Materiality and 2030 Targets

The TS TECH Group’s Materiality

The TS TECH Group has established sustainability targets for 2030 with indices indicating the vision the Group aims to achieve for itself by that year. We will address key material issues (materiality) in a priority manner to help build a sustainable world. Under our 15^th Medium-Term Management Plan (fiscal 2024–2026), we will execute our management policy of “realizing ESG management,” moving forward boldly to achieve our targets.

Policy for Identifying Materiality

Issues that are material to the vision statement under the TS TECH Philosophy: “A company dedicated to realizing people’s potential” and “A company sincerely appreciated by all”
Issues that are highly material to the United Nations Sustainable Development Goals (SDGs)
Issues that are material to contribute to a sustainable world

Procedure for Identifying Material issues

Surveys: Based on international standards and guidelines such as the GRI Standards and the core subjects of ISO 26000, we studied identification methods.
Identification and organization of issues: We identified the risks and opportunities based on the Group’s business environment and ultimately identified and organized the relevant issues.
Prioritizing of issues: Issues were evaluated and prioritized in terms of their importance to stakeholders and their importance to the TS TECH Group.
Consultations with outside experts: We exchanged opinions with outside experts on the issues identified to verify their scope and validity.
Selection of materiality: Out of 24 items, eight material issues were selected to be addressed by the TS TECH Group.
Approval by management: Following approval by the Executive Committee, the eight material issues were submitted to the Board of Directors for discussion and approved.

Identified materiality

With the goal of achieving ESG management, we organized the identified material issues into three categories: society, environment, and corporate foundation.

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Category	Material issues	Vision
Society	Providing attractive, innovative new products and technologies that exceed society's expectations	We will create new value that exceeds the expectations of customers and help to build safe, secure, and prosperous societies by providing attractive, high-quality automobile interiors.
Environment	Reducing impact by practicing environmentally friendly manufacturing to build a sustainable world	Aiming for a decarbonized society, we will work to contribute to reducing our environmental impact by pursuing energy-savings and effective use of resources, starting with product design and continuing throughout every stage of the product life cycle. We will strive to ensure that all of our employees have a high level of environmental awareness, while working to protect the environment and conserve ecosystems based on the concept of "giving greenery back to the earth."
Corporate foundation	Respecting diversity and developing structures to maximize individual abilities	We will respect the human rights of all stakeholders and offer rewarding working environments in which each and every employee makes the most of their diverse talents. We will engage in diversity-positive, highly transparent management to fulfill our corporate social responsibility (CSR), achieve sustainable business growth, and enhance corporate value.

KPIs and 2030 Targets

We have set KPIs for specific material issues and established specific targets for 2030 for each indicator. To achieve these targets, we will aggressively pursue measures and manage progress under the sustainability promotion system that was updated in fiscal 2022.

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Category	Materiality	Materiality KPIs	14^th Medium-Term Management Plan results	15^th Medium-Term Management Plan targets	2030 targets	Main measures
Society	Developing attractive, innovative technologies	Innovative technology development expenses as a percentage of R&D expenses	vs. FY2021 +2.6%	vs. FY2021 +3%	vs. FY2021 +10%	Proactively investing in original technologies, including biosensing and environmental technologies
Society	Improving product quality	Seat supplier IQS rating^*1	8.8P	7.0P	2.0P (stable high levels)	Enhancing product quality with higher-precision verification tools Constructing a framework enabling ongoing cultivation of quality human resources worldwide
Environment	Responding to climate change	CO_₂ emissions reduction rate^*2	vs. FY2020 -16%	vs. FY2020 -25%%	vs. FY2020 -50%	Improving development and manufacturing efficiency Developing and promoting products that use plant-based raw materials, etc. Analyzing and responding to risks and opportunities based on the recommendations of the TCFD Conducting energy management based on ISO 14001/ ISO 50001 Installing energy-saving and renewable-energy equipment
	Recycling and effectively using resources	Waste reduction rate^*3	vs. FY2020 -16% (Total)	vs. FY2020 -25%	vs. FY2020 -50%
	Recycling and effectively using resources	Water intake reduction rate and environmental impact from wastewater^*4	vs. FY2020 -13% (Total)	vs. FY2020 -15%	vs. FY2020 “0” environmental impact
	Harmoniously co-existing with nature	Establishment of the TS TECH Fund (matching gift program)	Program survey Study of plans	Establishing a TS TECH Group donation program	Establishing a TS TECH Group donation program	Researching and establishing a matching gift program
Corporate foundation	Respecting human rights	Engagement rating^*5	C	BB	AAA	Analyzing survey findings individually by department and identifying priority issues Enhancing the evaluation system and communication opportunities
	Respecting human rights	Supplier Sustainability Guidelines compliance rate^*6	97% (Subject: 126 domestic suppliers)	100% (Subject: Domestic and international suppliers)	100% (Subject: Domestic and international suppliers)	Preparing to expand surveys to verify circumstances of compliance to locations outside Japan
	Reforming work styles to make the most of diversity	Percentage of management positions held by diverse human resources^*7	32.5%	33.3%	35%	Supporting career development with rank-specific training Helping personnel balance their work and personal lives (childbirth, childcare, nursing care)
	Strengthening governance	Corporate Governance Code compliance rate	100%	100%	100%	Pursuing ongoing efforts to prevent corruption

Rating awarded in the Initial Quality Study (IQS) conducted by J.D. Power Japan, Inc. The study looks at new car buyers and their experiences with any problems and calculates the number of problems indicated per 100 vehicles. The lower the number, the higher the quality.
CO₂ emissions reduction rate (Scope 1 and 2) resulting from the Group’s business activities
Rate of reduction of waste (excluding residue, sludge, etc.) resulting from the Group’s manufacturing activities
Reduction rate in water intake (amount used) at the Group’s production facilities and environmental impact of wastewater resulting from manufacturing activities
The engagement targets look at the company’s employees using Link and Motivation Inc.’s Motivation Cloud. The target “AAA” rating is the highest of the 11 ratings.
Rate of compliance with the Supplier Sustainability Guidelines among the Group’s suppliers (including overseas suppliers)
Percentage of women, mid-career hires, non-Japanese citizens, older employees, and persons with disabilities in management positions

Thoughts on Sustainability Sustainability Promotion Framework Materiality and 2030 Targets Value Creation Story Value Chain (Value Creation Strategy) Stakeholder Engagement