Pursue decarbonization in all corporate activities

• Challenges
• Our policy <Our approach to climate change>
• Activity promotion system <Governance> (as of April 2022)
• Responsible Executive (as of April 2022)
• Grievance mechanism
• Main resources in promoting activities (2021)
• Responding to climate change
• Reducing GHG emissions
• Reducing Greenhouse Gas Emissions
• Increasing use of clean energy

Challenges

• Responding to climate change
• Reducing greenhouse gas emissions
• Increasing use of clean energy

Relevant stakeholders

• Direct: Local communities, the environment, customers
• Indirect: Shareholders and investors, creditors, NGOs, industry groups

Our policy <Our approach to climate change>

Climate change has begun to cause frequent extreme weather events and natural disasters in recent years, such as heavy rainfall and flooding. We acknowledge that it is increasing the risks faced by our Group, including impacts on the growth of trees providing the natural rubber used to make tires, impacts on plant operations, and disruptions in the supply chain.
We also recognize that our Group’s efforts to reduce CO₂ and other greenhouse gas (GHG) emissions within its business are essential in working toward achieving both the Paris Agreement goal of limiting average temperature increases to below 2°C, and carbon neutrality in Japan.
As the impact of climate change intensifies, increasing social demands are being made towards mobility. We see the mobility business as the heart of our Group, and recognize that responding to climate change is the most key issue decisive to our growth. Our responsibility to both current and future generations is to reduce our greenhouse gas (GHG) emissions to help achieve the long-term targets set by the Paris Agreement, as well as expand our use of clean energy, and we are aiming to be carbon neutral by 2050.
With all this in mind, the Group has declared our support for the TCFD recommendations, and will report information covering governance, strategy, risk management, and metrics and targets in accordance with the TCFD framework in order to activate stakeholder dialogue and promote climate change-related initiatives that help work toward a more sustainable world.

Responsible Executive (as of April 2022)

Director, Corporate Officer and Vice President of Quality Assurance, Environment & Safety Headquarters

Activity promotion system <Governance> (as of April 2022)

In April 2021, we established the Sustainability Committee with the President as chairperson.
The committee meets quarterly to report on, deliberate and decide on measures and responses to climate change and other sustainability issues.
Under the jurisdiction of the Sustainability Committee, we established the Decarbonization Task Force in July 2021 to discuss project plans, targets and KPIs for reducing CO₂ emissions in our corporate activities. The Sustainability Committee regularly checks and monitors the task force’s progress.
Climate change-related issues deliberated and decided upon by the Sustainability Committee are reported to the Executive Committee for further consideration, and reflected in the establishment and review of annual and medium-term business plans. These issues are also reported to the Board of Directors in a timely and appropriate manner.

Grievance mechanism

• Reporting hotline (whistle-blowing system): For executives, employees and suppliers
• Customer Relations Department: For customers (consumers) and local communities
• Online inquiry form: For customers (consumers), shareholders and investors, and NGOs

Main resources in promoting activities (2021)

Costs of climate change adaptation and mitigation in main business area: 2,914 million yen

Activities: Responding to climate change

Strategy (Climate-related risks and opportunities)

We have performed a scenario analysis of the impact climate change could potentially have on Group corporate activities.
Below is an overview of this process.

1. Select scenarios to use and understand the outlook of each scenario
2. Investigate risks and opportunities in each scenario
3. Assess the significance of each risk and opportunity, and identify those of high significance

Highly significant risks and opportunities

Baseline Scenario Short-term: around 2025, Medium-term: around 2030, Long-term: around 2050

Transition Scenario Short-term: around 2025, Medium-term: around 2030, Long-term: around 2050

Risk management

Identification and assessment of climate-related risks is carried out primarily by the Corporate Administration Division, which leads TCFD response, the Corporate Infrastructure Division’s ESG Promotion Department, which oversees the Sustainability Committee, and the Environment & Safety Division’s Environment & Health Department, which manages the Decarbonization Task Force. After assessment, they are deliberated by the Sustainability Committee to evaluate company-wide climate-related risks.
Through the Sustainability Committee’s Decarbonization Task Force, we closely monitor the regulatory requirements in each country—such as GHG emissions reduction targets (including renewable energy targets), vehicle fuel efficiency regulations, and bans on sales of new gasoline-powered vehicles—and encourage the relevant departments to address each risk and manage progress.

Metrics and targets

Climate-related metrics

• • GHG emissions (scope 1,2,3)
  →View results from 2019-2021 here
• • GHG emissions intensity
  →View results from 2019-2021 here
• • ICP to be introduced during 2022 (for making decisions on decarbonization-related investments)

Climate-related targets

• • GHG emissions reduction targets

•  * Set by the Sustainability Committee in November 2021 and approved by the Executive Committee in December. Announced in February 15 in 2022.

Scope1 & 2	GHG emissions: Reduce CO₂ emissions by 46% by 2030 (vs. FY2019). Be carbon neutral by 2050
Scope3	GHG emissions intensity: Aim to help reduce CO₂ emissions per tire by 20% by 2030 (vs. FY2019)

Continuing to Align with TCFD

To continue incorporating the TCFD recommendations, in the future we will further refine our scenario analysis to gain a greater understanding of the quantitative impacts of risks and opportunities, and to investigate, devise and enact strategies in response.
We will also follow the TCFD recommendations when providing our stakeholders with timely disclosures.

Activities: Reducing GHG emissions

Reducing energy consumption

To help mitigate climate change, the Toyo Tire Group is striving to reduce energy consumption through effective usage of the energy required for corporate activities both in and outside the organization. We are also developing new products and technologies that contribute to climate change mitigation and adaptation.

Energy consumption

• Please click here to read more about boundary, period, and assumptions underling of data.

(thousand GJ)

	2019	2020	2021
Total energy consumption	7,346.1	6,777.4	6,992.9
By Region
Japan	3,991.7	3,594.3	3,842.6
US	1,810.0	1,704.2	1,753.3
Asia (excluding Japan)	1,544.4	1,478.9	1,397.0
Type of Source
Fuel consumption from non-renewable energy sources (gas, oil)	5,065.8	4,662.4	4,735.7
Fuel consumption from renewable energy sources (solar, waste tires)	2.91	0.44	0.80
Consumption of purchased electricity	1, 963.3	1,818.8	1,944.2
Reference: Percentage of renewable energy* in purchased electricity (estimate)	15.6%	15.7%	15.6%
Purchased steam	314.2	295.8	312.2

• * Renewable energy sources can include geothermal, wind, solar thermal and photovoltaic, hydro and biomass.

Note: In 2019, the Toyo Tire Corporation Sendai plant switched its thermal energy source from waste tires to natural gas.

Reducing the energy requirements of products (fuel-efficient tires)

• Please click here to read more about boundary, period, and assumptions underling of data.

(Reference) Total tire production volume (new rubber)(thousand tons)

	2019	2020	2021
Total tire production volume (new rubber)	245.6	212.3	245.7
By Region
Japan	130.6	108.8	127.7
US	70.1	62.2	71.9
Asia (excluding Japan)	44.9	41.4	46.0

Energy consumption (during logistics)

• Please click here to read more about boundary, period, and assumptions underling of data.

	2019	2020	2021
Energy consumption for raw material & product transportation in Japan (thousand GJ)	127.8	109.6	118.9

•  * Main efforts to reduce energy consumption: introduce containers and undertake modal shifts (train, and marine transport), and utilize consolidated shipments

Energy intensity

• Please click here to read more about boundary, period, and assumptions underling of data.

	2019	2020	2021
Energy intensity within the organization (GJ/million yen)	19.5	19.7	17.8

• Note: Energy intensity is the total amount of energy used within the organization divided by total sales.

Examples of reducing energy consumption

• Please click here to read more about boundary, period, and assumptions underling of data.

Reducing the energy requirements of products (fuel-efficient tires)

• Please click here to read more about boundary, period, and assumptions underling of data.

	2019	2020	2021
Reducing the energy loss *Estimated values	169.2	253.7	338.1
Reference: Production ratio of Fuel Efficient Tires
PCR (passenger car radial tires)	20.7%	19.5%	23.1%
TBR (truck and bus radial tires)	21.0%	22.4%	35.0%

Activities: Reducing Greenhouse Gas Emissions

Reducing Greenhouse Gas Emissions

GHG emissions are the main cause of climate change. The Toyo Tire Group is working to reduce emissions by using energy effectively throughout business activities both in and outside of the organization, and in our products.
While increasing production volume does increase energy consumption, we are promoting fuel conversion and equipment renewals at manufacturing bases to address scopes 1 and 2.
For scope 3 emissions, our R&D team is working to develop fuel-efficient tires and other technologies to help reduce the CO₂ emitted by vehicles.
A calculation of GHG emissions throughout the Group’s value chain based on the Japan Automobile Tyre Manufacturers Association’s Tyre LCCO₂ Calculation Guidelines Ver. 3.0 revealed that scope 3 category 11 (product use stage) emissions account for at least 80% of overall GHG emitted. We are working to develop fuel-efficient tires which, according to the guidelines, can reduce GHG emissions during use by 95.4 kg CO₂e per tire for passenger car radial (PCR) and 879.0 kg CO₂e per tire for truck and bus radial (TBR) compared to standard tires.

GHG emissions

• Please click here to read more about boundary, period, and assumptions underling of data.

(thousand t-CO₂e)

	2019	2020	2021
Total direct (scope 1) GHG emissions	296.3*	263.9*	268.2*
By Region
Japan	204.7	180.7	190.4
US	57.8	51.8	51.0
Asia (excluding Japan)	33.8	31.3	26.8

	2019	2020	2021
Total indirect (scope 2) GHG emissions	294.6*	271.6*	284.4*
By Region
Japan	70.4	57.1	65.0
US	91.2	86.8	94.2
Asia (excluding Japan)	133.0	127.7	125.2

	2019	2020	2021
Total other indirect (scope 3) GHG emissions	13,626.4	12,059.8	12,932.2

• * Third-party verified data

Note: GHG used for calculation is CO₂.

	2019	2020	2021
GHG emissions intensity (t-CO₂/million yen)	1.57	1.56	1.40

• Note: Emissions intensity is total volume from scopes 1 & 2 divided by total sales.

Activities: Increasing use of clean energy

From 2022, the Toyo Tire Group is successively converting our Japanese plants to renewable energy sources.
Moving forward, we will expand our use of clean energy at our plants and business sites both in Japan and abroad in pursuit of decarbonization in all of our corporate activities.