Collaboration with Business Partners

Toyota's Basic Philosophy Regarding Business Partners

In order to contribute to society through automobile manufacturing and monozukuri(manufacturing) and put into practice the principle of "Customer First," it is necessary to implement various activities in a spirit of cooperation and share principles with our business partners. In addition to pursuing open and fair business activities, Toyota has, for many years now, been engaged in CSR and other related activities. In order to further raise customer satisfaction levels, Toyota is committed to improving quality in terms of safety and customer confidence through increased cooperation with suppliers, dealers and other business partners.

Good products at lower prices in a timely manner

Collaboration with Suppliers

Since its establishment, Toyota has sought to work closely with its suppliers in its manufacturing activities. In good times and bad, Toyota and its suppliers have faced the same issues together and Toyota has built strong and close relationships with them based on the need for mutual support and a harmonious society. With the recent globalization of business activities Toyota will cherish these ties—including those with new partners—and together will promote the Customer First policy.

Toyota's Basic Purchasing Policies

Toyota believes that the most important task in purchasing is the creation of relationships in which Toyota and suppliers do business on an equal footing based on mutual respect, thus building firm bonds of trust and promoting mutual growth and development. It is also important to contribute to the sustainable development of society and the sustainability of the earth by working with suppliers in various countries and regions to ensure legal compliance and respect for human rights, and to carry out initiatives that take local communities and the regional environment into consideration. Toyota's global purchasing activities based on close cooperation revolve around the following three policies making up the Basic Purchasing Policies.

1.Fair competition based on an open-door policy 2.Mutual benefit based on mutual trust 3.Contribution to local economic vitality through localization: good corporate citizenship

Implementation of Policies

Revision of the Toyota Supplier CSR Guidelines

To clarify the expectations of its suppliers, Toyota issued the Toyota Supplier CSR Guidelines in February 2009. Toyota suppliers are asked to implement their own independent CSR activities based on the Toyota Supplier CSR Guidelines, and in turn expand their individual CSR policies and guidelines to their own suppliers. Furthermore, in December 2012, Toyota revised the guidelines to clearly indicate to companies in its supply chain its principles regarding human rights issues (strengthening of monitoring and corrective actions, and approaches towards Conflict Minerals). Toyota also held suppliers briefing meetings to ask suppliers to enhance and strengthen the global scale CSR initiatives society expects of them.

TOYOTA Supplier CSR Guidelines

Support for Supplier Activities

Toyota holds CSR Study Meetings to support the CSR activities of suppliers. In FY2012, study meetings targeting around 340 Japanese suppliers were held based on the themes of compliance (management of confidential information, competition laws, and anti-corruption) and human rights/labor (respect for human rights, labor management). At the global level, Toyota also participated in CSR education activities targeted at suppliers belonging to the Automotive Industry Action Group (AIAG)* in an effort to propagate CSR promotion activities to suppliers inside and outside the U.S.

*Organization which lays down the code of conduct in the U.S. automobile industry

The CSR Lecture held in 2012The CSR Lecture held in 2012

Suppliers' CSR Activities

Toyota suppliers also voluntarily engage in various activities to promote CSR and Toyota's supplier associations, Kyohokai and Eihokai jointly hold the CSR Lecture every year. In an effort to improve the awareness level among member companies about the importance of CSR in management, Chief Executive Hiro Motoki of E-Square Inc. was featured as a guest speaker in July 2012 and lectured on "Implementing CSR Management in a Global Society." Furthermore, continuing from last year the Kyohokai and Eihokai took part in the Make a CHANGE Day event as part of their CSR activities. Volunteer activities were held to collect goods for people living in the areas struck by the Great East Japan Earthquake. All items collected were donated to the disaster-stricken Iwate Prefecture.

Letter of appreciation received from Iwate Prefecture regarding the support provided by the Kyohokai and Eihokai volunteersLetter of appreciation received from Iwate Prefecture regarding the support provided by the Kyohokai and Eihokai volunteers
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Approaches to Conflict Minerals*1 Issues

Seminar for suppliers Seminar for suppliers

Civilians in certain regions around the world are being subjected to massacres, plunder, abduction, conscription of child soldiers, and other inhumane conduct as a result of armed conflict, thereby giving rise to international condemnation. In the Democratic Republic of the Congo, which is located in central Africa, the unlawful mining and smuggling of the country's abundant mineral resources is said to be a major source of funding for armed groups.

Toyota undertakes business with a strong awareness that violations of human rights, environmental degradation, unlawful mining, and other issues in these conflict regions, as well as the issues of minerals that provide sources of funding to armed groups through such actions, are major social issues concerning the supply chain.

As a global enterprise, Toyota adopted "Toyota's Policies and Approaches to Conflict Minerals Issues," which have been implemented internally and by its consolidated subsidiaries in Japan and overseas with the aim of not using any conflict minerals —which are relating to illegal conduct including human rights infringement —as raw materials. Toyota is further addressing the issues in the supply chain by asking suppliers to engage in responsible material procurement in accordance with the Toyota Supplier CSR Guidelines.
In 2011, Toyota established the Conflict Minerals Task Force, consisting of representatives from relevant departments within the company, to begin considering the actions to be taken regarding conflict minerals. Toyota has also participated in a working group of the Automotive Industry Action Group (AIAG*2) on conflict minerals and promoted the consideration of unified action to be jointly taken by the automobile industry. In addition, Toyota has worked with other Japanese automobile manufacturers and the Japan Auto Parts Industries Association (JAPIA*3) to establish an investigation method that will effectively and efficiently assess the usage status of conflict minerals and which also takes impact on suppliers into consideration. The automotive industry as a whole agreed to adopt the Electronics Industry Citizenship Coalition/Global e-Sustainability Initiative (EICC*4-GeSI*5) Conflict Minerals Reporting Template standardized by the electronic industry. In 2012, Toyota conducted a survey of suppliers who are JAPIA members and asked them to identify their smelters. In 2013, Toyota asked more than 7,000 suppliers globally to respond to the survey including companies which are first tier suppliers of its consolidated companies in Japan and overseas.

The automotive supply chain is wide and complex. Therefore, in order to help second-tier suppliers and beyond gain a better understanding of the issues of conflict minerals, Toyota is also helping industry organizations, for example by providing report form completion guidelines and survey result summarization tools, and by supporting for seminars in cooperation with JAPIA and Japan Electronics and Information Technology Industries Association (JEITA*6). On a global scale, Toyota has had its overseas subsidiaries explain the issues to their suppliers to seek their understanding and conduct surveys in the same way as in Japan. The surveys have been carried out in Toyota's automotive business as well as all other business areas. Toyota has reported the survey results to the U.S. Securities and Exchange Commission and also posted them on Toyota's website.

In the 2013 survey, Toyota could not determine if its used materials are conflict-free or not, as many of upstream suppliers could not identify their trading smelters/mines. In addition, for some smelters and recycling firms that suppliers identified as their sources of minerals, it could not be confirmed whether or not they were indeed smelters and recycling firms based on information available for public, such as corporate websites. In such circumstances, Toyota has strived to confirm details of smelters in cooperation with other auto makers, parts manufacturers, and other industries including the electronics industry. In Japan, through the Japan Conflict-free Sourcing Working Group consisting of volunteer companies, Toyota cooperates for identification of smelters by providing the Conflict-Free Sourcing Initiative (CFSI*7) with information on smelters etc. Toyota has also asked concerned smelter organizations relating to the subject minerals in Japan to identify smelters and asked each smelter to gain Conflict-Free Smelter (CFS) certification.

Toyota has taken actions in line with "OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas," and it will continuously conduct surveys on use of conflict minerals and ask for understanding and cooperation from the upstream supply chain through its first-tier suppliers in and after 2014. However, Toyota recognizes that asking its suppliers not to use the subject minerals originated in the Democratic Republic of the Congo or an adjoining country regardless of the possibility of human rights infringement could decrease legal mineral trades in the area, which could not lead a genuine solution of the issues. With these recognitions, in addition to asking suppliers to cooperate to ensure responsible material procurement, Toyota continuously strives for solution of the conflict minerals issues through initiatives that cut across industry boundaries. Specifically, Toyota consistently asks smelters to gain CFS certificates in cooperation with the auto industry and other industries in order to encourage upstream supply chain smelters to avoid using conflict minerals related to human rights infringement etc. Toyota also communicate and collaborate with human-rights NGOs and other organizations by participating in the Public-Private Alliance for Responsible Minerals Trade (PPA*8) , which is a hub for the U.S. government, corporations, industry organizations and NGOs, and the conflict-free sourcing initiative (CFSI) through AIAG which promotes acquisition of CFS certifications to support conflict-free initiatives.

Toyota's Policies and Approaches to Conflict Minerals Issues

We-Toyota Motor Corporation and its subsidiaries promote obtainment of materials with full deliberation and care to avoid the procurement or usage of materials which are unlawful or which are obtained through unethical or otherwise unacceptable means. We recognize that the issue of conflict minerals originating in the Democratic Republic of the Congo or an adjoining country is one of the significant social issues among supply chains. We aim at procurement and usage that are free from conflict minerals originating in the Democratic Republic of the Congo or an adjoining country and relating to illegal conduct including human rights infringement. To realize such procurement and usage, we conduct inquiries tracing back through our supply chains and confirm if conflict minerals are used. In addition, we take appropriate steps to discontinue procurement of materials that can cause social problems or finance armed groups, if such usage is detected. Based on mutually beneficial relationships, we ask our suppliers to understand our policies and approaches and to promote responsible material procurement.

*1
Conflict minerals : Columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives, or any other mineral or its derivatives financing conflict in the Democratic Republic of the Congo or an adjoining country
*2
AIAG (Automotive Industry Action Group) : https://www.aiag.org/
*3
JAPIA (Japan Auto Parts Industries Association) : http://www.japia.or.jp/
*4
EICC (Electronics Industry Citizenship Coalition) : http://www.eicc.info/index.shtml
*5
GeSI (Global e- Sustainability Initiative) : http://gesi.org/
*6
JEITA (Japan Electronics and Information Technology Industries Association) : http://www.jeita.or.jp/
*7
CFSI (Conflict-Free Sourcing Initiative) http://www.conflictfreesourcing.org/
*8
PPA (The Public-Private Alliance for Responsible Minerals Trade) : http://www.resolv.org/site-ppa/

Collaboration with Sales Networks

Dealers/distributors are the front line where Toyota's "Customer First" principle will be directly observed. Toyota and its dealers/distributors always work as one to enhance customer satisfaction based on a strong relationship of trust, close two-way communication, and the shared value of Toyota products and services.

Relations with Dealers in Japan

Within Japan, Toyota has concluded contracts directly with approximately 280 dealers who operate around 5,400 sales outlets including used car outlets. Based on the policy of "Customer First, Dealer Second, Manufacturer Third," Toyota believes that dealer success, which ultimately leads to Toyota's growth, can be achieved if Toyota supports and collaborates with dealers to meet customers' expectations and raise their level of satisfaction.

Japanese Dealers' CSR Activities

The Toyota National Dealers' Advisory Council (TNDAC) issued the TNDAC CSR Guidelines in 2005 to promote unified CSR activities involving all Toyota Japanese dealers. In FY2012, the CSR Lecture, offered annually since 2006, was held in October with the theme, "CSR Activities of Toyota Japanese Dealers from the Perspective of Compliance." Over the two-day period, the lectures were attended by 408 representatives from dealers all over Japan. Comments from participants included, "The lecture reminded me of the importance of approaching issues from the customer's perspective." All dealers are promoting CSR activities under the three pillars of Compliance, Environment, and Social Contribution and are consistently going through the Plan-Do-Check-Act cycle with self-auditing. Toyota is sharing know-how to support the CSR activities of dealers by cooperating in activities such as revising and upgrading the self-auditing tool (the CSR Checklist) and making improvements to the system for collecting results to be audited. In FY2012, all 90 items on the checklist were revised and improved with the aim of strengthening compliance related activities.

Aqua Social FES to Promote Protection of Local Environments

As part of its Aqua branding campaign, Toyota is running the Aqua Social FES (ASF) nationwide, encouraging the general public to participate in this regional environment protection and preservation initiative named after the vehicle and focused on water (aqua). The event was held 131 times in 50 locations throughout Japan last year and 11,533 people participated, motivated by the slogan, "Together we can do it!" A total of 1,228 dealer employees sweated alongside general participants working on various local projects, such as waterfront clean-ups and invasive species removal. Toyota is continuing to hold ASF events in FY2013.

Aqua Social FES official website http://aquafes.jp(Japanese only)

Aqua Social FES 2013 "Let's Beautify the Area Surrounding Toyama Bay!" on May 25, 2013 Held at the Shimao Beach in Himi City, Toyama Prefecture, with 107 participantsAqua Social FES 2013 "Let's Beautify the Area Surrounding Toyama Bay!" on May 25, 2013 Held at the Shimao Beach in Himi City, Toyama Prefecture, with 107 participants

CommentsFrom a general participant in ASF Shizuoka

This was the first time I participated in this event and it was really fun. I want to do it again and hope a lot of loggerhead turtles will return to this beach.

Welcab Station Where Customers Can Test Drive and Seek Advice Regarding Purchasing a Welcab

A Welcab Station is a dealer's sales outlet where customers can experience Toyota's assisted-mobility cars, the Welcab series. Both demonstration models and Welcabs for test drive are always available and consultants possessing specialized knowledge are always on duty. These outlets are barrier-free and equipped with wheelchair-accessible bathrooms and parking spaces for assisted-mobility vehicles, meaning everyone can visit with peace of mind. Welcab Station consultants can assist in choosing the right vehicle for the elderly, people with physical disabilities, and those with difficulty getting in and out of cars. As of the end of March 2013, there were 204 Welcab Station sales outlets operated by 119 dealers.

Welcab StationWelcab Station

CommentsFrom Welcab Station staff

Welcabs, which are rarely displayed in normal dealer outlets, are always on display. Customers can try getting into a Welcab while seated in their wheelchairs to check ease of use.

"Driving Festival" Events with Regional Flair

"Driving Festival" is a hands-on event Toyota has held from time to time since 2007 to disseminate its expertise to dealers all over Japan. Dealers hold the Driving Festival events adding regional flair to enable customers to experience the appeal of cars. In May 2013, as part of its initiative to aid disaster-stricken areas, Toyota and dealers co-sponsored the Driving Festival 2013 in Fukushima, primarily for children, drawing 13,700 visitors over a two-day period. The Big Palette Fukushima in Koriyama City, where the event was held, was full of smiling and cheering children who received a chance to experience cars through such activities as riding electric vehicles and watching a car being assembled.

Hands-on area to experience the work of an auto technicianHands-on area to experience the work of an auto technician

CommentsFrom a father who participated with his children

I am so happy that this event gave my children the chance to experience things that they normally cannot. I hope Toyota will hold more of these hands-on events in the future.

First Experience Program, a Traveling Classroom of the Waku-Doki Project

As part of its CSR initiatives rooted in local communities, Toyota has been collaborating with dealers to hold a traveling classroom at elementary schools all over Japan since 2008, with the aim of helping children of the "virtual era" gain real-life experience through cars. In FY2012, the First Car Experience Class and the Class for Everything You Always Wanted to Know about Cars were held at 376 schools, bringing the cumulative total of schools where these classes were offered to 1,095, with approximately 58,000 children attending. Teachers at these schools commented, "We really like these classes because they encourage our students to use all five senses to actively learn." Participating dealers are enthusiastic about holding these classes because they believe that they contribute to local communities and also help their employees develop as human resources.

Hands-on experience of power and control using an actual vehicleHands-on experience of power and control using an actual vehicle

CommentsFrom children who attended the class

  • ・ I usually ride in a car without thinking much about it, but the class helped me understand how awesome cars are.
  • ・ I learned that car companies are developing cars with the environment in mind, so I want to do something good for the environment, too.

Relations with Overseas Dealers and Distributors

Toyota's approximately 170 distributors and 8,700 dealers located overseas serve as key partners in highlighting the attractiveness of Toyota vehicles to customers. They also engage in a variety of activities to advertise the value of products and cars to customers.

[Overseas Initiatives] 15% CO2 Emissions Reduction Achieved across UK Dealer Network in 2012

In 2012, Toyota's dealer network across the UK achieved a 15% reduction in CO2 emissions. More than 3,700 tons of CO2 emissions are being reduced each year, equivalent to the emissions from 22.2 million kilometers driven in an average car. Following a pilot scheme in 2009 that revealed substantial energy savings could be made without the need for heavy capital investment, all Toyota and Lexus Centers initiated measures towards realizing a 20% reduction in CO2 emissions by the end of 2014. In order to oversee the progress of these activities, all premises were equipped with energy monitoring devices by the end of 2011. Initiatives include a range of practical measures that are simple and in many cases cost-free to implement, such as adjustment of heating and air conditioning systems to match building occupancy hours. Some Centers have also made individual investment in low energy equipment, such as LED lighting.

CommentsFrom the Manager, Corporate Social Responsibility and Environmental Affairs

Our commitment to environmental responsibility is not confined to building clean and fuel efficient vehicles; it extends to all areas of our business operations, not least our network of Toyota and Lexus Centers.

Thomas Rosselle Manager, Corporate Social Responsibility and Environmental Affairs, Toyota Great Britain

LED lights in Toyota JEMCA Edgware Road showroomLED lights in Toyota JEMCA Edgware Road showroom
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