FUTABA INDUSTRIAL CO., LTD.

Climate Impact & Sustainability Data (2021-04-01 to 2022-03-31, 2022-04-01 to 2023-03-31)

Reporting Period: 2021-04-01 to 2022-03-31

Environmental Metrics

Total Carbon Emissions:42,572 tCO2e/year (FY2021, non-consolidated)

Waste Generated:1,402 tons/year (FY2021, non-consolidated)

ESG Focus Areas

Environment
Peace of mind
Quality of life
Climate change
Digitalization
Diversity and inclusion
Corporate governance

Environmental Achievements

Reduced CO2 emissions by 43.2% (vs. FY2013) on a non-consolidated basis.
Reduced steel usage by 1.2% (vs. FY2019) on a non-consolidated basis.
Reduced oil usage by 2.4% (vs. FY2019) on a non-consolidated basis.
Reduced industrial waste output by 15.4% (vs. FY2020) on a non-consolidated basis.
Completed installation of solar power generation equipment at Kota Plant Building No. 4 (in operation from August 2022).

Social Achievements

Achieved profitability in all global regions in 2020.
Diversity & Inclusion Declaration in August 2022.
Improved work-life balance measures.
Increased percentage of new female graduates hired in administrative and technical positions to 12.5% (joined in April 2022).
Employment rate of people with disabilities exceeding the statutory requirement (2.52% vs. 2.3%).
Held a workshop targeted at the management team to promote female empowerment in August 2022.

Governance Achievements

Increased the ratio of Outside Directors.
Carried out third-party assessment on the Board effectiveness (October - November 2021).
Established the Nominating Committee and the Compensation Committee as voluntary committees.
Declared support for the TCFD recommendations in June 2022.
Revised the Supplier CSR Guidelines to the Supplier Sustainability Guidelines in June 2022.

Climate Goals & Targets

Long-term Goals:

Achieve zero accidents at all sites by 2050.
Achieve zero defects in all global plants by 2050.

Medium-term Goals:

Reduce CO2 emissions by 50% or more by 2030 (non-consolidated).
Achieve 20% sales proportion of eco-certified products to environmental products by FY2025.
Achieve 50% sales proportion of eco-certified products to environmental products by FY2030.
Increase the percentage of female managers to 3% or more by 2025 and 5% or more by 2030.

Short-term Goals:

Reduce CO2 emissions by 40% by 2025 (non-consolidated).
Achieve FCF of 15 billion yen and operating profit ratio of 5% by FY2024.
Increase productivity by 15% by FY2025 (vs. FY2020).

Environmental Challenges

Impact of BEV popularization on net sales of exhaust and fuel system parts (estimated decrease of 30-35 billion yen in FY2030).
High interest-bearing debt.
Low profitability of overseas business in the past.
Limited number of digital specialists.
Supply chain disruptions.
Surging raw material prices.

Mitigation Strategies

Three strategies to address the impact of BEV popularization: expanding the body parts business, increasing market share in engine-powered vehicles, creating new businesses.
Strengthening earnings capacity and increasing free cash flow (FCF) to at least 15 billion yen per year.
Strengthening competitiveness in the overseas business through communication, support, and local management training.
Implementing a training plan to have at least 500 digital specialists in three years.
Developing alternative sourcing strategies.
Cost-reduction efforts.

Supply Chain Management

Responsible Procurement

Green Procurement Guidelines
Supplier Sustainability Guidelines

Climate-Related Risks & Opportunities

Physical Risks

Natural disasters and extreme weather events

Transition Risks

Stricter CO2 emissions regulations
Promotion of the use of BEVs and EVs

Opportunities

Increase in net sales with new offerings of more energy-efficient and lighter-weight products
Increase in net sales with newly marketed products after the development of parts for BEVs

Reporting Standards

Frameworks Used: International Integrated Reporting Framework of the IFRS Foundation

Certifications: ISO14001 (at most production sites), IATF 16949 or ISO9001 (at most production sites)

UN Sustainable Development Goals

Goal 7 (Affordable and clean energy)
Goal 9 (Industry, innovation, and infrastructure)
Goal 12 (Responsible consumption and production)
Goal 13 (Climate action)

The 14 Priority Issues (Materiality) are aligned with the Strategic SDGs (6 out of 17 goals).

Sustainable Products & Innovation

agleaf® (CO2 accumulation and application device for greenhouse cultivation)
Eco-certified products (mufflers, exhaust manifolds, DPFs, and canisters)
Light-weight exhaust systems
Parts with cold stamped UHTSS

Reporting Period: 2022-04-01 to 2023-03-31