The TODA KOGYO Groupsupports local sports
and arts.

©2023 S. FC

CSR
Report2023
For inquiries about this report, please contact:
CSR & Environment Management Group	Otake Plant, 1-4 Meijishingai, Otake,
Hiroshima Prefecture 739-0652 Japan
TEL: +81-827-57-6129
Published in January 2024

Approach to Sustainability
The TODA KOGYO Group defines sustainability as "the lively growth anddevelopment of the company, society and the earth."
To achieve sustainability as we see it, we help resolve social issues
through our business activities.
The Group has been incorporating this term of sustainability, "lively
growth and development" in our Management Principle for a long time.
As well as achieving lively growth and development as a company, we believe it is equally important to ensure that our technologies and activities
contribute to the sustainable development of humanity and the global
environment.
To pursue this management principle, the Group emphasizes three values.

1

2

Contributing to futuresociety through innovative fine particle
synthesis technologies

3

Being a better corporate
citizen and a better social
institution

Building a sustainable supply chain

Editorial Policy

About the coverPurposeWe transform the potential of fine particles into
new possibilities for our world.

Management Principle
Our Group will further improve the fine particle synthesis technology we have developed with iron oxides and will always
continue lively growth and development.
We will work on a foundation built on sincerity and trust
and we will bring together our creativity and manufacturing
strength to make a contribution to society in general with attractive new materials and solutions that are full of originality.

Contents
Approach to Sustainability

The TODA KOGYO Group has been conducting
sound business management and CSR activities

Purpose / Management Principlewith a view to the sustainable development of

Top Message

business and society. To make the Group's activities better understood by stakeholders, this re-Establishment of Purpose and New Brand Logo

port carries details about our activities for innova-

TODA KOGYO Group's History and Businesstion, the environment, safety and health, humanrights, quality assurance, corporate governanceand other aspects.
We hope that this report will help build stronger
trust with stakeholders.
Scope of report: TODA KOGYO CORP. and some of its
group companies
Period covered: April 1, 2022 to March 31, 2023
Published in January 2024 (English Version)

2

CSR Report 2023

The TODA KOGYO Group sponsors Paralym Art, aproject for participation of artists with disabilities insociety and for their economic independence. As an
official partner, the Group supports Paralym artists.
Artwork entitled: Harvest
Created by: Sakura Yuki
The picture expresses the celebration and joy of harvest.

Page

2
3
4
6
7

Safety and Health Activities
Quality
The Environment
Sustainable Procurement
Human Capital Management

Familiar Products from the TODA KOGYO Group

8

Business Overview, Segment Overview andMedium-Term Business Plan

10

The TODA KOGYO Group's Business-Specific Strategies

12Compliance

18

Information Security

Special Feature: Materiality (Material Issues)Special Feature: Innovation Management
Special Feature: Risk Management
Expression of Support for the TCFD Recommendations

14
20
22

Human Rights
Diversity, Equity and Inclusion
Intellectual Capital
Governance Data

Company Information
Offices and Plants
CSR Report 2023

Page

26

28

30
34
36
38
40
42

43
44
45
46

47

3

Top Message

Believing in the potential of people
and fine particles,we continue to pursue the challengeof creating new value.
President and CEO

Shigeru Takaragi

Endeavors Envisaged with the Next Generation in Mind are the Wellspring of Growth

TODA KOGYO was founded in 1823 as a manufacturer of Bengala, a red pigment that is essential forthe painting of porcelain, lacquerware and historicalbuildings. At the time, Bengala was made from ironsulfide ore, produced as a by-product from mining
through a manual process of baking, crushing andgrinding. Later, the TODA KOGYO Group establishedproprietary fine particle synthesis technologies
such as wet synthesis to provide inorganic materials
based around iron oxides to various companies.

4

CSR Report 2023

Looking back on the history since our founding, the Group has
continued to develop and provide new materials and solutions
in step with changing social needs. Underpinning this is theGroup's management approach, which seeks to always look to
the next generation while at the same time regarding customer
needs as a starting point. When I joined the company in 1984,
the business of magnetic recording materials was expanding
after the widespread use of audio cassette tapes. The management in those days already focused on research and development and strengthened marketing efforts with an eye towards
future needs in society. Those efforts led to the launch of abusiness producing materials for photocopiers and printers tofollow on from the magnetic recording material business. At thetime, we were among the first to respond to the introduction of
new technologies using magnetic toner in the photocopier andprinter market, and managed to meet demand by developing
and manufacturing the needed materials. We continued withthis forward-thinking approach subsequently, taking on thechallenge of manufacturing materials for lithium-ion batteries(LIB) in an effort to cater to a market with potential for future
growth. The LIB materials developed through the fine particle
synthesis technologies cultivated in the magnetic recording
material business were first applied to mobile phone and PC
applications, and today are supplied as battery materials forelectric vehicles. The magnetic material and dielectric material markets, which are currently regarded as growth businesses, are also materials we have been developing in anticipationof the maturation of magnetic recording materials. Magnetic
materials serve growing demand in applications for motors
and sensors due to the electrification of vehicles, while dielectric materials are increasingly used as materials to meet demand for more compact laminated ceramic capacitors used insmartphones and other devices. In these ways, the Group has
continued to grow by always anticipating societal changes,
considering what society will demand next and how its corecompetence in fine particle synthesis technologies ties in to
those new needs.

Our Growth Vision Focusedon the Medium and Long Term
The TODA KOGYO Group is currently implementing its threeyear medium-term business plan Vision 2023 which began in
April 2021, and has established Go Beyond 200 as its vision
for fiscal 2024 and beyond. We will enhance profitability in
our core functional pigment business. In the electronic materials business, we will strive to expand sales in four domains
we have defined as growth businesses, namely magnetic materials, dielectric materials, soft magnetic materials and lithium
ion battery materials. We will work toward the commercialization of soft magnetic materials and environmental materials as
next-generation businesses.

The Environmental Materials Business
Reducing Our Environmental Impact
The environmental materials business started at TODA KOGYO
in the 1990s. At the time, the release of dioxins from waste
incineration plants was a social issue. We developed and pro

vided a dioxin-suppressing combustion catalyst, utilizing its
function of promoting the complete combustion of iron oxide.
Starting in the 2000s, we began collaborating with universities
and other institutions to utilize iron-based catalysts and othermaterials to develop the direct methane reforming (DMR)
method which generates hydrogen and carbon (carbon nanotubes) from methane in a way that produces no carbon dioxide.
In August 2023, we began using this technology in Japan's first
demonstration experiment to produce hydrogen at commercial
scales from natural gases including methane in Toyotomi-cho,
Hokkaido. We will steadily proceed with this demonstration
project while continuing to expand the environmental materials
business in Japan and overseas in the future.

Our Human Resource Strategy to
Achieve Sustainability Management
The TODA KOGYO Group also regards ESG initiatives as important in achieving sustainability management. On the corporate governance front, the Group has also worked to strengthen
governance while enhancing the transparency and independence of the Board of Directors. And on the environmental
front, we have disclosed greenhouse gas emission reduction
targets as an internal initiative while conducting the scenario
analyses required under the framework of the Task Force on
Climate-Related Financial Disclosures (TCFD).
We have made our human resources strategy a particular focus. TODA KOGYO is a company founded on technology wherea third of all employees are involved in development. Whilecontinuing to invest in human resources to refine our uniquefine particle synthesis technologies on an ongoing basis, we
also recognize the importance of rotating employees throughmultiple departments while maintaining an engineering groupfulfilling a wide array of roles. But not all of our employees are
required to have a background in chemistry. Above all else, thequalities we value are passion and motivation toward the creation of new value, and a willingness to work in a genuine andserious way in cooperation with others.

Supporting Society ThroughPurpose-Oriented Management
In anticipation of our 200th anniversary, in January 2023 we established the TODA KOGYO Group's Purpose (reason for existing)as "we transform the potential of fine particles into new possibilities for our world." This was the result of extensive discussions on
the future of the Group by a team mainly comprising mid-leveland junior employees. As expressed by part of the accompanying
statement which reads, "There is infinite potential embedded in asingle tiny particle," since its founding the Group has continued toembrace the challenge of creating new value that represents hopefor the future. The Group will continue to push forward based on
its belief in the potential of fine particles and people in order tofulfill its social role of supporting people's daily lives and society
as a whole. And to meet the expectation of our stakeholders, wewill aim to help solve social issues and achieve the sustainablegrowth of the TODA KOGYO Group through the business activities
we pursue together with our employees. Thank you for your continued understanding and support.

CSR Report 2023

5

Establishment of Purpose and New Brand Logo
TODA KOGYO marked the 200th anniversary of its founding and the 90th anniversary of its incorporation on November 30,
2023. On this occasion, we established our Purpose and introduced a new brand logo.

TODA KOGYO Group's History and BusinessHistory

TODA KOGYO's history began with Bengala. Technologies cultivated over the 200 years since its
founding are still in use today.

Coloring for building materials
and ceramics

Establishment of Purpose

1823

Founding

Statement

Purpose– reason for existing –We transform the potential of fineparticles into new possibilities for
our world.

Our business dates back to 1823, when we commenced
manufacturing of the Bengala iron oxide pigment. We haveconstantly unlocked new potential in chemical materials andcreated products to meet the demands of the times. In doing
so, we have supported the foundations of society. The Group's
products are used not only for iron oxide pigments as original
applications but are also found in automobiles, smartphones,
household appliances and other state-of-the-art domains.
Our chemical materials are created from fine particle synthesis
technologies that we have been developing since our founding,and reach markets around the world.
The newly established Purpose embodies our belief in thepotential of both people and fine particles and our aspiration toincessantly try to create new value that generates hopes for the
future.

There is infinite potential embedded in a single tiny
particle.
Even the smallest particles have enormous potential
in their ability to join together, combine with each other, as well as react to and bring about changes thatcan ultimately contribute to greater growth for ourown lifestyles and society.
Similarly, people also have boundless possibilities.
By working hand-in-hand to share knowledge, wisdom, and ingenuity, each person holds tremendous
power to help face any type of challenge.

Pigments

Our business is founded in the city of Ibara,
Okayama Prefecture.

A family business of Bengala manufacturing is started.

Maritime transport becomes amainstream form of distribution

1933
Incorporation
Ship bottom coatings

Pigments

Hiroshima Plant(currently at Asa-Kita-ku in the city of Hiroshima)

TODA KOGYO Corporation is incorporated.
A company with a mission of manufacturing andselling Bengala is set up in the city of Hiroshima.

1960s

It is our viewpoint that every person is an irreplaceable“particle” making up our larger world.
We see our mission as continually trying to connect
with each other and combine our abilities as we attempt to create new possibilities that bring hope tothe future. Supporting life and society through nanotechnology.

SloganAutomatic ticket gates

Deﬂection yoke materials

Soft magnetic
materials

Monochrome TV sets are in widespread use.
First TV boom (wedding of the Crown Prince)
Second TV boom (1964 Olympics in Tokyo)

Motors are in growing demand.

Old brand logo

* A horse bit is a metal mouthpiece for a horse for attaching reins.

CSR Report 2023

Magnetic recording

Magnetic recording materials
Environmental awarenessincreases.

Magnet materials
We have created a new brand logo, including an upgraded
form of the horse bit* symbol that we have used since the logo
launch.
The new brand logo highlights the four quarter-circles. They
correspond to the four empty areas in the circle and the crossthat constituted a horse bit. These quarter-circles are now solid
to represent TODA KOGYO's presence as an entity that keeps
supporting diversifying society by taking advantage of the potential of fine particles to create objects hitherto unknown to
the world.
To implicitly maintain the essential meaning of the horse bit,namely connection and linkage, a sphere that implies a particle is placed at the center of the four new elements shaping
the horse bit (TODA KOGYO's presence). In total, the new logo
embodies TODA KOGYO's commitment to linking people andgoods as well as society and the future through materials or
particles that serve as a source of power for new manufacturing
and the constant creation of particles.

Magnetic
tickets

1980s

Magnet materials for motors inhousehold appliances

New brand logo

Audio and video cassettetapes are in widespread use.

1970s

Printers and photocopiers
are in widespread use.

Fine particles for a fine future.

New Brand Logo

6

BengalaTODA KOGYO's business dates back to 1823, when we commenced handicraft manufacturing of Bengala. It is the oldest
pigment in human history and is indispensable for painting on porcelain and for the coloring of historical architecture.
Nearly 200 years have passed since then. Throughout our history, we have been able to survive by successfully overcoming
challenges at different times. We have consistently opened
up new frontiers for chemical materials and have continued
to produce products that meet the demands of the times.
When pollution was a social issue, we created an environmentally friendly manufacturing method. At a time whenmagnetic recording materials used for video and audio cassette tapes were our mainstay products, we were anticipating the advent of the digital age and working to open up new
fields.
The Group's products are used not only for pigments asoriginal applications but for automobiles, smartphones,
household appliances and other state-of-the-art domains.
Our chemical materials are created from technologies that
we have been developing for 200 years since our founding,and reach markets around the world.

Lithium ion battery products arein widespread use.

Toners and carriersElectronic printing
materials
IT society advances.

2000s

Ferrite IC tags andNFC tags on metal

Cathode and anode materials

Lithium ion
battery materials

Flexible
ferrite sheet

Electromagnetic control components
and magnetic sheet

1990s

Iron oxide for
combustion
catalyst: Activatediron oxide (TIC®)
Garbage bags for burnable waste

Hydrotalcite

Environmental
materials

Lead-free
polyvinyl
chloridestabilizer

Heat retaining
agent for agricultural polyoleﬁn ﬁlm

2010s to 2020s
Automobiles shift to electric vehicles and ICT advances.

Soft magnetic
materials

Motor and sensor materials for automobiles,
household appliances and others

Magnet materials

Noise control materials
Materials for contactlesscharging for electric vehicles (EVs)2023

Marking our 200th anniversary

Barium titanate
for multilayer ceramic
capacitors

Soft magnetic Dielectricmaterials
materials

CSR Report 2023

CO2 solid capture sorbents

Environmental
materials

7

Familiar Products from the TODA KOGYO Group
化学製品は私たちの身の回りで様々なところで使われています。

戸田工業グループの素材も自動車、家電製品、情報機器等に利用され、Fridge door seals

小型化、軽量化、高性能化へ貢献しています。

Inductors
Ferrite sheets for contactless charging

Capacitors

Motorsfor washing machines

Touchscreen panel ﬁlms
Magnetic toners and carriers

Lipsticks
Magnetic tickets

Motors for air conditioners

Fan motors

Combustion catalysts
Industrial catalysis

Rust preventive agents for steel frames

Automotive coatings

Color paving

Lithium ion batteries

Bengala lattice

Film for plastic greenhouses

BrakesMotorsCenter lines on roads

8

CSR Report 2023

Electronic circuit components

Ship bottom coatings (rust prevention)

CSR Report 2023

9

Business Overview, Segment Overview andBusiness Policy

Overview of Business Segments

The TODA KOGYO Group has achieved its growth by fulfillingits mission of helping to find solutions to social issues throughits business and by addressing social problems and the mostadvanced needs of the times. On November 30, 2023, the200th anniversary of our founding and the 90th anniversaryof our incorporation, we established the Purpose (reason forexisting), which reads "We transform the potential of fine particles into new possibilities for our world." This embodies our belief in the potential of fine particles and humans and our aspiration to incessantly try to create new value that generates hopes
for the future. Our business commenced with manufacturing
Bengala. It is the oldest iron oxide pigment in human history
and is indispensable for painting on porcelain and for the coloring of historical architecture. We have been serving society withthe use of different functions of the iron oxide. After its 200th
anniversary, the TODA KOGYO Group will continue its efforts to
explore the potential of iron oxide, to offer new materials andsolutions and to remain a company that will support a diversely
evolving society.

Business Overview for Fiscal 2022
(from April 1, 2022 to March 31, 2023)
Net sales dropped year on year, due to the semiconductor
shortage and weak demand for ICT equipment.
Among the decline in net sales and rises in prices of raw
materials and energy and in transport expenses, operating
profit and ordinary profit contracted year on year. However,profit attributable to owners of parent ended higher than in
the previous fiscal year after a transfer of equity stake in Toda
United Industrial (Zhejiang) Co., Ltd. (hereinafter "Toda United"), which was formerly a consolidated subsidiary.
For fiscal 2022, net sales stood at 34.9 billion yen (35.3 billion yen for fiscal 2021), operating profit at 1.3 billion yen (2.5billion yen for fiscal 2021), ordinary profit at 3.3 billion yen (4.1billion for fiscal 2021), and profit attributable to owners of parent at 3.2 billion yen (3.1 billion yen for fiscal 2021).

The Group reports two business segments: electronicmaterials and functional pigments. Segments are determined on the basis of the range of products and in consideration of manufacturing methods and processes as wellas the similarity of their markets. The electronic materials
segment covers businesses of magnet materials, dielectricmaterials, lithium ion battery materials and other materials.
The functional pigments segment deals with pigments.
Overview of the electronic materials segment: Net sales were
down 1.5 billion yen from fiscal 2021 to 20.2 billion yen. The
segment profit rate dropped 3 percentage points from fiscal
2021 to 12%.
In magnet materials, net sales surged from fiscal 2021. That
reflected the expansion of sales of rare earth bonded magnet materials, which have the world's highest-class magnetic
characteristics, for automotive motor applications. In addition,
Jiangmen & Partner's Magnetic Product Co., Ltd. (hereinafter"Jiangmen & Partners'"), which became a subsidiary in August
2021, had a positive effect on financial results throughout the
fiscal year. (For fiscal 2021, its statement of income was consolidated from the third quarter onwards.) In dielectric materials and others, net sales dropped from fiscal 2021, chiefly
reflecting the semiconductor shortage and inventory adjustments following sluggish demand for ICT equipment.
Overview in the functional pigments segment: Net sales rose
1.1 billion yen from fiscal 2021 to 14.7 billion yen. The segment profit rate(Fiscal)
tumbled 2 percentage points from fiscal 2021
to 14%.
Behind the net sales growth, market demand remained
strong as in fiscal 2021, particularly for materials for photocopiers and printers, materials for coatings and materials forcatalysts. Meanwhile, segment profit decreased. This was due
partly to the transfer of Toda United, which was a consolidated subsidiary manufacturing iron oxide pigments, in the third
quarter of fiscal 2022 and to surging prices of raw materials
and energy.

Quarterly trends in consolidated net sales, operating profit and ordinary profit

Fiscal 2021

Fiscal 2022
10.6

8.1

7.8

8.6

9.7

1.4
14
1.0
10
0.6
1Q
Externalfactors
Our
moves

10

0.6

Medium-Term Business Plan

0.8
8

2Q

0.8
8

0.8

0.3

3Q

0.8
4Q

9.0

1.1
11

1Q

Unit: billion yen

8.7

7.4

2Q

0.0

0.4
4

3Q

0.1

4Q

Surges in raw material prices
Rise in energy prices and others
Weak demand for ICT equipment

Demand rallies in Japan and overseas.

Continued activities for rectifying prices
Jiangmen & Partners’ TODA MAGNET (SHENZHEN) CO., LTD.
(based in China)(based in China) dissolved
reorganized into a
Factory of TODA FERRITE KOREA CO., LTD.
consolidated ubsidiary (based in South Korea) closed down

CSR Report 2023

-1.5

15%

12%

-3 point

Magnet materials

9.8

11.4

+1.6

Household appliances, automotive and othermotors and sensors

Dielectric materials

1.5

1.0

-0.5

Multilayer ceramic capacitors for electronic
components for ICT equipment and EVs

Lithium ion battery
materials

8.3

5.8

-2.4 Lithium ion batteries for EVs and HEVs

Other materials

2.1

1.8

-0.3

13.5

14.7

+1.1

16%

14%

-2 point

13.5

14.7

+1.1

Electronic(Fiscal)materials

Functional pigments

Toda United(based inChina)
transferred

Segment
profit rate

Net sales

Segment
profit rate

Functional pigments

Progress of Medium-TermBusiness Plan Vision 2023

◆ Progress against the Medium-Term Business Plan
Result or forecast(single year)

Target(cumulative total)

Ordinary
proﬁtResult or forecast(cumulative total)
Unit: billion yen

102.0

35.3 (Result)９９.２(Forecast)

65.5

31.0

(Result)

34.5

34.9

(Result)

36.5
29.0

(Forecast)

2021

2022

Main applications
Coloring of road surfaces and building materials, photocopiers and printers

Result or forecast(single year)

2023 (Fiscal)

Net sales (Line: cumulative total, Bar: single-year)

Target(cumulative total)

Result or forecast(cumulative total)

5.9
3.8 (Result)

2.5 (Result)

Unit: billion yen

4.6 (Forecast)

3.6

1.7
1.7

2.5

(Result)

1.9

2.3

1.3

(Forecast)

0.82023 (Fiscal)(Result)

2021

2022

Operating profit (Line: cumulative total, Bar: single-year)

Materiality: Determination of
Financial Indicators
The TODA KOGYO has defined Financial Base as a material
issue towards 2030, determined specific indicators and set
numerical targets for the purpose of achieving its aspiration
to become a company that is essential on a global level andincrease the corporate value of the Group as stated in its Management Policy.
The following shows the targets for 2030 and trends in thepast two years. We will make an analysis for each set of quarterly results, incorporate measures for reaching the targets into
specific initiatives and carry out activities.

◆ Financial Base
Initiatives
aimed atachievement

31.0
35.3

Main applications

Target(single year)

Fiscal 2022 was the second year of the plan. For that year,
net sales ended at 34.9 billion yen, against the target of 34.5
billion yen. Operating profit was 1.3 billion yen while the target
was 1.9 billion yen. This reflects surges in prices of raw materials and energy.
For fiscal 2023 as the final fiscal year of the plan, prices of(Fiscal)raw materials
and energy are expected to remain at high levels.
Amid the continued global trend towards tighter monetary policies, there is a downward risk to the overseas economy. In theforeseeable future, uncertain situations are expected to last.
Towards meeting the three-year cumulative targets of 102
billion yen in net sales and 5.9 billion yen in operating profit,
we will conduct measures suited to individual businesses Especially regarding operating profit, the cumulative target is set at
5.9 billion yen while the cumulative total of results and forecast
is 4.6 billion yen. All our departments will steadily implement
measures for boosting profits in an effort to attain the target.
(The forecast for fiscal 2023 represents the figure announced
on August 8, 2023.)

70.2 (Result)

0.6
6

Unit: billion yen

20.2

Net sales

OperatingproﬁtChange21.7

Target(single year)

1.1
11
0.3

Fiscal 2021 Fiscal 2022

Net sales

Indicators

Fiscal2021

Fiscal2022

TargetYear of
Achievement

Optimization
Stabilizationof the business of ROE(consolidated)
portfolio

30%

21%

10% orhigher

-

7%

4%

8% or
higher2030

31%

40% orhigher2030

Operatingprofit ratio
Improvement in (consolidated)cash flows
2021
Equity ratio(consolidated)

CSR Report 2023

2022

24%

2023 (Fiscal)

11

The TODA KOGYO Group's Business-Specific Strategies
Electronic materials business

Functional pigments business

The electronic materials business deals chiefly with materials used in the domains of automobiles and ICT equipment. The
markets for these products are expected to grow further. In particular, we are concentrating our efforts on expanding thebusinesses of magnet materials used in motors and sensors and of dielectric materials used in capacitors.

The functional pigments business deals with iron oxide and other materials. Its growth has been driven by its applications
as coatings and coloring materials for photocopiers and printers. These coloring materials have been a pillar of earnings since
our founding. We are working to develop products tailored to the needs of the times.

Magnet materials

Functional pigments

Main products
Magnetic powder(ferrite and rare earth)Compound(ferrite and rare earth)Mainapplications

Net sales*1

Strategic points

Unit: billion yen

9.8MotorsSensors

11.4

6.2

Dissolution :TODA MAGNET (SHENZHEN) CO., LTD. (a company based in China
dealing with rubber magnets (2021))
Factory closure:
TODA FERRITE KOREA CO., LTD. (a factory of ferrite magnetic powder
based in South Korea (2021))

Magrolls

Plastics
Formed magnets

Seek growth while maintaining high profit
through selection and concentration

2020

2021

2022

(Fiscal)Acquisition of equity stake:
Jiangmen & Partner's Magnetic Product Co., Ltd (a company forming
plastic magnets based in China (2021))
Capacity increase:
Processes for rare earth powder and compounds (2022)

Dielectric materials
Main products
Barium titanate

Mainapplications
Multilayer ceramic capacitors(MLCC)

Strategic points

Net sales*1

1.5

Unit: billion yen

1.1

1.0

Dispersion

Improve quality and additional value ofmaterials
Capacity increase:
Process for barium titanate (2022)
Research and development:
Functional improvement and microparticulation of barium titanate

2020

2021

2022

(Fiscal)Research and development:
Acceleration of development of Dispersion

Lithium ion battery materials
Main products
Precursor

Cathode material

Net sales*1

8.3

Cell

Strategic points

Unit: billion yen

5.8

5.5

Expand business through collaboration withpartners
Develop recycling technologies• Increase capacity to answer strong demandPack• Develop recycling technologies

2020

2021

2022

(Fiscal)Soft magnetic materials
Main products
Tapes

Adhesives

Main
applications

Strategic points

Inductive devices

Facilitate the shift to CASE and a MaaS society with noise control materials

EMC
Forming

SheetsInductive devices• Development subjects:
Soft magnetic materials, powder form control, composite
materials and others

EMC• Development subjects:
Noise control components, millimeter wave absorbers,
high frequency noise control materials and others

Contactless power supply*1 Net sales for fiscal 2020 conform to the new accounting standards.

12

CSR Report 2023

Hematite

Main applications

Goethite

Strategic points

Unit: billion yen

Coloring

11.1

TonersMagnetite

Net sales*1

13.5

14.7

Expand new applications and increase added
value with wet synthesis technologies• Transfer of equity stake: Toda United (a manufacturer of ironoxide based in China (2022))

Friction materials• Capacity increase and investment for business continuity:
Wet process for iron oxide (Onoda (2022))

Recording materials• Research and development: Advancement of purification
technologies, and establishment of recycling technologies

Catalysts

Batteries

2020

2021

Expansion into environmental
materials in the next generation

Since the 1980s, the functional pigments business hasachieved growth with magnetic recording materials used foraudio and video cassette tapes. Given that the market was
expected to shrink gradually in the 1990s, we modified existing facilities to produce materials for photocopiers andprinters. After that, we marketed coloring pigments in the
Chinese market to change our business portfolio. Today, wedefine materials with a reduced environmental impact as abusiness for the next generation, and we carry out researchand development efforts with a view to commercializing them.

Efforts on environmental materials

Mainapplications

EV

Main products

2022(Fiscal)Ship bottom
coatings<<Expansion into environmental materials in the next
generation>>

Dioxin-suppressing
combustion catalyst(4) Environmental
materials• CO2-free hydrogen and carbon
nanotubes (CNT)• CO2 separation and capture(3) Coloring pigments
China: Sale of Toda United(2) Photocopiers• Materials for printers(1) Magnetic
recording materials
Magnetic
tapes

1990s

* Excluding the engineering business(a manufacturer of ironoxide pigments)(December 28, 2022)

Photocopiers
Printer toners

2020s

Future◆ Research and development of a high efficiencyhydrogen production system using ferrous catalyst
by the direct methane reforming (DMR)◆ Development of Revolutionary CO2 Separation
and Recovery Technology Using Na-Fe Oxides

Since 2021, TODA KOGYO has been working to develop a CO2free hydrogen production process and system based on the DMR
method, in which hydrogen is produced from methane, which isa main component of natural gas, biogas and others, with theuse of a highly active ferrous catalyst. It is carried out as a project commissioned by the New Energy and Industrial Technology
Development Organization (NEDO*2). Going forward, we will,
jointly with Air Water Inc., set up a hydrogen production plantusing the DMR method with a commercial scale in Toyotomi-cho,
Hokkaido, on the basis of our past development achievements. It
will produce high-purity hydrogen from natural gas associatedwith hot springs, which mainly comprises methane. In addition,
we will aim to process carbon generated as a by-product into
multilayer carbon nanotubes boasting high conductivity andmarket them. We will search for their applications and evaluate
their performance. We will strive to establish a hydrogen production system based on the DMR method to produce hydrogen andhigh value-added multilayer carbon nanotubes by fiscal 2025 ina bid to reduce hydrogen production costs and to achieve a cleanhydrogen supply chain.

Na-Fe oxides are substances fundamentally composed of
sodium ferrite. Discovered at Saitama University, sodium
ferrite is an iron oxide-based material with the ability to absorb and desorb CO2. Sodium ferrite is a layered compoundin which iron, oxygen and sodium are arranged in a layered
form. It selectively chemically absorbs the CO2 in combustion exhaust gasses and in the atmosphere. When heatedto around 120°C, it desorbs the CO2 so that it can be recovered. Without the deterioration of its characteristics after repeated absorption, separation and recovery, it can beused as a CO2 solid capture sorbent that may be continuously used for a long period of time. In May 2022, a joint
proposal by Saitama University, Air Water Inc. and TODA
KOGYO for development of a revolutionary CO2 separation
and recovery technology using Na-Fe oxides was adopted asa project commissioned and subsidized by NEDO. They havesince been conducting development efforts. This technology
was presented in Japan's governmental public relations display at the International Media Center for the G7 Hiroshima
Summit in May 2023.

*2 NEDO: New Energy and Industrial Technology Development Organization
CSR Report 2023

13

Special Feature: Materiality (Material Issues)
The Group has been incorporating this term of sustainability, "lively growth and development" in our Management
Principle for a long time. As well as achieving lively growthand development as a company, we believe it is equally important to ensure that our technologies and activities contribute to the sustainable development of humanity andthe global environment. To achieve this "lively growth anddevelopment", the Group has been offering materials thatlead to solutions to social issues in the different eras it has
existed in.
Today, issues facing human society and the global environment are becoming more complicated and changing more dramatically, and companies are faced with thechallenge of determining how to address these issues. On
the occasion of the 200th anniversary of its founding, theGroup identified its material issues in view of its long-maintained principle of lively growth and development and thelatest social trends.
We will aim to achieve sustainability at corporate, societal
and global environmental levels through management that
integrates our Management Principle, Purpose, Management Policy and material issues. In tandem with that, we
will study what is wanted from the Group, which we learn
through dialogues with stakeholders, as well as social changes to change for the better to address the material issues.

The Structure of Materiality
The ten material issues we have identified are consistent
with the four management policy items designed to achieve
our management principle. They also include specific measures, indicators and targets for pushing us to better address the issues. The Group's material issues will not merely
serve to mitigate risks in our business activities. We believethat they will also serve as metrics of medium- and longterm management and human resources strategies and as
a guidepost for daily decision-making by the management
team and by employees.

Management
Principle

Management
Strategy

PurposeHuman Resource
StrategyManagement Policy

Consistency

Material Issue Formulation
Process
The process for identifying material issues was in accordance with the GRI Standards (GRI 3: Material Items 2021),
a set of international guidelines. In considering these items
we not only took risks into account, but also feedback fromstakeholders and the Group's management strategies.

The 10 Material Issues and Grounds for Identification
Material Issues

Grounds for Identification
We regard innovation itself as a solution to social issues and a source ofProduct Innovation

corporate growth, and believe that it is the Group's mission to maximize thepotential of fine particles and support the development of society with thematerials we provide.

Step 1:

Understanding the Internal and External Environments

Based on reports issued by international organizations, theJapanese government and various governmental agencies,
the representatives of each division verified the external
environment in which the Group lies with regard to global
trends and changes to the social environment. Next, they
reviewed the values of the Group, its business activities,
and its relationships with stakeholders.

We regarding environmentally friendly manufacturing methods as a source

Process Innovationof corporate competitiveness, and believe it is important to continue to refine fine particle synthesis technologies as a core competence of the Group.
We regard solving customer issues and supporting customers to create in-Value-centric Marketing

novation as the source of business creation, and believe it is important toseek out business opportunities in the global market.
We believe it is important to enhance reliability in terms of safety, quality

Step 2:

Identifying Impacts

We considered risks that have materialized and potential
risks from a medium- and long-term perspective. We organized the risk items according to our interests, categorizingthem as either "impacts from external sources" or "impacts
on external sources." Moreover, in addition to negative impacts such as risks, we considered positive impacts such as
customer expectations, and the Group's unique ability toprovide chemical materials.

Stable Supply

and logistics to ensure that all interested parties including suppliers, customers and end users can use the products of the Group with peace ofmind.
Achieving a low-carbon society is seen as one of the most important issues

Climate Change

worldwide, and as a corporate group in an energy-intensive industry, we believe that working to reduce CO2 emissions is an important responsibility.
To earn the trust of all stakeholders in an environment of volatility, uncer-

Financial Basetainty, complexity and ambiguity (VUCA), we believe it is essential to ensuresustainable revenue and maintain sound financial capital.

Step 3:We see the diversity of human capital, including personnel who forge con-Assessing the Effects of the Impacts

We gauged the scale, extent and difficulty of responding to
the effects of each impact, and prioritized them. In the process of prioritizing the impacts, we identified those impacts
that were material in terms of both "impacts from externalsources" and "impacts on external sources," thus identifying them as material items. To increase the effectiveness of
PDCA management, we defined specific measures, indicators and targets for the individual material issues identified.

DE&I

nections between people, discover various issues and lead the way to solving them, as a source of innovation, and believe that this diversity should betackled with the highest priority in the management of the Group.
As a company founded on technology, we believe it is essential to develop
by carrying on existing technologies and principles while simultaneously in-

Personnel Development

corporating new methods and concepts, and having each person continuallychange by putting those technologies, principles, methods and concepts
into practice.

Material Issues

Step 4:

Approval of the Board of Directors

After verifying their consistency with the values and management strategies of the TODA KOGYO Group in the Management Conference, the material issues were finalized
upon receiving approval of the Board of Directors.

In addition to observing global rules and compliance requirements, we be-

Governancelieve it is important to be introspective regarding our own activities throughdialogue with stakeholders, which leads to high-quality decision making.
As a Group doing business with customer and suppliers around the world,

Information Management

we believe that developing high-quality information infrastructure and ensuring information security is essential.

14

CSR Report 2023

CSR Report 2023

15

Purpose

We transform the potential of fine particles into new
possibilities for our world.

Management Policy (Our Vision)

Management Principle

Our Group will further improve the fine particle synthesis technology we have developed with iron oxides and will always
continue lively growth and development.
We will work on a foundation built on sincerity and trust and wewill bring together our creativity and manufacturing strength to
make a contribution to society in general with attractive newmaterials and solutions that are full of originality.

Material Issues

Value We Bring to Society

When determining the material issues, we focused on two points. The first wasconsistency with our Management Principle and Management Policy which wehave long valued. The second was that it was possible for all employees to implement the measures to address the issues.
To go on a voyage, it is necessary to have a compass and a chart. I feel that ourManagement Principle and Management Policy are generally accepted by employees as a compass that points the way to what the Company should be, and the
newly formulated material issues are the chart that shows where we are now andour destination. All the officers and employees aim to reach the destination set by
the Management Principle and the material issues.
Atsushi Tomokawa,
Department Manager of the Corporate Planning Department

Initiatives Aimed at Achievement
Accelerate open innovation
Creation of new products and technologies
that contribute to the environment

Product Innovation

We will refine our only-one
technologies and continue

Process Innovation

to offer products and solutions

Contributing to future society
through innovative fine particle
synthesis technologies

that have high added value.
Value-centric Marketing

Stable Supply
We will establish a managementfoundation as a "Manufacturing
Company" that can contributeto society and will continue togrow and develop even 100
years after its establishment.

that is essential on a global
level and increase the corpo-

Climate Change

rate value of the Group.

Keywordcreate the futurefamilies and will be a compa-

Personnel Development

ny that is constantly trusted
by our stakeholders.

Governance

Information Management

16

CSR Report 2023

38%

70% or higher

2030

20 per year

At least 50
per year

2030

2025

―

3 or more2030

Toughening of infrastructure and facilities

0.4 billion yen

4.5 billion yen

2026

Circular economy

Commercialization of battery material recycling―

Commercialization

2030

Branding that utilizes our strengths

Number of press releases (cumulative)

3

16 or more

2030

Marginal profit rate (consolidated)

37.8%

50% or higher―

Cultivate global market

Percentage of overseas sales (consolidated)

59.7%

70% or higher

2030

Swift coordination between manufacturing,development and sales

―

―

―

Pursuit of zero qualify defects

Number of defects occurring

29 per year10
per year or fewer

2030

Pursuit of zero serious accidents

Occupational accident rate

1.39

1.20% or less2030

Stable procurement

Excellent supplier ratio

74%

85% or higher

2030

41,100 t
per year

22,000 t
per year or lower

2030

18%

At least 17%

2030

Renewable energy usage rate (Japan)0%

At least 17%

2030

Industrial waste reduction rate
(in Japan, vs. 2013 base year)

19%

25% or higher

2030

0

3 or more2030

CO2 emissions (Japan, Scope 1 and 2)
Specific energy consumption reduction rate
(in Japan, vs. 2013 base year)

Repurposing and effective utilization of resources

Optimization of the business portfolio

Stabilization of ROE (consolidated)

20.6%

10% or higher―

Improved cashflow

Operating profit ratio (consolidated)

3.9%

8% or higher

2030

Equity ratio (consolidated)

30.5%

40% or higher

2030

Ratio of female employees

17.1%

25% or higher

2030

Ratio of female managers

2.8%

10% or higher

2030

Rate of childcare leave and leave for childcare purposes
taken by eligible male employees

91.7%

95% or higher

2030

―

Start of measurements in 2023―

Development of a workplace environment
enabling employees to display creativity

Being a better corporate citizen

At least 50
per yearAmount invested in toughening infrastructure andfacilities

DE&I

of our employees and their

45 per year

Number of projects commercialized

Workplace development that unlocks people's potential

We will seek the happinessYear of
Achievement

Switching to new manufacturing methods

Conversion of crude raw materials and by-products into
raw materials

Financial Base

Imagine andRatio of developed products that are environmentallyfriendly/harmonious

TargetNumber of applications

Building a sustainable supply
chain

Number of collaborative themes pursued with companies
and universities

Current
StatusStrengthening of intellectual property strategy

Encourage carbon neutrality

We will become a company

Indicators

Human resource development supporting acompany built upon technology

and a better social institution

Improvement of employee engagement
Cost of education per person(consolidated, base year: 2022)

Number of participants selected for next-generation
management candidate training

19,800 yen
per person

30,000 yen
per person

2030

―

6 or more
per year―

Improved transparency and effectiveness ofBoard of Directors

Improved analysis and functioning through ongoingevaluations of effectiveness

―

―

―

Strengthening compliance

Number of serious legal or regulatory violations

0

Zero violations―

Strengthening information security of theGroup

Incident identification within 24 hours and expanded
scope of response

Japan

Consolidated
subsidiaries

2030

Improved information literacy Groupwide

Number of digitalization projects led by user departments(cumulative)

17

250

2030

CSR Report 2023

17

Special Feature: Innovation Management
Innovation management within the
Research & Development Division
TODA KOGYO calls our Research & Development Division“Innovative Headquarters” in Japanese. It is carrying out thethree actions below with a view toward creating a new society
and new lifestyles and implementing manufacturing that creates a better future.

Product development management
We have introduced the stage gate method in the developmentof new products. By selecting and concentrating on development
subjects, we are efficiently using resources. Today, market conditions change dramatically and product life cycles are becoming shorter and shorter. It is more necessary than ever before torelease new products that have been developed to society more
quickly and without fail. We divided the process from the creationof development subjects to technology transfers to the businessdivisions into five stages. We carry out the development process
in a step-by-step manner. At each stage, deliverables (such as
customer information, technological achievements, information
about matching the value offered, and their required levels). aredetermined. Whether or not the deliverables meet the required
levels is checked using the Development Subject Management
Sheet. The process proceeding to the next stage is dependent
on this. Based on the new problems found in the individual stages, we will revise our strategy as needed and continue with new
product development according to the new strategies.

This stage gate method opens the way to conducting development activities while constantly paying attention not only totechnological achievements but to deliverables necessary forcommercialization and, from the management perspective, todevelopment investments made in consideration of the current
risks (or uncertainties).
In addition, we assess the direct impact (on the internal operation) and indirect impact (on customers and markets) of the item
being developed at the initial stage of development using the environmental assessment checklist. Thus, we develop environmentally-friendly and harmonized products. The ratio of developed
products that are environmentally friendly/harmonious has been
rising every year since 2021. We have the goal of increasing thisratio to 70% or higher by 2030.
（%）

100
90

70% or higher

80
70
60
50
40
30
20

18

10
0

49

38

2021

2022

2023

* As of July 2023

2030

(Fiscal)Ratio of developed products that are environmentally friendly/harmonious(an indicator connected to TODA KOGYO's material issues)

Business Divisions

Research & Development Division
Stage

Review 3

Construction ofa hypothesis
regardingthe value oﬀered

Check that thevalue oﬀered isconsistent withcustomers’ needs

Check that thevalue oﬀered isconsistent with
proﬁtability

Acceleration oftechnology
transfers

Initialmanagement

Market trend research

Study on customers’ issues
Research on competitors

Intellectual property survey

Construction of a hypothesis
regarding the value oﬀered
Elemental technology
development

Design of products for diﬀerentiation
Development of technologies
for commercialization
Sample work
Coordination with customers’
needs
Formulation and implementation of intellectual property
strategies* Surveys continued

18

CSR Report 2023

Consideration of scalability
Check of proﬁtability(implementation of a feasibility study)* Surveys andimplementationof intellectual
propert strategies
continued

Mass production prototype
Consideration of mass
production processes andfacilities
Preparation of documents(such as checklists for raw
materials for products, work
procedures, quality control
process sheets and productinspection standards)

Gate 4

Review 2

Gate 3

Review 1

Gate 2

Research

Gate 1

Idea

Initial management
before mass production
Preparation of documents(such as checklists for raw
materials for products,
work procedures, quality
control process sheets
and product inspection
standards)

Construction of an environment
for innovation
The Otake Creative R&D Center houses not only the Research& Development Division but also related organizations, such as
the Process Development Department, the Intellectual Property Group and the Marketing Department. We will celebrate
the 90th anniversary of our incorporation. We have changed
the office layout to create an internal culture that enables people to continue to work with joy toward a bright future where
their hopes and dreams can be realized in our 100th year as acompany and beyond. In an open single-floor space there is awork space, a meeting space and personal spaces. A hot-desking system is being implemented in the work space and concentration spaces for personal use are provided. The central
space is equipped a large counter and a sofa, functioning as aplace for employees to converse casually. In addition, there is aconsultation space for meetings with people inside and outside
TODA KOGYO and a room for business talks to increase convenience. This enables the office to be used as a lecture venue. Background music is played at a low volume to enhance
the space's functionality as a place for employees to relax. The
work environment which is pleasant for everyone has led tobetter four-S practices and a brighter atmosphere on the floor
than in the past. Employees can freely choose where to work,
which stimulates internal communication. The employee satisfaction survey has confirmed that it is a worker-friendly environment that increases the creativity of the team.

Open innovation activities
Iron oxide and other inorganic particles have various characteristics. A very effective way of delivering new value createdusing these characteristics to markets broadly and quickly is tocombine the unique technologies possessed by customers anduniversities. We are vigorously working to develop new products through open innovation not only by leveraging the relationships we have built with customers and universities overmany years but also by advertising materials and other products at exhibitions and in catalogues and publishing press releases about developed products. The number of collaborative
projects TODA KOGYO is involved in with other companies anduniversities has been growing every year since 2020. We have
set the target of being involved in 50 or more of these projects
in 2025. This target is stated in our material issues.
Example collaboration: Elucidation of a mechanism for decreasing the magnetic coercive force of rare earth magnetic
powder compounds with Kyushu University
Amid the trend towards smaller and lighter magnets for motors and towards higher operating temperatures, there is strong
demand for injection-molded compounds with high magnetic
coercive force. Rare earth magnetic powders produced using
the hydrogenation-decomposition-desorption-recombination(HDDR) method have a high level of magnetic coercive force.
When they are processed into compounds, their magnetic coercive force decreases. To elucidate the mechanism behind thisdecrease in magnetic coercive force, we are carrying out a joint
study with Kyushu University, which possesses a technology for
analyzing the microstructures of magnetic bodies using transmission electron microscopes (TEMs) and scanning electron
microscopes (SEMs). This study is gradually clarifying the phenomenon causing the magnetic coercive force of compounds
to decrease and differences in the microstructures of rare earthmagnetic powders before and after the compound process. In
the future, we will optimize rare earth magnetic powders basedon the mechanism explained with a view towards commercialization.
(Cases)60

50 or more

50

43

40
30

45

33

20
10
0

8
2020

2021

2022

2023

2025

* As of June 2023

(Fiscal)Number of collaborative projects pursued with companies and universities(an indicator connected to TODA KOGYO's material issues)

CSR Report 2023

19

Special Feature: Risk Management

Identify and evaluate risks forthe next ﬁscal year

Conﬁrm budgets forthe next ﬁscal year

A
Interim and year-end reviews

Reporting of activities during theyear to the Risk Management
Committee

anManagement
Conference

Risk Management Committee(Chairperson: Representative Director)tion

Risk typeOperational support

ReportReportInstructions
on Corrective
ActionInformation
provision

Organizations managing risks

20

Implementation of drills

Ch

Sharing of risk analyses
Regular review of material
risks
Reporting to the Risk
Management Committee

CSR Report 2023

ExamplesIndustrial injuries

Quality
DisasterSocial infrastructure andfacilities

Product safety
BCP measures

Climate Change

Information security
Procurement
Sales
Finance and accounting
Management and public
relationsIntellectual property
Overseas safety
Labor affairs(High)

C

SafetyLegal affairs

Risk Management
Department

Incident risks

DX of production facilities
Actions towards carbon
neutrality
Leakage of confidential
information
2025 Digital Cliff
Logistics labor shortage
Expansion of overseas sales
Foreign exchange rate
fluctuations
Delays in information
disclosure
Patent infringement
Maintenance of security atoverseas bases
Actions for DE&I

pan as a whole is facing. We are actively reviewing logistics bases, delivery routes and units to address the issue. We also takemeasures that lead to the reduction of CO2 emissions from the
supply chain and the improvement of the business continuity
plan. Given that we are set to celebrate the 200th anniversaryof our founding, the emergence of the issue of aging and deteriorating facilities is not surprising. In addition, the delay in thedigital transition can be said to be an issue that Japanese companies face, especially small and medium-sized manufacturers. The measures to address the deterioration of facilities andthe digitalization trend came at the same time. We regard thiscoincidence as a good opportunity to implement DX measuresin tandem with the measures to address deteriorating facilities.
We will continue to properly manage the different risks andprevent them from occurring.

Risk map at the start of fiscal 2023

Response to material risks

Do

Table: Examples of the 14 types of risks

Decide / Oversee

We have drawn up a risk map for viewing, comparing andunderstanding the sizes of risks from a broad perspective. The
risk map is updated by the Risk Management Department andthe organizations managing risks at the beginning, middle, andend of the fiscal year. We use it to monitor progress of countermeasures addressing risks and the emergence of new risks.
According to the Company's risk distribution in fiscal 2023,
the ratio of risks that were of high significance calculated fromthe frequency of occurrence and the severity of the risks was
0%. The rate of risks that were of medium and higher significance was 20%.
Among them, major risks include the logistics labor shortage
and the DX of production facilities. It is impermissible to delay
addressing either of these risks. We are taking measures, regarding them as opportunities to create new value.
For example, the logistics labor shortage is an issue that Ja-

Severity

Formulate countermeasures

Risk Distribution

D

Response to remarks from the
Risk Management Committee

Board of Directors
ReportPAc

In accordance with its Risk Management Regulations, theTODA KOGYO Group has established the Risk Management
Committee. Its objective is to control the various risks that may
hamper the Group's development. Chaired by the Representative Director, the Risk Management Committee is composedof executive officers and full-time Audit and Supervisory Committee members. It formulates risk management policies anddiscusses specific measures from a group-wide and cross-organizational perspective. In principle, it meets once a month
to receive reports from organizations controlling different risks,exchange opinions and monitor risks.
The Risk Management Department has been established
as an organization providing operational support to the Risk
Management Committee. At the beginning of fiscal year, thecommittee identifies the external and internal risk environment
from a global perspective and communicates this to the separate organizations managing individual risks. These organizations each determine the risks that should be managed fromtheir individual standpoint and develop plans for management
measures. Once every six months or once a year, they report
the progress of their plans at a meeting of the Risk Management Committee and review their risk management measuresin view of the opinions of the management team.

k

Risk Management System

The Risk Management Department divides risks into 14 risk
types to manage them: safety, quality, disaster, social infrastructure and facilities, climate change, legal affairs, information
security, procurement, sales, finance and accounting, management and public relations, intellectual property, overseas safety
and labor affairs. The organizations managing the risks identified at the start of fiscal year and the Risk Management Department exchange views and evaluate the significance of therisks looking at severity and frequency of occurrence. They use
progress charts to manage the countermeasures for the identified risks. This paves the way for viewing and understanding
the size of the risks from a groupwide perspective and for theindividual organizations to manage the risks from a broad perspective using risk maps. The risk maps and the progress charts
are completely updated in the middle and at the end of the fiscal year. This makes it possible to check how the risks identified
at the beginning of the fiscal year have changed following theimplementation of measures and to see what new risks haveemerged following changes in the external and internal environment.

ec

The circumstances surrounding companies become more
complicated and uncertain every year. Being able to properly
respond to risks that may seriously impact corporate activities
is necessary for the fulfillment of management strategies andbusiness objectives. The TODA KOGYO Group manages risk tominimize the impact of different risks on the management of its
business to steadily increase the corporate value of the entire
Group.

Risk Management

Pl

Basic Stance

5

2%

5%

1%

0%

0%

Significance ofrisks

Likelihood of
risks

4

1%

5%

4%

4%

0%

High

0%

3

1%

5%

14%

7%

1%

20%

2

0%

5%

3%

8%

5%

59%

1

0%

6%

7%

4%

12%

1

2

3

4

5

(Low)
(Low)

Frequency

Low

21%

(High)

Including climate change, COVID-19, the situation in Ukraine
and inflation, the circumstances surrounding businesses arechanging every day. It is impossible to reduce business risks to
zero. However, it is important to predict business risks and reduce their negative impact. Thus, we have constructed a mechanism for managing risk in compliance with the ISO 31000 standard. Humans are the ones operating this mechanism. The Risk
Management Department emphasizes conversation with the organizations managing risks in particular. Increased conversation
aids the deep understanding of the impact of every single riskon the Group. Deepening the mutual understanding between the
Risk Management Department and the organizations managing
risks will lead to the sharing of the importance and meaning of
the risk measures with employees and to the enhancement of
measures. Today, an internal information platform has been constructed so that the Group can now more efficiently converse.
We will increase our ability to address the currently presumed
risks and also our crisis management capabilities that are usedin the event of a crisis based on the relationships built throughconversation.
Kuniyoshi Shigeoka, Risk Management Department
CSR Report 2023

21

Expression of Support for the TCFD Recommendations
The TODA KOGYO Group views climate change as a key
management issue and we engage in measures to tackle
global warming to create a sustainable economic societythat enables future generations to live with peace of mind.
In July 2023, the Group declared its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

◆ 1.5/2℃ scenario
Under these scenarios, regulations and policies aimed
at achieving carbon neutrality by 2050 are strengthened,around the world, action on climate change that exceeds
the current status quo is implemented, and the rise in mean
temperatures compared with pre-industrial levels is kept towithin 1.5-2.0℃.

Major Risks
Category⿠ Costs will be incurred to respond to regulations and policies, and transition risks such as rising prices of electricity from renewable energy will increase.
⿠ Although the physical risks are also expected to increase,
the impact will be minor compared with the 4℃ scenario.
⿠ Information sources: IEA1,WEO2 2022 NZE Scenario3
and IPCC4 RCP5 1.9, RCP 2.6, etc.

Governance

To promote and manage action on climate change Companywide, we have established the CSR and Environment Committee under the Risk Management Committee(Chairperson: Representative Director), and work throughthe committee to implement oversight and management ofenvironmental matters for the Group in Japan.
The Board of Directors confirms the status of action on
climate change through reports received from the Risk
Management Committee, and makes decisions and supervises the development of the necessary systems andschemes. The Department Manager of the Corporate Planning Department serves as chairperson of the CSR and Environment Committee, whose members comprise managers and personnel from business sites across the Company.

◆ 4℃ scenario
Under this scenario, action on climate change beyond thecurrent status quo is not taken, and mean temperatures rise byaround 4℃ compared with pre-industrial levels.

Type

Mediumto longtermTechnology

Increased capital investment due tothe switchover to low-carbonizationequipment and low-carbon
processes

Mediumto longterm

⿠ Reduced lifecycle costs due to productMedevelopment with low-carbonization in mind
dium ⿠ Consideration of fine particle synthesis
technologies with high energy efficiency

Increased raw material and energy
procurement costs

Mediumto longterm⿠ Further loss reductions in manufacturing
Meprocesses
dium ⿠ Appropriate reflection of increased
procurement costs in sales prices

Reduced demand for toner due tothe restricted use of photocopiersand printers

Mediumto longterm

⿠ Increase in toner market share by responding
to increasingly diverse customer needs andMeenergy saving measuresdium ⿠ Development of applications forenvironmental materials utilizing functional
pigment technologies

Loss of reputation amongcustomers and investors in the caseof insufficient efforts in response to
climate change being recognizedMediumto longterm

Medium⿠ Promotion of greenhouse gas emission
reductions
⿠ Improved information disclosures

Damage to buildings andequipment due to natural disasters

Mediumto long
term

Large

⿠ Improvements to BCP and implementation ofdrills⿠ Utilization of casualty insurance

Reduced plant utilization rates due
to supply chain disruptions

Mediumto longterm

⿠ BCP enhancements
Me⿠ Development of multiple suppliers anddiumtransportation routes

Increased investments in coastal
business site due to rising sea levels

Longterm

Large

Impact on our business activities

Time
span

Evaluation

Mediumto long
term

Large

Mediumto longterm

MediumIncreased demand for CO2 capturematerials associated with expansionof the CCUS market

Mediumto long
term

Large

Increasing demand for the supply ofhydrogen and carbon nanotubes
through the direct methane
reforming process

Mediumto longterm

MediumReputation

3. NZE Scenario: A net-zero emissions scenario. A scenario in which

ReportManagement
Conference

Decide / Oversee

developed nations achieve net-zero emissions by rapidly increasingclean energy policies and investments.

Risk Management Committee

Instructions on
Corrective Action

CSR and Environment Committee(Chairperson: Department Manager of
the Corporate Planning Department)

Strategies

Mean global temperatures rising 4℃ due to climatechange would have a serious impact on society. In light of
the Paris Agreement, which aims to limit the rise in global temperatures to less than 1.5℃, the Group has analyzed
the risks and opportunities it faces under three scenariosof rising temperatures, the 1.5℃ scenario, 2℃ scenario and
4℃ scenario.
CSR Report 2023

⿠ Monitoring of information about rising sea
levels5. RCP: Representative Concentration Pathway. A representative pathway for radiative forcing
6. STEPS Scenario: Existing government policy scenario. An energy
system where only current policies are implemented and no newpolicies are introduced.

ReportAcute

Chronic

4. IPCC: Intergovernmental Panel on Climate Change(Chairperson: Representative Director)

22

Physical risks(4℃ )Measures

Higher tax burden due to carbon
pricing (carbon tax, emissions
trading, etc.)

Market2. WEO: World Energy Outlook A report providing estimates on energy

Evaluation

⿠ Reduction of Scope 1 and Scope 2
greenhouse gas emissions due to the
Mepromotion of energy saving and expanded
dium
use of renewable energies
⿠ Use of internal carbon pricing in investment
decisions

Transition risks(1.5℃ /2℃ )⿠ Physical risks will increase, including greater damage
due to increasingly severe abnormal weather events,
and rising costs to deal with heat caused by higher air
temperatures.
⿠ Although transition risks are also expected to increase,
their effects will be minor compared with the 1.5℃ and
2℃ scenarios.
⿠ Information sources: IEA WEO2022 STEPS scenario 6
and IPCC RCP 4.5, etc.

demand and technological development among other information

Time
span

Policies
and legal
restrictions

1. IEA: International Energy Agency

Board of Directors

Impact on our business activities

Key Opportunities
Category

Type

Risk Management

The CSR and Environment Committee convenes monthly
and implements its functions to oversee and manage environmental matters related to the Group in Japan, set annual targets for each business site, and manage progress
through monthly activity reports from each business site. In
addition, reports on climate change action are submitted to
the Board of Directors twice a year through the Risk Management Committee.

Products/
Services

Opportunities

Higher demand for plastic magnets,
barium titanate and components forcontact-less power supplies due tothe expansion of the EV market
Increased demand for polyolefin
heat insulating materials for
agricultural use due to increased
greenhouse cultivation** For the purpose of protecting crops
from natural disasters

MarketMeasures⿠ Development of supply structures that meetmarket needs
⿠ Expanded and enhanced R&D investments

⿠ Development of business models utilizing
open innovation
⿠ Expanded and enhanced R&D investments
⿠ Utilization of public support

CSR Report 2023

23

Metrics and Targets

5.0

In June 2019, the Group formulated the TODA KOGYO
Group Environmental Vision 2033, setting 2033 as the target
achievement year to coincide with the Company's 100th anniversary. Under the vision we have declared specific numerical targets to be pursued as part of action on climate change.
GHG emissions for FY2022 in Japan were 41,067 t-CO2 for
Scope 1 + Scope 2 (a 54% reduction compared with FY2013
levels), achieving our goals at a faster pace than planned. In
addition, starting in FY2022 we have also been calculating
Scope 3 emissions, producing a result of 147,260 t-CO2.
To achieve carbon neutrality by 2050 (achieve net zero
GHG emissions overall), we have revised the target Scope 1+ Scope 2 GHG emissions, GHG emissions based on net sales
and renewable energy utilization laid out in Environmental Vision 2033, and set aggressive targets to be met by FY2030.

GHG emissions(Scope 1 + Scope 2,
in Japan)

GHG emissions (Scope 3, in Japan, FY2022)(t-CO2/million yen)

FY2022 Results [t-CO2]
41,067(54% reduction compared with
FY2013 levels)(Scope 3, in Japan)

147,260

4.0

3.0

70% reduction

2.0

Category

Items

t-CO2

1

Purchased products
and services

104,9392

Capital goods

2,214

1.0

0.0

3

’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22

Upstream fuelprocured

12,614(compared with
2013 levels)

Targets

The Group has been steadily achieving a reduction in CO2
in recent years. On the other hand, we have yet to organize
data into plain forms and to make them known to stakeholders. To address this issue, Environment Committee
members and others relearned the GHG Protocol and constructed a system for calculating Scope 3 emissions. In thefirst half of 2023, personnel responsible for separate organizations were joined by outside experts to organize information in line with the TCFD framework. I feel that we havefinally reached the starting line for information disclosure.
We fall under industries that emit large quantities ofgreenhouse gases* and we have a significant duty to cut
Scope 1 and 2 emissions. In the future, we will make clear
the process by which we will fulfill this duty by creating a
climate transition plan, which will serve as a roadmap tocarbon neutrality.

GHG emissions basedon net sales

Down

FY2030%Use of renewableenergyAt least%(Thousand t-CO2)

120

4Transportation anddistribution(Upstream)

7,227

Otake Plant
Okayama Plant
Tokyo Shikizai Industry
Onoda Plant

5

Waste generated byoperations

380

Otake Plant
Okayama Plant
Tokyo Shikizai Industry

IDEA Ver.2.3

Measures
Expenses subject to calculation
where at least the top 90% of
procurement amounts

Ministry of theEnvironment
Database of Emissions
Unit Values Version 3.3-

IDEA Ver.2.3
Ministry of theEnvironment
Database of Emissions
Unit Values Version 3.3-

Ministry of theEnvironment
Database of Emissions
Unit Values Version 3.3

At least the top 90% by
procurement volume wassubject to calculation.

IDEA Ver.2.3
Ministry of theEnvironment
Database of Emissions
Unit Values Version 3.3

Only production sites were
subject to calculation.
(Hiroshima Head Office andTokyo Office were excluded)

IDEA Ver.2.3
Ministry of theEnvironment
Database of Emissions
Unit Values Version 3.3-

IDEA Ver.2.3

-

-

-

-

Onoda Plant
Okayama Plant

Ministry of theEnvironment
Database of Emissions
Unit Values Version 3.3

Expanded estimate basedon emissions of business
partners with a high volume oftransactions

6

Business travel

148

TODA KOGYO

7

Employee commute

321

Tokyo Shikizai Industry

8

Leased assets(Upstream)

9

Transportationand distribution(Downstream)

2,231

10

Processing of soldproducts

Not
applicable

-

-

-

11

Use of sold products

Notapplicable

-

-

-

TODA KOGYO-

Tokyo Shikizai Industry

IDEA Ver.2.3
Ministry of theEnvironment
Database of Emissions
Unit Values Version 3.3

Toda Fine TechNotapplicable

Takahiro Araki, CSR & Environment Management Group60

17,185

13

Leased assets(downstream)Not
applicable

-

-

-

14

FranchisesNotapplicable

-

-

-

15

Investment

Not
applicable

-

-

-

-

Other (arbitrary)Notapplicable

-

-

-

147,260---

75% reduction

40
20

Total
’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22
GHG emissions (Scope 1 + Scope 2, in Japan)
CSR Report 2023

’30 (FY)

Otake Plant

End-of-life treatmentof sold products

12

80

24

Tokyo Shikizai Industry

Onoda Plant* Industries emitting large quantities of CO2 at the stage of manufacturing products and emitting no CO2 at the stage of using products

100

0

TODA KOGYO

Method for obtaining emission factor

TODA KOGYOReduction to(75% reduction compared with
FY2013 levels)

Tokyo Shikizai Industry

TODA KOGYO

GHG emissions based on net sales (Scope 1 + Scope 2, in Japan)

Scope 1 + Scope 2 GHG emissions

t-CO₂

TODA KOGYOTODA KOGYO’30 (FY)

To meet our goals, from April 1, 2023 we switched theelectric power used at our production sites in Japan (Otake
Plant, Onoda Plant and Okayama Plant) entirely to CO2-freeelectric power from solar power generation. In addition, we
will introduce solar power generation (solar car ports) for internal consumption making use of parking facilities, and plan
to use the electricity obtained for R&D activities.
Going forward, we will steadily implement the measures tocombat global warming described above, continuing to evaluate the risks and opportunities posed by climate change
based on the scenario analyses recommended by the TCFD,
while phasing in improvements to information disclosures.

Calculated sites

Note: IDEA is a database that is able to quantify environmentally hazardous substances from all products and services in Japan including agricultural, forestry, marine
and industrial products.

CSR Report 2023

25

Safety and Health Activities
Safety and Health Activities in the
Workplace
The TODA KOGYO Group gives top priority to the safety andhealth of its workers. We will enhance workplace environments toensure that our staff can keep working safely and with peace ofmind. At the same time, we also carry out personnel development.
In order to share actions related to safety and health throughout
the Group and carry out these actions more intensively, we hold aCentral Safety and Health Meeting on a quarterly basis. It manages
the progress of these activities and provides information to individual plants.

KPIs (and Material Issues) Concerning Industrial Injuries

Frequency rate

2.00

1.39

1.50

 Improve yourhazard sensitivity.

● When you find a danger, do
you check it with others?

 Communication

Providing education to business
partners

2022 (Fiscal)

2013～2017

5

3

3

Trend in frequency rate over the past five years

Target10.00

Severity rate

2018～2022

9(Fiscal)1.00

Work-related injuries by type of employee

0.10

2

はさまれ注意Wear eye protection

工程内保護メガネ着用First aid kit

2019

2020

2021

Trend in severity rate over the past five years

Fiscal 2023 marks the 200th year of our founding and the90th year of our incorporation. Guided by the slogan, "Let's
think together about how we can prevent injuries," we will carryout activities in accordance with the basics of safety and healthduring this landmark year.

26

CSR Report 2023

Heat stroke training at the Otake Plant

40

5

0

Safety Guide (multilingual version)

20

Work-related injuries by length of experience (2013-2022)

Mental Health Care
The Group carries out stress checks once a year to provide
mental support to employees. The percentage of Group employees with high stress levels tends to be lower than averagein the manufacturing industry and the nationwide average. A
group analysis of workplaces within nine selected organizations found no workplaces with high health risks.
We will continue to maintain stress-free and comfortableworkplaces in collaboration with our industrial physicians andmedical helpdesks.

Unchanged
4%

Improved

37%

Hazardsensitivity

59%
Improvedsigniﬁcantly

Results of KY activity surveys

Stresslevel* Total number of work-related injuries from January to December
resulting in at least one day of absence.

60

50%

10

Stress check results for fiscal 2023

2022 (Fiscal)

80
15

0.01

2018

20

救急箱

Standard signs (pictograms)

0.03

0.00

100

Unrelated toexperience

2021

危険！
通行禁止

Others(Cases)Watch your hands

20 years or
more

2020

Do not enter

10 years ormore but lessthan 20 years

2019

（％）
(Cases)5 years ormore but lessthan 10 years

2018

Business partners’ employeeson the premises of TODA KOGYO
sites

Half of the work-related injuries involved employees withless than three years of experience.
Since fiscal 2019, The Group has been providing safety education centered on risk assessment to young employees with threeor fewer years of service.
In addition to this safety education program, we have introduced Kiken Yochi (or KY, meaning hazard prediction) activities in fiscal 2021. Each team of five members gathers
once a month to carry out these activities at their workplaces.
We conducted a total of five questionnaire surveys on these activities and learned that at least 90% of respondents said that
their sensitivity to hazards was higher than before the activities.

3 years ormore but lessthan 5 years

In recent years, the number of work-related injuries experienced by our staff has been decreasing. However, the number ofwork-related injuries experienced by the employees of our business partners on the premises of our sites is increasing. Every
year it becomes more important to provide safety and healtheducation not only to our employees but also to the employees
of our business partners. At our facilities, we do not distinguishbetween our employees and our business partners' employees
when providing safety and health education and training.
In 2022 specifically, we provided group education regarding heatstroke prevention with a focus on communication at the Otake
Plant. Workers are strongly advised to freely consult with and notify
their superiors whenever they are experiencing any physical symptoms that are out of the ordinary. This helped prevent three heatstroke near misses from developing into serious illnesses.
TODA KOGYO’s employees

0.50

0.00

● Do you leave any unsafe
states unaddressed?

Our foreign personnel working in Japan mostly understandthe Japanese language. Even so, Japanese language signs are
hard for them to understand. We are successively replacing
them with pictograms compliant with the GB, ISO and JIS
standards.
In addition, we are conducting activities to improve their understanding about safety. They include the creation of foreigntranslations of the Safety Guide, which workers are supposed
to always carry with them, in collaboration with business partners.

Less than 3
years

1.00

 arefully follow
C
the rules.

Cumulative percent

Target2.50● Do you do any unsafe
behaviors?

Safety education for young personnel

Work accidents

In 2022, the Group had two work-related injuries within thescope of the consolidated companies in Japan. Although thenumber was identical to the previous year, we failed to meet our
new target. The target frequency rate for the current year was
made tougher than for past years.

Care for foreign workers

FY2023 Policy

TODA KOGYO

12%

13%

12%

63%

Average in the
manufacturing industry

17%

16%

16%

51%

Nationwide
average

16%

14%

17%

53%

Feedback from participants (excerpts)
⿠ Now I pay attention to any dangerous situations in
my everyday work.
⿠ Hazard prediction from the viewpoint of other workplaces enabled me to discover new things.
⿠ Work-related injuries can happen to anyone. I feelthat the subjects of the activities should not be limited to younger staff members.
⿠ I found it good that hazard prevention could be doneby the entire workplace after we, the members of
the workplace, shared our findings in our separate
groups, instead of keeping them limited to us.

CSR Report 2023

27

Quality
Quality Assurance Activities

In pursuit of zero quality defects

The TODA KOGYO Group endeavors to achieve zero quality defects in accordance with the policy below.
We see complaints from customers and internal quality
incidents as opportunities for improvement. We discussmatters at Quality Assurance Committee meetings andconduct improvement activities.
To swiftly respond to customer requests, the Quality Assurance Committee centrally manages complaint information for the entire Group and supports the quality-related
activities of individual facilities. The Quality Assurance Department implements the decisions of the Quality Assurance Committee. For more impartial decision-making, thedepartment is independent from the sales, development
and manufacturing functions of the Group.

The TODA KOGYO Group has defined stable supply as
one of its material issues. To achieve the final goal of zero
quality defects,* we set the medium-term goal of limiting
the number of defects to ten by fiscal 2030.
To achieve this we carried out efforts to strengthen operations in fiscal 2022, including the strengthening of source
management, improvements based on past experienceand the use of a risk analysis tool.
In the future, we will strive to improve root cause analysis
and implement facility-related measures.
* Complaints and out-of-control processes(Cases)50

40

1. We check to ensure that we comply with the requirements of the ISO 9001 series and carry out quality
audits aimed at increasing the level of our quality
assurance system.
2. We monitor our state of compliance with laws,
regulations and other requirements.
3. We conduct overall quality improvement activities,
including quality analysis, guidance on improvement to relevant teams and organizations of regular Quality Assurance Committee meetings for
quality-related discussions. All of these activities
are designed to improve the quality of the TODA
KOGYO Group's products.
4. We are working to improve the quality assurance
systems of overseas operating companies.
5. We conduct personnel education for building up
capacity on the shop floor.

30

65%
reduction

20

0

2018

2019

2020

2021

2022

2030 (Fiscal)

ReportConsultation

Spread of measuresin the Group
Technical support

Onoda Plant

Otake Plant

Manufacturing
stage

Chemicals safety management
Prevention of contamination with
non-designed substances
Response to changes in laws andcustomers' requirements
Verification of impact of expansionof product applications

Chemical substances

Conﬂict minerals

Business continuity planning(BCP)

OthersEnvironmental andquality management
systems

600

Instruction

Information
gathering

Hazardous substance-free design
Verification of the scope of the
impurities contained
Assessment of risks at the time ofuse by customers

700

Guidance

Quality Assurance Department
Research & Development
Division

Environmental impact assessment(Number)

Instruction

Risk Management
Committee

ReportDevelopment
stage

Number of defects occurring(an indicator regarding the material issues)

Management Conference
ReportThe TODA KOGYO Group provides environmental andsafety information to ensure that customers can use its
products with peace of mind.
All the safety data sheets that we submit to customers
conform to JIS Z 7253:2019. The Group implements environmental impact assessments in the development stage
and carefully works to make designs that are free of hazardous substances and prevent hazardous substance contamination. In the manufacturing stage, we manage theimpurities in raw materials and products.
Many of the inquiries from customers are about whether or not products contain hazardous substances and theamount of hazardous substances in products. We always
try to respond swiftly and carefully to questions regarding
hazardous materials, conflict minerals, management systems and our business continuity plan (BCP). We will resolve issues found through communication with customers
in cooperation with relevant organizations.

10

TODA KOGYO Group Quality assurance system diagram
Identifying causes of complaints and claims
Developing and implementing recurrence
prevention measures
Managing the progress of measures andintroducing them throughout the Group
Carrying out preventive actions

Safety of Customers

SupportReport on
remediation

Okayama Plant

Guidance

Tokyo Shikizai
Industry Co., Ltd.

Notiﬁcation of complaints
and claims

Sales Division

Quality audit

TODA ISU

Human Capital
Development Department
Qualityeducation
Personnel
development
Other manufacturingsubsidiaries

500
400
300

The Otake Plant has obtained IATF 16949:2016
standard certification of its quality management systems.
The goal of this certification obtained chiefly bycompanies involved in the automobile industry is toachieve zero defects.
We started workshops in the winter of 2019, and welaunched a project to become certified in spring 2020.
We then obtained the certification in March 2023. The
process from preparation to acquisition took us three
years.
A good point is that we worked in a cross-organizational manner. Members from different organizations
worked together and communicated to coordinate
their duties. They worked as one and made steps towards the big goal of becoming certified.
Understanding the requirements of the standard
accurately and implementing them in the system wasdifficult. IATF 16949 differs slightly from ISO 9001,
which is another quality management system standard. It took us a long time to change the culture andthe mindset that had been cultivated over years ofoperating in the ISO system to the customer-oriented
mindset that is required by the IATF standard, and toensure that the staff of the related organizations understood the new mindset and system before starting
implementation.
The acquisition of the certification is an achievementthat will increase business opportunities, but the process towards acquisition was valuable. Members withdifferent specialized skills gathered and worked asone. This more effectively and broadly communicatedthe significance of the IAFT standard. Based on the acquisition of this certification, we will make group-wide
efforts to continuously improve the quality management system and carry out quality improvement activities to seek quality that results in customer satisfaction.
Ikuko Honda,
Quality Assurance Group,
Otake Plant, Production Division

200
100
0

Onoda

Otake

Okayama

Tokyo Shikizai

Number of inquiries from customers in fiscal 2022

28

CSR Report 2023

CSR Report 2023

29

The Environment
Resource Recycling

Management of Industrial Waste

The TODA KOGYO Group has long been using byproducts
and waste generated by other industries as raw materials.
The Onoda Plant produces iron oxide, which will be processed into pigments and toner materials, chiefly from ironsulfate crystals that are a byproduct of the titanium andsteel industries and from iron sulfate solution which is produced by dissolving steel scrap. The Otake Plant produces
ferrite mainly from iron oxide powders that are a byproductof the steel industry.

Officesand Plants

Onoda Plant

Otake Plant

SourcesRawmaterials

Titanium andsteel industries

Iron sulfate
crystals

Metal
processing
industry

Steel scrap(iron sulfate
solution)

Steel industry

Iron oxide
powderTODA
KOGYO
product

Applications

Iron oxide

TonersColoring
materials
Catalysts

The Onoda Plant produces barium titanate as a material
for electronic components. The process of manufacturing it
generates effluent that contains barium. In the past, it was
simply put into the wastewater treatment process. In 2019,
we started making effective use of it. Effluent containing
barium is collected and transported by tanker truck to the
Otake Plant, which uses it as an auxiliary material. By effectively using it in this way, we reduced the effluent disposal
volume 245 tons in fiscal 2021.

The Group defines climate change as a material issue. As
an initiative to address this issue, we are working on measures to divert and effectively utilize resources. Regarding
industrial waste, we have revised our Environmental Vision
2033 and set audacious targets for fiscal 2030. Industrial waste emissions are decreasing. However, the recycling
rate is stagnant. We will take the actions below in the futurewith a view towards meeting the targets:

FY2030 Targets
Sorting of waste (at the Otake Plant)● Reduce industrial waste by at least 25%(from the fiscal 2013 level)● Achieve a 100% recycling rate
(Thousand tons)

12.0

FerriteMagnets andelectronic
components

10.0

25%
reduction

8.0
6.0
4.0

Facility for loading barium-containing effluent(at the Onoda Plant)

0.0(Tons/year)

200

100

90

100

80

50

70
60

2019

2020

2021

2022

(Fiscal)

Reuse of barium-containing effluent (at the Onoda and Otake Plants)

Steel scrap (at the Onoda Plant)

2030 (Fiscal)

（%）

150

0

2013 2017 2018 2019 2020 2021 2022
Waste emissions (Japan)

250

Iron sulfate crystals (at the Onoda Plant)

Sorting of waste (at the Onoda Plant)

2.0

The Group has determined that process innovation is amaterial issue. As a means to address this issue, we areconsidering the introduction of a circular economy measure, specifically the commercialization of the recycling ofbattery materials. The importance of resource recycling
will continue to increase. We will independently establish asystem for it and cooperate in the implementation of measures by national or local governments.

Recycling of sludge (at the Onoda Plant)50
４02013 2017 2018 2019 2020 2021 2022

2030 (Fiscal)

Percent recycled as resources (Japan)

⿠ Reduce the volume of waste (by drying and compressing it)⿠ Accelerate the use of sludge as a cement material⿠ Search for applications of recycled sludge and recycled
waste plastics

Sorting of waste and recycling waste plastics into resources(at the Okayama Plant)

30

CSR Report 2023

CSR Report 2023

31

Air Pollution and Foul Odor

Water Management(Effective Use of Water Resources)
In addition to risks arising from global warming, water
shortages and pollution arising from extreme weather andenvironmental changes are emerging as social issues. The
Group has newly developed a perspective on the conservation of water resources.

Conservation of Water Resources
The TODA KOGYO Group consumes a large amount ofwater resources in its manufacturing processes. For example, water is used for cooling and the cleaning of products
and used as solvents for wet synthesis. After use, all of thewater is decontaminated in a wastewater treatment process and then discharged into rivers and the sea.
To provide high-purity, high-performance products, itis necessary to secure sufficient water sources with appropriate quality. To continue our business operations, itis necessary that we manage wastewater quality based on
stringent standards.
The Group will address the following to ensure the proper use of water resources.

Reducing water usage

⿠ Adjustment of water intake according to production status
⿠ Acceleration of the cascade utilization of water

Water
consumption

Wastewater
volume(1,000 m³/year)

2,500
2,000
1,500
1,000
500
0

2017

2018

2019

2020

2021

2022 (Fiscal)

Water consumption and wastewater volume (Japan)

Wastewater generated by individual plants is properly treated at wastewater treatment facilities before it is discharged
into the sea and public sewage systems. In recent years, water
consumption and the wastewater volume has remained unchanged. In view of this, we will take the following actions.
⿠ Adjustment of water intake according to production status
⿠ Reuse of water to reduce the consumption of new water⿠ Introduction of a reduced water consumption production
process

The Group's Otake Plant and Onoda Plant are so large in terms
of production volume and they consume such a huge amount offuel that they are subject to regulations under the Air Pollution
Control Act and pollution control agreements with local governments. In addition observing the requirements set by applicablelaws, regulations and agreements, we will fully implement dailyequipment management and regularly measure exhaust gases toprevent air pollution.
We will also take actions to address foul odors. We properly
maintain facilities that may generate odors for reasons including the use of chemicals as raw materials and the combustion offuels to prevent any problems that may occur. The Onoda Plant
regularly enables the local government to measure odors, andthey have confirmed that the plant has not breached regulations.
(g/Nm³)

0.14

0.10
0.08
0.06

Heat treatment furnace exhaust gas treatment system (at the Otake Plant)

0.04

Noise

0.02
0.00

1H
2H
1H
2H
1H
2H (Fiscal)
FY2020 FY2020 FY2021 FY2021 FY2022 FY2022
Soot (at the Otake Plant)

⿠ Rigid observance of wastewater standards
⿠ Strict maintenance of equipment in wastewater
treatment facilities

(ppm)

250

TargetMeasurement value

Regulation value

200

Water consumption per unit of production equal toor lower than the previous fiscal year
Wastewater volume per unit of production equal toor lower than the previous fiscal year

13.7 m3/t or less

60

0

1H
2H
1H
2H
1H
2H (Fiscal)
FY2020 FY2020 FY2021 FY2021 FY2022 FY2022(m³/h)

0.18

Measurement value

43.8 m3/t or less

Agreed level

0.16

0.06

2021

2022 (Fiscal)

Average noise level

Maximum noise level

Agreed level

60

0.02

CSR Report 2023

2020

65

0.04

32

2019

70

0.10

Wastewater treatment filter press (at the Onoda Plant)

2018

Noise at the boundaries of the premises of the Otake Plant

75

0.12

0.00

2017

（dB）

0.14

51.1 m3/t or less

55
50

0.08

Onoda Plant

Agreed level6550

NOx (at the Otake Plant)

20.5 m3/t or lessMaximum noise level

70

100

FY2023 Targets
Wastewater
volume per unitof production

Average noise level

75

150

Wastewater treatment facility (at the Onoda Plant)

Water use
per unit ofproduction

The Group is striving to minimize the impact of noisefrom its plants on their surroundings in order to maintainthe surrounding environment. We are taking measures toensure that noise levels do not exceed the threshold set by
the Noise Regulation Act and the level agreed on with local
governments at the boundaries of the premises. We have
敷地境界騒音(大竹)regularly measure noiselevels at the boundaries of thepremises to check that regulations are observed.
（dB）

Individual plants are working to reduce the Group's consumption of water resources by setting individual goals regarding river water, industrial water and clean water.

Otake Plant

Agreed level

0.12

Strict wastewater management

PlantsMeasurement value

55

1H
2H
1H
2H
1H
2H (Fiscal)
FY2020 FY2020 FY2021 FY2021 FY2022 FY2022
SOx (at the Otake Plant)

50

2017

2018

2019

2020

2021

2022 (Fiscal)

Noise at the boundaries of the premises of the Onoda Plant

CSR Report 2023

33

Sustainable Procurement
The TODA KOGYO Group shares the global values in the areas of human rights, labor, environment and anti-corruptionthat are speciﬁed in the United Nations Global Compact. We
endeavor to construct a responsible global supply chain byincreasing its sustainability. We have formulated the Procurement Code of Conduct set out below in accordance with ourCompliance Code of Conduct and internal rules.

Procurement Code of Conduct
1. Statutory compliance: We will comply with laws andordinances in all activities relating to procurement andensure the fairness of transactions.
2. CSR: We will be aware of our responsibilities as a better corporate citizen, and will proactively conduct CSR
activities. We will work with suppliers who share ouraspiration to serve society.
3. Green procurement: We will pay attention in our procurement activities to the protection of resources andthe conservation of the environment.
4. Fair and impartial transactions: We will keep the
possibility of purchase transactions open broadly to
Japanese and overseas suppliers and engage in thesetransactions based on fair and impartial standards.
5. Selection of suppliers: We will comprehensively evaluate suppliers in terms of quality, pricing, delivery time,
eﬀorts to reduce costs, potential to provide new materials and technologies and other factors and selectsuppliers based on economic rationality.
6. Soundness: We will always seek sound purchasetransactions and eschew speculative transactions.
7. Information management: We will strictly control thematerials and information provided to us in connection with purchase transactions.
8. Respect for human rights: We will fulfill our duty torespect human rights in procurement transactions.
9. Efficient use of resources: We will appropriately manage energy, water, raw materials and other resourcesand ensure the efficiency of transactions in line withthe consumption plan.

For the responsible sourcing ofminerals
In recent years, minerals mined in conflict and high-risk regions
have been used by armed forces and anti-government forces assources of funding. This is recognized globally as a serious problem.
In 2010, the United States passed the Dodd-Frank Wall Street
Reform and Consumer Protection Act. It requires companies listed on stock markets in the United States to disclose information
about their use of gold, tantalum, tin and tungsten produced in the
Democratic Republic of the Congo (DRC) and neighboring countries, which are considered to be conflict areas. In 2021, the European Union's own conflict mineral regulations came into force.
In light of the spread of the movement toward urging companies
to take action against conflict minerals, the TODA KOGYO Groupasks its suppliers to ensure that their purchases of conflict minerals
and extended minerals, such as cobalt and natural mica, are in accordance with the Responsible Minerals Assurance Process (RMAP).

34

CSR Report 2023

CSR Procurement◆ Major investigation items in the CSR Self-Check Sheet

To conduct sustainable procurement in collaboration withthe supply chain, we ask our suppliers to respond to oursurveys on the purchase process. We ask our major suppliers to answer survey items on the CSR Self-Check Sheet(prepared in Japanese, English and Chinese). We then issue
feedback sheets to them. We repeat this every year to run
a PDCA cycle in the hope that they will constantly improve
CSR efforts. We have set a goal of 85% fulfillment of requirements as a material issue in procurement.

Criteria for main suppliers

Quality actions

China 16%

Japan

Suppliers

Self-Check Sheet(1) Distribute the CSR
Self-Check Sheet(3) Issue feedback sheets

TODA KOGYO Group

Action report85%

Investigation

Customers

⿠ Emergency
structure⿠ Assumption ofrecovery⿠ Education

⿠ Alternative
strategies

Fiscal 2021

84%

Fiscal 2022
92%
87%
95%
86%

Respect forhuman rights

47%

Business
continuity plan⿠ Internal audit

Safety and healthmain suppliers(2) Reply to the CSR

⿠ Employment

⿠ External certifications, suchas ISO 14001
certification

Sound business
management

67

Sound business
management◆ CSR Self-Check Sheet Results
Business continuity
plan

4%

Safety and health⿠ Life cycle
assessment(LCA)● Supplying raw materials or components that are
difficult to replace

Europe and USA

Respect forhuman rights

⿠ Fairness and⿠ Safety for
information
workers
⿠ Young workers
⿠ External certidisclosure⿠ Preparation
fication⿠ Work hours
for emergency ⿠ Information
⿠ CSR
⿠ Elimination of
security⿠ Environmental⿠Industrial injudiscrimination
⿠ Quality control
conservation
⿠ Mineral prories, diseases
activities
curementand health⿠ Carbon neu⿠ Intellectual
tralityproperty⿠ Organization● A large purchase amount● Supplying important materials or components

Environmental
considerations

Environmental
considerations

96%

Fiscal 2021 Fiscal 2022

92%
88%
84%

Quality actions

94%
87%

Number of issues

66

78

Number of responses

65

71

Response rate

98%

91%

Target of 85% or more (an indicator connected to TODA KOGYO’s material issues)

Message to suppliers◆ [Request for reducing quality unevenness]◆ [Request for water resources management]

Specific manufacturing sites of TODA KOGYO have acquired
IATF 16949 certification. IATF 16949 is a specialized standard
for the automobile sector. This standard requires the development of a quality management system that leads to the prevention of defects and the reduction of inconsistencies andwaste.
We will ask our suppliers to establish quality management
systems that will result in the reduction of inconsistencies andwaste in the supply chain, to carry out quality assurance activities and to make sure that they make similar requests of their
suppliers.

Utilization of water as limited resources is changing amid
global warming, economic development and population
growth in developing countries. The water crisis is one of
the risks that have global impacts. Water resources are indispensable to manufacturing activities in the TODA KOGYO
Group. They are susceptible to the exhaustion of water resources and to flooding. It is vital to properly understand andcontrol water risks.
We therefore ask our suppliers to carry out wastewater management and to make efficient use of water.
The TODA KOGYO Group will bolster sustainable utilizationof water in collaboration with local communities and stakeholders.

CSR Report 2023

35

Human Capital Management
Personnel Development

We received advice onhuman capitalmanagement from

Sanno University fromJanuary to March 2023.

Yukari Ando,
Sanno University

Let me review the definition of human capital management.
According to the Ministry of Economy, Trade and Industry, it
is management that considers human resources as capitaland maximizes their value, leading to the improvement ofcorporate value in the medium to long term. I see that TODA
KOGYO has long sought management that believes in thepotential of humans and that its employees have sought thecompanywide unity of its manufacturing, engineering, sales
and administrative departments to seriously and enthusiastically respond to expectations. One proof of this is the Purpose
announced in January 2023, which reads, "We transform thepotential of fine particles into new possibilities for our world."
Employees took part in its formulation. I strongly hope thatthe management team will accelerate TODA KOGYO's styleof human capital management for increasing corporate value
to meet the expectations of shareholders and the market bytransforming the potential of fine particles mentioned in the
Purpose and the potential of its personnel into a tangible form.
I hope that employees will understand that the improvementof corporate value through human capital management leads
to the improvement of their own value. Some of them may
doubt that their own value will be improved. Executives will
surely act as examples.

Correspondence education course

Training for new employees
Follow-up training for new employees

Language training(main players)

Quality control training

Grade 2Training for Grade 3

Training for appraisers

Grade 3Training for Grade 4(chiefs and equivalents)

Second life training

Grade 4Training for Grade 5(assistant managers and equivalents)

Mental health care (superiors' care and self-care)⿠ Increasing demand for various types of personnel
that enhance corporate value (prospective successors to people in important positions, staffing for
new growth businesses, the replenishment of necessary personnel in production, engineering, sales
and administration (stable operation of the supply
chain) and specialized personnel in DX, finance,
legal affairs, marketing and other areas)⿠ Imbalance of personnel composition in terms ofgender, age, position and other attributes

Grade 5Training for managers

Management Principle

Healthimprovement

Introduce a health and productivity
management system, construct a
company-wide cross-organizational
mental health care structure and other activities

Managers

Training for womenat management
positions

Engagement
strategy

Reform workstyles (working fromhome and childcare leave for male
employees), conduct diversity management, provide anti-harassment
training, improve personnel programs
and other activities

Seniormanagers

On-the-job training for leaders

Staffing
strategy

Carry out staff surveys, rotate personnel from the perspective of development, assign employees in consideration of their abilities and otheractivities

Corporate
Officers

Self-development

Focused on specific issues

Career development training

Development
strategy

Officers
Management workshop and training
Executive Officers
for directors

GlobalTraining forrecruitment
interviewers

CSR Report 2023

Issues36

Strategies

The TODA KOGYO Group values the originality and diversity of its employees. It will continue working towards
a bright future aiming to be a company that serves society with strengths in highly advanced development.
To help employees develop their unlimited skills, we
as a company will improve the working environment andsupport them in their learning to increase their expertise.
In so doing, we aim to ensure that employees will lead
happy lives full while securing proper revenue as a business entity so that we can return it to society and investors.
At the time of the 200th anniversary of our founding
and the 90th anniversary of our incorporation, we formulated our Purpose, which reads, "We transform thepotential of the particles into new possibilities for ourworld." This was the organization's reconfirmation of thisgoal.
“Particles" was stated because of the fine particle synthesis technology that the Group has nurtured since its
founding. As is suggested by the Statement and the Slogan, by (fine) particles we also mean employees (personnel).

Provide rank-specific training to all
employees, develop selected personnel as executive candidates (develop
a personnel pool), develop specialized personnel and other activities

For selected
personnel

For specific grades

Language training— Founded on the basis of the spirit of technology, we are currently using technologies thathave been cultivated over 200 years. —Personnel
recruitment
strategy

Improve the quality and quantity ofinternship programs, visits to universities and company orientation meetings, actively employ diverse personnel, increase employee referrals andthe reemployment of ex-employees,
enhance the onboarding of new employees and other activities

Category

Training for personnel assigned overseas◆ Human Capital Development Policy

⿠ Starting from the President and CEO, the Group
formulates and implements personnel strategies
to ensure the management strategy is connected
to decisions that are optimal for the whole Group.
⿠ TODA KOGYO will introduce a talent management
system and a health and productivity management
system and have personnel affairs organizations
interview every employee and conduct personal/
management aptitude testing to better understandthe needs and conditions of employees and organizations and consider them in the design of different
measures.

Grade

Dispatch to outside bodies

Governance2023 marks the 200th anniversary of our founding and the90th anniversary of our incorporation. On this occasion, we
will renew our awareness of the spirit of technology. We havepreserved this spirit down from generation to generation since
the founding of TODA KOGYO. With a more solid management
structure, we are committed to creating a culture that enables
our personnel to dream and hope and continue working vigorously towards a bright future. Our vision is that we will be a significant, indispensable company when we celebrate the 300th
anniversary of TODA KOGYO's foundation. We are a company
where personnel are able to grow and build trust-based relationships with each other that are full of gratitude and earn the
deep trust of customers.

Training Program

Training for management personnel

We will improve our organizational strength,
develop our business and serve society throughthe development of personnel.

The Group is working every day to operate a cycle that combines the wisdom of many different employees, invents andmanufactures products, provides services and achieves customer satisfaction. A key to the success of this cycle lies in thegrowth of employees and their ability to display their potential.
Our personnel affairs organizations will improve the workplaceenvironment that enables employees to grow and fully display
their capabilities and support the process of constantly developing the business and serving society, a virtuous circle ofgrowth and development.

(universities, graduate schools, research institutions and suchlike)

Personnel Vision— At the heart of the TODA KOGYO Group's
personnel measures —◆ Human Resource Strategy

From the perspective of a financial planner, I support
the monetary education of people from different generation in the training of new employees, life planning training for people just before retirement and monetary training for the working generation. From around the 1950s
to the 1980s, people in Japan did nothing but save toaccumulate assets, received large retirement benefits
and enjoyed an easy post-retirement life solely on theirpensions. This life plan is now collapsing.
Under the slogan of the era of the 100 years lifespan,
the Japanese government encourages people to build
and manage their assets. In reality, people's awarenessis still poor. I hope that this training will enable trainees
to learn to manage and control money matters on theirown without being dependent on others. As a lecturer, I
am happy if the lecture helps improve someone's ability
to manage their life independently, including asset management.

I provide financial

planning training topeople of different
generations.

Takayoshi Ohara,
AIX CONSULTING Co., Ltd.

CSR Report 2023

37

Human Rights
Human rights policy

Future Schedule

The TODA KOGYO Group formulated its Human Rights Policy in April 2023 to state its commitment to respecting humanrights. We have since been carrying out actions accordingly.

FY2023 Schedule
Category

The TODA KOGYO Group has set its Purpose as “We transform the potential of fine particles into new possibilities for our world.” In ourManagement Principle, we are committed to “work on a foundation built on sincerity and trust and bring together our creativity and manufacturing strength to make a contribution to society in general with attractive new materials and solutions that are full of originality.” Under
our Purpose and our Management Principle, we are determined to “be a company that is constantly trusted by our stakeholders” in ourManagement Policy, as well as to act with a strong sense of ethics as corporate citizens who are faithful and fair and to work for harmony andsymbiosis with the local community and with the global environment in our Code of Conduct.
The TODA KOGYO Group recognizes the importance of respecting the human rights of every individual affected by our business activities
to achieve these commitments to society. In order to fulfill our responsibility to respect human rights, we hereby establish the TODA KOGYO
Group Human Rights Policy ("the Policy") based on the Guiding Principles on Business and Human Rights adopted by the United Nations
Human Rights Council.

The Policy expresses the TODA KOGYO Group's commitment torespect human rights and is reflected in its regulations and procedures. The Policy also represents our commitment to respecthuman rights based on our Purpose, Management Principle,
Management Policy, Code of Conduct, and other related internal
policies and rules.
The Policy applies to all directors, officers, and employees of
the TODA KOGYO Group (including contract workers and parttime workers). We also expect all our business partners and otherparties linked to our business, products, and services to support
and comply with the Policy.

2. Basic Stance on Respect for Human Rights

The TODA KOGYO Group always respects fundamental humanrights. We support and respect the United Nations International
Bill of Human Rights*1 and the International Labour Organization(ILO) Declaration on Fundamental Principles and Rights at Work*2.
We pay particular attention to the following human rights issues: eliminating any form of discrimination on the grounds ofrace, color, age, gender, sexual orientation, ethnicity or national
origin, disability, disease, pregnancy, religion and creed, politicalaffiliation, social status, or other differences; prohibiting any inhumane treatment including harassment; protecting privacy of individuals; prohibiting child labor and forced labor (including humantrafficking); ensuring proper working conditions including working
hours, payment of wages, and benefits in compliance with laws
and regulations; respecting the fundamental rights of workers including freedom of association, the right to organize and the rightto collective bargaining; ensuring occupational safety and health,and other human rights issues.
If there is any conflict between internationally recognized human rights standards and the laws and regulations of a country or
region where the TODA KOGYO Group operates, we will pursue
ways to respect international human rights standards while complying with the respective laws and regulations.

*1 T his consists of the Universal Declaration of Human Rights, International Covenant on Civil and Political Rights, and International
Covenant on Economic, Social, and Cultural Rights.
*2 This stipulates fundamental rights at work and includes respect
for the ILO’s Core Labour Standards: freedom of association andthe effective recognition of the right to collective bargaining; theelimination of all forms of forced or compulsory labour; the effective abolition of child labour; the elimination of discrimination in
respect of employment and occupation; and a safe and healthy
working environment.

3. Responsibility to Respect Human Rights

The TODA KOGYO Group recognizes that it may be unintentionally involved in adverse impacts on human rights either directly through its business activities, or indirectly as a result ofits business relationships with external parties. We endeavor to
avoid causing or contributing to adverse impacts on human rights
through its business activities and will take action to correct any

38

CSR Report 2023

7

8

9

10

11

12

1

2

3

(1) C
 ollect and organize information about the TODA KOGYO
Group's offices and plants

TODA KOGYO Group Human Rights Policy

1. Position of the Policy and Scope of Application

Items

adverse impacts that may occur. We do not intend for our business activities or the products and services it provides to be used
in a manner that may have adverse impacts on human rights. In
the case where it is suspected that our business activities, products, or services are linked to adverse impacts through our business relationships, we will take appropriate measures together
with our business partners and other related parties.
4. Approach to Human Rights Issues

The TODA KOGYO Group will actively work on the following
items based on the United Nations Guiding Principles on Businessand Human Rights:(1) Responsible Personnel
President and Representative Director of the TODA KOGYOCORP. takes responsibility for practicing the Policy and willsupervise the status of progress.

(2) Education and Training
We will provide education and training to our directors, officers, and employees to ensure that the Policy is reflected on
our entire business activities and practiced effectively.

(3) Human Rights Due Diligence
We will conduct human rights due diligence in accordancewith the United Nations Guiding Principles on Business andHuman Rights. We will identify adverse human rights impacts
in which we may be involved and strive to prevent and mitigate such impacts.
(4) Remedy
When we recognize that our business activities have caused
or contributed to any adverse human rights impacts, we willtake steps to remedy such impacts through dialogue andcooperation with stakeholders and appropriate proceduresin accordance with the United Nations Guiding Principles on
Business and Human Rights and other international standards.
If it becomes clear that our business activities, products andservices are linked to adverse human rights impacts throughbusiness relationships, we seek to ensure that remedies areprovided.
(5) Dialogue and Consultation
In the process of practicing the Policy, we will apply both internal
and independent external expertise on human rights as well as will
engage in dialogue and consultation with our stakeholders.
(6) Information Disclosure
We will disclose the progress and results of our efforts for respecting human rights on our website and through other media.

The Policy was prepared with expert advice from within andoutside the TODA KOGYO Group, approved by the Board of Directors,
and signed by the President and Representative Director.
Date of Establishment: April 21, 2023
TODA KOGYO CORP.
President and CEO

Human rights
due diligence
(DD)

(2) P
 rovisionally determine the scope of the implementation
based on an analysis of outside information and examine risks(3) Identify the scope of implementation of due diligence andidentify risks based on internal information(4) Analysis of risks(5) Information disclosure

RemedyCheck the current state of the complaint handling mechanismand develop an action policy

Education andAwarenessRaising

Organize a workshop on human rights for group companies
and others

FY2024 Schedule
Category

Items

Q1(Apr-Jun)

Q2(Jul-Sep)

Q3(Oct-Dec)

Q4(Jan-Mar)(1) Risk assessment (impact assessment)
Human rights
due diligence(DD)(2) Implementation of measures(3) Evaluation of effectiveness(4) Information disclosure

Stakeholder
engagement

Dialogue with outside experts

RemedyCreating grievance mechanisms

Actions for respecting human rights◆ Living wage

◆ Respect for the rights of labor unions

The TODA KOGYO Group carries out labor management incompliance with labor laws and regulations in the countries
in which it operates. Our basic policy is to not only observe
the minimum wage regulations in the countries but also pay
more than the minimum wage.

(1) T he TODA KOGYO Group will respect the freedom of
workers to join labor unions and the right of labor unions
to bargain collectively and will not disturb them in accordance with the laws and regulations in the countries andregions where it conducts business activities.
(2) T he TODA KOGYO Group will respect the operations oflabor unions, carry out open collective bargaining basedon mutual trust and collaboratively endeavor to settle
disputes in consideration of local labor practices.
(3) T he TODA KOGYO Group will not engage in discrimination, retaliation, harassment or any other disadvantageous
treatment of any employee regarding labor conditions dueto their exercise of their rights through a labor union.

◆ Foreign workers
When hiring foreign workers locally, we will create labor
contracts in their native languages or other languages thatthey understand. Before foreign workers leave their homecountries, we will provide employment contracts.

CSR Report 2023

39

Diversity, Equity and Inclusion
In accordance with the Act to Advance Measures to Support Next-Generation Child-Rearing and the Act on the Promotionof Female Participation and Career Advancement in the Workplace, TODA KOGYO drew up the action plans mentioned below
to support next-generation childcare and to accelerate women's career participation and advancement. We are carrying out
activities in line with these plans.

1

2

3

We have identified DE&I and personnel development as material issues related to our personnel strategy. Our metrics, targets
and fiscal 2022 results are as follows.

◆ Workplace development that unlocks people's potential

Action plan for supporting next generation child-rearing(five-year period from April 1, 2021 to March 31, 2026.)
TargetMateriality (Fiscal 2022 Results)

Actions for meeting the target

Results on fiscal 2022

Improve awareness of childcare in workplaces
and achieve the target specified below concerning the use of childcare leave during the periodof the plan
State of acquisition of childcare leave: At least
one acquiring the leave among male employees
entitled to it
Maintain the state in which all the women entitledto it acquire it and return to work⿠ Create a situation where employees do nothesitate to take childcare leave⿠ Regularly provide information about the different programs related to childbirth and childcare to employees via the Intranet and othermeans⿠ Create internal documents about childbirthand childcare and distribute them to both
men and women employees

The percentage of eligible women taking
childcare leave and the percentage of women
returning to work after childcare leave both
remained at 100%.
The percentage of childcare leave used by eligible
men was 91.7%.
The percentage of men returning to work after
leave (including men returning from leave forchildcare purposes) was 100%.

Create an environment for diverse and flexible
workstyles (by encouraging workstyles thatoffer flexibility in terms of location, such as
working from home and teleworking)⿠ Institutionalize working from home and teleworking and create an environment where
they can be smoothly implemented

Consideration of institutionalization

Provide children with fun experience about scienceand chemistry⿠ Participate in events for elementary schoolchildren and junior high and senior high students
to increase their understanding of science andchemistry⿠ Cooperate in school education for elementary
schoolchildren, such as visiting lessons

⿠ Participated in three science and chemistry
events⿠ Visiting instructors taught nine science lessons
at seven schools

Fiscal 2030 Targets

Fiscal 2020

Fiscal 2021

Fiscal 2022

Ratio of female employees

25%

17%

15%

17%

Ratio of women in positions at the level ofassistant managers

―

12%

13%

17%

Ratio of women at management positions

―

3%

3%

3%

Ratio of women among officers

10%

０%

０%

０%

Male

FemaleFiscal 2030 Targets Fiscal 2022 Results Fiscal 2030 Targets Fiscal 2022 Results

Action plan for women's career participation and advancement(five-year period from April 1, 2021 to March 31, 2026)

Number of employees entitled to childcare
leave

―

12

―

3

Number of employees taking childcare
leave

11

12

―

3

Ratio of employees taking childcare leave

95%

92%

100%

100%

Ratio of employees returning to work

―

100%

100%

100%

◆ Recruitment of women◆ Management of prescribed working hours* The ratio of female employees taking childcare leave has been staying at 100% for at least 10 years.
* The ratios of male employees include leave for childcare purposes (for the birth of a child).

Aim to increase the ratio of women to new graduates recruited
to 30% or more (total) during the period of the plan to address
our problem about the low percentages of women in personnel,
new recruits and management positions.

Keep the total number of overtime working hours of all personnel within a limit of 10 hours on monthly average.

◆ Development of a workplace environment enabling employees to display creativity / Human resource
development supporting a company built upon technology

⿜ Target⿜ Actions for meeting the target

Disclose the ratio of employees taking childcare leave and otherfigures and feature some actively working female employees
on recruitment media to positively advertise our company as a
women-friendly workplace.

⿠ Create and improve the workplaces and necessary environments for women's career participation.
⿠ Provide female employees with career education.

採用⿜ Result（%）

35

⿜ Result
12

10.3

10
8

2020

27%

2021

17.1%

14%

16
14
12

5

10

Among newAmong newgraduates
graduates
recruited for 2022 recruited for 2023

Average length
acquired(Days)

10

0

Next-generation management candidate
training

TargetAmong all new
graduates
recruited

In the company’s(Fiscal)workforcein 2022

Ratio of female employees

CSR Report 2023

8
6

Fiscal 2030 Targets

Fiscal 2022 Results

Remarks――

Start of measurements in
2023

30,000 yen

19,800 yen

6 or more per year―

Start of provision in 2023

8.19

7.2

6

Improvement of employee engagement
Cost of training per employee(Hours)2022(Fiscal)Monthly average overtime working hours

25

40

Implement a no-overtime day to raise awareness of overtime
working.

4

Target30

15

⿜ Actions for meeting the target

38%

40

20

⿜ Target

65.2
44.9

13.0

Average acquisition
rate

80

61.1

60

12.5

40
20

8.7
2020

（%）

2021

2022

0
(Fiscal)Average length of annual paid leave acquired and averageacquisition rate

I took one year of childcare leave starting in 2022 because I wanted to watch the growthof our baby, who changes every day, together with my wife. I had received an explanation of the childcare leave system and heard stories from people who had taken the leave.
Therefore, I told my supervisor about my desire to take childcare leave at an early stage
and gained the understanding of the people around me. I am in charge of installing andmaintaining information systems, and my job involves many irregular tasks and frequentinteractions with people outside the company. I developed a handover plan immediately
after I decided to take childcare leave and I was able to go on leave without any problems.
Having actually taken leave, I felt that it is difficult to be responsible for an innocent life.
I think that it was possible to reduce the psychological burden on both my wife and me
by sharing both childcare and household tasks. I was worried about the burdens that mygroup members would bear while I was on leave, but I believe that they had a positiveeffect. For example, my childcare leave enabled them to review the division of duties andprevent dependence on individuals' skills.
Naoki Nishi, Information Technology Group, Corporate Planning Department
CSR Report 2023

41

Intellectual Capital
The TODA KOGYO Group understands that intellectual property is a significant asset for corporate activities.
It therefore encourages activities relevant to intellectual
property and endeavors to ensure that it is protected andutilized properly. The Group advances initiatives involving
intellectual property in a bid to maximize corporate value.

Current Initiatives Involving Intellectual Property

Number of registrations

60

To promote and manage compliance initiatives in a companywide manner, we have established the Compliance Promotion Bureau under the Compliance Committee (Chairperson:
President and CEO) and implement oversight and management.
The Board of Directors confirms the status of action throughreports received from the Compliance Committee, and makes
decisions and supervises the development of the necessary
systems and schemes. The Compliance Promotion Bureau isoverseen by the Executive Officer in charge of compliance andconsists of members of the administrative team from the head
office.

40

30

20

10

2018

2019

2020

2021

2022

2030

The TODA KOGYO Group is working to maintain and improve
compliance on the basis of its Code of Conduct, according towhich every single member of staff should behave with a highsense of ethics as a sincere and fair corporate citizen. We haveset "strengthening compliance" as a governance initiative. It is
one of our material issues and we are implementing initiatives
with the goal of achieving zero serious legal or regulatory violations.

Management System

50 or more

50

0Basic Stance(Fiscal)Board of Directors

Numbers of applications(an indicator connected to TODA KOGYO's material issues)Compliance Committee

Environmentalrelated
8.0%

un

Implementation
report449
in total
ctio

n al

Iron oxide
24.3%

Instruction
on policies

Compliance Promotion Bureau

Ele
ct

rs

Supervision(Chairperson: President and CEO)Soft
magnetic
materials
14.9%
Others28.7%

ReportLiB
cathodematerials
13.4%
Magnetmaterials
6.7%

Dielectricmaterials
4.0%

Distribution of Japanese patents owned by business domain(including patent applications under examination)

Education

Whistleblowing system

CSR Report 2023

Number of applications(Cases)materials
nic
ro

42

Statistical InformationF

The R&D team and the intellectual property team will
form close ties with each other and will work as one to carryout intellectual property activities. We have set the target
of increasing the annual number of patent applications to
50 by 2030 as one of our material issues (2022 results: 20
applications). We believe that, to maintain and expand ourbusiness, we need to develop technologies that enable us
to solve users' issues, ahead of other companies, and secure intellectual property rights regarding the developed
technologies. In addition, we are committed to fine particles (materials) and conscious of patent applications thatcan be filed only by companies that are upstream from the
manufacturing of products. In particular, we are focusing
our efforts on soft magnetic materials and environmental
materials that we position as growth fields.
We work to engage in activities based on strategic initiatives instead of simply increasing the number of patentapplications. Specifically, we are endeavoring to develop
technologies and submit patent applications by constantly
monitoring the trends in applications filed by other companies (users and competing manufacturers) and finding areas which are likely to be promising markets and where wecan demonstrate our unique strengths. We are also conscious of market information in our monitoring of trends
in development areas. We also try to clarify the intent andobjective of the patent applications we are submitting forthe technologies we have developed, with an awareness of
the use of the rights as well as the number of applications.
Generally, we assume that we acquire the rights associatedwith the results of our R&D and use them on our own togenerate operating revenue. Depending on the businesssituation, however, we also license or assign patents to othercompanies to monetize them.
To support these activities, we are trying to create a map
to visualize and share patent-related information. We startby creating a list and analyze the matter from a perspective
suited to the purpose the map is being used for. We willcontinue creating the map in cooperation with not only theintellectual property team but also the development team.
At the same time, we train our development personnel
to enable them to easily create patent specifications by removing as many barriers to the creation of patent applications as possible and to secure high quality intellectual
property rights. We act daily with an awareness of cooperation with development personnel.
Because we also engage in open innovation, or development in collaboration with other companies, we try toproperly manage our own technologies by identifying themand classifying them as either those for which applications
should be filed or as those to be kept undisclosed as ourinternal know-how. We will also jointly submit patent applications when we obtain the consent of the other parties
involved in the development of the technology.

OtheBasic Principles on Intellectual Property

Compliance

Report of results
Consultation

Employees

Response
and report

Report of inquiries
and violation
incidents

Internal helpdesk
Full-time Audit
and Supervisory Committee
memberOutside helpdesk
Compliance helpdesks

Operation management

The Compliance Promotion Bureau has mainly been handling non-compliance incidents. In fiscal 2022, we took thereinforcement of the governance structure of the company
as a whole as an opportunity to improve the operations of theCompliance Promotion Bureau. We have created opportunities
for regular consultations to enable the Compliance Promotion
Bureau to engage in more effective, flexible activities. The activities of the Compliance Promotion Bureau are reported to
management as necessary in our efforts to ensure effective supervision related to compliance operations.
When a non-compliant situation has occurred, it is reported

in accordance with organizational rules and the employee who
discovered the issue is able to consult people regarding thematter using the whistleblowing system. The goal of the whistleblowing system is to prevent the violation of laws, regulations and ethics and prevent the concealment of the facts ofany violations that do occur. We have set up both internal andexternal compliance helpdesks.
When an employee has consulted the internal helpdesk, theincident is reported to the Compliance Promotion Bureau, withthe greatest possible consideration for the protection of theemployee who contacted the helpdesk, and the Compliance
Promotion Bureau investigates and handles the matter. Wherean employee has consulted a full-time Audit and Supervisory
Committee member or the external helpdesk, the incident isreported to the Board of Directors or the Compliance Committee, depending on the content of the incident, and investigatedand handled by either the Board of Directors or the Compliance
Committee.

Specific Initiatives

We believe that the ethics of each individual employee and theinternal regulations that are behavioral standards are importantfor ensuring compliance.
We regularly provide compliance training to all officers andemployees to help develop their ethics. At the same time, we
provide harassment training to increase their understanding of
human rights.
Internal regulations that are behavioral standards for employees are established through prescribed procedures, and they are
adjusted by the Regulation Review Committee at the head office
to prevent the standards contradicting regulations. Regulations
are established and revised with consideration given to ensuring
they reflect necessary social rules. We make sure to inform theentire company of the contents of new or revised regulations.

Matters Reported to the Helpdesks

A woman was appointed to be a legal advisor at the external
helpdesk in fiscal 2021, creating an environment that made iteasier for employees to contact the helpdesks, and the helpdesks were contacted regarding a certain number of matters.
Many of the matters regarding which helpdesks were contacted
recently were about harassment.
We will continue to create comfortable, harassment-freesystems and workplaces to enable officers and employees toparticipate actively in a healthy manner.
(Cases)

4
3
2
1
0

2017

2018

2019

2020

2021

2022

2023 (Fiscal)

Number of matters regarding which the compliance helpdesks were contacted

CSR Report 2023

43

Governance Data

Information Security

Governance Data
Category

Items

Unit

Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

3

3

3

0

0

0

0

0

Number of Corporate Auditors (including
Audit and Supervisory Committee Members)*1

4

4

4

4

4

Male

4

4

4

4

4

0

0

0

0

0

3

3

3

3

3

0

0

0

0

0

Number of Executive Officers*2

–

8

10

10

10

Male

–

8

10

10

10

–

0

0

0

0

–

0

1

1

1

%

–

0

0

0

0

meetings

19

18

18

18

17

80

96

100

100

100

96

96

100

100

100

Ratio of females%

persons

FemaleOutside Corporate Auditors*

Ratio of females%

persons

FemaleNon-JapaneseRatio of females
Number of meetings
Outside Director attendance rate
Outside Audit and Supervisory Committee
Member*1 attendance rate%(including Audit and Supervisory Committee
Members who are Outside Directors)

Boardof Corporate
Auditors(including
Audit andSupervisory
Committee)

Number of meetings(including Audit and Supervisory Committee
Members who are Outside Directors)(Audit and Supervisory Committee
Compensation Directors
1
for officers Members)*(Outside Directors)%

millionyen

Corporate Auditors*1(Outside Corporate Auditors)
Number of serious incidents related to TODA
KOGYO's Compliance Code of Conduct

8

8

10

8

8

cases

100

100

96

100

96

133
(10)

120
(12)

110
(14)

105
(14)

114
(14)

–

–

–

–

17
(10)

18
(10)

18
(10)

18
(10)

18
(10)

4
(2)

0

0

0

0

0

*1: Following a resolution at the 89th Annual General Meeting of Shareholders on June 28, 2022, TODA KOGYO transitioned to being a company with anaudit and supervisory committee.
*2: The executive officers system had yet to be introduced in fiscal 2018.

44

CSR Report 2023

Technical
measuresPhysicalmeasures

Material Issues◆ Enhancing the security measures of overseas
subsidiaries
The TODA KOGYO Group aims to ensure by fiscal 2030 thatincidents including ones at overseas subsidiaries are identified
and addressed. The Group is also enhancing security at overseas subsidiaries. In fiscal 2023, we introduced security measures at two overseas subsidiaries. We will advance this initiative to steadily improvesecurity.
海外子会社セキュリティ対応計画
Planned number ofcompanies (cumulative total)(Cases)10

Step3

4 the year and after

Establishing operations andimproving their levelStep2

3 rd year

Number of companies which haveintroduced the measures (cumulative total)

Present to6

Increasing awareness of
security (regular training andmanagement), improving thehandling of incidents

2 nd year

Step1

Reducing the risk ofincident occurrence

Security policies for overseas subsidiaries(on an individual company basis)

4

Directors (excluding Audit and Supervisory
Committee Members)*1(Outside Directors)

CorporateethicsOrganizationalcountermeasures

8

meetings

Outside Audit and Supervisory Committee
Member*1 attendance rate

C

Information security
measures1(including Audit and Supervisory Committee
Members who are Outside Directors)

Board ofDirectors

To appropriately address the threats that are growing more
complicated and sophisticated every year, we endeavor to
improve our information security by implementing the PDCA
cycle to improve organizational, technical and physical countermeasures.

Managementof devices takenout of oﬃces

3

Outside Directors*(excluding Audit and Supervisory Committee
Members who are Outside Directors)

Physicalmeasures

Technical
measuresManagement
under lockand key11Information Security Initiatives

Use of cloudservices0

Use of external
data centers

0

D

Information
Security

IT asset anduser accountaccounting

0A

Restrictions andmonitoring of
external devices

0

Organizationalcountermeasures

Detection of
network intrusions

0

persons

Updatemanagement5Anti-virus
measures7

Restrictions andaccess monitoring

7

5

Network
connection
restrictions

7

7

Security training

6

7

Security education

Male

7

Internal audit

6

The TODA KOGYO Group pushes forward with activities tomanage information security by recognizing safe, reliable information management as a key management issue to properly
and efficiently share and utilize all of its information assets related to its business activities.

Establishmentof rulesNumber of Directors*1(excluding Audit and Supervisory Committee
Members who are Outside Directors)

FemaleOfficers

P

Information Security Policy

2
0

2023

2024

2025

2026

Security plan for overseas subsidiaries

2027(Fiscal)◆ Number of digitalization projects led by user
departments
As digital technologies have evolved and come into ever greateruse, the TODA KOGYO Group has been improving the efficiency of its
business by introducing cloud systems and using tools with the user
departments taking the initiative in the implementation of these systems, with the goal of enabling these departments to properly handle
digital technologies and information on their own for the analysis andutilization of data. While there were 17 projects in fiscal 2022, we areworking to achieve a cumulative total of 250 projects by fiscal 2030.

Target (cumulative total)(Cases)Result (cumulative total)

250
200
150
100
50
0

2022

2024

2026

2028

2030

(Fiscal)Number of digitalization projects led by user departments

CSR Report 2023

45

Company Information

Offices and Plants

Corporate Profile (as of March 31, 2023)

7,477 million yen

Number of Employees:

374 (non-consolidated),
846 (consolidated)

ISO 9001

ISO 14001

ISO 45001

IATF 16949

●

●

●

1984

●

●

●

●

ⓒO
 kayama Plant (manufacturing of inorganic pigments)

1933

●

●

ⓓ Otake Creative R&D Center (research, development and marketing)

1991

●*

●

●

●*

Consolidated
Subject to equity method

●

●

ⓕT
 oda Magnequench Magnetic Material (Tianjin) Co., Ltd.
(manufacturing and sales of rare-earth magnetic compounds and others)

China

2007

●

●

ⓖ Toda Advanced Materials Inc.
Canada(manufacturing and sales of lithium ion battery cathode material precursors)

2007

●

●

ⓗT
 OKYO SHIKIZAI INDUSTRY CO., LTD.
(manufacturing and sales of organic pigments)

Japan

2008

ⓘT
 oda Kogyo Asia (Thailand) Co., Ltd.
(manufacturing and sales of ferrite magnetic compounds and others)(import and sales of coloring pigments)

Thailand2016ⓙ J iangmen & Partner's Magnetic Product Co., Ltd(manufacturing and sales of injection molded magnets and others)

China

2021

ⓚ Zhejiang Huayuan Pigment Co., Ltd.
(manufacturing and sales of inorganic pigments)

China

2003

●

●

ⓛ ZHEJIANG TODA DMEGC MAGNETICS CO., LTD.
(manufacturing and sales of bonding ferrite materials)

China

2004

●

●

ⓜT
 ODA ISU CORPORATION(manufacturing and sales of magnetic materials)

South
Korea

2008

●

●

ⓝ Central Battery Materials Co., Ltd.
(manufacturing and sales of lithium ion battery cathode material precursors)

Japan

2011

●

●

ⓞ Mechema Toda Corporation(manufacturing and sales of materials for lithium ion battery cathodematerials and others)

Taiwan2013ⓟ BASF TODA Battery Materials LLC(manufacturing and sales of lithium ion battery cathode materials)

Japan* Some design and development processes
CSR Report 2023

2015

(Iwaki, Fukushima)hTOKYO SHIKIZAI INDUSTRY
CO., LTD. Head Office and Plant(Itabashi-ku, Tokyo)(Minato-ku, Tokyo)

Central Battery Materials Co., Ltd.
(Sakai, Osaka)n(Kitakyushu, Fukuoka)

1959

2003

(Sanyo-Onoda, Yamaguchi)

BTBM*, Kitakyushu Plantⓐ Onoda Plant(manufacturing of functional pigments, dielectric materials and others)

ChinaTOKYO SHIKIZAI INDUSTRY
CO., LTD. Iwaki Plant

Toda Kogyo Onoda Plantp(as of March 31, 2023)ⓔ TODA PLASTIC MAGNET MATERIAL (ZHEJIANG) CORP.
(manufacturing and sales of ferrite magnetic compounds and others)hSubject toequity method

Toda Kogyo Tokyo Office

1933

Japan

Consolidated

BTBM* Head Office,Onoda Plant

TODA KOGYO CORP.

ⓑ Otake Plant(manufacturing of magnet materials and functional pigments)

46

Since

a

p

Core Business Division

Company (business)

LocationJapan(Sanyo-Onoda, Yamaguchi)

Production Division

Onoda Plant

Otake Plant

Okayama Plant

Production Technology
Division

Research & Development
Division

Sales DivisionCorporate Administration
Division

Business Support Promotion
Department

Corporate Planning
Department

Quality Assurance
Department

Procurement & Logistics
Department

Intellectual Property GroupISO Certification Acquired in TODA KOGYO Group

General Meeting of
Shareholders

Capital:Audit and Supervisory Committee

November 30, 1933

Board of Directors

Date of Incorporation:

President and CEO

1823

Management Conference

Founding

Internal Audit Department

1-23 Kyobashi-cho, Minami-ku,
HiroshimaCompliance Committee

Head Office Location:

Risk Management Committee

TODA KOGYO CORP.
Nomination and Compensation
Advisory Committee

Company Name:

Organization Chart (as of June 28, 2023)

c

d

b

Toda Kogyo Otake
Creative R&D Center(Otake, Hiroshima)

Toda Kogyo Otake Plant

Toda Kogyo Head Office

Toda Kogyo Okayama Plant(Otake, Hiroshima)(Minami-ku, Hiroshima)(Kita-ku, Okayama)* BTBM = BASF TODA Battery Materials LLC●

Overseasm

Toda Kogyo Europe GmbH
(Düsseldorf, Germany)

Consolidated

Subject toequity method

TODA ISU CORPORATION(Wonju, Gangwon, South Korea)

TODA (CHINA) CO.,LTD.
(Shanghai, China)

f
m

●

●
●

●

●

e
g

●

j

o

Zhejiang Huayuan Pigment
Co., Ltd.
(Zhejiang, China)fToda Magnequench Magnetic
Material (Tianjin) Co., Ltd.

(Tianjin, China)

o

j

e

Toda Kogyo Asia
(Thailand) Co., Ltd.

Mechema Toda
Corporation

Magnetic Product Co., Ltd

Jiangmen & Partner’s

TODA PLASTIC MAGNET
MATERIAL (ZHEJIANG) CORP.

ZHEJIANG TODA DMEGC(Ayutthaya, Thailand)(Taoyuan, Taiwan)(Guangdong, China)(Zhejiang, China)(Zhejiang, China)

i

●

k

l
i

Toda Advanced
Materials Inc.
(Sarnia, Canada)k

CSR Report 2023

l

MAGNETICS CO., LTD.

47