Environment Report 2015

Front Cover

Contents

1. Company Overview P1

2. Yorozu Products P2

3. Yorozu Charter of Corporate Behavior

P3

4. Message P4

5. Environmental Challenge

1) Group Environmental Philosophy P5

2) Environmental Policy P5

3) Group Environmental Slogan P5

4) Environmental Goals P5

5) 2015 Group Environmental Target P5

6) Environmental Management Structure P6

7) Group ISO14001 Accreditation Status P7

8) Environmental Education P8

9) Environmental Slogan P8

10) Compliance with Environmental Laws and Regulations

P9

11) Green Procurement P10

12) Energy-Saving Initiatives P11

13) Waste Recycling P14

14) Biodiversity Conservation P15

15) Contribution to Society P17

16) Environmental Data P18

Contents

Period covered:

Apr. 1, 2015～Mar. 31, 2016（incl. the data which period does not fall into the targeted period.)

Business Development, design, manufacture and sale of auto parts, agricultural machinery parts, and production equipment

Address 3-7-60 Tarumachi, Kohoku-ku, Yokohama, Kanagawa-ken 222-8560 Japan

Established April 1, 1948

Employees 7,255 (consolidated) (as of the end of March 2016）

ISO certification November 2009 (acquired by the Yorozu Group)

Site area 2,126 m2

Building area 726 m2

YOROZU Engineering Corporation (YE）

YOROZU Oita Corporation

Shonai YOROZU Corporation

YOROZU CORPORATION Europe Office

YOROZU Automotive Tennessee, Inc. (YAT)

YOROZU Mexicana S.A. de C.V. (YMEX)

YOROZU Automotiva do Brasil Ltda. (YAB)

YOROZU (Thailand) Co., Ltd. (YTC)

YOROZU Engineering Systems (Thailand) Co., Ltd. (YEST)

Wuhan YOROZU Bao Mit Automotive Co., Ltd. (W-YBM)

PT. YOROZU Automotive Indonesia (YAI)

1. Company Overview

Yorozu Global Network

1

YOROZU Corporation, Head Office（YC）

YOROZU Global Technical Center (YGTC)

YOROZU Tochigi Corporation

YOROZU Aichi Corporation

YOROZU Service Corporation

YOROZU America Corporation (YA)

YOROZU Automotive North America, Inc. (YANA)

YOROZU Automotive Guanajuato de Mexico, S.A. de C.V. (YAGM)

YOROZU Automotive Alabama, Inc. (YAA)

Y-Ogura Automotive (Thailand) Co., Ltd. (Y-OAT)

YOROZU Bao Mit Automotive Co., Ltd. (G-YBM)

YOROZU JBM Automotive Tamil Nadu Pvt. Ltd. (YJAT)

The suspension is one of the key technologies that enable cars to demonstrate the required high performance. Not only does it support the car’s function to “run, stop and turn,” it also adds significant value to the ever-evolving cars. Yorozu makes use of its advanced development technology to supply suspension members and links - the key structural components of a suspension - in various modular forms.

The Group has now gained the reputation as “Yorozu for Suspensions” in and outside Japan. We have reached a point beyond simply being an auto part maker. Yorozu is contributing to the new era of car making as a good partner of car makers with development capabilities and as a member of the automotive industry that is moving toward a low-carbon society.

2. Yorozu Products

2

Links

Brake Pedal

Oil Pan

Modules

Link

Front Suspension Member

Rear Beam

Link

Rear Suspension Member Car Products

3

Basic Philosophy

3. Yorozu (Group) Charter of Corporate Behavior

Our basic philosophy at Yorozu is to engage in fair and transparent corporate activities based on high ethical standards and respect for the law. Grounded in this philosophy, we recognized the need to increase our corporate value by fulfilling our social responsibility as a good corporate citizen and earning the trust of our stakeholders (※1), in addition to abiding by relevant laws and ordinances. Accordingly, the Yorozu Group Charter of Corporate Behavior and the Code of Conduct was established, which we use as guidelines in our day-to-day operations. (※1) Stakeholders: shareholders, employees, customers, business partners and local community, etc. １）Customer Satisfaction and New Technologies The company earns customer satisfaction and confidence by developing new technologies and offering beneficial and reliable products and services and by paying careful attention to safety. ２）Observance of Laws and Regulations The company respects the company rules, the laws and regulations of the countries where it does business, and will pursue the highest standard of ethical behavior in its business. ３）The Environment The company places high priority on the preservation of the earth’s natural environment, and by acting positively contributes to the betterment of quality of life in the world. ４）Globalization The company respects the cultures and customs of all countries in which it operates, and seeks to enhance regional prosperity thorough Yorozu Group business activities. ５）Disclosure The company values communication with its shareholders, other stakeholders and the public at large, and fulfills its duty to make full, fair and timely disclosure of corporate information. ６）Respect for Human Rights The company respects human rights, abstains from discrimination on any basis, and from engaging in any form of harassment. And also respects each employee's individuality and creates work environments where all its employees can fully demonstrate their abilities and carry out their job with enthusiasm. ７）Fair Trade The company recognizes that free and fair competition is a fundamental principle of the market economy and will engage in transactions by adhering to this principle. ８）Commitment by Executives The Company management will lead in the implementation and enforcement of the Charter of Corporate Behavior, and should a breach of this charter arises, will vigorously address the violations by themselves to investigate the causes and prevent recurrence of such breach. Also the management will make timely and accurate disclosure of information to the public and take disciplinary actions against persons involved (including themselves), identifying the responsibility and authority of the person(s) in question.

4. Message

4

Since its foundation and start of manufacturing automotive parts in 1948, Yorozu has

enjoyed a remarkable growth and development; with the increase of the number of its

employees to 7,000 from 50, and the sales growth of 170 billion yen from 4 million yen

at that time.

In the meantime, we have gone through a transition in environmental problems, from

environmental pollution, which became a serious social problem, to global warming

which has a big impact on the entire world. In line with this transition, it is necessary for

us to squarely address each of the diversified environmental problems.

Based on our corporate philosophy, “Our primary mission is to contribute to society,” we

will actively contribute to the well-being of the society around the world, placing local

and the world environmental conservation activities as an important issue to tackle.

contributes to the well-being of the society

In order to do so, we conduct corporate activities giving consideration to the

environment preservation not only in the production processes, but in all business areas

including manufacturing light-weight products and logistics, etc. In order to get the

whole Yorozu group involved with, we have regulated specific environmental policies

described on the next page, and are promoting activities which involve each member of

the whole group, using the environmental management system.

As a member of the global auto industry, we will continue striving to make a contribution

to the further development of a sustainable society.

Initiatives of Yorozu Group “To build a company loved by stakeholders and will last 100 years or more”

Ken SHIDO President & COO

Yorozu Corporation

5. Environmental Challenge

5

1) Group Environmental Philosophy “Yorozu Group places high priority on the preservation of the earth’s natural

environment, and by acting positively contributes to the betterment of quality of life in the world. “

２）Environmental Policy 1. Accurately grasping the effects of our corporate activities on the environment, we will establish environmental goals and targets while enhancing and continuously improving our environmental management system. 2. We will prevent environmental pollution by complying with environment-related laws, regulations, agreements, and requirements. 3. We will work toward resource and energy conservation, recycling, and the reduction of waste in all areas of our corporate activities. 4. We will practice product manufacturing and technological development in ways that reduce environmental impact. 5. We will work to reduce substances that have an impact on the environment. 6. We will coexist in harmony with local communities and actively exchange and provide information related to environmental conservation.

３）Group Environmental Slogan “We will appreciate the bounty of nature as we pursue growth in harmony with the natural environment, based on CSR.”

４）Environmental Goals (7 sites in Japan) 1．Fulfillment and continuous improvement on the environmental management systems. 2．Prevention of environmental pollution (no environmental accident) 3．Save energy: Reduce carbon emissions intensity by 1% per year 4．Reduce waste: Reduce waste intensity by 1% per year 5．Reduce water: Reduce water intensity by 1% per year 6．Manufacturing considering energy-saving and resource-saving 7．Reduce substances of concern 8．Cooperation and co-existence with local communities 9．Actively exchanging and disclosing information relating to the environmental conservation

５）2015 Group Environmental Target（7 sites in Japan） 1. Maintain ISO 14001 certification 2. Comply with environmental laws/regulations and the control value of each company 3. Save energy: Reduce carbon emissions intensity by 1% in 2015 from 2014 4. Reduce waste: Reduce waste intensity by 1% in 2015 from 2014 5. Reduce water: Reduce water intensity by 1% in 2015 from 2014 6. Continue to be certified as an excellent company for waste separation (Yokohama HQ) 7. Develop products with less weight 8. Reduce tooling costs by 10% 9. Select materials free of restricted substances, and control information by IMDS 10. Participate in environmental protection activities, at least 100% of the planned activities 11. Report on 'Environmental Management Survey' / October 2015

６）Environmental Management Structure

6

Group Environmental Management Organization

Group Environmental Management and Internal Audit Structure

７）Yorozu Group ISO14001 Accreditation Status

7

Japan

Outside Japan

Company Certification acquired

YOROZU Automotive Tennessee, Inc. (YAT) October 2001

YOROZU Mexicana S.A. de C.V. (YMEX) August 2002

YOROZU (Thailand) Co., Ltd. (YTC) July 2002

YOROZU Automotive North America, Inc. (YANA) July 2003

YOROZU Bao Mit Automotive Co., Ltd. (G-YBM) October 2007

YOROZU JBM Automotive Tamil Nadu Pvt. Ltd. (YJAT) December 2013

Wuhan YOROZU Bao Mit Automotive Co., Ltd. (W-YBM) June 2014

YOROZU Automotive Guanajuato de Mexico, S.A. de C.V. (YAGM)

September 2015

PT YOROZU Automotive Indonesia (YAI) October 2016

New overseas sites other than the above are in the process of certification.

８）Environmental Education Environmental education programs are in place to increase environmental awareness. Contents of the environmental education General education ・Education of environmental managers ・Education of environmental impact assessors ・Education on the committee for internal audit on environment Education on changes associated with environment ・Chemical substances management ・Energy conservation initiatives ・Education on biodiversity, others ・Freon Emission Control Law ・E-Learning

<Best slogans>

１ From a zero base, creating an eco-friendly facility by racking our brain. （by YE, Assembly Engineering Section）

２ Achieving less waste in Monozukuri with our concerted effort. (by Yorozu Aichi, Manufacturing Section）

３ Keen to keep the sense of “Mottainai,” (a sense of regret to the wasteful behavior) the spirit of a Japanese traditional culture.

(by YC, Marketing and Sales Dept.)

９）Environmental Slogan To increase the awareness to the environment, members of the Group in Japan are encouraged to submit slogans to improve the environment during Environment Awareness Month in June every year. Awards are given to the best slogans.

8

Initiative during Environment Month

During the Environment Month, environment-related panels created by the City of Yokohama are put on display at the company cafeteria in the HQ. On the panels, information on water, chemicals, global warming, bio diversity and green conservation, and a brief quiz on those subjects are described. By putting those panels there, the environmental awareness of our employees has been increasing.

１０）Compliance with Environmental Laws and Regulations

Initiatives to prevent air pollution To reduce sulfur oxides (SOX) emitted from production processes, we are making efforts to clean exhaust gases by switching to the use of fuels such as kerosene and LPG.

Compliance with environmental regulations There were no environmental accidents or incidents in the entire Group in Fiscal 2015.

Initiatives to reduce the amount of waste processed We are maintaining zero landfill waste as a result of ongoing efforts to practice the 3Rs. We are also maintaining a waste-recycling rate of 100%. All companies in the Yorozu Group have been making efforts to reduce waste generation and have achieved a 4.2% reduction in the waste output rate against a reduction goal of 1%. We will continue these efforts in the next fiscal year.

Initiatives to prevent water pollution We regard the water used at our plants as a precious resource. Accordingly, we try to reduce water usage by reusing it within production processes and process wastewater in water treatment facilities before releasing it to rivers and other bodies of water.

Management of chemical substances With respect to materials such as grease and oil, chemicals, and paints used in production processes, we have had a standing policy of obtaining SDSs before adoption to conduct an environmental assessment. Based on the assessment we would either adopt the material or switch to a substance with a lower environmental impact. We will also continue to comply with the PRTR law and REACH regulations.

9

【Requests to Suppliers】 We request the following environmental initiatives from suppliers: 1. Establishment and operation of an environmental management system 2. Management of substances that impact the environment 3. Resource recycling efforts

1 Establishment and operation of an environmental management system （a）We ask that all suppliers carry out environmental conservation efforts as well as establish and operate an environmental management system in order to continuously make improvements. ・Obtain and continually renew external certifications, such as ISO 14001 ・Or, implement similar environmental initiatives （b）We ask that suppliers comply with all environmental laws and regulations in their business operations. ・Environmental laws and regulations in each country ・Relevant norms and standards of customer automakers （c）We ask that all suppliers appoint an environmental supervisor and personnel charged with implementing environmental initiatives. Suppliers are to carry out environmental initiatives with Yorozu through these employees.

2 Management of substances that impact the environment We ask that all suppliers make efforts to improve their environmental performance. <Environmental Initiatives> ・Monitor GHG (CO2), waste, and water usage ・Once monitoring is in place, implement reduction measures (formulate targets, draft reduction plans, take action, and confirm results) Note: When establishing reduction targets, we suggest a goal of “at least 1% compared to the previous year.”

3 Resource recycling efforts We encourage suppliers to use recycled materials in order to make more effective use of limited resources. ・Consider using mill ends from parts ・Consider using material recycled from scrap in parts ・Consider reusing packaging materials

10

11) Green Procurement

The Group is committed to eco-friendly purchasing based on the Green Purchasing Law. The following is an excerpt from Yorozu Green Procurement Guideline.

To achieve a low-carbon society, Yorozu has been making efforts to reduce greenhouse gases (GHG), working toward the goal to reduce GHG emissions by 1％ every year. Seeing energy as important resources, (= cost), under the slogan of “Maximum efficiency with bare minimum cost,” we are conducting energy-saving activities in every area of our corporate activities including manufacturing, product development, manufacturing facility design, logistics, and office. Further, as for the Paris Agreement on Climate Change adopted in 2015, in line with the trend and development of the industry group, we will work hard on our initiatives.

11

１２）Energy-Saving Initiatives

Yorozu Oita conducted a energy consumption reducing activity - changing the layout of a pressing area. This activity lead to a reduction of emissions of CO2, substance of concern, and this is a case example of energy-saving as a result of our efforts on improvement of daily operations: Conventionally in Yorozu Oita, the dies used in a 1200 ton-transfer pressing machine were used to be stored outside, and such dies were transferred by a large forklift every time they were used. By changing the layout of the area, the dies frequently used are now stored inside of the area so that they have become transferrable to the pressing machine by the crane in the plant instead of using the forklift. This resulted in reducing the amount of light oil as well as the number of man-hour. ○Results of the reduction: Achieved a reduction of 31 tons of CO2 emissions/year

Energy-saving activities at our manufacturing bases (Introducing case example of Yorozu Oita)

② High Tensile Materials

12

Development of Energy Saving Products

Light weight is achieved through the use of high tensile materials in automotive parts because such thin metal sheets ensure the same level of strength as traditional materials. Though high tensile sheets are known to have lower press formability, application to key structural parts, such as frames and arms, has increased thanks to our innovative design and forming technology.

① Pipe forming

③ Quenching

④ Beam assembly

② Heating (Electric furnace)

Pipe Beam Process

PIPE BEAM

Since late 2015, Yorozu has been producing Rear Beams of a new design and method that contribute to improving the performance of next generation cars such as EVs and FCVs. Rear Beams used to be made of steel sheets and roll bars. The new pipe beam method involves press-forming steel tubes which are heat-treated to increase tensile strength (3 times stronger). Higher stiffness is achieved while reducing weight. The pipe is flattened at the beam area to make it stronger without the need of a roll bar. (See right) Without the roll bar, the beam has become lighter and is expected to help increase fuel efficiency of vehicles. Yorozu is now working on methods to manufacture the beams with less energy use.

① Mass Production of Rear Beams with High Stiffness

(Rapid cooling in water)

Conventional steel sheet

+ Roll bar type

Yorozu Global Technical Center, which functions as the Group’s R&D center, uses solar energy to power the building. Power generation data is viewable in the lobby by all visitors to the facility. In 2016, the Group including its HQ has started to adopt low CO2-emission energy generated from renewable energy sources.

Power Generation Monitoring and the Solar Panels at YGTC

13

Monthly Power Generation

Use of Renewable Energy

Previous year

Current year

Previous year mean 1,220 kWh

GOOD

BAD August

1,180 kWh

Monthly solar power generation

13) Waste Recycling Yorozu contributes to building a sustainable society through its long-term

commitment to zero emissions (100% recycling of industrial waste) since 2006 in addition to reducing waste emissions intensity by 1% every year.

Inspection at Pickup Garbage Separation Rules Inspection at Supplier

Yorozu HQ has been named Excellent 3R Enterprise for five straight years by the City of Yokohama. (Also the ninth year to be awarded Excellent Enterprise for Garbage Separation.)

Eco House (Garbage collection station)

14

Yorozu is certified as an “Excellent 3R Enterprise” by the City of Yokohama

About the Certification The City of Yokohama awards companies that have contributed to reducing general waste and recycling of waste as resources. Such companies’ efforts are widely introduced to promote separation of business-generated waste and encourage 3R

activities. The Certification Criteria Proper garbage separation, employee environmental programs, promotion of recycling, reduction of paper waste, collection of recyclable waste, total waste reduction, and contribution to society, among others

14) Biodiversity Conservation

Basic Approach to Conservation of Biodiversity Yorozu recognizes the impact that it’s business activities have on biodiversity And is committed to contributing to the sustainable development of the society.

Agenda for Actions

1. Internal education on biodiversity conservation Lectures will be given to understand biodiversity laws and to share the initiatives taken by the Group.

2. Biodiversity conservation activities in collaboration with the community Yorozu will take part in community activities and events related to biodiversity. (such as ecosystem surveys and community clean-up campaigns)）

3. Biodiversity conservation initiatives on the Company premises Yorozu will keep the premises clean, the greenery in good condition, and work to preserve the ecosystem.

4. Contribution to developing a society that nurtures biodiversity Yorozu will actively participate in nature protection activities in collaboration with outside groups and organizations.

15

Yorozu actively takes part in community events to stay in touch with the community. (Participation in community clean-up days and biological surveys)

16

Participation in Ecological Survey in Oyama Industrial Park, Tochigi Prefecture

Participation in Forestation Project, Kanagawa Prefecture

Yorozu members took part in a forestation project sponsored by Kanagawa Trust Midori Foundation to plant trees in Hakone-machi. This event takes place in fall every year.

At Oyama Dai-ichi industrial park where Yorozu Tochigi is located, the employees participate in the ecological survey hosted by Yokokura neighborhood council on July and September every year. In this factory complex area, wastewater is recycled by each industrial plant to be reused for agricultural purposes after filtrated through internal system so as not to harm species in the ecosystem or break biodiversity stability. During last year events, in addition to pond loaches and crayfish, we found not only ordinal species like fish, dragonflies and butterflies but also rare river snails whose health can be seriously affected by water quality degradation. These activities are also good opportunities for neighbor companies, NPO entities and the local council to build relationships and have a good communication.

What is the eco business certification? It is the system to support corporate environmental activities introduced by Nagoya city. A certificate is given to operational sites that positively and voluntarily carry out ecological activities along with business. Yorozu Aichi’s continuous contribution to environmental activities and also to the local community was highly evaluated and the company was certified as Excellent Ecology Workshop by the municipal office in FY2015.

15) Contribution to Society

17

Environmental activities in overseas sites

Eco Business Certification, the City of Nagoya

As a monthly event, all the employees of YOROZU JBM Automotive Tamil Nadu Pvt. Ltd. located in India team up for a campaign to cleanup around the factory. The company also makes a contribution to the community by running a plant tree activity to promote greenery in the newly developed land of the factory complex site (the state of Tamil Nadu) it belongs to. Co-existence with the local community is an important communication for the environment conservation activity.

YOROZU Mexicana S.A. de C.V., the largest site in Mexico, recycles wastewater from its factory through an adequate treatment process to reuse for neighbor green space conservation. Groundwater used for the factory is a precious global resource that must be recycled effectively.

Reuse of drain water for greenery (Mexico)

Plant tree campaign in neighborhood (India)

16) Environmental Data (Japan)

CO2

Waste

Water

18

Chemical Substances

kg per million yen

Thousand m3 per million yen

Total emissions (ton)

Total consumption (thousand m3)

Data collection started FY2015

16) Environmental Data (Japan)

Capital Goods (Scope 3) CO2 emissions from manufacture and construction

of capital goods

Waste Treatment (Scope 3) CO2 emissions during treatment

Commuting by Car (Scope 3) CO2 emissions from commuter cars

19

Distribution of Goods (Scope 3) CO2 emissions from Yorozu truck service

※ Scope 3: Calculation is based on Basic Guidelines on Accounting for Greenhouse Gas Emissions throughout the Supply Chain issued by Ministry of the Environment.

Total emissions (ton)

Total emissions (ton)

16) Environmental Data (Overseas)

CO2

Waste

Water

20

Chemical Substances

16) Environmental Data (Overseas)

21

Commuting by Car (Scope 3) CO2 emissions from commuter cars

Capital Goods (Scope 3) CO2 emissions from manufacture and construction

of capital goods

Waste Treatment (Scope 3) CO2 emissions during treatment

Distribution of Goods (Scope 3) CO2 emissions from Yorozu truck service

※ Scope 3: Calculation is based on Basic Guidelines on Accounting for Greenhouse Gas Emissions throughout the Supply Chain issued by Ministry of the Environment.