Climate Change Data

Environmental Metrics

ESG Focus Areas

• Human Rights
• Labor
• Environment
• Anti-Corruption
• Governance
• Community Engagement
• Quality Assurance
• Sustainable Products
• Supply Chain Responsibility

Environmental Achievements

• Achieved a 7.73% or more reduction in CO2 emissions per sales unit from 2012 to 2020 (target)
• Switched headquarters to an eco-friendly building with various energy-saving technologies
• Implemented waste reduction targets at each site
• Vietnam factory commended for “Binh Duong Green Book 2016”
• Developed lightweight speakers for eco-friendly vehicles
• Developed environmentally friendly headphones and headsets with reduced solder and harmful substances

Social Achievements

• Implemented various activities such as reduced working hours in the first year of the working style innovation
• Maintained a record of zero failures with serious societal impacts
• Introduced a work-at-home program
• Improved system to support work-life balance for employees raising children
• Aiming for 30% female managers by March 2021
• Conducted various community engagement activities including music festivals, environmental education classes, and speaker-making workshops
• Supported disaster victims in Vietnam
• Engaged in various volunteering activities at overseas sites
• Improved support for trainees and transferred employees from overseas sites with a guidebook

Governance Achievements

• Established a global CSR structure with representatives at headquarters and seven Group companies
• Implemented 43 CSR internal audits at facilities
• Established Corporate Governance Guidelines
• Established the Compliance Committee and Risk and Crisis Management Committee
• Implemented a compliance test and invited an outside expert to lecture on compliance
• Developed and implemented a Business Continuity Plan (BCP)
• Established the Information Security Committee
• Established the Foster Group Supplier CSR Code of Conduct
• Conducted investigations into conflict minerals in the supply chain with a 99% response rate

Climate Goals & Targets

Environmental Challenges

• Declining headset sales due to lower-than-expected sales of major customers’ smartphones and transition period to new models
• Strong yen affecting revenue
• Supply chain disruptions (implied)
• Environmental risks (implied)
• Social risks (implied)
• Governance risks (implied)

Mitigation Strategies

• Focusing on automotive speakers and speaker systems
• Developing new products to meet changing needs
• Implementing CSR procurement policies
• Deepening mutual understanding with suppliers
• Sharing goals with suppliers
• Conducting CSR internal audits
• Strengthening risk management structure
• Implementing BCP
• Improving compliance structure
• Developing environmental leaders

Supply Chain Management

Supplier Audits: 43 internal audits in fiscal year 2016

Responsible Procurement

• Foster Group Supplier CSR Code of Conduct
• Green procurement
• CSR procurement
• Conflict minerals due diligence

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI G4, UN Global Compact

Certifications: ISO 9001, ISO/TS 16949, ISO 14001

Sustainable Products & Innovation

• Lightweight speakers for eco-friendly vehicles
• Environmentally friendly headphones and headsets

Awards & Recognition

• Encouragement Award at the Excellence in Environmental Empowerment Award 2016

Environmental Metrics

ESG Focus Areas

• GHG Emissions Reduction
• Environmentally Friendly Products
• Penetration of Corporate Philosophy
• Diversity
• Decent Work
• Governance Enhancement
• Sustainable Supply Chain

Environmental Achievements

• CO2 emissions in fiscal 2018 decreased by 19% year on year due to energy-saving activities and the reduced production volume. However, emissions per sales unit increased by 6%.
• The weight of car speakers was reduced by approximately 50%. 140 g was achieved for speakers with a diameter of 17 cm.
• The ratio of car speakers using adhesives that do not contain harmful solvents increased from 3% to 4.4% (per sales ratio). The ratio of new mobile audio products using adhesives that do not contain toluene for at least some parts was 75%.
• The ratio of speakers with reduced use of solder increased from 1.6% to 3.5% (per sales ratio).
• Analog amplifiers for FOSTEX active speakers were changed to digital amplifiers, which achieved a reduction in power consumption.

Social Achievements

• Held workshops, implemented interviews with management, issued a collection of Foster Rhythm practices. Planned to proceed with an employee satisfaction survey.
• Held career development seminars for women, introduced the Global-eye Program, an overseas training program.
• Rate of paid holidays taken (headquarters) was 78.9% in fiscal 2018 (Target: 77%). Monthly average working hours were 162.6 hours. Overtime money was returned to sections that reduced overtime.
• Maintained 0 failures that would have a serious social impact.

Governance Achievements

• Implemented a compliance test (response rate: 95.3%) and a compliance questionnaire (response rate: 78.8%). Held compliance training for executives and management. Monitored CSR activity statuses in major business locations at the monthly CSR committee meetings in which executives participate.
• Implemented Foster Group risk identification and assessment and provided the results of the risk assessment as input data for developing the Business Policy. Monitored the review of the business continuity plan (BCP), desktop training, the bribery prevention structure and the review of the information security management system.
• Response rate collected for SAQ: Existing suppliers: 91% or higher, New suppliers: 100%. Response rate collected for the conflict mineral survey from business associates: Existing suppliers: 99% or higher, New suppliers: 100%.

Climate Goals & Targets

Environmental Challenges

• CO2 emissions per sales unit increased by 6%, against the target of a 1% year-on-year reduction.
• Sales volume of premium brand products for some customers declined. Shipments of audio/visual speakers and speaker systems were generally in line with our plan. The sales volume and prices of headsets for a major customer declined.

Mitigation Strategies

• Energy-saving activities and reduced production volume.
• Development of lightweight speaker, optimum for next-generation environmentally friendly vehicles such as electric vehicles (EVs).
• Employed adhesives that do not contain harmful solvents.
• Developed speakers with reduced solder applications.

Supply Chain Management

Supplier Audits: 21 total internal audits at facilities in the last fiscal year. 10 on-site audits from 2 corporate customers at manufacturing sites in China and Vietnam.

Responsible Procurement

• Foster Group Supplier CSR Code of Conduct
• CSR-related questionnaires and CSR SAQ distributed to suppliers
• Green Procurement Standard

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards: Comprehensive option, United Nations Global Compact

Certifications: ISO 14001, ISO 9001:2015, IATF 16949:2016, OHSAS 18001 (Nanning Plant)

UN Sustainable Development Goals

• 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)

Foster Group promotes the following 13 items among the 17 goals through its business activities.

Sustainable Products & Innovation

• Lightweight car speakers
• Environmentally friendly speakers
• Headphones and headsets with reduced environmental burden
• Active speaker NF04R with reduced power consumption

Awards & Recognition

• New Diversity Management Selection 100 (2017)
• Top 100 Telework Pioneers (2019)
• Certification of Excellent Company in Health: Gold
• 2019 Health and Productivity Management Outstanding Organizations (White 500)
• Ecovadis Silver Ranking
• Award from the Prime Minister of Vietnam
• Top 50 Energy Saving Companies 2018 (Da Nang)
• Award from the Chairman of Vietnam Chamber of Commerce – Da Nang
• Award from the Executive Committee of the Labor Union of Quang Ngai Province
• Award from the general director of Viet Nam Social Security
• Commendation for compliance structure (China)

Environmental Metrics

ESG Focus Areas

• GHG Reduction
• Environmentally Friendly Products
• Penetration of Corporate Philosophy
• Diversity
• Decent Work
• Governance Enhancement
• Sustainable Supply Chain

Environmental Achievements

• Reduced CO2 emissions by 18% year-on-year in fiscal 2019 due to energy-saving activities and reduced production volume. Achieved a 50% weight reduction for 6.5-inch car speakers.
• 100% of new mobile audio products used toluene-free adhesives.
• Increased the ratio of environmentally responsible car speakers (per sales) from 7% to 10%.

Social Achievements

• Held workshops and interviews to promote corporate philosophy.
• Improved systems to support employees raising children and providing nursing care.
• Implemented a compliance test (100% response rate) and a compliance survey (66.8% response rate).
• Held compliance training for executives and management.

Governance Achievements

• Reinforced compliance and risk management structures.
• Implemented a compliance test and survey, and held compliance training.

Climate Goals & Targets

Environmental Challenges

• Increased emissions intensity per unit of revenue despite absolute CO2 emission reduction.
• Need to further reduce Scope 3 emissions.

Mitigation Strategies

• Energy-saving activities and adoption of renewable energy.
• Including "water consumption reduction" in the mid-term environmental plan.
• Developing alternative adhesives to achieve 100% toluene-free products by 2025.

Supply Chain Management

Supplier Audits: 21 CSR internal audits in fiscal 2020.

Responsible Procurement

• Basic Principles of Procurement
• Foster Group Supplier CSR Code of Conduct
• CSR self-assessments from suppliers
• CSR audits of suppliers
• Conflict minerals due diligence

Climate-Related Risks & Opportunities

Reporting Standards

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

Certifications: ISO 14001, ISO 45001, ISO 9001:2015, IATF 16949:2016

UN Sustainable Development Goals

• Goal 7
• Goal 8
• Goal 9
• Goal 12
• Goal 13

The report lists 13 SDGs that Foster Group is promoting through its business activities.

Sustainable Products & Innovation

• Lightweight speakers
• Speakers with toluene-free adhesives
• Speakers with reduced solder applications

Awards & Recognition

• New Diversity Management Selection 100 (2017)
• 2020 Health and Productivity Management Outstanding Organization (Large Enterprise Category)
• Certification of Excellent Company in Health: Gold Accreditation
• Selected for the S&P/JPX Carbon Efficient Index
• Selected for SNAM Sustainability Index (2019)

Environmental Metrics

ESG Focus Areas

• Decarbonized Society
• Resource Recycling
• Harmony with Nature
• Exciting, unrestricted work styles
• Diversity and Inclusion
• Product Quality and Safety
• Governance Enhancement
• Supply Chain Management
• Employee Happiness

Environmental Achievements

• Reduced absolute CO2 emissions (Scope 1 & 2) by 12% from the previous fiscal year.
• Achieved 25% toluene-free new mobile audio products.
• Achieved 12% environmentally responsible car speakers (per sales).
• Recycled 14 tons of assembled products and parts.

Social Achievements

• Implemented work-from-home program and other work-style reforms.
• Reduced scheduled working hours by 15 minutes.
• Removed the ban on second jobs.
• Improved childcare and nursing care leave systems.
• Launched Shigoto Rakuraku Project (easy work project).
• Achieved 12.6% female manager ratio (headquarters).
• Achieved 10.3% ratio of overseas human resources (headquarters).
• Achieved 2.2% employment rate of persons with disabilities (headquarters).

Governance Achievements

• Increased the number of Independent Directors and appointed a new Independent Corporate Auditor (female).
• Enhanced business execution reporting.
• Developed and announced a mid-term business plan.
• Implemented a compliance test (100% response rate) and a compliance survey (100% response rate).
• Held compliance training.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impact on business activities and supply chains.
• Maintaining employee happiness and engagement during remote work.
• Reducing Scope 3 emissions.
• Ensuring responsible sourcing of materials throughout the supply chain.

Mitigation Strategies

• Implemented comprehensive measures to control COVID-19 infections at manufacturing sites.
• Introduced work-from-home system and special leave program for employees receiving vaccines.
• Developed alternative sourcing strategies.
• Implemented CSR self-assessments and audits of suppliers.
• Provided training and education on ESG and compliance matters.

Supply Chain Management

Supplier Audits: 18 CSR internal audits; 4 supplier audits; 2 re-audits

Responsible Procurement

• Basic Principles of Procurement
• Foster Group Supplier CSR Code of Conduct
• CSR requirements in basic transaction agreements
• Conflict Minerals Policy

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards: Comprehensive option, United Nations Global Compact

Certifications: ISO 14001, ISO 45001, Kurumin Certification

Sustainable Products & Innovation

• Lightweight speakers
• Toluene-free adhesives
• Power-saving parts in headphones and headsets

Awards & Recognition

• New Diversity Management Selection 100
• Top 100 Telework Pioneers
• Kurumin Certification
• Health & Productivity Management Outstanding Organization
• Certification of Excellent Company in Health: Gold Accreditation
• Model Company for Bicycle Safety
• Various awards from Vietnam and Korea

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)
• 13.2% female manager ratio (headquarters, as of March 31, 2022)
• 9.8% ratio of overseas human resources (headquarters, as of March 31, 2022)
• 2.3% employment rate of persons with disabilities (headquarters, FY2021 average)
• 57.1% rate of males taking childcare leave (headquarters)

Governance Achievements

• 100% compliance with the revised Corporate Governance Code
• Maintained 100% response rate to compliance test and survey
• 100% of employees informed of the internal whistleblowing system
• Maintained average 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 compliance and risk management in a global operation

Mitigation Strategies

• Developed CO2 Reduction Action Program (Ver. 2022)
• Set mid-term and long-term CO2 emission reduction goals
• Implemented power-saving efforts, renewable energy procurement, in-house renewable energy generation, and green energy certificate purchasing
• Established Risk and Crisis Management Committee
• Established Sustainability Committee
• Implemented comprehensive compliance program including internal whistleblowing system and regular training

Supply Chain Management

Supplier Audits: 6 companies audited in FY2021, 2 re-audited

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 for climate change regulations
• Decreased market share due to technology development delays
• Increased competition in electric vehicle market

Opportunities

• Reduced CO2 emissions from local production
• Increased sales opportunities from 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

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)
• Goal 5 (Gender Equality)
• Goal 10 (Reduced Inequalities)
• Goal 17 (Partnerships for the Goals)

Various initiatives contribute to these goals through decarbonization, resource recycling, responsible procurement, diversity and inclusion, and community engagement.

Sustainable Products & Innovation

• Lightweight speakers
• Adhesives with reduced solvent content
• Adhesives without solvents
• Toluene-free adhesives
• Power-saving parts in 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 (Large Enterprise Category)
• Certification of Excellent Company in Health: Gold Accreditation (2022)
• FTSE Blossom Japan Index constituent (2021)
• CDP B- rating for Climate Change and Water Security (2021)
• EcoVadis Silver ranking (2019)