SANGOGroup Report

2019

Manufacturing that creates harmony between the environment, people and goods
Contact
Corporate Planning Division Governance G,Sango Co., Ltd.
1-3-1 Mutsuno, Atsuta-ku, Nagoya-shi, Aichi-ken 456-0023
TEL: +81-52-882-0035(Main) FAX: +81-52-882-3562

http://www.sango.jp/en/Company Creed

Three intertwined elements of prosperity
Prosperity for our country, for our company
and for ourselves

100th anniversary
and beyond

Corporate Principles
With a steadfast commitment to the preservation of our family-like bond and teamwork,and the development of our human resources, manufacturing skills, and environmental
policy, we shall persevere in our challenge to create Sango products that contributeto global society.

The Sango spirit -- an untiring sense of challenge
and the desire to make wide-ranging
contributions to society

Hierarchy of Our Policies and Principles

Editorial Policy

CONTENTS

The goal of this report is to unambiguously demonstrate the
Sango Group CSR activities to all of our stakeholders. The
basic policy in compiling this report has been to focus on our
approach towards technologies for the future. This includes
our Long-term 2030 Outline, which we have formulated withthe aim of transcending the once-in-a-century structuraltransformation of the automotive industry. This reportconveys to our many stakeholders our current situation, ourapproach to the challenges we face, and our future goals.

01 Editorial Policy / Company Creed / Corporate Principles

Cover page photographThis is a scene of local schoolchildren invited toparticipate in a “Nature Observation” event heldat our head office (ECO 35) every May.
Students learn the significance of nature throughthe discovery of insects and wild birds living in
the Sango woods which they would not normallysee in their daily lives.

01

SANGO Group Report 201903 Message from the President
07 Company Overview
09 Product Overview

CSR Policy
SANGO WAY

CompanyCreed

Our philosophy, unchanged
since our foundation

Corporate
Principles

The underlying principles shared
among all employees

10 A Look at Sango by the numbers
11 Special Feature 1
Sango Growth and Development
13 Special Feature 2
Sango’s future as seen through the "STEP 5"
heat recovery product
ESG Information_Environment
15 Environmental Initiatives
ESG Information_Society
18 Together with Our Customers

Long-term 2030 Outline
Fiscal year policies

Where we want to bein the future
Company policies
implemented in asingle year

19 Together with Our Employees
23 Together with Our Suppliers
24 Together with Our Local Communities
ESG Information_Governance
25 Governance
26 Compliance02

Message from

01Revision of Our "Corporate Principles"
Recreated in our own words

the President

Initially established ten years ago to mark the 80th
anniversary of the company’s founding, the Corporate
principles have been revised and polished. Although themain intent remains unchanged, our new basic policy
states that "With our family-like ties and teamwork thatwill never change, we will pursue the development of
human resources, manufacturing capabilities, and anearth-friendly environment, and continue our challenge
to create Sango products that contribute world-wide."
The principles have been improved with the belief thatshorter sentences and simpler language will promote a
clearer understanding for every employee and lead topractical implementation. Moreover, instead of taking a
top-down approach, the voices of younger generations
were included, as they will be the ones to shoulder the
future of the Sango Group. It is expected that these
Corporate principles will become a part of every aspectof the company and by reflecting them in everyday
language and behavior, they will become ingrained into
our company culture.

02Planning the "Long-term 2030 Outline"
Look into the future and consider what needs to be done today
Although continuing growth is being predicted in the
global market for our main product area of automotive
exhaust systems, beyond 2030 we anticipate very toughoverall business conditions, as electrification begins tomake headway. In this age, what direction should theSango Group take, and what should be done today toprepare for this? A management vision called the"Long-term 2030 Outline" was formulated in order toboth spell out and share these issues.

The Long-term 2030 Outline’s 3 categories● The Sango Group goals for the future

What the Sango Group should be by 2030

● Detailed Approach

What needs to be done in detail, from management planning,development, manufacturing, and sales to work-styles● Image of the progress towards these goals

Investment for each approach and image of the targets forsales and profit*Image below (excerpt)

Sango Group goals for the future

A corporate group that offers new value to fields other than automotive,
achieving a safe and secure environment and way of life

New approaches(Exhaust system products)● Development of new products that utilize thermal management technology● Development of new products that utilize forming and joining technologies● For passenger cars ▶ Development of new products utilizing integrated / reinforced

noise reduction, emissions control, and thermal management technologies● For commercial vehicles ▶ Promotion of sales to multiple customers throughinnovative emissions control technology

Chassis business(Drive system products,
electric system products)● Development of new products that utilize forming technology as their strength

Body components● Development of new products utilizing pipe-related technologies as their strength

Maintaining existing ● Promotion of sales to overseas customers, while maintaining and expanding current business through enhanced,
business and building superior cost competitivenessnew business growth ● Maintaining and expanding precision steel products by enhancing processing techniques● Management efficiency reforms through restructuring within the organization

Greater global management ● Strengthening of group company business foundations and development of

Businessmanagement
innovation

President

New productsthat utilize coretechnologies
Power train business

Automobiles

With the opportunity to celebrate our 90th anniversary in 2018, the Sango Groupwould like to express our sincere gratitude for your support and guidance.
As many have noted, the automobile industry is in a period of great transformation.
It is our intention to not only survive these tides of change,
but also achieve a continuous and sustainable growth for the next 100 years and beyond.
This report takes up three major areas out of the several measures taken up
during the previous year as part of this journey.

A corporate group where its employees and companies take on inspirational challenges to achieve new progress

Nonautomotive
fieldsContinuing to hone ourmanufacturing capabilities
will open the path to Sango's future.

Opening up new paths for the Sango Group with new ideas and decisive action

a global governance system

Expanded functions
to create new products● Enhancement of R&D functions (such as the Sango Group Toyota Technical Center)● Shifting of resources through selection and centralization, and active utilization ofalliances with other companies● Innovation of the work process through reconstruction of the IT infrastructure

Major changes
to create new working styles ● Implementation of work styles that will encourage the coexistence of a sense of
purpose in life and the need to meet work challenges.

03

SANGO Group Report 201904

Work-style reforms that the government is promoting,changes in the automotive industry, and technologicalinnovations are behind Sango’s long-term vision. This
year marks the end of the Heisei era and the beginningof the Reiwa era, just as drastically changing externalbusiness conditions are bringing fundamental
transformation to every company in the industry.
Although this fact should not be misconstrued, it muststill be noted that, as automobile electrification
progresses, there will come a day when cars no longer
need mufflers. However, this does not mean that Sango
technologies will become obsolete, as the knowhow insuch areas as pipe bending, precision stamping, andothers are valuable assets and without a doubt, willcontinue to be useful, not just for the cars of the future,
but also in other non-automotive fields. There are manytechnical aspects to the approaches described in the"Long-term 2030 Outline", because after all, the Sango
Group mission continues to be a dedication tocontributing to society with our manufacturing
capabilities. Refining the technologies that have been
fostered for 90 years, and utilizing them in broader fields
around the world is the challenge set forth in our vision.
This leads us to consider what non-automotive fields
lend themselves to our capabilities. Such a question isbroad in scope and simply creating any brand new
business could seem to lack reason. Thus, the best way● For example ...

space...?
music...?

Noise
reduction

nursing Weightcare...? reduction

Heat
controlVibration

What Sangois great at

to proceed may be to apply a characteristically Sango
approach to this question.
We begin by coming up with flexible ideas and looking at
non-automotive fields that are familiar to everybody.
"Searching for something that can give us small
happiness in our everyday lives" is also the start of anew "challenge."
For work-style reforms as well, a "Sango approach" isthe key. Generally speaking, this should involve
revisions of work regulations and other measures toachieve diversified employment structures and lessovertime. As a manufacturing company, reducing defects
for a single product, for example, will allow those at thework site to go home early. Improving the operating
efficiency of a line that normally requires three people
will allow one person to work shorter working hours. Thismay bring up new issues, but we believe that measures
to solve them can be found through experience gained ineveryday work activities.
Only eleven years away, 2030 is a future that is not far
off and one that can be reached successfully with theplacement of mid-term and long-term milestone targets.
By coming up with flexible and passionate ideas, andfurther mastering the art of manufacturing, we shall notjust overcome the coming transformation, but turn it into
new strengths.

residentialbuildings...?

Purifying

Processing food...?

E

Three pillars
supporting
the policy

Environment

Fundamental
approaches

us chilled watermelon to help us cool down. At sunset,
they would bring us homemade omusubi (rice balls) and
we would eat together. Such history lives on, and people
from other companies often note that "Sango exudes anatmosphere of home and the people are kind." Today, in asituation that can only be described as challenging, ourfamily-like ties should be channeled to pool our potential
power, making us even stronger, as both management andemployees cooperate on the journey forward.

S

G

Governance

Environmental challenge

Higher customer satisfaction

Corporate governance

Human-friendly workplace

Participation in local communities

Compliance

Employees

Suppliers●Striving for mutual

development throughstrong partnerships built
on trust and fairness

work environment where
everyone can work withpeace of mind

Statement"

At the same time, with a strong awareness of our position
as a manufacturer, we are dedicated to conserving the
global environment and contributing to local communities.
Efforts are increasing every year, through such initiatives
as the Sango Tree Planting Project, creating biotopes atfactories, or the tree planting events celebrated together
with people from the surrounding local communities neargroup companies both in and outside of Japan. The Sango
Tree Planting Project and the tree planting activities inparticular have been developed into activities that now
represent the Sango Group CSR approach. In FY 2018,
the total number of trees planted in Japan and overseas
was approximately 270,000.

Society●Development of a safe

03Concluding the "Labor and Management

Tree plantingevent at Yawatayama
Plant (2009),
with Dr. Akira Miyawaki (left).

CSR Policy To be a company that contributes to society, is trusted, and grows sustainably

to accommodate
member diversity andlifestyles

Working together like a crew on the same boat,
we will overcome the rough seas ahead

SANGO Group Report 2019

Formulated in 2017, the Sango CSR Policy is embodied
by the three pillars of environment, society, andgovernance, also known as "ESG", with an underlying
foundation of six key initiatives. The CSR Policy andthese three pillars continue to be promoted through eachmeeting body to this day. The Sango Group CSR Policy
is incorporated into all company activities, from thecompany creed, Corporate principles, and Long-term
2030 Outline, to fiscal year policies. It ensures that we
remain a company that "contributes to society, engenders
trust, and achieves sustainable growth" throughcontinuous improvement.
With our manufacturing capabilities, Sango products have
met the needs of society over the years and we continue
to contribute to society through further development of
this craftsmanship.

●A range of work-styles

Think in association to the contents in our everyday life

05

Implementing a CSR Policy

Relations withstakeholders

agricultural
products...?

One must be strongly determined to survive in this age ofsignificant changes. This applies to employers andemployees, and as both make up the crew on a boat called
the Sango Group, they must all row together. The Laborand Management Statement was published so as to create
an opportunity for the company and the Sango Labor
Union to mutually renew their awareness of this concept.
Our corporate culture is based on "family-like ties", whichis also integrated into our new basic policy. When we werestill a small-scale factory, our grandmothers would prepare

Further expansion of Sango Group contributions to society

Customers

Local communities●Delivering satisfaction●Actively participating inthat goes beyond
customer expectations
through safe,
high-quality products●Development of

products that arefriendly to people andthe environmentsocial contribution
activities as a good
corporate citizen andcommunicating with thelocal community throughdialog●Promoting manufacturingthat is friendly to the local
environment

To Our Stakeholders
We will continue to aggressively pursue the mastery of manufacturing capabilities tocreate a bright future.
To this end, I would like to urge all Sango employees to interpret their work from a broad
perspective that includes holding an interest and caring about technology, culture, andsociety, as well as other facets of our surroundings. The ideas to resolve issues are in
our everyday lives. If it catches your attention, do some research. Put it into action once
you have acquired knowledge on the topic. Those small actions can bring improvements
to future jobs, generate new products, and lead to the development of a new business.
Creating a bright future is not as difficult as one may think.
Upon the 90th anniversary of our foundation, I am deeply appreciative of theencouragement given to the Sango Group from across the country and the world. The
Sango Group exists because of each and every individual at each Sango Group location.
We will continue to facilitate sustainable growth, work alongside everyone in the local
communities, and make contributions to society in a collective effort.

06

Company Overview

Global Network

Company name

Sango Co., Ltd.

Domestic plants and group companies

Representative

President Kozo Tsunekawa

Head office

1-3-1 Mutsuno, Atsuta-ku, Nagoya City, Aichi-ken

FoundedJune 1, 1928

Incorporated

June 1, 1950

Capitalization

608 million yen

Main Products

Mufflers, exhaust pipes,
exhaust manifolds, vehicle body products,
impactdoor beams, other automotive parts,
cold forged products, cold finished steel bars,
drawn pipes,
carbon steel pipes for mechanical structures,
machined / ground steel bar products

Customers

Main Banks

Toyota Motor Corporation, Hino Motors, Ltd.,
Daihatsu Motor Co., Ltd., Nissan Motor Co., Ltd.,
Mitsubishi Motors Corporation, Isuzu Motors, Ltd.,
Subaru Corporation, Mazda Motor Corporation,
Toyota Industries Corporation,
JTEKT Corporation, KYB Co., Ltd.,
Toyota Tsusho Corporation,
Sumitomo Corporation, Asai Sangyo Co., Ltd.,
Metal One Corporation, Canox Corporation(random order)

Overseas group companies

1

5

9

A

E

I

Head Office (ECO35)

Toyohashi Plant

Sango Hokkaido Co., Ltd.

Arvin Sango, Inc. (USA)

Sango India Automotive
Parts Pvt. Ltd. ( IND)

Tianjin Sango Automotive
Parts Co., Ltd. (CHN)

2

6

10

B

F

J

Fukuta Plant

Inabe Plant, Komeno Plant

Sanpuku Co., Ltd.

Arvin Sango Canada, Inc.
(CAN)

YS Pund Co., Ltd. (THA)

Guangzhou Sango Automotive
Parts Co., Ltd. (CHN)

3

7

11

C

G

K

Toyota Technical Center

Miyoshi Plant

Sango Kanto Co., Ltd.

Sango Auto Parts Mexico,
S.A. de c.v. (MEX)

Sango Thai Automotive
Parts Co., Ltd. (THA)

Xiangyang Sango Automotive
Parts Co., Ltd. (CHN)

4

8

12

D

H

Yawatayama Plant

Miyoshi No.3 Plant

Sanwa Koki Co., Ltd.
Tsunekawa Tekkosho InstituteCo., Ltd.

Sango Turkey, Inc. (TUR)

PT. Sango Indonesia ( IDN)MUFG Bank, Ltd.,
Sumitomo Mitsui Banking Corporation

Sales(Consolidated)（Billion yen）

400.0

4,038

4,253

3,880

3,802

4,045
9

300.0
200.0

D

STI

100.0
0

A ASI

K XSC
2014

2015

Sales composition
by business field*
Secondary steel processing
11％

2016

2017

Automotive parts

89 ％

J

2018

（Term that ended in March）

Sales composition
by region*

Europe/America

F

C SAM

11

GSC

YSP G
STA

6
10

H

SID

1

12

5

Japan

53％

7
Nisshin City

2Countries where foreign companies receiving Sango

technical assistance are located

Mexico, Venezuela, Brazil, Argentina, India, Malaysia,

Indonesia, Taiwan, UK, Czech Republic, Portugal, Spain, South Africa

8

Togo
Town

4

Miyoshi City

Toyota City

KariyaCity

23％*Results for Sango Co., Ltd. and consolidated subsidiaries for FY 2018.
SANGO Group Report 2019

E

SIAP

China
13 ％
Australi /
Asian
11％

07

B ASCI

I TSC

3

08

Product Overview

A Look at Sangoby the numbers

Exhaust Systems■ Exhaust manifolds

Environment■ Emission control devices

Total amount of CO2
discharge

131,235 t
Single wall tubular manifolds

Air gap manifolds■ Pipe components for engines

Catalytic converters(made using spin forming)■ Exhaust heat recovery device■ Mufflers

Spin-formed sub-mufflers

Dual mode mufflers(internal valve)■ Mufflers*1

Average age

40.1

Number of educationalcorrespondence courses

Average number ofyears at the company

Body, chassis products

Secondary Steel Products

15.9

*2

Roof side rails

Cold finished bars

Carbon steel pipes formechanical structure purposes

A-pillars

6*3

Number of auditors
Cold finished bars (drawn)

Steel wires (drawn)
for cold heading and extruding

Cross members

4

*3

09

SANGO Group Report 2019

93.1％

*3

Number of reported
whistleblowing cases

6 / year

Number of Board of
Directors meetings

Number of employees
who took security training*2

16 / year
Steering shafts

Attendance rate at Boardof Directors meetings( including 2 external directors )*3

Door impact beams

298

Governance
Number of directors

Radiator supports

Number of workers
who have acquireda National Trade Skill Test
& Certification qualification*2( including 1 external director )Floor cross members

120(Total)Employment rate ofpersons with disability

2.1％

100％
62

6.86％

Sports mufflers

Rate of returning towork after maternity leave

Number of training courses*2*2

Titanium mufflers

44 t

*2

Ratio of female
employees
Laser welded mufflers

271,464

Society

7,031

Heat collectors*1

Total amount of CO2
absorbed / fixed as a resultof planting trees

SCR after-treatment systems

Number of employees

EGR pipe

Total number of trees
planted (world-wide)

621 / year

*1

Cold forged products*1 Results for Sango Co., Ltd. and consolidated subsidiaries for FY 2018. *2 Results for Sango Co., Ltd. and Sango Corporation for FY 2018.
*3 Results for Sango Corporation for FY 2018.

10

Special
Feature1

Sango plants

12

16

Domestic entities

21

24

Sango Growth and Development2012 XSC (Xiangyang, China)
established

Since its founding 90 years ago, Sango has supported the development of the automotive industry
through the manufacture of exhaust systems and their components.
As the company grows and establishes new industrial bases to meet the changing times,
we will continue responding to emerging needs by aggressively taking up bold new challenges.

Consolidated sales

Overseas entities

1996 YSP (Thailand) established2003 Sanpuku Co., Ltd. establishedEstablishment of YS Pund Co., Ltd., a joint
venture of three companies

Established in Fukuoka Prefecture as a
production base for Kyushu

25

2008 Sango Kanto Co., Ltd.
establishedEstablished as a production base for trucks

13

17

2002 STI (Turkey) established2003 TSC (Tianjin, China) established2012 SIAP (India) established09(Billion yen)
400

01

05

1971 Sanwa Koki Co., Ltd. established
350

06

1928 Tsunekawa Ironworks founded1987 ASI (USA) established

Arvin Sango Inc. established as a joint
venture with Arvin Industries, USA

02

300

Sango Turkey, Inc. was established asa production base for Europe

26

2008

Established as a production base for the
Asian market

14

LehmanCrisis18

2013 STA (Thailand) established27

101973 Fukuta Plant established250

No.1 Plant that was completed in thephase 1 construction work

1950 Sango Co., Ltd. establishedOriginal Head factory, located at ECO35 today200

2004 GSC (Guangzhou, China) established

15

19

07

28

2011 ASCI (Canada) established1984 Takaoka Plant

29

2012 SID (Indonesia) established

08

1991
1986 Toyohashi Plant established

02

Started operations as a plant specializedin cold finished steel bars

2008 Sango Mie Co., Ltd.

The collapseof the bubble
economy1973

1967 Miyoshi Plant established01

2014 TTI Co., Ltd. established20

establishedestablished04

50

established1994 Yawatayama Technical Center(present day Fukuta East Plant)

23

2007 Sango Hokkaido Co., Ltd.

(present day Komeno Plant) established1963 Toyota Plant established2014 SAM (Mexico) established11

2002 Sango Komeno Co., Ltd.

150

(currently Inabe Plant) established04052015 No.2 Technical Centerat Toyota Plant completed

13First oilcrisis03

221990 Yawatayama Plant established

03

100

2002 Miyoshi No.3 Plant established

23
20

14 16

06

07

08 09

10

11

12

15 17 1824

27

22 25 26 28 29

19 21

0

1928 // 1950

1960

1970

1980

1990

2000

2010

1999

2002

2010

2018

Sango History of New Product Development

1954

Began production of
exhaust system products

1973

Adopted built-in catalytic converters
in accord with emission control
regulations

1987

Began production of heat- andcorrosion-resistant
stainless steel
mufflers

1990

Began production ofdoor impact beams
as a result of revised
safety standards

Emission control
regulation-compliant
exhaust systems

Outer shell lock seam process
for mufflers

Established tube
mill facility

Door impact beam

11

SANGO Group Report 2019

Steering shafts

2001

Began production of
fabricated exhaust
manifolds

Began production ofhigh impact-absorbing propeller
shaft tubes(production lines
integrated)

Added Tubing Department to Fukuta North Plant

Began production of hollow andlightweight steering shafts

Spin-formed sub-muffler
Stainless steel muffler

1977

Began production of eccentric/obliquespin-formed products

Tubularexhaust manifold

Propeller shaft tube with crushable structure

2008

Began production of eco-friendly
exhaust heat recovery devices

Began production of urea
SCR after-treatment
exhaust systems
for trucks
Urea SCR system

2011

Began production of cold forgeddrive shafts
Toyota Technical Development Award

Heat collector

Drive shaft

12

Special
Feature2

Sango's future as seen through the"STEP 5" heat recovery product

The Sango Group has robust experience in developing and manufacturing exhaust systems.
In 2008, before any other companies considered it, we began using our expertise and knowledge to develop heat collectors,
which are devices that recover exhaust heat and help improve energy efficiency.
By 2018, we had completed the "Step 5" version of this device.

Technology used torecycle unused exhaust heat
Heat collectors efficiently recover
30% of the exhaust heat that had
previously been disposed of as loss.
The recovered heat is used to warm
engine coolant faster, which in turn,improves fuel efficiency and reduces
CO 2 emissions.

Engineperformance

30 ％(Heat efficiency
30％)

Exhaust loss

30％
Fuel
combustionenergyEngineHeat emission

10 ％Key improvements achieved by "Step 5"Integrating the gas inlet and outlet sections inside the heat exchanger,
Sango's original heat exchanger structure provides a significant reduction
in size and weight.

Heat collector

100％

STEP4

STEP5

(conventional product)(newly developed product)

Cooling loss

30％

Size reduction

60%

Engine coolant

EngineExhaust gas
ectionInlet sHeat r
e
chang

ex

se
Outlet

Heat

ction

41%

w

w
Inlet
n
sectio13

SANGO Group Report 2019

Converting outsourced parts to in-house production meanta series of first time challenges, such as thermal energy
calculation, brazing, and thin metal sheet processing.
Although there were many obstacles, the company foundsolutions to problems through the cross-disciplinary
teamwork of members from design, productionengineering, and manufacturing functions. We believe that
Sango was able to achieve such results because of thecompany’s strong, internal family-like ties and hightechnological skills fostered over many years.
By applying our company's strengths to create new
products and ideas, Sango will continue its mission tocontribute to society.

r

Gas flo

Gas flo

In 2018, we completed development of the STEP 5 heatcollector, number 1 in the world in performance with its
compact size, lighter weight, and higher heat exchanger
efficiency. Its most significant feature is a major reduction
in size and weight while maintaining functionality.
Compared to the conventional STEP 4, it is 60% smaller
in size and 41% lighter in weight, yet maintains a fuelefficiency improvement level that is top class within theindustry.
In order to build a product that appeared to be impossible,
we reviewed the production process from scratch. We
also stepped into new boundaries for in-house productionof heat exchangers.

ange

Weight reduction

Engine cooling water

Development of the world's number 1 heat collector
Sango's growing capabilities in manufacturingexchtOutle nsectio"STEP 5" has won awards from the customer

A demonstration of tight-knit Sango teamwork contributes to higher
customer evaluation
When compared with conventional products,
significant reductions in both size and costwere achieved through Sango companywide,cross-functional efforts. This led torecognition from Toyota Motor Corporation in
not just one, but two different awards.
Toyota Project Awards 2018

Received an award for the"Technology Section"
Toyota Global General Meeting for Suppliers 2019

Received award for the"Technology Development Awardin Excellence"

Reporting the award to the manufacturing site for the Step 5 heat collector.

14

ESG Information_Environment

ESG | Environment

Commitment for environmental initiatives
Long-Term Environmental Vision

Environmental Basic PolicyLong-Term Environmental Vision:
Sango Environmental Challenge 2050

Sango Basic Global Environmental Policy

Towards a better global environment in 2050, the Sango Group will strive to balance economic growth and preservation of the
global environment. To contribute to the realization of a sustainable society, the Sango Group will take up initiatives aimed atcreating 3 areas of value.

CO2
CO2

Reduction ofenvironmental
burden frombusiness activity

CH

K
EC

PL

CT

O

Waste
Overburden

A

Consolidated control by the
Sango Group(From July 2019)

UnevennessD

Establishment of anenvironmental management
systemPreservation of biodiversity andprotection of our natural environment torealize a society where man and nature
co-exist in harmony
・Tree planting
・Elimination of invasive species

Number of trees planted

Current record
270,000 trees
15

350,000trees

SANGO Group Report 2019

Development of products andtechnology that areenvironmentally-friendly throughout
their life cycle, from material
procurement to manufacturing,usage, disposal, and recycling.

Minimization oflife cycle CO2
emissions

Sango
Environmental
challenge

Creation of asociety in harmony
with nature

4 th Challenge

1st Challenge

1

5

4

Reduction of discharge(CO2, waste, chemical
substances, water, etc.)
in all business activities

Tree planting

5 Challenges

Creation of an environmental management
system, control of environmental risk, andthe prevention of contamination in
conjunction with continuous improvement(enhanced operations and management)

ISO 14001

Preservation of
the naturalenvironment

Contributing to thesustainability of society
and our customers

5 th Challenge

PurposeCO2

Environmentally-friendly throughour products

Environmentally responsible
production sites

NA

Expansion and creationof markets forenvironmentally
responsible products

2050

3

Basic policy

1With this basic policy, the Sango Group aims to achieve a sustainable society that will balance economic growth
and the preservation of the global environment, through the creation of environmentally-friendly products, moreenvironmentally-friendly production sites, and the "Sango Tree Planting Project."2

We will not only comply with laws, regulations, and agreements, but also take this a step further by setting ourown standards and putting them into practice. Furthermore, we will respond in a fair and sincere manner torequests made by our stakeholders.

3

We will provide environment-related information in a timely and appropriate manner to ensure the safety andsecurity of our stakeholders.

4

To raise the environmental awareness of every employee, we will conduct employee education and development
programs, continuously training employees so that they can contribute to environment preservation activities.

Code of conduct

1

2

3

4

5

st
Challengend
Challengerd
ChallengethChallengethChallenge

We will strive to develop
products and technologythat takes theenvironment into accountat every stage of the
product life cycle, fromdevelopment, design,
procurement, production,
logistics, specification, todisposal.

We will strive to develop
products andtechnology with higher
added value that
contribute to thecustomer’s
environmental value.

We will save energy andresources thoughinnovations in
manufacturing.
We will strive to create
manufacturing processes
that reduce environmental
burden, including the
reduction of greenhousegases, waste, andchemical substances.

We will take up theprotection of our naturalenvironment and thepreservation of
biodiversity to achieve asociety where people
and nature can coexist.

We will build a global
environmental
management system andcontrol environmental
risks, correlating themwith business
management strategies.
We will also strive forcontinuous improvement
and the prevention ofcontamination.

2 nd Challenge

2

Development of high value-added
products and technology that
contribute to the customer’s
environmental value

Minimization of
new vehicle CO2
emissions→ Contribute to CO2

reduction by improving
fuel efficiency

・Utilization of

Minimization of production
activity emissions(CO2, waste)

3rd Challenge
Reduction of emissions andwaste from production
activity through innovations
in manufacturing methods

exhaust heat・Weight reduction
Exhaust heatrecovery device

Total CO2
emissionst-CO ₂

40 % reduction

128,568

Total wastet

35% reduction

6,155
3,624

79,487
2016

2030

2016

2030

Promotion Structure

A structure to promote andraise environmental
awareness at all affiliates
As a first step and based on the structure forpromotion shown on the right, we began more
precise data collection and the implementation oftraining about the "Sango Environmental Challenge
2050" for the entire corporate group, both in Japanand overseas, in FY2018. We began this training at
Sango Kanto, then on to Sango Hokkaido and
Sanpuku in September. From November, we rolled
the training out to overseas companies, including
STI in Turkey and TSC (Tianjin), GSC (Guangzhou),and XSC (Xiangyang) in China. It is scheduled forcompletion by July 2019.

Sango Board of Directors
CSR Committee
Environment Committee
Sango

Domestic affiliates

Overseas affiliates

Energy and resource savings in design andEnvironment Product Development： Committee
development
Energy and resource savings in production
preparations： Committee

Energy and resource savings inmanufacturing： Environment Management Committee

Environment Innovative Production Methods

Company environmental preservation activity Committee for Social Contribution：(Tree planting)

Function departments / Function meetings

16

ESG Information_Environment

ESG | Environment

ESG Information_Society

ESG | SocietyWith Our Customers
Tree planting

Quality Improvement

From Sango to local communities, and then on to the world

To enhance awareness for quality for the entire group

The "Sango Tree Planting Project" keeps growing
Sango Group tree planting activities started in 2007 under the
personal guidance of Dr. Akira Miyawaki and a total of
271,464 trees had been planted by FY2018. For this fiscal
year, tree planting events will take place in 11 locations insideand outside Japan, including the United States, Thailand,
Indonesia, China, and regions of Tohoku, Kanto, and Tokai.

FY2018 Sango’s Tree-Planting Activities

Domestic entities

Quality Exhibition held for employees〈 Building good relations with local communities〉
As the first tree planting activity outside the company, 4,584 trees
were planted in the Miyoshi City Botagaike Park in cooperation wit
the city of Miyoshi in Aichi Prefecture. The event was hosted by the
Botagaike-Koen Donguri-no-kai, whose members gathered acorns,
and with Sango support, they cultivated seedlings for 4 years, whichwere then planted by Sango employees and families from the local
community.
Every year we participate in tree planting events aimed at building a"Forest Seawall" along the Sanriku Coast, which was affected by
the Great East Japan Earthquake.
This effort involves collecting tree seeds in Tohoku, cultivating themat Sango, and then planting the cultivated seedlings. To this day,
we have provided 20,000 seedlings. For this continuous andlong-term support, we received a panel of appreciation from theForest Seawall Association in April 2018.

Sharing the joy of tree

VOICE planting at our company
in Xiangyang China.

235trees
ECO35 Tree Planting
Event (April)Overseas entities

4,000 trees
ASI (USA)The 5th Tree Planting
Event (May)3,008 trees
Sango Kanto
The 3rd Tree Planting
Event (October)

2,160 trees
Inabe Plant
The 6th Tree Planting
Event (May)1,600 trees
TSC (China)
The 6th Tree Planting
Event (May)

300 trees

1,000trees

STA (Thailand)
Planting mangroves (April)

YSP (Thailand)
Planting mangroves (May)1,664 trees
XSC (China)
The 1st Tree Planting
Event (November)

In peripheral areas of our plant, 123 employees
and their family members planted 1,664 seedlings
indigenous to the local
area, including the
Quercus variabilis,
Osmanthus fragrans andothers. They are looking
forward to seeing thesetrees grow.
XSC (China) Ms. Du Yalan, Administration Division

Regional cooperation

1,440 trees
SID (Indonesia)
The 3rd Tree Planting
Event (November)

4,584 trees

3,047 trees

Bodagaike-Koen(Miyoshi City) Tree
Planting Event (February)

Millennium Hope Hills(Iwanuma City)
Tree planting event with aview of the ocean (May)Biotopes created to preserve biodiversity
and firefly watching events

17

SANGO Group Report 2019

A scene from a firefly watchingevent▶ Quality Exhibition Survey results

Exhibits showed problem situations with images anddefective products that had actually occurred in thefield. Many saw these problems or situations for the
first time, giving them pause to think, "How would I feel
if this happened to my car?"Actual defective products that
occurred in the field and videos

63 ％

1％
Improved
moderately

36 ％Take a Look

Significantly
improved

Did not
improve much

Did yourawareness ofquality
improve?

FeelThis display featured a "Where canabnormalities be found?" quiz corner. The
quiz created a virtual reality experienceby filming work scenes with a 360-degree
camera and uploading them into the VR
system and tablets.
About the quiz, participants remarked that
"It was experience-based, and I enjoyeddiscovering the importance of daily
inspections," and "The exhibitions wereeasy to understand for office workers andengineers who cannot actually experience
being on work sites", thus providing
employees with an opportunity to enjoy
themselves while learning about quality.

Participants
trying VR andtablet quizzes

Let's consider

Biotopes

Yawatayama's biotopes are
homes for living creatures

To improve quality awareness at Sango domestic affiliates, overseas affiliates,and suppliers, a Quality Exhibition was held as a special event during Quality
Month (November).
The main exhibits at this event have traditionally displayed examples ofimprovement. In 2018, however, we revised the content with the concept of"take a look, feel, and think". A demonstration exhibit for employees featured a"Look for abnormalities quiz" using tablets, VR (virtual reality), and a display ofactual defective products that had occurred in the field.

In addition to the ECO35 facility, a small retention pond within thepremises of Yawatayama Plant was transformed into a biotope in
September.
At the ECO35 biotope, efforts have emphasized environmental
awareness and the provision of spaces where more living creatures
can live. This includes a "firefly watching event", which is held
every year on an evening in June. The aim of this event is towelcome Sango employees and their families to an introduction of
our approach to the environment, as well as the ecology of fireflies.

Here, employees watched a video that followed products made by Sango as they
move on to the next processing steps. Where will the product in front of you betaken to next, how will it be processed, and what kind of car will it be used in? To
respond to these questions from our employees, this display focused on a single
part, filming it as it underwent changes, starting at the No. 3 Miyoshi Plant, moving
on to the supplier, and then to Fukuta Plant. Understanding how one member’s
work is linked to following processes drives home the importance of quality.
Exhibition videos〈 Bringing the exhibition to remotely located plants〉
The plants in Toyohashi and Inabe, as well as the domestic affiliates
Sango Hokkaido, Sango Kanto, and Sanpuku are located far from
Sango's event site, so satellite Quality Exhibitions were held at thesesites.
In cooperation with each of the sites, more than 1,000 people in total
participated, thus allowing all participants to share views on defects thathave occurred within our company group.
Sango Kanto Quality Exhibition

Sanpuku Quality Exhibition

More than 2200 people from across the Sango Group participated in this new project. Participants were not only frommanufacturing departments, but also from human resources and general affairs. We will continue to work on quality improvement
activities for the entire Sango Group.
18

ESG Information_Society

ESG | Society

Together with Our Employees
Labor and Management Proclamation

Labor and Management Proclamation signed declaring unity
in the face of an era of major transformation
A labor and management proclamation was signed by Sango Co., Ltd. and the Sango
Labor Union during the Sango 90th anniversary ceremony held in October 2018.
In this proclamation, labor and management pledged that "labor and management(i.e. company and union, where union members are employees) shall renew theresolution to overcome difficulties together" in this period of major change in theautomotive industry.
To create this statement, members were selected from both the company and theunion and they held many study and review meetings on such matters as the historyof the company and the union, the basics of labor and management relations, what
legacy must be passed on to future generations, and what commitments labor andmanagement should make to the local community.

[Excerpt from Labor and Management Proclamation]

programs for childcare support, which includes a childcare
leave program and a program of shorter working hours forparents, and a long-term nursing care leave program for
employees who provide long-term care for family members.
These programs are equally available to both men andwomen, and through them, we are creating a system for abetter work-life balance, so that employees can work at
Sango for as long as they want, in a way that suits theirpersonal circumstances.

Partnership Activities with Overseas Affiliates

President Tsunekawa and Mr. Mori, Chairmanof the union's central executive committee
pledge to overcome difficulties together.

1. Labor and Management relationship shall be based on mutual understanding, mutual
trust and joint responsibility.
2. In the aim for continuous development, each member will strive to fulfill his or her
duties, while the company will strive to develop human resources who actively take on
new challenges and to create a corporate climate which allows it.
3. We aim to be a company that contributes to global environments and local
communities / society through our business.
Labor and Management Proclamation

From FY2019 onward, we will reexamine the interview
system in order for management and re-hired employees tothoroughly discuss post-retirement employment in a
comfortable way. With regard to workplaces, in order tooffer a broad range of opportunities for extending amember’s work experience, we will introduce a system
which starts two years before retirement and sharesinformation on re-employment with all departments in thecompany,.
In addition to the re-employment system, we also have

All employees understand and share the idea in the Labor and Management Proclamation, andmaintain, continue to enhance and forever inherit good and sound labor and management
relationships which do not change regardless of time.

Strengthening human resource functions
in collaboration with overseas affiliates

We are promoting activities for the purpose of reinforcing
partnerships with overseas affiliates and improving the skillsof HR Department members.
In these activities, we are conducting assessments regarding
human resources (self-assessment). We identify issues, plan
improvement activities for the issues, and promote improvements in collaboration with Sango's Human Resources
Department.
The improvement activities are a good opportunity, not only
for the members of the HR Departments at overseas affiliates
to acquire knowledge and personal networks, but also for themembers of Sango’s HR Department to gain a better
understanding about overseas work conditions. This leads tohuman resource development for both organizations.

Sharing issues at the meeting

Promoting Diversity

Developing worker-friendly job sites that respond to changesof life stages▶ Re-employment process

Superior
Re-employment
candidate

SANGO Group Report 2019

Jobs forre-hired
employees

Periodic discussion

19

Two years before
retirement (58 years old)

One year before
retirement (59 years old)

April

April

January

January

Other
departments

Year of retirement(60 years old)

Retirement

Remarks

評 価Company-wide

Department

Ninety percent of employees
who retire at age 60 use there-employment system andcontinue actively working, using
the techniques and skills they
have acquired over many
years. Depending on healthconditions or individual
requests, we also have aprogram to introduce retired
employees to workplaces otherthan where they worked before
retirement, where they can use
their abilities much more
effectively or where they canwork seamlessly. We are
striving to create workplaces
where our employees can feelan even greater sense ofsatisfaction.

Jobs for the re-employed are organizedWell-planned
human resource
development(education of
successors) in

Summarization of human resource
development and issues in each department
Based on ability, aptitude, etc.,

re-employment job content is clarified
Directions provided for the enhancement ofnecessary knowledge and skills.

Re-employ-ment
job decided
Review re-employment candidate’s
experience, knowledge, and skills
Identify potential contributions of theWork as are-employed
membercandidate for human resource
development and issues in the department
Supplement areas that the candidate lacks
for the re-employment position.

Information
on re- hired
employees

Coordinate with other departments as necessary(transfer of re-hired employees)

each department.
Bdue to thechanging needs ineach department,
conduct periodic
discussions andrespond asnecessary.

Information on
re-hired employees,
such as career andqualifications

Partnership Activities with Overseas Affiliates

Enhancing capabilities of overseas leaders
through technical training

The purpose of this activity is to understand the ideal Group
Leader and improve their skills. We invite Group Leadersand Group Leader candidates working at manufacturing
sites in overseas affiliates to Sango and conduct training.
With regard to members for the first fiscal year of thistraining, 9 people were selected from YSP (Thailand). They
started this program in September 2018.
One trainee stated confidently, "I am discovering new things
every day, and my life here is very exciting. I would like tolearn even more and stimulate other members of ourcompany." As for the department that accepted the trainees,
they stated "We are impressed by their attitudes to absorb
everything they learn. Their presence is also a goodstimulation for other people in our department." A positive
cycle has been created in the group as a whole.

We will proceed with this activity so that all employees
involved in this training can act as a bridge connecting
Japan and the overseas affiliates.

Training in practical welding skills

Enjoying Japan during theholidays

20

ESG Information_Society

ESG | Society

Together with Our Employees
Sango Training System

Safety in the Workplace

Business skill improvement

Strengthening risk management systems

through a variety of training courses

Group training at managerial level

TPS training

Leadership training

QC leader training

Generalemployees

Introduction to TPS (Toyota Prod. System)
QC introductory course

Good work practices

New
employees

New employee training

Basics in logical thinking / expression

Business manners training

Good meeting practices / presentations

Twenties trainee program

Mid-level employee training

Generation-specific
Pre-management Juku for
those in their thirties

Mental health care

OJT & communication training

The National Trade Skill Test

Director level training

New executive training

Public certifications acquisition

Section manager training

Problem solving course

Leaderposition

Mental health care/communication

Educational correspondence course

Mana-gerial
position

Self-development
Education for responding to
globalization

We have developed humanresources who can play activeroles in the front line of workplaces
through basic training. In thistraining, we develop the abilities
required in each level, from new
employees to managerial positions.
Furthermore, we support them toattend courses such as language
training and correspondence
education to provide opportunities
to learn independently.

towards the prevention of accidents and disasters

VOICE

I would like to make use of my exchange
experience at ASI around the world.

through overseas training starting withpeople in their twenties

The generation-specific trainee system sends young employees
in their twenties to overseas affiliates for one year, where theyreceive language and practical training at overseas affiliates.
This program aims to develop human resources at an earlystage in their careers, teaching language skills and providing a
global vision and experience. An understanding of different
cultures and the networking which can only be gained throughoverseas life play an important role even after returning toJapan. In FY 2018, one employee participated in this programat ASI (USA).

In addition, we systematically conduct visualization activities
for risks in work, equipment, and chemical substances. Thisis followed with efforts to make improvements that will
reduce accidents and damage from disasters by managing
risk factors.

Overseas affiliate staff
members taking partin a diagnosis using thecommon assessment sheet

Promotion of Physical and Mental HealthTrainee Program

Early development of global
awareness

Corporate activity involves a variety of risks. However, theserisks can be mitigated by predicting and managing them toavoid accidents or damage from disasters.
In the manufacturing workplace, we have appointed "Safety
Specialists" whose function is to indicate where risk lies andwork with management to reduce the risk. This leads to theearly discovery of risk factors. Also, in crane work whereserious accidents can occur, we strive to prevent accidents
through repeated (refresher) training to qualified operators.
A self-diagnosis was carried out at each affiliate in Japan,
using a common assessment sheet. Follow-ups to thediagnosis confirmed by each professional on-site then focus
on preventing accidents.

*Second from the rightTrainee Tsuyoshi Harauchi〈Production Engineering Division, Production Engineering Field〉

At first, I concentrated on improving my English skills, but mycommunication is also expanding with people from othercountries who became my friends in language school, including
local engineers and their families. I learned local safety rules
related to production engineering in practical training. I would
like to make use of these experiences to become a bridge
between local and Sango members.

Enhancement of a health care system
to promote prevention and early treatment

As an approach towards employee health care, regular health checkups are carried out
along with special medical checkups for some types of work. We also have a follow-up
system for employees who need follow-up health checks, dental checkups that are free ofcharge, medical examinations for members with long-term overtime by industrial physicians,
stress checkups and mental health care which is aimed at early identification of poor health.
Other physical and mental health promotion initiatives include efforts to install exercise
machines at each plant, mental health campaigns, and non-smoking activities.

Taking a pleasant walk around the plant

Creating a Sense of Unity Among the Employees

The whole company is working on

Pre-Management Juku

Developing ambition and management concepts

Creating teamwork through sports

with the aim of becoming next generation leaders
In generation-specific training for members in their thirties,
that are necessary for leaders, Pre-Management Juku aims tonurture executive candidates by developing ambition andmanagement concepts, so that they will be able to lead future
generations of the Sango Group,.
Through activities on a theme assigned to teams for one year,
Juku trainees selected from each department work to broaden
their viewpoints and improve their skills, so they can beconsidered a future managerial candidate. In FY2018, eight
employees selected in May worked hard on the challenge
assigned to them to "Create a New Business", presenting
their work to the Directors at the end of the term.
Trainees are provided guidance from advisors, special

21

SANGO Group Report 2019lecturers and the President
during the period of activity,
but all operations are
conducted by the teams
themselves in order toStudents of pre-management Juku
in the 4th fiscal year
encourage self-initiative. A
total of 29 Juku students graduated, and are now actively
working at their own job sites.

The Ekiden Relay Road Race was
livened up by runners andsupporters

GSC (Guangzhou China)
Twenty three people joined the
3 km Running Competition

Sango Group holds sports events to create a sense of unity
among employees.
In November, we held the "2nd Sango Group Ekiden Relay
Road Race" at Fukuta Plant. A total of 900 people from Sangoand Sango business partners attended. The race included a
Diversity Category and a General Category, with teams fromdifferent workplaces competing against each other. All teams
did their best, receiving loud cheers from supporters.
A race was also held at an overseas affiliate, with a
3 km-Running Competition at GSC (Guangzhou, China) in
March, 2019.
Such activities not only enhance teamwork, they also promote
the good health.

22

ESG Information_Society

ESG | Society

Together with Our Suppliers

Together with Local Communities

Environmental Conservation Activities

Volunteer Activities

Promotion of green
purchasing guidelines

Contribution to society as a supporter of theSpecial Olympics Aichi 2018

In the interests of environmental conservation, Sango
actively promotes procurement of environmentally-friendly
parts and materials. However, the state of the global
environment is worsening year by year as abnormal
weather increases and the world faces waste disposal
problems resulting from mass consumption. In 2018, wereleased the "Sango Group Green Purchasing Guidelines"
and we are promoting activities aimed at sociallysustainable development, while working with our suppliers
for a better harmony with the environment.

Sponsored by the international sports organization, The Special Olympics, The
2018 National Summer Games were held in Aichi Prefecture. This organization
provides sports training and opportunities to persons with intellectual
developmental disorders. A total of 63 members from Sango basketball, table
tennis, and badminton sports clubs joined The Games as volunteers to work on
setting up the venue and managing thecontest.
Held once every four years, it is the purposeof the National Games to encouragecommunication and friendship among
participating players from all over Japan.
Sango club members also enjoyedparticipating
and communicating with theMembers of the basketball club
serving as scorers
players, making it a meaningful activity for all.

A meeting held by the Engineering Planning Department to follow up
on chemical substance control.

[Requests to our suppliers]
1. Establishment of an environmental
management system
2. Reduction of greenhouse gases (GHGs)
3. Reduction of environmental impact on water
4. Promotion of resource recycling
5. Control of chemical substances
6. Build a society in harmony with nature* "5. Control of chemical substances" is mandatory,
and is the most important item.

Greenhouse gases(GHGs)

CO2 CH4 N2O HFC PFC

Transportation Our company
Manufacturing

Transportation Assembly

Use of fossil fueland electricity(Suppliers)

SF6
Use

Implementing environmental conservation measuresthroughout the supply chain

Strengthening partnerships
Sango suppliers are often invited to join events held at Sango on safety, quality and kaizen. In some instances, suppliers may
take ideas from these events back to their own companies, basing similar initiatives there on a company-wide scale—thesharing of such information is exactly for this kind of purpose, and we encourage utilization of this information to solve
problems within their companies.

SANGO Group Report 2019

Plant Tour

offers them an experience at an actual manufacturing site

Ninety four pupils in the fifth grade of Chubu Elementary School in Miyoshi City visited
Fukuta Plant and the watched spinning line, the manufacturing process for mufflers— ourmain product, the heat collector line, and a performance of "karakuri", etc. By asking local
people to visit our plant, we offer an opportunity for them to learn what we as a local
company are making, and at the same time, allow them to see and have an interest in
manufacturing and efforts toward safety and security.

Elementary schoolchildren listening
to an explanation about "karakuri."Group Company Activities

by sharing secure information

23

Rare metals were collected from recovered
PCs, and a part of the profits from the saleof the resources was donated to the Special
Olympics. This also contributed to theemployment of people with intellectual
disabilities who played active roles in suchoperations as the disassembly work at ourplants. 144 PCs were provided by Sango,
with 17 PCs provided by individual
employees.

A plant tour for elementary schoolchildren

Cooperation with Suppliers

A supplier meeting

Supporting
TOPICS the Special Olympics
Aichi 2018 by recycling
unwanted PCs

Suppliers participating in an exhibition at Sango

Regional contribution activities by overseas affiliates
to further facilitate exchanges with the local community

Volunteer participation in Christmas
parade (ASI / USA)

We conducted cleanup activities
around plants (SIAP / India)

Activities to alleviate air pollution,"The Blue Sky Battle Plan" (TSC / China)

Regular and temporary employees
numbering around 50-strong, and theirfamilies volunteered their time to make afloat for the Christmas parade, a popular
event in Madison, Indiana. ASI members
threw candy to the gleeful crowds watching
the parade.

As a regional corporate contribution activity,
29 employees participated in cleanups inthe peripheral areas of an industrial
complex (the BIDADI area.) SIAP willcontinue participating in this activity as it
aims to be a company that is rooted in thelocal community.

TSC is promoting equipment modifications
and improvements in line with the Chinese
government Blue Sky Battle Plan campaign.
Improvements include a reduction in VOC(volatile organic compound) emissions byinstalling the latest combustion-type
exhaust emission control device on ourpaint line.

(The ASI float has won consecutive first prizes in
the corporate category.)

24

ESG Information_Governance

ESG | Governance

GovernanceComplianceCorporate Governance System

Compliance Enlightenment Activity

Aiming for sound and sustainable management

Posting a compliance example in the company magazine

Sango has established the corporate governance system shown below. This system enables us to make transparent and fairdecisions quickly, taking into consideration all of our stakeholders, including our employees, shareholders, customers,
suppliers, and local communities.

The company magazine, Sunshine, is issued every other month,and includes a "Sango ★ Compliance Newsletter!" on the last
page, so that everyone can learn about laws and regulations.
With cartoons and explanations, the article helps employees
realize what acts they might do that would be considered
improper and raise awareness to take care about such topics as
information leaks through social media, harassment prevention,and compliance with driving rules and manners.

for our stakeholders

for easy understanding and practice

Shareholders Meeting
Appoint

Appoint

Management function

Auditing function

Board of Directors

CSR Committee(Highest decision-making body)

Subordinate meetings /committees(including external directors)

Instruct

ReportManagement Meeting(Preliminary discussion)
Instruct

ReportExecution of business
Executive Officers
Instruct

ReportHead office / Function depts.
Affiliates in Japan / overseas

Advise

●
●
●

●
●

●
●
●

Internal Control Committee
Environment Committee
Sango Group Safety and HealthCommittee
Labor Management Meeting
Human Resource Development
Meeting
Social Contribution Committee
Quality Meeting
Supplier Meeting

Financial audit

Financialauditors
Cooperate

Audit

Auditors(Including external
auditors)

Education on Important Laws and Regulations

In-house education on important laws and regulations
requiring strict compliance

There are various laws and regulations related to our operations.
Even if an illegal act is carried out inadvertently, a heavy finewould still be imposed on the company or individuals. To prevent
such a situation from arising as a result of ignorance aboutprohibitions, Sango holds various training workshops about laws
and regulations that relevant employees should be aware of, using
examples of actions that are likely to lead to a violation of suchlaws as The Antimonopoly Act, the Subcontract Act, and theWorker Dispatch Act.

Cooperate

ReportInternal audits

An example of a "Sango ★ Compliance Newsletter!"

Sango Grp Audit Office

The highest decision-making body in the Sango Group is the Board of Directors, which consists of six directors, including one
external director, and it decides on critical issues concerned with management and statutory matters. At the same time, toensure fairness and independence, our auditors, including the external auditors, supervise management and audit how
directors are executing their duties.

Training session given by an in-house lecturer on important laws
and regulations

Whistle-blowing System
Internal Controls Committee

Establishment of an effective internal controls system
to minimize risk and maximize profits
The basic approach for Sango internal control systems is to ensure operations within company organizations are carried out
properly. In accordance with this basic tenet, our Internal Controls Committee promotes initiatives for three main areas:❶ corporate governance; ❷ compliance; and ❸ risk management.

Internal Controls Committee❶ Corporate governance❷ Compliance❸ Risk management

Establishment of an internal controls
system to ensure that the company’s
executives execute their duties efficiently

Establishment of a system to ensure thatcompany employees carry out their work fairly
and justly in compliance with societal norms

Establishment of a system to minimizerisks that arise in management activities

Established a consultation contact
for violations of laws and regulations

for the early detection and correction of wrongful acts
Wrongful acts should not happen at a company. However, if such an act does occur,
we must respond to it as early as possible to minimize damage to the company. We
have a "Sango ☆ Helpline," as a reporting system for illegal acts.
There are "internal (legal affairs)" and "external (attorney’s office) " consultation
contacts. In order to protect whistle-blowers, confidentiality obligations for relevant
persons are stipulated in the Company Rules to prevent leaking of corporate
information, under the section "Whistle-blowing system operational regulations".

An information poster displayed in thecompany

25

SANGO Group Report 201926