Materiality and 2030 Targets

Identified Material Issues and 2030 Targets

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,” incorporating sustainability perspectives into management strategy as we further accelerate efforts to achieve our targets.

TS TECH Materiality Identification Policy

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: Each department identifies risks and opportunities in the external environment and within the company based on business plans, etc. The Corporate Planning Division, which serves as the lead, consolidates these findings and identifies and organizes issues along both business and social axes.
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: Prior to submission to the committee, discussions are held with the involvement of senior management. The proposal is then approved by the Executive Committee and submitted to the Board of Directors, where further deliberation is conducted, and resolved if deemed appropriate.

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 nature 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	15^th Medium-Term Management Plan results	Fiscal 2026 Main Initiatives	16^th Medium-Term Management Plan targets	2030 targets
Category	Materiality	Materiality KPIs	15^th Medium-Term Management Plan results	Fiscal 2026 Main Initiatives	16^th Medium-Term Management Plan targets	2030 targets
Society	Developing attractive, innovative technologies	Innovative technology development expenses as a percentage of R&D expenses	vs. FY2021 +18.4%	Enhancing cabin coordination functions Enhancing efforts to promote environmental technology development	vs. FY2021 +5%	vs. FY2021 +10%
Society	Improving product quality	Rank A for customer quality satisfaction^*1	88%	Enhancing new product quality verification Enhancing the in-house quality structure	90%	95%
Environment	Responding to climate change	CO_₂ emissions reduction rate^*2	vs. FY2020 -35%	Lateral deployment of energy conservation measures Adoption of renewable energy	vs. FY2020 -44%	vs. FY2020 -50%
	Recycling and effectively using resources	Recycling rate^*3	76%	Recycling surveys for major wastes Surveying recycling trends and studying measures	75%	75%
	Recycling and effectively using resources	Water intake reduction rate and environmental impact from wastewater^*4	vs. FY2020 -15%	Preparing checklists and conducting inspections on water leaks, etc. Implementing measures to reduce water intake	vs. FY2020 -30%	vs. FY2020 -50% “0” environmental impact
	Harmoniously co-existing with nature	Operating the TS TECH Foundation and ecosystem preservation activities	Foundation established and under operation	Renovation of ecosystem preservation activity concepts Donations to nature-preservation foundations Raising internal/external awareness of donation results	Operations based on activity concepts	Operations based on activity concepts
Corporate foundation	Respecting human rights	Percentage of positive responses to engagement surveys^*5	74％	Lateral deployment of collected improvement case studies Action plan formulation and execution	78.5%	80%
	Respecting human rights	Supplier Sustainability Guidelines compliance rate^*6	98%	Raising awareness of guidelines to achieve 100% compliance Ongoing promotion of periodic interviews	100%	100%
	Reforming work styles to make the most of diversity	Percentage of management positions held by diverse human resources^*7	33.3%	Continuation and development of proactive midcareer hiring	34.2%	35%
	Strengthening governance	Corporate Governance Code compliance rate	100%	Reflecting important details in the Corporate Governance Report	100%	100%

Internal definition: Achievement level measured by the number of months with zero delivery-related defects at each delivery site for each customer.
CO₂ emissions reduction rate (Scope 1 and 2) resulting from the Group’s business activities.
Recycling rate of waste generated by 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.
Percentage of positive responses in the Company's employee engagement survey.
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 Our Strengths Built over Time Stakeholder Engagement