Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions by 19% in 2018 (although per revenue unit increased by 6%)
• Increased the adoption rate of speakers using adhesives without harmful solvents to 4.4% of sales in 2018
• Increased the adoption rate of solder-reduced speakers to 3.5% of sales in 2018
• Reduced power consumption of active speakers by switching from analog to digital amplifiers

Social Achievements

• Implemented various initiatives to improve employee satisfaction and achieve 'Be Happy 80%'
• Extended childcare leave to a maximum of 3 years and caregiving leave to a maximum of 183 days
• Held career development seminars for women
• Achieved a 78.9% paid leave rate in 2018
• Implemented a residual pay return system for departments that reduced overtime by more than 10%

Governance Achievements

• Conducted compliance tests and surveys
• Held compliance training for executives and managers
• Implemented a risk management system and monitored important risk items such as business continuity plans (BCP)

Climate Goals & Targets

Environmental Challenges

• Increased CO2 emissions per revenue unit despite overall reduction
• Decreased sales of certain products

Mitigation Strategies

• Energy saving activities and production reduction
• Development and implementation of alternative sourcing strategies
• Continuous improvement of environmental performance

Supply Chain Management

Supplier Audits: 91% response rate from existing suppliers; 100% from new suppliers

Responsible Procurement

• Foster Group Supplier CSR Code of Conduct
• CSR self-assessment questionnaires (SAQs)
• Green procurement standards
• Conflict minerals policy

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI Standards (Comprehensive option), UN Global Compact

Certifications: ISO 14001, ISO 45001 (in progress)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 1: No Poverty
• Goal 3: Good Health and Well-being
• Goal 7: Affordable and Clean Energy
• Goal 8: Decent Work and Economic Growth
• Goal 9: Industry, Innovation and Infrastructure
• Goal 11: Sustainable Cities and Communities
• Goal 12: Responsible Consumption and Production
• Goal 13: Climate Action
• Goal 17: Partnerships for the Goals

The report details how various initiatives contribute to these goals.

Sustainable Products & Innovation

• Lightweight speakers
• Environmentally friendly speakers
• Solder-reduced speakers
• Digital amplifier active speakers

Awards & Recognition

• New Diversity Management Companies 100 Selection (2018)
• Telework Pioneer 100 Selection (2018)
• Health Excellent Company Gold Certification (2018)
• Health Management Excellent Corporation 2019 (White 500)
• Ecovadis Silver Ranking (2019)
• Vietnam Prime Minister's Award (2018)

Environmental Metrics

ESG Focus Areas

• Decarbonized Society
• Resource Recycling
• Harmony with Nature
• Product Quality and Safety
• Supply Chain Management
• Creation of Exciting Workplace
• Diversity and Inclusion
• Governance Enhancement

Environmental Achievements

• Reduced absolute CO2 emissions by 32% from a 2018 base-year (Scope 1, 2)
• Achieved 14% ratio of environmentally responsible car speakers (as of March 31, 2022)
• Achieved 44.4% ratio of toluene-free new mobile audio products (as of March 31, 2022)

Social Achievements

• Maintained 0 failures with serious social impact
• Achieved 93% SAQ response rate from existing suppliers and 100% from new suppliers
• Achieved 99% response rate for conflict minerals survey from existing suppliers and 100% from new suppliers
• Employee satisfaction survey average deviation value (headquarters) of 50.7
• Average monthly working hours (headquarters) of 151.9 hours
• Achieved 82.4% rate of specific health guidance taken (headquarters)
• Maintained 100% rate of periodic health examinations taken (headquarters)
• Maintained 0% displaced workers due to nursing care (headquarters)
• Female manager ratio (headquarters) of 13.2% (as of March 31, 2022)
• Ratio of overseas human resources (headquarters) of 9.8% (as of March 31, 2022)
• Employment rate of persons with disabilities (headquarters) of 2.3% (FY2021 average)
• 57.1% of males took childcare leave (percentage of special leave for spouse's childbirth taken: 100%)

Governance Achievements

• 100% compliance with the revised Corporate Governance Code
• Maintained 100% response rate to compliance test and survey
• Achieved 100% employee awareness of the internal whistleblowing system
• Maintained compliance training satisfaction level at 4 or higher out of 5
• Achieved 100% risk profile review achievement rate
• Achieved 98% monitoring and achievement rate of key items

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to the COVID-19 pandemic and geopolitical risks
• Climate change related risks (transition risks, physical risks)
• Maintaining high levels of employee satisfaction and well-being

Mitigation Strategies

• Developed CO2 Reduction Action Program (Ver. 2022)
• Accelerated initiatives to achieve carbon neutrality by 2050
• Implemented work-from-home system, flexible work arrangements, and employee well-being programs
• Strengthened risk management and crisis management systems
• Enhanced supply chain management through supplier audits and responsible procurement practices

Supply Chain Management

Supplier Audits: 6 audits in FY2021, 2 re-audits

Responsible Procurement

• Foster Group Supplier Sustainability Code of Conduct
• SAQ (Self-Assessment Questionnaire)
• CSR requirements in basic transaction agreements
• Conflict minerals due diligence

Climate-Related Risks & Opportunities

Physical Risks

• Damage from climate change-related disasters
• Increase in energy consumption
• Depletion of water resources
• Factory inundation from rising sea levels

Transition Risks

• Increased business costs from climate change regulations
• Decreased market share due to technology development delays
• Intensified competition from new entrants to the electric vehicle market
• Decreased business opportunities from insufficient climate change initiatives

Opportunities

• CO2 reduction through local production
• Increased sales opportunities from manufacturing for a recycling-oriented society
• Decreased energy costs from energy-saving technologies
• Increased sales opportunities from low-carbon products
• Growth in demand for ADAS-compatible products

Reporting Standards

Frameworks Used: GRI Standards: Comprehensive option, UN Global Compact, TCFD Recommendations

Certifications: ISO 14001, ISO 45001, Kurumin Certification

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)
• Goal 8 (Decent Work and Economic Growth)

Foster's initiatives contribute to these goals through decarbonization efforts, resource recycling, sustainable product development, responsible supply chain management, and employee well-being programs.

Sustainable Products & Innovation

• Lightweight speakers
• Adhesives with reduced solvent content
• Toluene-free adhesives
• Power-saving parts for headphones and headsets

Awards & Recognition

• New Diversity Management Selection 100 (2017)
• Top 100 Telework Pioneers (2018)
• Kurumin Certification (2021)
• 2022 Health & Productivity Management Outstanding Organization
• Certification of Excellent Company in Health: Gold Accreditation (2022)
• FTSE Blossom Japan Index constituent (2021)
• SOMPO Sustainability Index constituent (2022)
• Various awards from Vietnam and China

Environmental Metrics

ESG Focus Areas

• Decarbonized Society
• Resource Recycling
• Harmony with Nature
• Employee Wellbeing
• Diversity and Inclusion
• Corporate Governance
• Supply Chain Management
• Human Rights

Environmental Achievements

• Reduced absolute Scope 1 and 2 CO2 emissions by 42% from a 2018 base-year.
• Developed products incorporating technologies for speakers weighing less than 115g.
• Achieved 16% ratio of environmentally responsible car speakers (per sales) in FY2022.
• Achieved 77.7% ratio of toluene-free new mobile audio products in FY2022.

Social Achievements

• Maintained 0 failures with serious social impact.
• Achieved 91% conformity rate of important suppliers to CSR standards.
• Achieved an employee engagement survey deviation value of 51.8 at headquarters.
• Maintained 100% rate of periodic health examinations taken at headquarters.
• Achieved 83% rate of specific health guidance taken at headquarters.
• Maintained 0% displaced workers due to nursing care at headquarters.
• Provided training to encourage the development of an organization where diverse people can demonstrate their capabilities.

Governance Achievements

• Achieved 100% compliance with the Corporate Governance Code.
• Maintained a 100% response rate to the compliance test and survey.
• Maintained employee satisfaction level at 4 or higher out of 5 for compliance training.
• Improved the system and operation of risk and crisis management based on risk assessment.

Climate Goals & Targets

Environmental Challenges

• Reinforcing the profit structure remains a challenge.
• Increasing earning capacity remains a challenge.
• Supply chain disruptions due to the COVID-19 pandemic and geopolitical factors.
• Customers' increasingly strict criteria regarding the environment and human rights.
• Decline in demand for products bundled with earphones in the Mobile Audio Segment.

Mitigation Strategies

• Established an organizational structure and began taking actions to improve global logistics management.
• Strengthening ties with strategic partners, increasing sales of automotive equipment other than car speakers, and improving profit levels and margins.
• Implementing cost reduction measures, reducing fixed costs, and price pass-through.
• Introducing and promoting R&D-oriented business and focusing on high-value-added products.
• Establishing a manufacturing base in Hungary to stabilize supply and reduce CO2 emissions from transportation.
• Gradually shifting to production for the Chinese market at manufacturing bases in China.
• Strengthening production systems in the United States and Europe.
• Developing three pillars plus something extra for the Beyond2025 strategy to respond to market changes.

Supply Chain Management

Supplier Audits: 21 sustainability-related internal audits and 4 on-site audits of suppliers in FY2022.

Responsible Procurement

• Foster Group Supplier Sustainability Code of Conduct
• CSR requirements in basic transaction agreements
• CSR self-assessments by suppliers
• Responsible minerals sourcing

Climate-Related Risks & Opportunities

Physical Risks

• Damage from climate change-related disasters
• Increase in energy consumption
• Depletion of water resources
• Risk of factory inundation

Transition Risks

• Increase in business costs for responding to climate change-related regulations
• Risk of decreased market share due to delays in technology development
• Impact of failing to respond to business partners’ environmental requests
• Intensification of competition

Opportunities

• Reduction of CO2 emissions through local production
• Increase in sales opportunities from manufacturing appropriate for a recycling-oriented society
• Decrease in energy costs from energy-saving equipment
• Increase in sales opportunities from low-carbon products
• Growth in demand for ADAS-compatible products

Reporting Standards

Frameworks Used: International Integrated Reporting Framework (2021), TCFD Recommendations, Environmental Reporting Guidelines 2018, GRI Sustainability Reporting Standards (2021)

Certifications: ISO 14001, ISO 45001, IATF 16949

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 1: No Poverty
• Goal 3: Good Health and Well-being
• Goal 4: Quality Education
• Goal 5: Gender Equality
• Goal 6: Clean Water and Sanitation
• Goal 7: Affordable and Clean Energy
• Goal 8: Decent Work and Economic Growth
• Goal 10: Reduced Inequalities
• Goal 12: Responsible Consumption and Production
• Goal 13: Climate Action
• Goal 15: Life on Land
• Goal 16: Peace, Justice and Strong Institutions
• Goal 17: Partnerships for the Goals

The report details how various initiatives contribute to these SDGs.

Sustainable Products & Innovation

• Lightweight speakers
• Adhesives with reduced solvent content
• Toluene-free adhesives
• Power-saving parts for headphones

Awards & Recognition

• New Diversity Management Selections 100 (2017)
• Top 100 Telework Pioneers (2018)
• Certification of Excellent Company in Health: Gold Accreditation (2018-2023)
• Kurumin Certification (2021)
• 2023 Health & Productivity Management Outstanding Organization (Large Enterprise Category)
• Gold recognition from EcoVadis (2022)
• B- rating from CDP for Climate Change and Water Security (2022)