Climate Change Data

Environmental Metrics

ESG Focus Areas

• Zero defect quality
• True globalization
• Creation of new businesses exceeding 100 billion yen in sales
• Cultivating a corporate culture that is not afraid of failure
• Contribution to society through business
• Human resource development
• Coexistence with the global environment
• Social and environmental considerations in the supply chain

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI G4

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Technology contribution to the world
• Human resource development
• Supply chain social and environmental protection
• Coexistence with the global environment

Environmental Achievements

• Improved energy unit CO2 emissions by 1.7% compared to the previous year
• Improved CO2 emission reduction contribution through products by 2.7% compared to the previous year
• 92.3% of suppliers confirmed as DRC conflict-free

Social Achievements

• Global talent database construction completed
• Global joint talent database application scope expanded
• Implemented CSR self-inspections at all production sites
• CSR self-inspections implemented at all labor dispatch companies cooperating with production sites in China and Asia

Governance Achievements

• Compliance-related e-learning attendance rate reached 100%
• Established a CSR assessment system for outsourced manufacturers

Climate Goals & Targets

Environmental Challenges

• Supply chain management challenges due to M&A activities resulting in a larger number of non-continuous management objects
• Meeting the diverse and evolving needs of customers in the automotive industry

Mitigation Strategies

• Close collaboration with suppliers and a focus on continuous improvement
• Implementation of a demonstration line for pursuing zero-defect quality in multilayer ceramic capacitor production

Supply Chain Management

Supplier Audits: CSR audits conducted on three outsourced manufacturers in China in 2017

Responsible Procurement

• TDK Procurement Policy
• Inclusion of CSR-related content in contracts with suppliers
• Evaluation and audits using CSR checklists

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI (Core)

Sustainable Products & Innovation

• Ag multilayer films for light control films and communication antennas

Environmental Metrics

ESG Focus Areas

• Energy transformation (EX)
• Digital transformation (DX)
• Quality Management
• HR Management
• Supply Chain Management
• Opportunity and Risk Management
• Pursuing both delegation of authority and internal controls
• Asset efficiency improvement

Environmental Achievements

• Reduced CO2 emission intensity from energy use by 25.2% compared with the previous fiscal year
• Improved water withdrawal intensity by 25.5% compared with the previous fiscal year
• Improved waste intensity by 14.9% compared with the previous fiscal year
• Achieved 30% renewable energy share in electricity consumption

Social Achievements

• 98% of targeted managers attended workshops on diversity promotion
• 98% of targeted personnel attended communication seminars on harassment prevention
• CSR compliant supplier rate of 99%
• 98% of manufacturing subcontractors complied with CSR procedures

Governance Achievements

• Established a global whistle-blowing system
• Established the Enterprise Risk Management (ERM) Committee
• Implemented risk assessments and corrective actions at manufacturing sites

Climate Goals & Targets

Environmental Challenges

• Regional differences in renewable energy infrastructure, legislative systems, and procurement costs
• Increased CO2 emissions from logistics due to increased production volume
• Decreased contribution to CO2 reduction by products
• One fatal accident due to electric shock at a Group company's factory in India

Mitigation Strategies

• Promoting measures according to conditions in each country and region
• Promoting reduction activities at overseas sites and studying a mechanism to gauge emissions
• Developing eco-friendly products and publicizing their value
• Analyzing accident situations and root causes, strengthening countermeasures, and sharing information throughout the Group

Supply Chain Management

Supplier Audits: 19 sites audited in 2022

Responsible Procurement

• TDK Supplier Code of Conduct
• RBA Code of Conduct
• TDK Green Procurement Standards
• Responsible Minerals Initiative (RMI)

Climate-Related Risks & Opportunities

Physical Risks

• Flooding

Transition Risks

• Carbon pricing
• Increased renewable energy costs
• Increased cobalt and lithium prices

Opportunities

• Expanded sales opportunities for EV-related products
• Development of next-generation battery materials

Reporting Standards

Frameworks Used: GRI Standards: Core option, SASB Standards

Certifications: ISO 14001, ISO 50001, ISO 45001

Third-party Assurance: SGS Japan Inc.

UN Sustainable Development Goals

• Goal 3
• Goal 7
• Goal 9
• Goal 11
• Goal 12
• Goal 13

The report details how TDK's products and initiatives contribute to these SDGs.

Sustainable Products & Innovation

• CLT32 series power inductors using recycled materials
• Compact motor thermistor with integrated flat coil
• ATF oil-temperature sensor

Awards & Recognition

• Environmentally Sustainable Company in the ESG Finance Awards Japan
• CDP Supplier Engagement Rating Leaderboard
• CDP ‘A List’ for water security
• Special award in the DBJ Environmental Rating

Environmental Metrics

ESG Focus Areas

• Decarbonization and energy
• Human capital
• Governance

Environmental Achievements

• Achieved a Group-wide renewable energy introduction rate of 50% or more by fiscal 2025 (one year ahead of schedule). Transitioned to renewable energy sources for 100% of the electricity used at all domestic manufacturing sites effective July 2023. CO2 emission intensity from energy use reduced by 30.7% compared with fiscal 2015. Overall CO2 emissions decreased by 18.7% from the previous year to 1.383 million tons in fiscal 2023.
• CO2 emission reduction by products in fiscal 2023 was 4.233 million tons, a year-on-year increase of 42.6%.
• Total amount of waste in fiscal 2023 was 130,696 tons, an 11.5% decline from the previous fiscal year.

Social Achievements

• Appointed Andreas Keller as Chief People and Sustainability Officer (CPSO) in April 2023 to deepen collaboration between Human Resources and Sustainability initiatives. Conducted first global Team Member Engagement Survey in February 2023 with an 80% response rate. Established the TDK Health Declaration to actively support managing and improving the health of its members. Joined the Health & Productivity Management Alliance.
• CSR compliant supplier rate exceeded the target to reach 100% in fiscal 2023.

Governance Achievements

• Appointed heads of regional headquarters in China and the Americas as corporate officers since October 2022 to delegate authority to the front lines. Established Global Common Regulations that every team member of the Group must follow. Restructured the Corporate Governance Committee to serve as a venue for discussing how the company should be managed in the medium- to long-term view.

Climate Goals & Targets

Environmental Challenges

• Improvement of low-profit businesses (magnet business, HDD heads). Delays in boosting productivity in the magnet business. Significant inventory adjustments in HDD heads due to restrained data center investment. Uncertain supplies of raw materials and semiconductors due to sharp expansion of the EVs and renewable energy markets. Unpredictable price fluctuations in energy, raw materials, and distribution costs. Geopolitical issues.
• Achieving profit targets of an operating profit margin of 12% and ROE of 14%.

Mitigation Strategies

• Implementing measures to improve profitability in problematic businesses while maintaining a more rigorous balance between investment and production. Downsizing the HDD-related business. Flexible reassessment of asset allocation. Prioritizing investments in business that clear a 10% WACC hurdle rate. Implementing pre-acquisition due diligence and post-merger integration (PMI) activities for acquired companies. Strengthening risk hedging function against changes in markets and demand.

Supply Chain Management

Supplier Audits: 15 suppliers implemented CSR audits in fiscal 2023, 22 planned for fiscal 2024. Aiming for 100% self-checks by sub-contractors in fiscal 2023-24.

Responsible Procurement

• CSR compliant supplier rate of 100% in fiscal 2023. Requesting suppliers to procure from RMAP-compliant smelters. Regular monitoring of supplier working environments.

Climate-Related Risks & Opportunities

Physical Risks

• Flooding

Transition Risks

• Carbon pricing, increased energy costs due to higher renewable energy ratio, increase in price of cobalt and lithium.

Opportunities

• Expansion of EV market, development of next-generation battery materials, increased customer demands regarding RE100.

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 9001, ISO 14001

Third-party Assurance: Third-party verification of CO2 emissions and energy data for fiscal 2020 and beyond.

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 12 (Responsible consumption and production)
• Goal 13 (Climate action)

TDK's initiatives in renewable energy, waste reduction, and CO2 emission reduction contribute to these goals.

Sustainable Products & Innovation

• i3 Micro Module (ultracompact sensor module with embedded edge AI), products contributing to CO2 reduction.

Awards & Recognition

• Nikkei Integrated Report Award 2022 Excellence Award, Gomez IR Site Ranking 2022 Silver Prize, Daiwa Investor Relations Co. Ltd. Internet IR 2022 Sustainability Excellence Award, Daiwa Investor Relations Co. Ltd. Internet IR 2022 Commendation Award, Nikko Investor Relations Co., Ltd. All Japanese Listed Companies’ Website Ranking 2022 All Markets Ranking, AAA Website