Promote supply chain sustainability

• Challenges
• Our policy
• Responsible Executive (as of April 2022)
• Activity promotion system (as of April 2022)
• Grievance Mechanism
• Procuring sustainable natural rubber
• Implementing supplier management
• Responding to conflict minerals risks
• Promoting efficient logistics

Challenges

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

Relevant stakeholders

Directly: Suppliers, local communities
Indirectly: Shareholders and investors, creditors, industry groups

Our policy

The Toyo Tire Group has established a legally and regulatory compliant Toyo Tire Group Basic Purchasing Policy concerning free competition and fair trade in individual markets, and seeks to secure appropriate product quality and price through fair transactions.
We also formulated the Toyo Tire Group CSR Procurement Guidelines and the Sustainable Natural Rubber Procurement Policy. We work with our suppliers to promote sustainable procurement that aims to mitigate, prevent, and minimize any actual or potential negative impact on the environment and society, to improve corporate value and competitiveness, and to secure a stable supply of materials.
We also help support sustainable logistics by improving the productivity and efficiency of truck transportation and ensuring safe cargo handling operations.

Toyo Tire Group Basic Purchasing Policies

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)

Responsible Executive (as of April 2022)

Corporate Officer and Vice President of Business Headquarters

Activity promotion system (as of April 2022)

We established the Supply Chain Task Force under the jurisdiction of the Sustainability Committee to formulate activity themes, targets, KPIs and implementation plans.

Grievance Mechanism

Activities: Procuring sustainable natural rubber

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 sustainable 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)^* 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. 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.
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.

•  * 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

In 2020, GPSNR provided guidance to encourage tire manufacturers to incorporate GPSNR’s Principles of Sustainable Natural Rubber into their business activities. Following this development, we conducted a thorough review of the items related to natural rubber procurement that were incorporated into our CSR Procurement Guidelines, and decided to formulate and announce a separate Policy on Sustainable Natural Rubber Procurement. That policy is designed to improve the effectiveness of initiatives relating to healthy ecosystems, human rights, and communities, etc.
Currently, in addition to conveying this policy to suppliers and asking for their cooperation, we have launched various activities such as forming contracts with suppliers and exchanging information with environmental NGOs to ensure a level of traceability that complies with the activity plan prescribed by our Supply Chain Task Force.
We have also set up a dedicated contact point specifically for the natural rubber supply chain. We received no reports in 2021.
We will continue to cooperate with international initiatives and stakeholders to build a sustainable natural rubber supply chain.

Activities: Implementing supplier management

Engaging suppliers through guidelines

We have formulated the Toyo Tire Group CSR Procurement Guidelines and request 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.
When we announced our goal in 2021 to become carbon neutral by 2050, we conducted a questionnaire of approximately 350 existing suppliers worldwide to promote decarbonization activities across our entire supply chain. We plan to further engage with suppliers going forward based on the results of the questionnaire.
To strengthen our efforts to address environmental and social risks in the supply chain, we have also decided to add third-party assessments by specialist institutions to the evaluations of suppliers that we previously conducted independently. We will also look to utilize the evaluation results to enhance our due diligence process.

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 2021.
We also set up a dedicated contact point for receiving reports of concerns or grievances about the natural rubber supply chain in 2021.

Fair and transparent transactions

We declared our commitment to free competition and fair trading in each market in the Toyo Tire Group Code of Conduct. We conduct our activities in compliance with antimonopoly and subcontracting law, pursue fair procurement activities, comply with import and export-related laws and regulations, and ensure appropriate labeling and product explanations.
For instance, at Toyo Tire Corporation, we seek to ensure business activities are based on fair and free competition by establishing purchasing regulations that stipulate the 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 law or any action that could be construed in such a way.

Thorough compliance during purchasing transactions

The Toyo Tire Group Code of Conduct determines our own standards of conduct in the face of different laws, regulations, and customs in individual markets as we strive to instill and promote compliance.
For example, we continue to independently monitor the status of compliance of purchasing transactions with subcontracting law by using a checklist created together with the Procurement Division, Legal Department and Compliance Department. The checklist enables us to confirm whether subcontracting law applies, and, if so, whether there are any omissions in the documentation and statements that have to be compiled and stored. We also use e-learning platforms to conduct continuous seminars on subcontracting law and other regulations.
These initiatives help promote information sharing within the Group and both improve the knowledge of staff in charge of subcontracting transactions and ensure a unified understanding.

Using an electronic bidding system

To prevent any fraud or bid rigging caused by interactions between procurement personnel and to reduce the cost of bidding, the Group has introduced an electronic bidding system for selecting suppliers at major purchasing bases around the world. The system is designed to enhance the fairness and transparency of the selection process.
We have used the electronic bidding system to select suppliers for equipment installations and company car lease contracts.

Activities: Responding to conflict minerals risks

Conflict minerals response

In Europe and the US, manufacturers are legally obliged to conduct due diligence when purchasing tin, tantalum, tungsten and gold mined in conflict areas (conflict minerals) in light of the fact that the money from such purchases may be used to fund local armed groups and promote corrupt practices, such as human rights infringements, bribery, and money laundering. The Toyo Tire Group enlists the cooperation of suppliers to enable us to investigate back through to the smelters and conduct surveys to confirm that the raw materials purchased by the Group are not linked to any such inhumane acts.

Activities: Promoting efficient logistics

Relevant stakeholders

• Direct: Suppliers, local communities
• Indirect: Shareholders and investors, creditors, industry groups

Responsible Executive (as of April 2022)

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.

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

Initiative: Improving Transport Productivity and Creating Better Working Conditions

As the shortage of truck drivers grows ever more serious in Japan, the Ministry of Land, Infrastructure, Transport and Tourism is developing initiatives to improve the productivity and efficiency of truck transportation and create better working conditions for all workers.
To improve the productivity and efficiency of truck transportation, Toyo Tire Corporation is instigating a modal shift to ships, national railways and large trailers for the longdistance transportation of goods in Japan dispatched from our factories. In addition, ensuring even safer cargo handling operations will not only reduce the burden on drivers, but will also fuel further economic growth and help create higher levels of job satisfaction.
We intend to continue to help create a sustainable society by pursuing sustainable logistics initiatives.