Corporate governance
Governance framework

Managementfoundation

In order to become a truly global company that realizes sustainable growth, Tokyo Electron (TEL) takes into
consideration medium- to long-term perspectives on matters including the ESG and strives to strengthen
its management and technology base to establish a global level of profitability. Furthermore, we believethat it is important to build a governance structure to achieve this.
TEL adopts the Audit & Supervisory Board System, consisting of a Board of Directors and an Audit &Supervisory Board. The Board of Directors works to achieve sustainable growth and increase corporate
value over the medium- to long-term based on their fiduciary responsibility to shareholders. The current
Board of Directors meetings achieve an appropriate sense of productive tension and constructive debate
due to the presence of executive directors, essential for making operational decisions, and outside
members, who provide objectivity.
The Audit & Supervisory Board is part of a structure that enables its board members to obtain sufficient
information necessary for audits by collecting information through on-site surveys conducted by full-time
Audit & Supervisory Board members, and by maintaining appropriate coordination with the Internal Audit
Department and Independent Auditors. In addition, the balanced composition of Audit & Supervisory Board
members provides the knowledge required for operational audits and accounting audits, and we believethese board members are able to perform the company’s auditing functions effectively.

Initiatives to strengthen systems
Our Board of Directors strives proactively to resolve various issues related to sustainability with the aim ofenhancing corporate value. As one aspect of this, in addition to anti-corruption and compliance education
for members of the Board of Directors, we significantly increased the description of ESG initiatives as key
non-financial information in the Notice of Convocation for the Fiscal Year 2018 Annual General Meeting of
Shareholders.
Diagram of the corporate governance framework, internal control system and risk management system

Build a management foundation for increasing value

Shareholders' Meeting
Appointment or
dismissal

Board ofDirectors

Priority themes
The role played by companies in the realization of asustainable society is growing. Tokyo Electron (TEL)
recognizes the challenges in our social and businessenvironments, and our role, and will build a strong
management foundation that supports business activities.
We recognize that corporate governance is essential tosustainable growth for companies, and we strive not only
to comply with laws and implement compliance, butalso to build a world-class governance structure and tooperate an effective Board of Directors. In recent years,
climate change and abnormal weather conditions havebecome more serious on a global scale, therefore we arealso trying to further reduce the environmental impact of
our operations. TEL is promoting initiatives based on global
standards to realize sustainable operations not only within
our company but also in our supply chain.

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TOKYO ELECTRON SUSTAINABILITY REPORT 2018

Appointment or
dismissal

Nomination Committee

Chief Business Ethics Director

Compensation Committee

Chief Internal Control Director

Chief CSR Director

Audit

Appointment or
dismissal

Audit &
Supervisory Board
Audit

Independent Auditors
Cooperate
Cooperate

Business execution
Representative
Directors
Audit

Internal Control & Compliance Executive Officer

Governance andcompliance

HumanrightsEnvironmental
management

Supply chain
management

CSS & Executive
Officers

Internal Audit Dept.
(Global Audit Center)

Ethics Committee
Information Security Committee
Export Trade Control Committee
CSR Management Council

Relevant SDGs

Audit

Risk Management Function(General Affairs Dept.)
Compliance Function (Legal Dept.)
Monitoring

Business Execution Organization

Decent work andeconomic growth

Climate action

Peace, justice andstrong institutions（All Division / All TEL Group companies)

TOKYO ELECTRON SUSTAINABILITY REPORT 201842

Management foundation

Board of Directors

Evaluating the effectiveness of the Board of Directors
TEL discusses and evaluates the effectiveness of the Board of Directors every year in accordance with the
TEL Corporate Governance Guidelines. This fiscal year, we again conducted a questionnaire of all directors
and Audit & Supervisory Board members regarding the effectiveness of the Board of Directors, theNomination Committee, and the Compensation Committee, covering June 2017 to April 2018. In addition
to the results of this questionnaire, exchange of opinion and deliberation was held, mainly among outside
directors and outside Audit & Supervisory Board members, which was shared with the whole Board of
Directors in order to evaluate the effectiveness of the Board of Directors.
The Board of Directors undertakes vigorous discussion by directors and Audit & Supervisory Board
members with a diversity of opinions and experience. Regarding important matters, we also undertake
close examination from the viewpoint of risk, and conduct frank discussion and careful consideration. Asidefrom the official Board of Directors meetings, we held off-site meetings, where we undertook deliberations
focused on topics related to management strategy and vision. In addition, the Board of Directors has
internal committees—the Nomination Committee reports to the Board of Directors on activities basedon the succession plan, and the Compensation Committee makes proposals to the Board of Directors
regarding the compensation system to enhance correlation with medium-term performance.
Based upon this, we believe that the Board of Directors, including the Nomination Committee andCompensation Committee, is functioning effectively and fulfilling its role as stipulated in the TEL Corporate
Governance Guidelines “to demonstrate the management strategy and vision” and “to make decisions
concerning important business administration based upon strategic orientation.”

The roles and responsibilities of TEL’s Board of Directors are “to demonstrate the management strategy
and vision,” “to make decisions concerning important business administration based upon strategicorientation,” and “to undertake open and constructive debate.” Members of the Board of Directors are
selected with emphasis placed upon diversity together with a balance of knowledge, experience andcapabilities within the Board overall. The 17 participants in the Board of Directors meetings, which consistof 12 Corporate Directors and 5 members of the Audit & Supervisory Board, is comprised of 6 members,
or over 30%, independent outside directors or outside Audit & Supervisory Board members, in order tosupport strong governance.
In the selection of executive directors, we seek people with outstanding execution capabilities backed byexperience, knowledge and achievements as a manager. They must also possess high sensitivity and theability to accurately analyze and judge all risks. Furthermore, they are required to believe in themselves andto be able to express their opinions directly in meetings.
With regards to independent outside directors or outside Audit & Supervisory Board members, they
are expected to express frank opinions from an independent standpoint and to guide discussion within
the Board of Directors in an appropriate direction so that the company can be competitive and succeed
globally. In making these selections, we aim to assemble talented people with a balance of expertise inglobal business, a wide range of knowledge concerning related industries, a diverse personal network, anobjective perspective in relation to society and capital markets, knowledge of finance, accounting and thelaw in general. In addition to requirements under the Company Act, TEL has established separate criteria to
avoid conflicts of interest with general shareholders, and to ensure the independence of outside directors
and outside Audit & Supervisory Board members.

Compensation policy

Formation of structure of directors and auditorsA

TEL emphasizes the following points in its compensation policy.
(1) Composition and levels of compensation with global competitiveness(2) Link with business performance in the short term, sustainable growth, and medium- to long-term
increase of corporate value(3) Securement of transparency and fairness in management and appropriateness of compensation
Based on the above policies, TEL has adapted a director compensation system that is closely linked toperformance and shareholder value. However, we have introduced a new medium-term performancebased compensation from August 2018 in order to better link director compensation to medium-term
performance and thereby achieve further growth. As a result of this, director compensation will consist of
fixed basic compensation, annual performance-linked compensation, and medium-term performancelinked compensation. Audit & Supervisory Board members’ compensation consists only of a basic fixedcompensation to maintain independence from management. Payment of retirement allowances, whichconstituted a significant portion of fixed compensation to Corporate Directors and Audit & Supervisory Board
members, was abolished in and after year-ended March 2006.

Nomination Committee

Board of Directors

B

C

D

F

G

H

E

I

J

K

L

Chairmanof the Board

Non-executive
officers

C

G

H

O

Compensation Committee

Audit & Supervisory Board

G
M

N

O

P

I

K

Q

Tax policy

InsideOutsidecompany company

In March 2018, TEL established its global tax policy. We are working hard to ensure transparency in our tax
affairs, by maintaining and improving our compliance structure, responding appropriately to changes inthe environment surrounding our international tax affairs.
As specific measures for our tax policy, we are working on the following:
1. Building of a tax risk management system, headed by the Chief Executive Officer (CEO)2. Payment of appropriate taxes in regions where value is created based on business strategies andbusiness activities, specifically without the purpose of tax avoidance
3. Building of relationships of trust with the tax authorities of each country

Executive message
In corporate management, I see creating and maintaining an appropriate system of governance as key to sustaining
and maximizing corporate value. True corporate governance, I believe, entails the building of a system which verifies
that all review processes and decision-making processes related to management policy and business strategy
contribute to the sustained improvement of corporate value, and which also monitors the implementation ofthese processes and provides feedback and feedforward for a better direction. It is also important that, in addition
to compliance, globally accepted standards of fairness and transparency, and a high level of business ethics beestablished as part of the corporate culture. Going forward, we will continue working over the medium- to long-termto ensure a world-class governance framework is created and that the Board of Directors operates effectively.

43

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

Tetsuo Tsuneishi
Representative Director
Chairman of the Board

TOKYO ELECTRON SUSTAINABILITY REPORT 201844

Management foundation
Risk management

ComplianceApproach to risk management

Approach to compliance

Along with changes to society and the business environment, the risks facing businesses have become
increasingly complicated and diversified. At Tokyo Electron (TEL), as we conduct our business, weunderstand the risks that we may face as well as their impact and we manage them appropriately, which
we consider to be a crucial factor in a company’s sustainable growth.

Stakeholder trust is essential to business activities. In order to maintain this trust, it is essential tocontinuously implement compliance and enhance corporate ethics. The Fundamental Policies concerning
Internal Controls within the Tokyo Electron (TEL) Group also stipulate that all TEL Group executives andemployees must act with high ethical standards and awareness of compliance.

Risk management system

Compliance systems and initiatives

In order to promote more effective risk management, TEL is working to strengthen its systems throughout
the entire company. TEL has established a dedicated risk management organization within the General
Affairs Department at our headquarters to promote enterprise risk management. This organization
identifies key risks by analyzing various risks in our business activities such as compliance risk, humanresource and labor risk and business continuity risks. Once critical risks have been specified, it can monitor
the respective departments responsible and support risk management activities. Their status is regularly
reported to the Board of Directors and the Audit & Supervisory Board.

Internal control & compliance system
TEL has appointed an Internal Control and Compliance Executive Officer as we strive to further boost
compliance awareness and implementation throughout the company. From April 2018, the Legal Department
operates as the main department overseeing compliance within the company and is working to further
strengthen the compliance system under the guidance of the Internal Control and Compliance Executive
Officer.

Auditing by the internal audit department
The Global Audit Center, which is the internal audit department for the entire company, implements auditing
based on the audit plan. With issues discovered through audits, they give instruction for making improvements,
follow up the state of improvements and provide support. For fiscal year 2018, we received assessment fromthe accounting auditors that internal control evaluation related to financial reports was effective.

Corporate ethics
TEL has established our Code of Ethics as the standard which employees should abide by, and has
produced booklets in Japanese, English, Korean and Chinese for distribution to employees in order toensure awareness. We revise the content when necessary in response to the changing demands of society.
TEL has also appointed a Chief Business Ethics Director and has established an Ethics Committee in orderto spread corporate ethics throughout the operations of our organization.

Initiatives for risk
In fiscal year 2018, we monitored risk management activities focusing on the following risks, andencouraged improvement.

Business Continuity Plans (BCP)
Following the experience of the Kumamoto Earthquake, reinforcement work was conducted for buildings
at bases in Japan to improve their seismic resistance above the Japanese standards. We are also working toestablish an alternative production structure using the company’s network and developing a multi-source
system for suppliers of important parts.

Mental health, long work hours and harassment
TEL is promoting measures to address employee mental health and long work hours. We are also
conducting harassment education and building mechanisms to manage mental health. Furthermore, wehave introduced a mechanism to check excessive workloads that lead to health risks, and we will continue
their implementation.

Compliance regulations
Based upon our Code of Ethics, TEL has established compliance regulations within the company in Japan andabroad to raise awareness of compliance. The compliance regulations are intended to ensure that all individuals
who take part in the business activities of the company clearly understand the pertinent laws and regulations,international standards and internal company rules, and consistently apply these rules in all of their activities.

Compliance education
We conduct online education for all employees concerning topics including the basics of compliance,
export compliance and the Subcontract Act. In addition, with the worldwide strengthening of enforcementof anti-corruption laws in recent years, in fiscal year 2018, we incorporated anti-corruption and antibribery aspects and implemented testing to check the degree of understanding among employees.
Furthermore, we conducted face-to-face training focused on the prevention of bribery of foreign public
officials for department heads, and another training emphasizing overseas subsidiary management for
directors and executive officers in order to deepen their understanding.

Internal reporting system
An ethics hotline and a compliance hotline have been established to receive internal reports from thecompany. From fiscal year 2018, we established an external contact point and another contact point
which suppliers can use, to create a system where it is easier to make a report. All of these hotlines accept
anonymous reports and guarantee that the caller will not suffer disadvantage from reporting.

The result of these initiatives is that there have been no reports or cases of noncompliance with laws,
regulations, or the Code of Ethics that could have had a material impact on the company’s business or
local communities.

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TOKYO ELECTRON SUSTAINABILITY REPORT 2018TOKYO ELECTRON SUSTAINABILITY REPORT 201846

Management foundation
Respect for human rights

Supply chain management

Our stance on human rights

Procurement principles and system

Conscious of its corporate social responsibility, Tokyo Electron (TEL) recognizes that it is important to
conduct itself 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.
For us, respecting human rights means a significant undertaking, not only to fulfill our responsibility foreliminating adverse impacts on people caused through our business activities, but to respect those people
who support our business 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 tonurture a dynamic corporate culture where each person can realize his or her full potential.

The high-value manufacturing that Tokyo Electron (TEL) strives for is based on the functions of
all materials and components that make up the products and the pursuit of high quality. We valuecommunications with suppliers and seek to grow manufacturing on a global scale with our suppliers basedon ongoing trusting relationships.
We engage in procurement activities in line with a procurement policy which we formulated based on
the laws, regulations, and social norms of each country as well as the RBA code of conduct, and which wehave disseminated internally and to our suppliers. Under the leadership of the TEL Representative Director,
President & CEO as the top of the procurement system, issues identified during procurement activities
are shared with the manufacturing company presidents’ council and the purchasing department manager
council for consideration of specific improvements.

Human Rights Policy
Amid growing demand for companies to respect human rights as a corporate social responsibility, we
published our Human Rights Policy in September 2017 as a summary of our approach to human rights
in business. With reference to the United Nations’ Guiding Principles on Business and Human Rights inaddition to the International Bill of Human Rights and the ILO Declaration on Fundamental Principles
and Rights at Work, we have specified the human rights we believe are particularly important in ourbusiness activities as: Freedom, Equality & Non-Discrimination; Freely Chosen Employment; Product
Safety & Workplace Health and Safety; Freedom of Association; and Appropriate Working Hours &Breaks/Holidays/Vacations. We will establish assessment and remediation processes for dealing practicallywith human rights issues, such as identifying and assessing human rights risks and impacts, responding
to those risks and impacts, and reviewing the effectiveness of those responses. In addition, we will also
operate a whistle-blowing system, and establish effective human rights initiatives at the operational level.
In March 2018, we also implemented a human rights e-learning program targeting all TEL executives andemployees in an effort to facilitate communication on the basic principles and initiatives related to respectfor human rights. Moreover, we believe it is essential for our suppliers to also conduct their businessactivities with respect for human rights, and so ask them to comply not with only laws and regulations but
also with the RBA Code of Conduct.

Procurement initiatives
CSR procurement
With an aim of keeping track of its suppliers’ engagement in CSR activities, TEL has conducted a CSR Survey
since fiscal year 2014. The survey we conduct is in accordance with the RBA code of conduct. We analyze
the responses and provide feedback to suppliers in an effort to build on improvements. During fiscal year
2018, we surveyed key suppliers accounting for more than 80% of our procurement spend. Improvementsin overall rating level were observed at 21% of suppliers and improvements in overall raw scores were seenat 62%. No suppliers were engaged in any of the practices given particular emphasis in the RBA code of
conduct, namely child labor, forced labor, bonded labor, inhumane treatment, false reports, falsificationof records, or bribery. Neither were any suppliers of a sufficient size1 to be considered high risk in terms ofcompliance. Our endeavors also included strengthening partnerships by providing training programs on
the RBA code of conduct and confirming supplier agreement.
Supply chain CSR process

Executive message
Tokyo Electron Group’s Management Policies and Code of Ethics reflect the group’s commitment to acting ethically,
with integrity and respecting human rights in all our business relationships. In recent years, because of the emerging
concern within the various industries for better treatment of workers in supply chains, we publicly announced in June2015 that it joined the RBA® (Responsible Business Alliance formerly the EICC) and committed that we will be fullycompliant with the RBA Code of Conduct. Our European operation in line with our global standards is committed tochains with a continuous improvement approach.

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TOKYO ELECTRON SUSTAINABILITY REPORT 2018

STEP 1

STEP 2

STEP 3

Appeal for CSR activities
to suppliers

Supply chain
CSR assessment

Provision of feedback
based on the results, andrequest for improvements

Conflict minerals
TEL regards taking action against conflict minerals (3TG2) obtained through illegal exploitation, including
sources with human rights violations or poor working conditions, an important part of corporate social
responsibility. Our resolute goal is to eliminate the use of raw materials made from these conflict minerals
as well as any parts or components containing them.
In fiscal year 2018, we conducted our fourth annual survey on countries of origin and smelters ofpotential conflict minerals, using the reporting template (CMRT3) developed by the RMI.4 As a result, we
identified 249 RMAP5 conformant smelters, providing us confidence that 3TG sourced from these smelters
were conflict-free. None of the materials procured were found to contain conflict-affected 3TG.

Source: United Nations Human Rights Office of the High Commissioner

pursuing socially responsible practices and advocating respect for human rights in our operation and in our supply

1 500 employees or moreDavid BroughSenior Vice President and General Manager,
Global Strategy, President and Managing
Director, Tokyo Electron Europe Ltd.

2 3TG: Tantalum, tin, tungsten and gold
3 CMRT: Conflict Minerals Reporting
Template
4 Responsible Minerals Initiative (RMI):
An organization that inspects 3TG
smelters to certify they do not haveconflict minerals
5 Responsible Minerals Assurance
Process (RMAP): A program
promoted and led by the RMI for
auditing smelters/refiners that do
not use conflict minerals

Procurement BCP
As part of its Business Continuity Plan (BCP), TEL collaborates with suppliers for disaster preparation.
We maintain a database of suppliers’ production sites so that if a crisis arises, we can promptly identify
impacted suppliers and quickly collaborate in recovery efforts. During fiscal year 2018, about 17,000
supplier sites were registered, and post-disaster impact surveys were conducted six times.
We also conduct a BCP survey of key suppliers accounting for more than 80% of our procurement
spend. We analyze their responses and the results are given as feedback to suppliers to promotefurther improvement. In the fiscal year 2018 survey, as well as the regular questions on earthquake
countermeasures, questions on fire prevention measures were also set. Improvements in overall ratinglevel were observed at 21% of suppliers and improvements in the overall raw score were seen at 48%.

TOKYO ELECTRON SUSTAINABILITY REPORT 201848

Management foundation
Environmental management
Environmental risks and opportunities

Initiatives to prevent global warming and save energy

Climate change and other environmental issues require action by humanity as a whole. Physical risks, suchas rising temperatures, increased heavy rains and water shortages caused by abnormal weather, heighten
the risks to business, such as damage to assets, increased operating costs and impacts on the supply chain.
In terms of legal risks, tougher environmental laws and regulations require action at business sites and withproducts. At the same time, promoting environmental initiatives leads to more opportunities to provide
outstanding environmentally friendly products, reductions in operating costs, and further improvements incorporate reputation. Based on the requirements of ISO 14001, Tokyo Electron (TEL) identified and analyzed
internal and external issues in relation to the environment, namely, its relationship with the climate, air quality
and water quality. We also identified the environmental needs and expectations of customers, suppliers,
governments and employees, as well as the company’s compliance obligations. From this information, we
have set the following as our risks and opportunities to address: (1) environmental management by reducing
the environmental impact of our business activities, (2) compliance with applicable laws, and (3) enhancing
product competitiveness with the environmental contribution of products.

Each TEL factory and office has an established goal of reducing energy consumption by at least 1%
year-over-year. Initiatives to achieve this goal include energy-saving clean room operation, appropriate
temperature settings for office cooling and heating, the introduction of highly energy-efficient equipment,
and the adoption of renewable energies.
As a result of these initiatives, in fiscal year 2018, we reduced energy consumption per unit sales at ourfactories and offices by 21% year-over-year. However, an increase in our volume of production and anincrease in energy consumption associated with product development and evaluation resulted in power
consumption of 282 GWh in fiscal year 2018, up 11% year-over-year; and energy-derived CO2 emissions*of 152 kilotons, up 8% year-over-year. Based on the correlation between business operations and energyuse, we changed to an appropriate metric at factories and offices in Japan, and standardized it across thecompany. Specifically, we adopted a metric calculated using a complex weighting of data from each areaon the number of evaluation units used in development, the number of units produced, total floor area andman-hours. Of all 11 of our factories and offices, both those overseas plus those in Japan that had set goals
based on this method, goals were achieved at 6 of them.

Environmental management system* In calculating CO2 emissions, theemission factor for TEL’s electricity
consumption in Japan in fiscal year2018 was substituted by adjusted
emission factors for the electrical
power providers concerned. The
emission factor for TEL’s overseas
electricity consumption was
substituted by estimated factors
calculated by the Federation ofElectric Power Companies of Japan
based on values published by theInternational Energy Agency (IEA).

Energy consumption reduced at business sites

To continuously improve its environmental activities, TEL has operated an environmental management
system based on ISO 14001 since 1997, primarily at its manufacturing subsidiaries. In March 2017, we
acquired multi-site ISO 14001 certification for our factories and offices in Japan that had previously
acquired certification separately. Coinciding with the multi-site certification, we have developed astandardized company format for environmental impact assessments, the identification of usefulenvironmental aspects, environmental management programs and internal audit checklists. During fiscal
year 2018, we established approximately 100 environmental goals for different levels across the entire
company and carried out these improvement activities. We also set up a system at our Head Office for
confirming the progress of activities at each of our sites in Asia. Progress of activities and compliancewith laws and regulations are confirmed through internal audits and third-party audits. In May 2018, we
obtained ISO 14001 certification for our TEL Epion and TEL NEXX sites in Massachusetts in the UnitedStates. The issues identified through these activities are reviewed by the EHS Council, reported to the
Manufacturing Company Presidents’ Council, and used in promoting environmental activities across theentire TEL Group. Under such a management system, fiscal year 2018 was again free from environmental
incidents, accidents, violations and associated legal proceedings.
ISO 14001 certified factories and offices
Company nameFactory/Office name

Certification dateTokyo Electron

Q-EHS Promotion Center(Fuchu Technology Center)

Tokyo Electron Technology Solutions

Yamanashi Office (Fujii/Hosaka),
Tohoku Office

Tokyo Electron Kyushu

Koshi/Ozu Office

Tokyo Electron Miyagi

Taiwa Office

Tokyo Electron (Kunshan)�March 2013

TEL FSI�March 2013

Tokyo Electron Korea

Balan Factory

July 2014

TEL Epion�

TEL NEXX�

21% reduction(compared to FY2017, per unit sales)

Example initiative
As a way of conserving energy and combatting global warming, we are proceeding to switch to LED
lighting. During fiscal year 2018, we progressively replaced the lighting at our factories and offices in Japan.
As a result, we estimate that this has a reduction effect equivalent to power consumption of 1,350 MWheach year, or approximately 600 t-CO2 of energy-derived CO2 emissions.

Renewable energy initiatives
We promote the use of renewable energies. At the Taiwa and Yamanashi Offices, renewable energy generated
from solar panels is used to power the factories, and monitors displaying their energy profile have been set
up at the entrances to the factories. At our Koshi Office, generated energy is sold, helping to prevent global
warming. In fiscal year 2018, we generated a total of 4,414 MWh of renewable energy in Japan.
In addition, Tokyo Electron U.S. Holdings has continued to purchase green power, 3,458 MWh in fiscal
year 2018.

May 1998

May 2018

Yamanashi Office49

TOKYO ELECTRON SUSTAINABILITY REPORT 2018TOKYO ELECTRON SUSTAINABILITY REPORT 201850

Management foundation

Initiatives to reduce water consumption

Management of chemical substances

Recognizing that the preservation of water resources is a social issue, TEL has established a goal of keeping
water consumption at the same level or below that of the baseline year (fiscal year 2012 for factories andoffices in Japan and a fiscal year of their choosing for each overseas operation). Our ongoing efforts toachieve these goals include reusing pure water from our manufacturing operations, installing water-saving
devices, watering lawns with rainwater, and implementing intermittent operation of cafeteria faucets.
During fiscal year 2018, an increase in our volume of production and an increase in water consumption
associated with product development and evaluation resulted in water consumption of 1,135,000 m3, up
7.6% year-over-year. Compared to the baseline year, though, this represents a 4.7% decrease. Moreover, weachieve 11 of the 14 goals at our sites worldwide. We also discharged an estimated 905,000 m3 of wastewater.

TEL uses chemical substances in its product development and manufacturing phases. The use and release ofchemical substances subject to the Japanese PRTR* law are constantly monitored and managed. Whenever
we introduce a new chemical substance or change the way an existing substance is used, we check forenvironmental, health, and safety risks beforehand. We dispose of substances properly after use, either
through expert waste disposal contractors or by using in-house processing equipment. In response to the Act
on Rational Use and Proper Management of Fluorocarbons, we conduct simple, regular inspections based on
the law in an effort to monitor the amount of fluorocarbons used and recovered. During fiscal year 2018, no
TEL factories or offices exceeded the level of ﬂuorocarbon leakage that requires reporting.

* Pollutant Release and Transfer
Register (PRTR): A framework for
tracking, tabulating, and disclosing
quantitative data on chemical
substances that may be hazardous
to human health and the ecosystem,
including the amounts used anddischarged into the environment
and the amounts transferred (as partof waste) off the original business’s
premises

Material balance of substances regulated under the PRTR Law

Water consumption at business sites

4.7% reduction

Amount handled

100 tons per year(compared to baseline year)

Example initiative
A cooling tower is utilized to remove heat from coolant used in a turbo refrigerator, which is used toair-condition clean rooms. At the Tokyo Electron Kyushu Koshi factory, we have promoted a reductionin blow-off water1 by installing a system in the cooling tower to prevent scale2 from building up. It isestimated that introducing this system has had a reduction effect equivalent to about 5,000 m3 per year.
Added benefits of the system are that it also lengthens the life of pipes by preventing corrosion, and it
reduces time spent cleaning by controlling algae.

1 Blow-off water: Water that is drained
from equipment and pipes to preventan overconcentration of impurities in
the water

Waste

2 Scale: An inorganic salt compound(calcium, magnesium, etc.) containedin water, which hardens on thesurface of equipment and pipes

Initiatives to reduce waste

Consumption

In an effort to curb the amount of waste generated and to recycle it wherever possible, TEL promotes
initiatives for reducing waste. In addition to participating in the electronic manifest system3 to ensure
proper waste management, we are also engaged in maintaining an appropriate amount of parts inventory
and in reusing cushioning material. We are also achieving lower waste processing costs, by promoting
waste sorting activities and by modifying and increasing the capacity of space used for storing waste so
as to reduce the frequency that it is collected. In fiscal year 2018, we generated 133 tons of incinerated andlandfill waste in Japan. As a result of our waste-reduction initiatives, the recycling rate4 at sites in Japan in
fiscal year 2018 was 99.0%, achieving our goal of maintaining a recycling rate of 97% or higher for the 12th
consecutive year since fiscal year 2007. We have also maintained a high level of recycling at our overseas
factories and offices of 87.7%.
Recycle rates at business sites in Japan
Achieving goal: 12th consecutive year

99.0%

95 tons per year

3 Electronic manifest system: A systemfor electronically tracking the flowof 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.
4 Recycling rate: (Recycled amount /Amount of waste generated) x 100

Note: Transferred to sewage, onsite landfill, removed,
recycled, released into the air, and released into
the water are omitted because those amountare less than 100 kg

5 tons per year

Biodiversity

URL

www.tel.com/csr/environment/office/In a global environment, a wide variety of organisms exist, interacting and engaging with each other. In
carrying out its business activities, the TEL Group has a not insignificant impact on biodiversity, and yet
without the benefits yielded from biodiversity, the company could not sustain its activities. In recognitionof this, we will develop a framework for promoting initiatives in an effort to conserve biodiversity.

Environmental communication

URL

www.tel.com/csr/environment/office/

TEL’s environmental policy requires that, based on a shared understanding with a broad range ofstakeholders, we promote cooperative partnerships with them, and we take appropriate steps to live up
to their expectations. In promoting initiatives for the environment, we will maintain close communication
with all our stakeholders.

Green procurement

URL

www.tel.com/csr/environment/green-procurement/

In cooperation with our suppliers, TEL promotes green procurement, prioritizing the purchase ofenvironmentally friendly parts, products and materials.

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Social contribution activities

Initiatives around the world
Tokyo(Head office)Approach to social contribution activities
The aim of social contribution activities by Tokyo Electron (TEL), are to contribute to the development of local communities and theresolution of social issues through various initiatives while deepening stakeholder trust. With Innovation and Technology, Education,
Environment, and Community Involvement as our four focus areas, we conduct activities according to the United Nations SDGs.*

TEL FOR GOOD is the new brand name that represents TEL’s social contribution activities. From fiscal
year 2019, we are using it as a collective term for social contribution events and various programs,
donations and volunteer activities sponsored by our company around the world.

The Tohoku Forum for Creativity(TFC) is an international visitor
research institute located within
Tohoku University. TEL has been
providing comprehensive support
to the TFC ever since the House of
Creativity was established in 2013.
At the TFC, specific strategic themes
are selected from various scientificdisciplines by weighing the challenges
facing mankind and the trends inworld affairs. Nobel laureates and other globally prestigious researchers are theninvited, and students and junior researchers are provided with an opportunity to
deepen their research over a period of one to three months.

Tokyo(Head office)Education

Environment

Tobitate! (Leap for Tomorrow) Study Abroad Initiative

The Tobitate! (Leap for Tomorrow)
Study Abroad Initiative is acollaborative project between the
Ministry of Education, Culture, Sports,
Science and Technology (MEXT)
and the private sector with a goalof sending 10,000 high-school anduniversity students abroad to study
by 2020. TEL has been supporting
this initiative from its launch in 2013,
based on the belief that nurturing talented people over the long term is a source of
momentum to business and society.

4 focus areas and relevant SDGs

Innovation andTechnology

Tohoku Forum for Creativity at Tohoku University

Tokyo Electron Forest

Tokyo Electron Technology Solutions’
Yamanashi Office conducts treeplanting activities at the Tokyo
Electron Forest. In July 2017, 135 people
including the employees and theirfamilies banded together to plant
some 1,200 konara oak and maple
saplings. This ongoing event has been
held since 2010 as an initiative to bothrespect biodiversity and to pass on therich natural and cultural resources of the forest to future generations.

EuropeSupport for areas affected by the
Kumamoto Earthquake

Support activities provided by Tokyo Electron Kyushu in response to the April 2016 Kumamoto
Earthquake include matching donations collected from TEL Group employees and donating emergency
supplies to nearby municipalities. At the request of local governments, we donated and distributed
some 8,000 disaster protection hoods to nearby elementary schools, with advice to children on theimportance of always being prepared for emergencies. Other activities included donating 5,000
emergency medical information kits for people requiring evacuation assistance, and helping to set
up container storage facilities for evacuees living in temporary housing to store their household
possessions.
In February 2017, we also initiated support for construction of a well to assist residents of Minamiasomura in rebuilding their lives. After drilling a deep well, an aquifer containing drinking-water was reachedin May, and a suite of necessary equipment was donated in July 2017, including a pump capable of drawing
300 tons of groundwater per day.

SEMI High Tech U

Tokyo Electron America hassponsored and partnered withSEMI High Tech U for many years.
Over 30 students from highschools around the area are invited
to Austin campus, where they
participate in a 3-day program ofpresentations, laboratory work andother events. Through hands-on
learning, students are given theopportunity to think about careers in high-tech.

Korea

Korean Conference on Semiconductors

Looking to contribute to developmentof new technologies and growth of
the semiconductor industry, Tokyo
Electron Korea has been sponsoringand participating in the Korean
Conference on Semiconductors—thecountry’s largest industry event—since 2015. Attracting about 1,300
researchers and students every year,
the conference features presentations
on the latest studies and encourages the exchange of information.

Community
involvement
Yamanashi

SPECIAL TOPIC

U.S.

Crawley Christmas charity days

At Tokyo Electron Europe’s Crawley Headquarters, theproceeds from its 2017 Christmas raffle were used tosupport the charity, Home Start CHAMS. Home Start
CHAMS helps parents of socially excluded children
to provide the children with opportunities to change
their life. We also support Christmas Jumper Day,1 an
event planned by Save the Children.2

TaiwanBeach cleanup for preserving a beautiful coastline

In June 2017, Tokyo Electron Taiwan helda charity event to coincide with its beachcleanup in Hsinchu City, pledging to makea donation proportionate to the numberof participants and the volume of waste
collected. On the day of the event, many
ordinary residents who happened to beat the beach joined with the more than150 employees and volunteers, collecting
over 300 kg of waste. This resulted in a donation of TWD 450,000, which was given to the
National Nantou Special School.

China

Liver Transplant Program for Children

The Liver Transplant Program forChildren aims to help children withliver disease and to increase awarenessof this area. In 2017, Tokyo Electron(Shanghai) donated 20,000 CNY tothe program. Since the start of the
program, the associated foundation
has helped 170 children to receive an
operation and begin a new life.

1 Christmas Jumper Day: an event in which employees donate 2 pounds and wear their Christmas jumper towork
2 Save the Children: a global, non-governmental charity which provides healthcare, education, protection andfood to millions of children around the world

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TOKYO ELECTRON SUSTAINABILITY REPORT 2018TOKYO ELECTRON SUSTAINABILITY REPORT 201854