Promote supply chain sustainability

• Procuring sustainable natural rubber
• Implementing supplier management and responding to conflict minerals risks
• Promoting efficient logistics

Relevant stakeholders

Direct

Suppliers, local communities

Indirect

Shareholders and investors, creditors, industry groups

The Toyo Tire Group has established the Toyo Tire Group Basic Purchasing Policy and seeks to secure the appropriate product quality and price through fair transactions. Based on the Toyo Tire Group CSR Procurement Guidelines (approved by the Board of Directors) and the Sustainable Natural Rubber Procurement Policy, we work with our suppliers to promote sustainable procurement, with the goal of mitigating, preventing, and minimizing the negative impacts of our corporate activities on the environment and society. Together, we also aim to improve our corporate value and competitiveness. Moreover, we help create sustainable logistics by improving the productivity and efficiency of truck transportation and ensuring safe cargo handling operations.

Toyo Tire Group Basic Purchasing Policy

TOYO TIRE Group CSR Procurement Guidelines

• TOYO TIRE Group CSR Procurement Guidelines (Vol. 3.2)
• TOYO TIRE 集团 CSR 采购指南（第3.2版）

Policy on Sustainable Natural Rubber Procurement

• Sustainable Natural Rubber Procurement Policy (Vol. 1.0)

It is essential to build a supply chain that supports sustainable procurement in order to maintain a secure and stable supply of raw materials. The securing of a stable natural rubber supply into the future is an important management issue for a business group like ours that uses natural rubber as the main raw material. The natural rubber industry is facing issues relating to deforestation at production sites and infringement of local residents’ rights. We recognize the importance of striving to solve these problems across the entire supply chain from production through consumption.

International cooperation for building the supply chain

There is a worldwide movement to realize the sustainable procurement of natural rubber. Toyo Tire Corporation is a member of the Global Platform for Sustainable Natural Rubber (GPSNR)^*1 launched in 2018 under the leadership of the Tire Industry Project (TIP), which is part of the World Business Council for Sustainable Development (WBCSD). As a member, we participate in discussions designed to solve relevant issues. We are working to prevent deforestation, conserve biodiversity and water resources, respect human rights and support local communities, improve the productivity of natural rubber, and improve the transparency of our supply chain. We also exchange information with civil society sectors (NGOs, etc.) with specialized knowledge on environmental and social issues at natural rubber production sites.
Our aim going forward is to continue to cooperate with international initiatives and stakeholders and to build a sustainable natural rubber supply chain across our whole value chain.

• *1　A platform that seeks to transcend industrial boundaries and ensure that the production and use of the world’s natural rubber is carried out in a way that is more socially and environmentally conscious

Promoting sustainable procurement

Based on the guidelines for incorporating GPSNR’s Principles of Sustainable Natural Rubber into our business activities as a tire manufacturer, we conducted a thorough review of the themes related to natural rubber procurement that had been defined as part of our CSR Procurement Guidelines. From 2021, we strengthened our implementation through a separate Sustainable Natural Rubber Procurement Policy.
That policy is designed to improve the effectiveness of initiatives relating to healthy ecosystems, human rights and communities, and was formulated by incorporating feedback from environmental NGOs. Currently, in addition to conveying this policy to suppliers and asking for their cooperation, we are promoting activities that ensure traceability and protect the environment in accordance with the action plan stipulated by our Supply Chain Task Force. As of the end of 2024, we have identified harvest areas that account for approximately 40% of our total procurement volume, and since 2023 have been making annual donations to an international environmental organization to help protect forests. We have also set up a dedicated contact point specifically for the natural rubber supply chain. We received no reports in 2024.
We will continue to cooperate with international initiatives and stakeholders to build a sustainable natural rubber supply chain.

Engaging suppliers through guidelines

We have formulated the Toyo Tire Group CSR Procurement Guidelines by incorporating feedback from environmental NGOs, and request all suppliers to pursue activities in accordance with these guidelines to help address environmental and social issues across our entire supply chain from production through consumption. We are also appealing to our suppliers to help convey the purpose and nature of these guidelines further up the supply chain. The guidelines are reviewed whenever there is change in social demands or the business environment. We have published the guidelines in Japanese, English, and Chinese as we expand our global procurement.

To ensure the fair and objective assessment of supply chain risks, in 2022 we formed a contract with EcoVadis,^*2a third-party organization that conducts CSR assessments. We have since been commissioning assessments of our suppliers’ environmental and social initiatives, including those on decarbonization, water management, environmental protection, human rights, safety, anti-corruption and fair business practices. By the end of 2025, we aim to have fully audited suppliers accounting for 95% or more of the total transaction value of our tire-related raw materials. We are currently starting with primary supplier of natural rubber and gradually expanding the scope. At the end of 2024, we finished evaluating suppliers that account for over 90% of that total transaction value. Going forward, we will promote engagement with suppliers based on the results of the EcoVadis assessments. To help us work together to solve supply chain issues, we have set a basic standard achievement of 45 points in the EcoVadis assessment, and we are considering asking suppliers that failed to meet the standard score to undergo annual EcoVadis sustainability assessments and encouraging them to attend related seminars. In addition, we are considering holding internal discussions on whether or not to continue transactions with suppliers who have fallen short of the standard score for over three years in a row, or who have not yet been assessed.
With regard to our decarbonization initiatives, we have been conducting a proprietary survey of our existing suppliers since 2021, and are tackling any issues that emerge to help reduce the environmental impact of our supply chain activities.
In addition, while supplier screenings (for legal risks such as inclusion on national sanctions lists) have been partially implemented in the past, in fiscal 2024 we expanded them to all suppliers on a trial basis in order to improve risk management, and plan to begin full operation of this in fiscal 2025. We will use these methods to conduct combined evaluations of suppliers moving forward.

• *2　Used in 180 countries around the world, EcoVadis’ sustainable procurement ratings platform has supported 130,000 companies in over 200 industries. EcoVadis provides a comprehensive assessment of corporate sustainability from the perspectives of environment, labor and human rights, ethics, and sustainable procurement.

EcoVadis Japan Co., Ltd.

https://ecovadis.com/ja/

Whistle-blowing system

Toyo Tire Corporation operates a whistle-blowing system that can also be utilized by suppliers, and conveys information to suppliers through briefing sessions on the CSR Procurement Guidelines and other venues. There were no reports from suppliers in fiscal 2024.

Fair and transparent transactions, and thorough compliance

We declared our commitment to free competition and fair trade in each country and region in the Toyo Tire Group Code of Conduct. We comply with antimonopoly and subcontracting laws, pursue fair procurement activities, comply with import- and export-related laws and regulations, and ensure proper labeling and product descriptions.
We ensure that our business activities are based on fair and free competition by establishing purchasing regulations that stipulate thorough implementation of fair and non-discriminatory business dealings and prohibit the development of personal interests with suppliers. We have also established anti-cartel regulations to prevent cartels and bid-rigging activities that are prohibited under antimonopoly laws or any action that could be construed in such a way.
For purchasing transactions, we continue to independently monitor the status of compliance with the subcontracting law using a checklist prepared together with the Procurement Division, Legal Department and Compliance Department. The checklist is used to check whether the subcontracting law applies and if so, whether there are any omissions in the documentation and statements that have to be prepared and stored. We also use e-learning platforms to regularly conduct seminars on subcontracting law and other regulations. These initiatives help promote information sharing within the Group, increase the knowledge of staff responsible for subcontracting transactions, and ensure a consistent level of understanding among them.
To prevent any fraud or bid rigging caused by contact between suppliers’ staff responsible for procurement and to reduce bidding costs, the Group has introduced an electronic bidding system for selecting suppliers and has engaged in fair procurement activities at major purchasing sites around the world.

Relevant stakeholders

Direct

Suppliers, local communities

Indirect

Shareholders and investors, creditors, industry groups

Responsible executive (as of April 2025)

Director Corporate Officer and Vice President of Business Headquarters

Efficient logistics promotion task force system (Promoting efficient logistics)

We have set up a task force led by the General Manager of the SCM Division and are working with the managers of six logistics bases in Japan.

Reporting systems

• 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