 emissions during transportation. It is also recyclable and has a lower environmental
impact than wood. The rate of reduction of wood use was 9% in fiscal year 2022, and 13% for the quarter fromJanuary to March 2022.
In fiscal year 2023, we set a new annual sustainability goal to further promote modal shifts and joint delivery
and reduce CO2 emissions of overall logistics (own delivery) by 10% (by fiscal year 2027) and are developing
activities that contribute to the achievement of this goal.

* PRTR: Pollutant Release and Transfer Register. A framework for tracking, tabulating and disclosing quantitative data on chemical substances that may behazardous to human health and the ecosystem, including the amounts used and discharged into the environment and the amounts transferred (as part ofwaste) from the plants and offices

Environmental Communication
Our environmental policy requires that we respond appropriately to the expectations of society. We promote
initiatives for the environment while engaging in ongoing communication with all of our stakeholders.
In addition, to better promote environmental communication internally, we provide an environmental
program for new employees and mid-career recruits, plus a refresher program for existing employees. In fiscal
year 2022, approximately 11,000 employees in Japan participated in the refresher program for existing
employees. We plan to expand this program overseas in fiscal year 2023.

Green Procurement
We began implementing our Green Procurement Guidelines in January 2001 and have since promoted green
procurement, prioritizing the purchase of environmentally friendly parts, products and materials, while updating
the content of the guidelines as appropriate. Through these guidelines, we strive to gain the understanding andcooperation of our suppliers with respect to building environmental management systems, monitoring,
reducing and disclosing information on the environmental impacts of business activities, and developing
environmentally friendly products.

Reduction Rate of Wood Use50* Modal shift: Efforts to transform the means of transportation. Refers to the shift of transportation from car and air to rail and ship, which have lower
environmental impacts.

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Responsible Procurement of Minerals (Conflict Minerals)

Principles and System of Supply Chain Management
To build a supply chain that is sound and sustainable, Tokyo Electron has formulated a procurement policy basedon the laws, regulations and social norms of each country, as well as the RBA Code of Conduct, and together with
its suppliers, is implementing activities based on this policy.
To identify issues in the supply chain from a variety of perspectives, we also value ongoing communication withdiverse suppliers, including materials suppliers that handle parts and raw materials, staffing suppliers that provide
services and logistics suppliers that handle physical distribution operations. Under the leadership of the CEO, any
identified issues are shared with relevant divisions and efforts are made to implement concrete measures for
improvement.
We will continue to strive to create value in the supply chain by working to build relationships of trust with our
suppliers, who support our business as partners, and by working together to conduct operations in compliancewith global standards.

We see taking action against conflict minerals (3TG1) obtained through illegal exploitation, which lead to humanrights violations and poor working conditions, as our corporate social responsibility. Our resolute goal is toeliminate the use of raw materials made from these conflict minerals, as well as any parts or components
containing them.
In alignment with this way of thinking, we conduct surveys on potential conflict materials using the CMRT2
and referring to the OECD3 Due Diligence Guidance for Responsible Supply Chains of Minerals from ConflictAffected and High-Risk Areas. In fiscal year 2022, we conducted our eighth annual survey on potential conflictminerals. As a result, we were able to identify 243 RMAP4 conformant smelters, providing us confidence that
3TG sourced from these smelters were conflict-free. In addition, none of the materials we procured were foundto contain 3TG involved in conflict.
1
2
3
4

3TG: Tantalum, tin, tungsten and gold
CMRT: Conflict Minerals Reporting Template. Survey format for reporting conflict materials, provided by the Responsible Minerals Initiative (RMI), which
has established international guidelines on conflict minerals.
OECD: Organisation for Economic Co-operation and Development
RMAP: Responsible Minerals Assurance Process. A program promoted and led by the RMI for auditing smelters/refiners to validate that they do not use
conflict minerals

Procurement BCP

Initiatives in the Supply Chain
Sustainability Operations
To keep track of our suppliers’ engagement in sustainability, we have conducted a sustainability assessment inareas such as labor, health and safety, the environment and ethics since fiscal year 2014. We analyze theassessment results, provide feedback to suppliers and together, promote initiatives for improvement as
required. In fiscal year 2019, we completely revised the content of the survey based on audit standards
stipulated by the RBA, and in addition to materials1 suppliers, included staffing2 and logistics3 suppliers in thescope of surveys.
In fiscal year 2022, we confirmed surveys and conducted that suppliers had implemented measures toprevent any reoccurrence of cases of false reporting that were identified in the previous year’s assessment andmaking efforts for improvement, including establishing committees to oversee these measures.
To ensure that all people in our supply chain can work of their own free will, we have expressly stipulated ourzero-tolerance policy for forced labor and bonded labor, and have communicated this to our major suppliers.

As part of our business continuity plans (BCPs), we collaborate with
Percentage of Supplier Sites byCountry (FY2022)
suppliers on ongoing disaster preparation.
We maintain a database of suppliers’ production sites so that if a crisis
Malaysia 1.2%
Taiwan 1.3%
arises, we can promptly identify impacted suppliers and quickly collaborate
Others 4.8%
U.S. 1.9%
in recovery efforts. During fiscal year 2022, approximately 24,000 supplier
China
3.9%
sites were registered, and we conducted 11 post-disaster impact surveys.
In addition, we conduct BCP assessments* on our suppliers and analyze
their responses to provide them with feedback so that they can promote
improvements in areas of concern. The fiscal year 2022 assessment
identified a 24% improvement in the overall rating level and a 51%
Japan 86.9%
improvement in the overall raw score compared to the previous year.
* BCP assessment: Surveys have been conducted since fiscal year 2013 on suppliers accounting for more than
80% of our procurement spend.

Supply Chain Sustainability Process

Plan
Formulation of
supply chain policies

1
2
3

Do

Check

Act

Notification ofrequests to our
suppliers and appeal
for sustainability
activities

Implementation of
supply chain
sustainability
assessment andanalysis of response

Provision of feedback
based on the results
and requests for
improvements to
suppliers

Materials suppliers: Surveys have been conducted since fiscal year 2014 for suppliers accounting for more than 80% of our procurement spend.
Staffing suppliers: Surveys have been conducted since fiscal year 2019 on 100% of employment agencies and contracting companies (internal contractors).
Logistics suppliers: Surveys have been conducted since fiscal year 2019 on 100% of customs-related operators.

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