Annual Report Chip

TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT TOYOTA 2002

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CONTENTS A Message from Our Leaders ...... page 2 Corporate Profile ...... page 4

Environmental Management...... page 8

Life Cycle I: Development and Design ...... page 16

Life Cycle II: Manufacturing ...... page 24

Life Cycle III: Sales ...... page 32

Life Cycle IV: Recycling End-of-Life Vehicles ...... page 40

Environmental Contributions ...... page 44

Information ...... page 48

S COPE OF T HIS R EPORT The period covered in this report is fiscal year April 1, 2001 through March 31, 2002, and product model year 2002. If data are presented with different dates, this is clearly indicated. Corporate data, and data from our manufacturing companies, includes our Canadian operations. Toyota Canada Inc. produces a companion report to this report, which provides more detailed information regarding our environmental activities in Canada. Last year, we published our first North American Environmental Report. In it we discussed the environmental aspects of our products and processes and outlined environmental action plans to address them. We committed to provide a progress update against our plans. This second report does that, and covers environmental issues pertinent to our activities in North America. As in our first report, we have structured this report to replicate the life cycle of our business, from design to manufacture, and sales to end-of-life management. This report was published in December 2002. For additional information about Toyota, please visit our website: www.toyota.com. This report can be accessed at www.toyota.com/environment.We listened to your comments and suggestions from our last report, and we have used them to improve this year’s report.We would appreciate hearing from you again.

Cover: Prius,Toyota’s award-winning, hybrid, passenger car, is the world’s first mass-produced, gasoline-electric automobile.

page one TOYOTA NORTH AMERICA E NVIRONMENTAL R EPORT

CONTENTS A Message from Our Leaders ...... page 2 Corporate Profile ...... page 4

Environmental Management...... page 8

Life Cycle I: Development and Design ...... page 16

Life Cycle II: Manufacturing ...... page 24

Life Cycle III: Sales ...... page 32

Life Cycle IV: Recycling End-of-Life Vehicles ...... page 40

Environmental Contributions ...... page 44

Information ...... page 48

Cover: Prius,Toyota’s award-winning, hybrid, passenger car, is the world’s first mass-produced, gasoline-electric automobile.

page one A MESSAGE FROM O UR L EADERS Toyota has had a long history of concern for the environment and is actively seeking ways to meet the growing transportation needs of society in DEAR READER ways that won’t harm our Earth. We are proud to present our second annual Environmental M ANUFACTURING E NVIRONMENTAL C ONTRIBUTIONS The 21st century will provide tremendous challenges for Performance Report for Toyota North America. Toyota has We reduced our energy consumption per unit of produc- Toyota was the major corporate sponsor of 2002 National all of us. One of the biggest will be finding new ways for had a long history of concern for the environment and is tion by seven percent, and our Indiana truck plant earned Public Lands Day, the largest one-day volunteer cleanup cars and the environment to peacefully co-exist. Toyota actively seeking ways to meet the growing transportation a “Governor’s Award for Environmental Excellence” in of our nation’s parks. We received a “Connie,” a National stands ready for that challenge. We look forward to work- needs of society in ways that won’t harm our Earth. Pollution Prevention. Conservation Achievement Award from the National ing cooperatively with government agencies, communi- Wildlife Federation. ties, environmental groups, customers, suppliers, share- To do that, we carefully examine our products, business S ALES/USE holders, our associates and the public to reduce the strategies and daily operations each year and set goals for An estimated 94 percent of Toyota and Lexus vehicles Overall, we’ve made good progress during the past year, impact of the automobile on our earth. We can’t do it improvement. This report outlines our progress during sold in the U.S. were EPA-certified as Low Emission but we realize there’s much more to be done. Continuous alone, but we can do it together. 2002 and many of the goals we’ve set for the future. Vehicles (LEV) or better, and more than one-third were improvement is a key principle of our company culture Ultra Low Emission Vehicles (ULEV). In addition, the and we intend to make more significant progress in 2003 Here are some key highlights from each stage of our business: Toyota Prius gas/electric hybrid sedan was the best-selling and beyond. In fact, our recently-released Global Vision D ESIGN AND D EVELOPMENT Sincerely, hybrid vehicle in America. 2010 initiative sets “concern for the earth” as one of our We improved our fuel efficiency by four-to-eight percent in E ND- OF-LIFE/RECYCLING four top business priorities. nine vehicle configurations, and the joint U.S. Environ- mental Protection Agency (EPA)/U.S. Department of For the first time, North American targets were set for con- Energy (DOE) 2002 Model Year Fuel Economy Guide ranked tinued management of Substances of Concern, including four 2002 Toyota models as class fuel economy leaders. arsenic, hexavalent chrome, cadmium, mercury, and lead.

Dennis Cuneo, Senior Vice Atsushi “Art”Niimi, President and Toshiaki “Tag”Taguchi, President President,Toyota Motor Chief Executive Officer,Toyota Motor and Chief Executive Officer, Manufacturing North America, Inc. Manufacturing North America, Inc. Toyota Motor North America, Inc.

Jim Olson, Senior Vice President, Jim Press, Executive Vice President Yoshi Inaba,President Toyota Motor North America, Inc. and Chief Operating Officer, and Chief Executive Officer, Toyota Motor Sales, U.S.A., Inc. Toyota Motor Sales, U.S.A., Inc.

Tadashi “George”Yamashina, Dave Baxter,Vice President, President,Toyota Technical Center, Toyota Technical Center, U.S.A., Inc. U.S.A., Inc.

The Toyota Leadership, from left to right: Dennis Cuneo, Art Niimi,Tag Taguchi, Jim Olson, Jim Press,Yoshi Inaba,George Yamashina, and Dave Baxter.

page two TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page three A MESSAGE FROM O UR L EADERS Toyota has had a long history of concern for the environment and is actively seeking ways to meet the growing transportation needs of society in DEAR READER ways that won’t harm our Earth. We are proud to present our second annual Environmental M ANUFACTURING E NVIRONMENTAL C ONTRIBUTIONS The 21st century will provide tremendous challenges for Performance Report for Toyota North America. Toyota has We reduced our energy consumption per unit of produc- Toyota was the major corporate sponsor of 2002 National all of us. One of the biggest will be finding new ways for had a long history of concern for the environment and is tion by seven percent, and our Indiana truck plant earned Public Lands Day, the largest one-day volunteer cleanup cars and the environment to peacefully co-exist. Toyota actively seeking ways to meet the growing transportation a “Governor’s Award for Environmental Excellence” in of our nation’s parks. We received a “Connie,” a National stands ready for that challenge. We look forward to work- needs of society in ways that won’t harm our Earth. Pollution Prevention. Conservation Achievement Award from the National ing cooperatively with government agencies, communi- Wildlife Federation. ties, environmental groups, customers, suppliers, share- To do that, we carefully examine our products, business S ALES/USE holders, our associates and the public to reduce the strategies and daily operations each year and set goals for An estimated 94 percent of Toyota and Lexus vehicles Overall, we’ve made good progress during the past year, impact of the automobile on our earth. We can’t do it improvement. This report outlines our progress during sold in the U.S. were EPA-certified as Low Emission but we realize there’s much more to be done. Continuous alone, but we can do it together. 2002 and many of the goals we’ve set for the future. Vehicles (LEV) or better, and more than one-third were improvement is a key principle of our company culture Ultra Low Emission Vehicles (ULEV). In addition, the and we intend to make more significant progress in 2003 Here are some key highlights from each stage of our business: Toyota Prius gas/electric hybrid sedan was the best-selling and beyond. In fact, our recently-released Global Vision D ESIGN AND D EVELOPMENT Sincerely, hybrid vehicle in America. 2010 initiative sets “concern for the earth” as one of our We improved our fuel efficiency by four-to-eight percent in E ND- OF-LIFE/RECYCLING four top business priorities. nine vehicle configurations, and the joint U.S. Environ- mental Protection Agency (EPA)/U.S. Department of For the first time, North American targets were set for con- Energy (DOE) 2002 Model Year Fuel Economy Guide ranked tinued management of Substances of Concern, including four 2002 Toyota models as class fuel economy leaders. arsenic, hexavalent chrome, cadmium, mercury, and lead.

Tadashi “George”Yamashina, Dave Baxter,Vice President, President,Toyota Technical Center, Toyota Technical Center, U.S.A., Inc. U.S.A., Inc.

The Toyota Leadership, from left to right: Dennis Cuneo, Art Niimi,Tag Taguchi, Jim Olson, Jim Press,Yoshi Inaba,George Yamashina, and Dave Baxter.

page two TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page three CORPORATE PROFILE

“As a core philosophy, we continuously strive to better tune the automotive industry to the needs of the Earth and get as close as possible to sustainable development.”

– Toshiaki “Tag”Taguchi, NTRODUCTION President & CEO,Toyota Motor North America I Toyota is the third largest automotive manufacturer in Toyota has invested significantly in North American the world, and fourth largest in North America. In North operations and facilities. As of December 31, 2001, our America, we build and sell vehicles under the Toyota and cumulative investment in North America totalled $13.3 Lexus brands. In 2001, Toyota set a best-ever sales record billion. We directly employed more than 32,000 North for the sixth year in a row, and Lexus was America’s top- American workers in 2001, more than half of which were selling luxury brand in both 2000 and 2001. directly involved in manufacturing. We are proud of our success in an increasingly competitive automobile marketplace and confident of our long- term sustainability as a company in North America. North American Sales and Production However, we measure our success in more than economic 2,000,000 terms. Our growing customer base and sales are paral- Figure A leled by our growing investment in capital projects, work- 1,800,000 ers, suppliers and environmental protection in North America. We try to keep these issues in balance and con- 1,600,000 tinuously innovate with breakthrough technologies,

including environmental technologies. 1,400,000 Since 1995, the majority of our vehicles sold in North America were produced in North America. In 2001, 1,200,000 Toyota produced more than one million vehicles, as well as a variety of other related components, at its nine North 1,000,000

American facilities located in Kentucky, West Virginia, Vehicles Indiana, Missouri, California, British Columbia and 800,000 Ontario. We purchased parts from over 500 North American automotive suppliers totaling $14.99 billion in 600,000 FY2002 (ending March 31, 2002). More than two-thirds of the company’s sales in the U.S. were vehicles manufac- 400,000 tured in North America. 200,000

0 1998 1999 2000 2001 Calendar Year Import North American Production Total Sales

Main: Herbert Recinos installs drywall at Toyota’s sales headquarters expansion in Torrance, Calif. On average, 55 percent of the building materials used in the construction contain recycled content. Inset: RAV4-EV electric vehicles serve as shuttles at Toyota’s sales headquarters, in Torrance, Calif.

page five CORPORATE PROFILE

“As a core philosophy, we continuously strive to better tune the automotive industry to the needs of the Earth and get as close as possible to sustainable development.”

0 1998 1999 2000 2001 Calendar Year Import North American Production Total Sales

page five CORPORATE PROFILE

We directly employed more than 32,000 North

American workers in 2001, more than half of

whom were involved in manufacturing.

Toyota associates applaud as the 10 millionth North American-built vehicle, a Camry, rolls off the line, at the Georgetown, Ky., assembly plant, July 29, 2002.

Calty Design Research, Inc. Toyota Canada Inc. Newport Beach, Calif. Toyota Motor Manufacturing Canada Inc. Scarborough, Ontario Cambridge, Ontario North American Investment Toyota Material Handling, U.S.A., Inc. T OYOTA’ S N ORTH A MERICAN Irvine, Calif. $14,000,000,000 Figure B A FFILIATE C OMPANIES Canadian Autoparts Toyota, Inc. Delta, British Columbia $12,000,000,000 Toyota Motor North America, Inc. is a holding company for Toyota Technical Center, USA, Inc. Ann Arbor, Mich. Toyota Motor Manufacturing, Toyota’s U.S. sales and manufacturing operating units. In addi- West Virginia, Inc. $10,000,000,000 Toyota Motor Manufacturing North America, Inc. Buffalo, W. Va. tion, it coordinates the business activities for all of Toyota’s Erlanger, Ky. North American companies. Toyota Motor $8,000,000,000 North America, Inc. Toyota Technical Center, U.S.A., Inc., headquartered in New York, N.Y. $6,000,000,000 Ann Arbor, Mich., is a comprehensive research, design $4,000,000,000 and development company.

$2,000,000,000 Toyota Motor Manufacturing North America, Inc., headquartered in Erlanger, Ky., is the parent company of Toyota’s $0 1998 1999 2000 2001 manufacturing operations in the United States and Canada. Calendar Year Toyota Motor North America, Inc. North American Investment Toyota Motor Sales, U.S.A., Inc., headquartered in Torrance, Washington, D.C. Calif., is responsible for sales, marketing, distribution, service North American Employment and parts support for Toyota and Lexus products in the conti- 35,000 Figure C nental United States. 30,000 Toyota Canada Inc., headquartered in Scarborough, Ontario,

25,000 is the head office for all divisions of Toyota’s sales, marketing, Toyota Motor Manufacturing, parts, service, Lexus and industrial equipment operations Kentucky, Inc. 20,000 in Canada. Georgetown, Ky. Toyota Motor Manufacturing de Baja California 15,000 S. de R.L. de C.V., Baja California, Mexico (2004) Toyota Motor Manufacturing, Alabama, Inc. Huntsville, Ala. (2003) 10,000 Toyota Motor Sales, U.S.A., Inc. Torrance, Calif.

5,000 Toyota Financial Services Torrance, Calif.

0 1998 1999 2000 2001 Toyota Technical Center, U.S.A., Inc. Toyota Arizona Proving Grounds Wittman, Ariz. Calendar Year Gardens/Torrance, Calif. Toyota Motor Manufacturing, Indiana, Inc. Princeton, Ind. North American Employment TABC, Inc. Long Beach, Calif. Bodine Aluminum, Inc. St. Louis / Troy, Mo. New United Motor Manufacturing, Inc. Fremont, Calif. Headquarters Facilities Vehicle Assembly Plants Parts/Component Manufacturing Other Facilities

page six TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page seven CORPORATE PROFILE

We directly employed more than 32,000 North

American workers in 2001, more than half of

whom were involved in manufacturing.

Toyota associates applaud as the 10 millionth North American-built vehicle, a Camry, rolls off the line, at the Georgetown, Ky., assembly plant, July 29, 2002.

5,000 Toyota Financial Services Torrance, Calif.

page six TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page seven ENVIRONMENTAL MANAGEMENT Toyota has made care for the Earth one of

four key components of its recently issued ANAGEMENT 2010 Global Vision. M H ISTORICAL P ERSPECTIVE To be more specific about its commitment to the envi- Toyota’s concern for the environment stretches back ronment, Toyota issued its global Earth Charter in 1992 to the late 1800s and some key principles espoused by and updated it in 2000. The Earth Charter spells out how Sakichi Toyoda, founder of Toyota’s first business, a the company plans to protect the environment at all weaving loom company. stages of its operations, from product development and design to manufacturing, marketing and final disposal. It Sakichi was an avid inventor who prided himself on find- also calls for all Toyota companies around the world to ing ways to help people be more efficient and avoid waste. develop specific environmental action plans and to report After watching his mother’s frustration with broken progress regularly. threads while weaving fabric, he set out to design a more efficient loom. In 1924, he succeeded in creating a revolu- To help employees, shareholders and the public under- tionary, fully automatic loom that shut itself down if it stand the full importance of the company’s environmen- detected a broken thread. He later sold the patent for the tal commitment, Toyota also has made care for the earth loom and gave the money to his son, Kiichiro, to start an one of four key components of its recently issued 2010 automobile company that became Toyota. Global Vision. This document spells out the future direc- tion of the company. Sakichi passed on more than the legacy of his company to his son. He also taught him key principles that Kiichiro The following section discusses most of these major mile- published for his company’s workers in 1935. They were stones in more detail. But it is important to remember called the “Toyoda Precepts” and one of the five princi- that concern for the environment did not come as a result ples stated, “Be reverent and show gratitude for things of these documents, but from people like Sakichi Toyoda great and small in thought and deed.” and many other company leaders who followed him. The Toyoda Precepts went through several revisions over 2010 GLOBAL V ISION the next five decades, and its basic tenets eventually In July 2002, Toyota adopted the 2010 Global Vision.It helped form Toyota’s Guiding Principles that were issued contains a bold new business vision of the worldwide in 1992 and revised in 1997. The principles state how transition of Toyota into the age of more integrated infor- Toyota plans to contribute to society through manufac- mation technology and infrastructure; of a society orient- turing high-quality automobiles and related services. ed towards natural resource conservation, a world with pervasive access to mobility and global respect for diversi- One of the Guiding Principles focused on the company’s ty (see Global Vision diagram on page 10). The Vision responsibility to the environment, stating, “Dedicate our- will be reflected in our future plans and policies including selves to providing clean and safe products and to enhanc- further environmental initiatives. ing the quality of life everywhere through our activities.”

Main: Toyota associates train in environmental management issues throughout the country.

TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page nine ENVIRONMENTAL MANAGEMENT Toyota has made care for the Earth one of

Main: Toyota associates train in environmental management issues throughout the country.

TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page nine ENVIRONMENTAL MANAGEMENT

Figure D 2010 Global Vision Since Toyota’s founding, our fundamental

Toward a Recycle-Oriented Society Toward the Age of Intelligent Transportation Systems • The shift to a recycle-oriented society on a global scale is progressing. and Ubiquitous Networks* • Transition from the era of large-scale production and large-volume • Information and telecommunications technologies are advancing consumption toward a recycle-oriented society that promotes and the use of IT in automobiles is increasing. mission has been to contribute to society “Reduce (conservation of resources), Reuse and Recycle.” • Mobile information services are improving rapidly. • Infrastructure-respondent preventive safety is developing. through creating value. Kind to the Earth Comfort of Life Toyota will use outstanding Toyota will create cars and a motorized environmental technologies to society that allow people to live safely, promote recycling on a global scale. securely and comfortably. New Corporate Image for Toyota T OYOTA’ S E ARTH C HARTER II. ACTION GUIDELINES to Pursue The Toyota Earth Charter, published in April 2000, 1. Always be concerned about the environment describes Toyota’s Basic Policy and Action Guidelines Work toward achieving zero emissions at all stages, Excitement for the World Respect for All People regarding environmental improvements. i.e., production, utilization and disposal Toyota will spread the appeal of Toyota will become a truly automobiles throughout the world to global corporation that is respected increase the number of Toyota fans. by people around the world. TOYOTA EARTH CHARTER (APRIL 2000) • Develop and provide products with top-level I. BASIC POLICY environmental performance 1. Contribute toward a prosperous 21st century society • Pursue production activities that do not generate waste Aim for growth that is in harmony with the environ- • Implement thorough preventive measures Toward Development of Motorization on a Global Scale Toward a Mature Society • People around the world will be able to enjoy the high degree of mobility • Nationalism will steadily decline and respect for all people will expand ment, and set a challenge to achieve zero emissions • Promote businesses that contribute toward afforded by automobiles. throughout the world. • People of a variety of nationalities and ethnicities will be able to engage throughout all areas of business activities environmental improvement in lively exchanges of ideas in global companies. 2. Pursue environmental technologies 2. Business partners are partners in creating a better environment *Ubiquitous Networks: An environment under which the advance of information and telecommunications allows anyone to access all information any time from any location. Pursue all possible environmental technologies, developing and establishing new technologies to enable the Cooperate with associated companies environment and economy to coexist T OYOTA’ S G UIDING P RINCIPLES • Respect the culture and customs of every 3. As a member of society Since Toyota’s founding, our fundamental mission has been nation, and contribute to economic and social 3. Take action voluntarily Actively participate in social actions to contribute to society through creating value, primarily by development through corporate activities in Develop a voluntary improvement plan based on Participate in creation of a recycling-based society manufacturing high-quality automobiles and providing local communities thorough, preventive measures and compliance with • Support government environmental policies laws, that addresses environmental issues on global, • Contribute to non-profit activities related services. The company’s seven Guiding Principles, • Dedicate ourselves to providing clean and safe national and regional scales, while promoting adopted in January 1992 and revised in April 1997, support products, and to enhancing the quality of life 4. Toward better understanding continuous implementation that mission. Our managerial values and business methods, everywhere through our activities Actively disclose information and promote environ- based on these core principles, are known collectively as The 4. Work in cooperation with society mental awareness • Create and develop advanced technologies and Toyota Way. The Toyota Way is an ideal, a standard and a Build close and cooperative relationships with a provide outstanding products and services that E NVIRONMENTAL M ANAGEMENT guiding beacon for the people of the global Toyota. Its two wide spectrum of individuals and organizations IN N ORTH A MERICA key pillars are: “Continuous Improvement” and “Respect for fulfill the needs of customers worldwide involved in environmental preservation, including Responsibility for environmental management, as well as People.” It defines how the people of Toyota perform and • Foster a corporate culture that enhances indi- governments, local municipalities and related com- the implementation of environmental action plans, gener- behave in order to deliver these values to customers, vidual creativity and teamwork value, while panies and industries ally rests with each Toyota North American company. In shareholders, associates, business partners and the honoring mutual trust and respect between addition, a unified group called the North American global community. labor and management Environmental Committee (NAEC) serves as a high-level G UIDING P RINCIPLES • Pursue growth in harmony with the global coordinating forum for environmental issues across North ADOPTED JANUARY 1992, REVISED APRIL 1997 community through innovative management America. In some instances, issues and recommendations requiring input or approval are brought before the North • Honor the language and spirit of the law of • Work with business partners in research and American Planning Meeting (NAPM), which comprises every nation, and undertake open and fair cor- creation to achieve stable, long-term growth and Toyota’s most senior executives. porate activities to be a good corporate citizen mutual benefits, while keeping ourselves open to around the world new partnerships

On behalf of Toyota Motor Manufacturing, Indiana, Inc.,Vice President Norm Bafunno (center) accepts the 2002 Governor’s Award for Environmental Excellence in Pollution Prevention from Lori F. Kaplan, Commissioner, Indiana Department of Environmental Management and Frank O’Bannon, Governor of Indiana. page ten TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page eleven ENVIRONMENTAL MANAGEMENT

Figure D 2010 Global Vision Since Toyota’s founding, our fundamental

Figure E Environmental Coordination and Management in North America efficient fuel consumption and clean emissions

Technical Subcommittees Toyota Technical Center, U.S.A., Inc. Business Admin. Subcommittee that can be easily recycled and have a minimal Environmental Committee Social/Community Subcommittee impact on the environment. Toyota Motor Sales, Environmental Working Groups: U.S.A., Inc. Compliance Resource Management Business Partners Environmental Communication Coordination Office Product Planning North American North American Safety and Environmental Department Environmental Coordinator Network: Planning Meeting Environmental Committee Facility Coordinators

Secretariat: Secretariat: Toyota Motor North America Plant-Level Work Groups Toyota Motor North America • North American Regulatory Group Toyota Motor Manufacturing • Stationary Source Working Group North America, Inc. • Communications Working Group Plant-Level Environment North American Manufacturing Steering Committees Environmental Committee (at each of nine plants) Figure F Relationship Between Automobiles and the Environment

Environmental Affairs Division Toyota Canada Inc. Regulatory Affairs Division Research and Analysis, Proposals Department of • Air Pollution, Acid Rain, Climate Change Corporate Affairs (Transportation Systems, Scientific Mechanisms) Public Affairs Division • Afforestation (Improve Atmosphere) • Resources, Etc. (Recycling System)

Environmental Coordination Environmental Management G LIN DE YC SI EC G R Local Issues N Air Pollution, Water Pollution, Waste, Noise, Etc. N ORTH A MERICAN E NVIRONMENTAL the NAEC. These working groups meet quarterly, or as C OMMITTEE (NAEC) needed, and serve as forums for information exchange The NAEC comprises one top executive from each North and coordination. In addition, ad-hoc teams are formed American company, as well as key executive coordinators to address specific issues. from Toyota Motor Corporation. This core group serves E NVIRONMENTAL I MPACT as the steering committee for a broader, full committee OF THE A UTOMOBILE A CROSS membership of executives, managers and environmental THE L IFE C YCLE Plants specialists from each company. Automobiles impact the environment during all stages of Recycling • Climate Change • Resource • Acid Rain (NOx, SOx), The NAEC meets quarterly to discuss environmental their life cycle, from the extraction of raw materials to Conservation, Etc. Air Pollution (End-of-Life Vehicles, • Water Pollution parts manufacturing, vehicle assembly, delivery logistics, Industrial Waste, • Waste activities, ensure consistency among affiliates and identify Energy, CFCs) • Noise, Odors key areas where more detailed collaboration/coordination use by consumers and end-of-life management (see Figure F). Regional Issue Global Issues Acid Rain Depletion of the Ozone Layer, is needed. Specifically, the NAEC: 1) articulates Toyota’s S Global Warming, Dwindling This report is arranged so as to correspond to these life A Resources, Destruction of Forests N L O North American environmental strategy; 2) creates ES TI cycle stages: & UC greater visibility and focus on key strategic issues; US D E PRO 3) communicates this uniform strategy to our parent Life Cycle I: Development and Design Life Cycle II: Manufacturing company, external stakeholders (government regulators Automobiles Life Cycle III: Sales, Distribution and Service • Air Pollution and NGOs) and the American public; and 4) coordinates • Noise Life Cycle IV: Recycling and End-of-Life Vehicles • Acid Rain (NOx) environmental decision-making and inter-company • Climate Change information exchange and collaboration. We also have a section on Toyota’s environmental contri- • Resources Within the NAEC are three standing working groups, butions to society. with membership from all of our North American companies, chaired or co-chaired by individuals appointed by

page twelve TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page thirteen ENVIRONMENTAL MANAGEMENT We’re committed to developing vehicles with

Figure E Environmental Coordination and Management in North America efficient fuel consumption and clean emissions

page twelve TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page thirteen Figure G ENVIRONMENTAL MANAGEMENT Consolidated Summary of North American Five-Year Action Plan* Status FY2005 Achieved Page Action Plan Goals Targets On Track Reference X Missed Life Cycle I: Development and Design Fuel Efficiency • Achieve Top Levels of • Exceed CAFE requirements for passengers and light-duty trucks See pg. 19 Fuel Efficiency in All Vehicle Classes Emission Reductions • Promote Emission • Meet Tier 2 and LEV II emission requirements See pg. 20 Reductions Clean Energy Vehicles • Introduce Cleaner • Introduce to market additional new hybrid electric vehicles by 2005 See pg. 22 Energy Vehicles • Demonstrate fuel cell technology by evaluating prototype beginning in 2001 Life Cycle II: Manufacturing Energy • Energy Reduction • Reduce total energy usage by 15 percent per unit of production from the base year See pg. 25 2000 by FY2005 thus resulting in a 15 percent decrease in CO2 Substances of Concern • Develop extensive • Reduce body-painting emissions of VOCs to less than 30 g/m2 for all paint shops See pg. 27 reduction strategies to • Reduce toxic chemicals emitted to air to 1.0 Kg/vehicle or less for entire plant See pg. 28 reduce emissions of concern • Continue R&D activities aimed at eliminating all VOCs and toxic chemicals from coolants See pg. 28 and cutting oils used in unit plants Waste • Reduce waste and • Reduce hazardous waste disposal to landfills by 95 percent from base year 1999 and See pg. 30 promote resource continue R&D activities aimed at reducing the landfill of other wastes, where possible conservation activities Water Most environmental impacts result from the use of auto- dation for each Toyota company worldwide to develop its • Implement aggressive plans • Reduce total water usage by 15 percent per unit of production from 2000 base year by See pg. 30 to reduce comsumption end of FY2005 mobiles, as opposed to manufacturing or distributing own specific goals and action plans. A summary of our of water them. At Toyota, we’re committed to developing vehicles FY2001-2005 North American Environmental Action Environmental Management Systems • Issue Green Supplier purchasing guidelines by June 2000 See pg. 31 with efficient fuel consumption and clean emissions at Plan and implementation status is shown on the next page. • Establish Green • Certify Key Suppliers to ISO 14001 by December 2003 See pg. 31 reasonable cost, designing them to be easily recycled and Supplier Guidelines • Comply with Chemical Ban List/Environmental Data Sheet See pg. 31 This Environmental Action Plan displays our five-year devising production methods that have minimum impact Life Cycle III: Sales, Distribution and Service goals, our targets to achieve these goals as well as an indi- on the environment. We also are developing a number of Environmental cation of whether we have achieved our targets (O• ), are Management Systems • ISO 14001 Certification at all parts and vehicle distribution centers by FY2005 See pg. 33 new technologies that will help us create a true eco-car • Establish an Environmental on track to meet them (O), or have missed them (X). Management System for tomorrow, while still meeting our customers’ needs Detail is provided in the body of this report. Hazardous Material and desires. • Promote excellence in • Maintain 100 percent compliance with all applicable hazardous material regulations on See pg. 34 handling and transporting an ongoing basis, through annual training and facility audits on a company-wide basis Although information in the action plan and this report hazardous materials T OYOTA’ S N ORTH A MERICAN is arranged by life cycle, several issues cut across more Waste E NVIRONMENTAL A CTION P LAN • Reduce Waste and • Implement a nationwide waste-tracking program See pg. 35 than one life cycle stage. The common goal of waste Conserve Resources • Set nationwide waste-reduction targets See pg. 35 Toyota Motor Corporation has developed a “Third Toyota reduction, for example, is being managed in manufacturing • Implement a returnable-packaging program at parts distribution centers where See pg. 35 Environmental Action Plan” covering the period FY2001 volume warrants by working to reduce hazardous waste sent from manu- • Increase returnable-packaging and direct shipment programs for vehicle See pg. 36 through FY2005. This over-arching plan forms the foun- distribution centers where practical facturing plants to landfills; and in sales by implementing Energy • Reduce Energy Use • Establish energy usage database See pg. 37 a range of programs directed towards reducing waste and • Reduce Greenhouse Gases • Compile greenhouse gas inventory by FY2004 See pg. 37 packaging at distribution centers. Another common goal, Dealers • Promote Environmental Re- • Launch the Toyota Environmental Assistance Network Online See pg. 38 energy reduction, is being tackled at design, with the sponsibility Among Dealers • Add enhanced features to the Environmental Assistance Network See pg. 39 introduction of more fuel-efficient vehicles; in manufac- Other • Promote Greener Building • Achieve LEEDTM certification for the sales headquarters South Campus expansion See pg. 39 turing by reducing energy usage per unit of production; Construction and buildings by the end of 2003 and in sales and distribution by establishing baseline Maintenance Operations information about our energy use in these functions. Life Cycle IV: Recycling End-of-Life Vehicles Substances of Concern • Manage Substances • Gather North American baseline data for selected SOCs See pg. 41 of Concern • Develop North American SOC strategy for beyond 2002 See pg. 42 Vehicle Recyclability • Develop Recycling Designs • Incorporate material and design strategies for increased vehicle recyclability See pg. 43 and Promote Expanded Use of Recycled Materials Toyota’s Environmental Contributions Environmental Communication • Promote environmental communication with community and key organizations See pg. 45 • Enhance environmental • Enhance environmental communication activities See pg. 46 communication activities in each region/country

Celebrating Arbor Day in Nebraska City, Neb., are (from left) Sooah Yoo, 2002 *The status indicated refers, in some cases, to progress towards achieving the five-year goal. In other cases, the status refers to an annual target in sup- Arbor Day national poster contest winner; and Veronica Pollard,Toyota Motor port of the five-year goal. Details are provided in the body of the report. North America (TMNA) group vice president.TMA sponsors the annual poster contest to promote environmental consciousness among America’s youth. page fourteen TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page fifteen Figure G ENVIRONMENTAL MANAGEMENT Consolidated Summary of North American Five-Year Action Plan* Status FY2005 Achieved Page Action Plan Goals Targets On Track Reference X Missed Life Cycle I: Development and Design Fuel Efficiency • Achieve Top Levels of • Exceed CAFE requirements for passengers and light-duty trucks See pg. 19 Fuel Efficiency in All Vehicle Classes Emission Reductions • Promote Emission • Meet Tier 2 and LEV II emission requirements See pg. 20 Reductions Clean Energy Vehicles • Introduce Cleaner • Introduce to market additional new hybrid electric vehicles by 2005 See pg. 22 Energy Vehicles • Demonstrate fuel cell technology by evaluating prototype beginning in 2001 Life Cycle II: Manufacturing Energy • Energy Reduction • Reduce total energy usage by 15 percent per unit of production from the base year See pg. 25 2000 by FY2005 thus resulting in a 15 percent decrease in CO2 Substances of Concern • Develop extensive • Reduce body-painting emissions of VOCs to less than 30 g/m2 for all paint shops See pg. 27 reduction strategies to • Reduce toxic chemicals emitted to air to 1.0 Kg/vehicle or less for entire plant See pg. 28 reduce emissions of concern • Continue R&D activities aimed at eliminating all VOCs and toxic chemicals from coolants See pg. 28 and cutting oils used in unit plants Waste • Reduce waste and • Reduce hazardous waste disposal to landfills by 95 percent from base year 1999 and See pg. 30 promote resource continue R&D activities aimed at reducing the landfill of other wastes, where possible conservation activities Water Most environmental impacts result from the use of auto- dation for each Toyota company worldwide to develop its • Implement aggressive plans • Reduce total water usage by 15 percent per unit of production from 2000 base year by See pg. 30 to reduce comsumption end of FY2005 mobiles, as opposed to manufacturing or distributing own specific goals and action plans. A summary of our of water them. At Toyota, we’re committed to developing vehicles FY2001-2005 North American Environmental Action Environmental Management Systems • Issue Green Supplier purchasing guidelines by June 2000 See pg. 31 with efficient fuel consumption and clean emissions at Plan and implementation status is shown on the next page. • Establish Green • Certify Key Suppliers to ISO 14001 by December 2003 See pg. 31 reasonable cost, designing them to be easily recycled and Supplier Guidelines • Comply with Chemical Ban List/Environmental Data Sheet See pg. 31 This Environmental Action Plan displays our five-year devising production methods that have minimum impact Life Cycle III: Sales, Distribution and Service goals, our targets to achieve these goals as well as an indi- on the environment. We also are developing a number of Environmental cation of whether we have achieved our targets (O• ), are Management Systems • ISO 14001 Certification at all parts and vehicle distribution centers by FY2005 See pg. 33 new technologies that will help us create a true eco-car • Establish an Environmental on track to meet them (O), or have missed them (X). Management System for tomorrow, while still meeting our customers’ needs Detail is provided in the body of this report. Hazardous Material and desires. • Promote excellence in • Maintain 100 percent compliance with all applicable hazardous material regulations on See pg. 34 handling and transporting an ongoing basis, through annual training and facility audits on a company-wide basis Although information in the action plan and this report hazardous materials T OYOTA’ S N ORTH A MERICAN is arranged by life cycle, several issues cut across more Waste E NVIRONMENTAL A CTION P LAN • Reduce Waste and • Implement a nationwide waste-tracking program See pg. 35 than one life cycle stage. The common goal of waste Conserve Resources • Set nationwide waste-reduction targets See pg. 35 Toyota Motor Corporation has developed a “Third Toyota reduction, for example, is being managed in manufacturing • Implement a returnable-packaging program at parts distribution centers where See pg. 35 Environmental Action Plan” covering the period FY2001 volume warrants by working to reduce hazardous waste sent from manu- • Increase returnable-packaging and direct shipment programs for vehicle See pg. 36 through FY2005. This over-arching plan forms the foun- distribution centers where practical facturing plants to landfills; and in sales by implementing Energy • Reduce Energy Use • Establish energy usage database See pg. 37 a range of programs directed towards reducing waste and • Reduce Greenhouse Gases • Compile greenhouse gas inventory by FY2004 See pg. 37 packaging at distribution centers. Another common goal, Dealers • Promote Environmental Re- • Launch the Toyota Environmental Assistance Network Online See pg. 38 energy reduction, is being tackled at design, with the sponsibility Among Dealers • Add enhanced features to the Environmental Assistance Network See pg. 39 introduction of more fuel-efficient vehicles; in manufac- Other • Promote Greener Building • Achieve LEEDTM certification for the sales headquarters South Campus expansion See pg. 39 turing by reducing energy usage per unit of production; Construction and buildings by the end of 2003 and in sales and distribution by establishing baseline Maintenance Operations information about our energy use in these functions. Life Cycle IV: Recycling End-of-Life Vehicles Substances of Concern • Manage Substances • Gather North American baseline data for selected SOCs See pg. 41 of Concern • Develop North American SOC strategy for beyond 2002 See pg. 42 Vehicle Recyclability • Develop Recycling Designs • Incorporate material and design strategies for increased vehicle recyclability See pg. 43 and Promote Expanded Use of Recycled Materials Toyota’s Environmental Contributions Environmental Communication • Promote environmental communication with community and key organizations See pg. 45 • Enhance environmental • Enhance environmental communication activities See pg. 46 communication activities in each region/country

Main: Justin Ward, engineer at the Toyota Technical Center, Sacramento, Calif., calibrates his equipment in preparation for continued evaluation of Toyota’s latest fuel cell hybrid vehicle, the FCHV-4. Toyota participates in the California Fuel Cell Partnership Program, evaluating two FCHV-4 vehicles in real-world driving conditions, providing valuable insight for ongoing development and improvement of our fuel cell vehicle technology.

page seventeen LIFE CYCLE I “We can no longer afford to ignore the signs of global warming and the fact that the consumption of gasoline and other fossil fuels is on the rise. Environmentally friendly cars will soon cease to be an option … they will become a necessity.” – Fujio Cho DEVELOPMENT President,Toyota Motor Corporation Toyota is committed to designing and developing 2001-2002 Fuel Economy Change 1.20 products that meet the needs of our customers and the Figure H environment. This commitment is not limited to our +9% hybrid technology, but extends to our pursuit of excellence +8% +7% +4% +5% +4% +5% +5% +4% on fuel efficiency, emissions and development of advanced technology vehicles. At the same time, our engineers put 1.00 significant effort into researching new technologies to continuously improve the environmental performance of products we bring to the marketplace. G OAL: 0.80 ACHIEVE TOP LEVELS OF FUEL EFFICIENCY IN ALL VEHICLE CLASSES Toyota has historically been a leader in designing and producing fuel-efficient vehicles, and we remain so even as we 0.60 Relative Fuel Economy Fuel Relative have grown to become the fourth largest auto maker in the U.S., offering a full line-up of trucks and the number one selling U.S. luxury car brand — Lexus. Consistent with the Toyota philosophy of continuous 0.40 improvement, our engineers seek to improve vehicle fuel efficiency with the launch of each new generation of vehicles. Among the 60 different model and powertrain configurations Toyota sold in the 2002 model year, we 0.20 improved the EPA-rated fuel economy on nine (Figure H). The fuel economy of 48 configurations remained the same; however, three vehicle configurations had lower fuel Solara Conv. 2.4L 4A/T Conv. Solara 2.4L 4A/T Coupe Solara ES300 3.0L 4A/T GS300 3.0L 4A/T Camry 2.4L 4A/T Camry 3.0L 4A/T 2.4L 4A/T 2WD Tacoma 2.4L 5M/T 2WD Tacoma Sequoia 4.7L 4A/T 2WD economy than the previous model year. As we work to 0.00 improve fuel efficiency, we also must provide our cus- 2001 Model Year 2002 Model Year tomers with the performance, size, and features they NOTE: Data are based on EPA adjusted combined fuel econo- demand. This requires a delicate, and often difficult balanc- my rating.Three 2002 model year vehicle configurations – ing of consumer and environmental needs. Tacoma 2.7L 5M/T 4WD,Tacoma 3.4L 4A/T 4WD and 4Runner 3.4L 4A/T 2WD – had lower fuel economy ratings than their 2001 model year counterparts.

page seventeen LIFE CYCLE I

Toyota Gasoline Vehicles Are Among the Most Fuel Efficient in Their Class On a class-by-class basis,Toyota offers conven- 40 Figure I 35 tional gasoline-powered vehicles that typically 30

25 rank among the most fuel-efficient in their class.

20 mpg

15 Toyota Passenger Car 10-Year CAFE History 34 Figure J 10

5 32 Two-Seat Car Two-Seat Minicompact Car Subcompact Car Car Compact Car Midsize Car Large Wagon Mid Size Pick Up Standard Minivan Sport Utility Vechicle 0 Industry High Industry Low Toyota Best Model 30

NOTES: Data and classes are based on EPA Adjusted Combined Fuel Economy ratings from the Model Year 2002 Fuel Economy Guide available at mpg www.fueleconomy.gov.The chart shows only those classes where Toyota offers products.The minicompact car model shown is the Lexus SC430. The mid-size wagon shown is the Lexus RX300, which generally competes with vehicles classified by other manufacturers as SUVs. 28

On a class-by-class basis, Toyota offers conventional and light-duty trucks (Figures J and K). While our gasoline-powered vehicles that typically rank among the passenger-car CAFE has consistently improved over the 26 most fuel-efficient in their class (Figure I). The 2002 past three model years, our truck CAFE has leveled off Model Year Fuel Economy Guide, published jointly by the after a period of decline. This reflects the growing Model Year U.S. Environmental Protection Agency (EPA) and the U.S. demand by consumers over the past decade for larger 2002 24 1993 1994 1995 1996 1997 1998 1999 2000 2001 Projected Department of Energy (DOE), rated four 2002 Toyota trucks. However, both our car and truck CAFE perform- models — Prius, RAV4 2WD manual transmission, RAV4 ance continues to exceed that of the industry as a whole. Toyota Car Fleet Industry Average Passenger Car CAFE Standard

2WD automatic transmission and Tacoma 2WD auto- Although motor vehicle CO2 is not regulated, we also matic transmission — as class fuel economy leaders based have included a historical view of our car and truck CO2 Toyota Truck 10-Year CAFE History on EPA fuel economy mileage estimates. In addition, we emissions per kilometer (Figures L and M). Toyota vehi- 30 Figure K are the leader in U.S. market-share of gasoline-electric cles emit less CO2 per kilometer than the industry average. hybrid vehicles. Our engineers improved the fuel efficien- G OAL: cy of conventional gasoline-powered vehicles by using PROMOTE EMISSIONS REDUCTION 26 variable valve timing, multi-valve cylinder heads, During normal operations, automobiles emit many com- advanced automatic transmissions, reduced vehicle pounds that impact the environment, including carbon weight and lower aerodynamic drag coefficients (Cd), dioxide (CO ), carbon monoxide (CO), hydrocarbons among others. For example, we have used multi-valve 2 22 (HC), nitrogen oxides (NO ) and non-methane organic cylinder heads on all our U.S. products since 1996. x

gas (NMOG). Regulatory organizations around the world, mpg Additionally, two-thirds of 2002 model year Toyota car including the EPA and the California Air Resources Board models and all 2002 model year Lexus car models use 18 NOTE: 2002MY Toyota (CARB), have challenged automakers to reduce levels of data are projected variable valve timing. based on mid-model harmful emissions. year CAFE estimates T ARGET: reported to the National 14 EXCEED CAFE REQUIREMENTS FOR PASSENGER Highway Traffic Safety Administration. 2002MY CARS AND LIGHT-DUTY TRUCKS industry estimate not Model Year 2002 For 2002 model year, as in all previous model years, we available prior to publi- 10 1993 1994 1995 1996 1997 1998 1999 2000 2001 Projected cation deadline. will meet our target to exceed Corporate Average Fuel Toyota Truck Fleet Industry Average Non-Passenger Car (Truck) CAFE Standard Economy (CAFE) requirements for both passenger cars page eighteen TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page nineteen LIFE CYCLE I

Toyota Gasoline Vehicles Are Among the Most Fuel Efficient in Their Class On a class-by-class basis,Toyota offers conven- 40 Figure I 35 tional gasoline-powered vehicles that typically 30

25 rank among the most fuel-efficient in their class.

20 mpg

15 Toyota Passenger Car 10-Year CAFE History 34 Figure J 10

Toyota Annual Passenger Car CO2 per Kilometer Figure N 2002 Model Year Product Data for Selected Models 200 Figure L 2 EPA Fuel Economy 3 Emission Standard Model Engine Transmission CO2 Notes (g/km) 195 City Highway (mpg) (mpg) Federal California

190 2002 Model Year Fuel Toyota Prius 1.5 L See Note 4 52 45 093.9 ULEV SULEV Economy Guide leader among /km 2 185 Compact Cars g CO

180 New 5M/T Lexus IS300 3.0 L 5M/T 18 25 219.7 LEV LEV transmission offering for 2002 175 2002 Model Year Model Year 2002 Fuel Economy 170 1993 1994 1995 1996 1997 1998 1999 2000 2001 Projected Guide leader 5M/T 25 31 169.6 LEV LEV among Toyota Car Fleet Industry Average Toyota M/T SUVs RAV4 2WD 2.0 L Toyota Annual Truck CO2 per Kilometer 2002 Model Year 4A/T 24 29 179.2 LEV LEV Fuel Economy 280 Guide leader Figure M among A/T SUVs 270 2002 Model Year Toyota Fuel Economy 260 Tacoma 2WD Guide leader 2.4 L 4A/T 22 25 200.4 LEV LEV among A/T Standard 250 Pickup Trucks

/km New 2.4L 4-cyl. 2 240 Toyota 2.4 L 4A/T 23 32 174.0 ULEV ULEV engine offering Camry & g CO NOTE: Grams of CO2/km Solara 230 is not regulated in North America, Camry but is being reported here as a refer- 2.4 L 5M/T 24 33 168.6 ULEV ULEV redesigned ence. It is calculated based upon for 2002 220 CAFE levels (miles per gallon) reported by Toyota to the National Highway New model Lexus 4.3 L SAT 18 23 231.3 ULEV ULEV 210 Traffic Safety Administration, con- SC430 for 2002 verted to CO /km. 2002MY industry Model Year 2 2002 estimate not available prior to publi- 200 1993 1994 1995 1996 1997 1998 1999 2000 2001 Projected cation deadline. Toyota Truck Fleet Industry Average Lexus 3.0 L Redesigned ES300 5A/T 21 29 194.7 ULEV ULEV for 2002

T ARGET: > All 2002 Lexus car V-8 engines, used in the LS430, Notes: MEET TIER 2 AND LEV II EMISSION REQUIREMENTS SC430 and GS430, are rated as ULEVs. Certification Vehicle NMOG CO NOx HCOH Standard Category (g/mile) (g/mile) (g/mile) (g/mile) 1. This chart shows 2002 models that are new, redesigned or have new powertrain options; and Additionally, the 2002 Lexus ES300 with a V-6 models that were identified in the 2002 Model Year Fuel Economy Guide as class fuel economy By 2004MY, U.S. vechicles must meet stringent Tier 2 and ZEV ALL 0.000 0.0 0.0 0.000 engine is certified as a ULEV leaders. A similar chart showing a complete listing of all Toyota and Lexus brand models can LEV II vehicle emission requirements of the EPA and SULEV Passenger Car 0.010 1.0 0.02 0.004 & LDT1 be found at www.toyota.com/about/environment. CARB, respectively. Toyota is on course to meet these > The Toyota Sequoia – the largest vehicle ever Passenger Car 0.040 1.7 0.20 0.008 2. EPA fuel economy estimates are determined by averaging numbers gathered through tests & LDT1 ULEV conducted by EPA. Vehicles are tested in a controlled setting, and the results are adjusted to requirements ahead of schedule, on a fleet average basis. offered by Toyota in America – and the popular MDT 0.117 5.0 0.60 0.011 suit real-world driving conditions. Toward these objectives, we can report the following for four-cylinder Toyota Camry are both ULEV certi- Passenger Car & LDT1 0.075 3.4 0.20 0.015 the 2002 model year: 3. Grams of CO2/km is not regulated in North America, but is being reported here as a reference. fied in their respective vehicle categories LEV LDT2 0.100 4.4 0.40 0.018 It is calculated based upon unadjusted, combined fuel economy measurements as reported • An estimated 94 percent of Toyota and Lexus MDV 0.195 5.0 0.60 0.022 by Toyota to the National Highway Traffic Safety Administration. > The Toyota Prius Hybrid is certified as a Super Passenger Car TLEV 0.125 3.4 0.40 0.015 vehicles sold were EPA-certified as Low Emission Ultra Low Emission Vehicle (SULEV) in & LDT1 4. Prius does not have a traditional automatic or manual transmission. Vehicles (LEV) or better. More than one-third of California – the Prius is up to 84 percent cleaner TIER1 MDV 0.390 5.0 1.10 0.022 Toyota and Lexus vehicles sold were certified as for harmful emissions than the average new car Ultra Low Emission Vehicles (ULEV). For example: For further information about emissions certification, see www.epa.gov/autoemissions.

page twenty TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page twenty-one LIFE CYCLE I

190 2002 Model Year Fuel Toyota Prius 1.5 L See Note 4 52 45 093.9 ULEV SULEV Economy Guide leader among /km 2 185 Compact Cars g CO

page twenty TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page twenty-one LIFE CYCLE I

Operation of the Toyota Hybrid System Toyota was first to mass-produce and globally market Figure O Startup Normal Driving Acceleration Deceleration Stopping Startup a practical, competitively-priced, four-door hybrid

Electric Motor & Engine Motor & Engine Battery Charging Engine Automatically Electric Motor Only (Additional power Shuts Off Motor Only passenger car, the Prius. drawn from battery)

advancements in Toyota’s fuel cell development program G OAL: consist of a continuously operating gasoline engine inter- ZEV•NET: AN ENVIRONMENTALLY CONSCIOUS already achieved, we announced in July 2002 that we will INTRODUCE CLEANER ENERGY VEHICLES mittently aided by the electrical motor. The Prius is certi- TRANSPORTATION ALTERNATIVE begin supplying limited commercial fuel cell vehicles to Along with making design improvements in gasoline- fied to California’s Super Ultra Low Emission Vehicle our first U.S. customers around the end of 2002. powered vehicles that will lessen their environmental (SULEV) standards, while most competitor models only Toyota has developed an “environmentally conscious trans- impact, we believe new technologies offer the greatest achieve Ultra Low Emission Vehicles (ULEV) certifica- Recognizing that there is no single solution to the environ- portation alternative” in conjunction with the National Fuel tion. The SULEV standard means nearly 10 times fewer mental impacts of today’s transportation needs, we are promise for the future. The resources Toyota has dedicat- Cell Research Center and the Institute of Transportation ed to these endeavors, and their resulting successes, smog-forming emissions over 120,000 miles of vehicle working with others in the search for new technologies demonstrate our concern for the environment. operation than ULEV. and solutions. For example, Toyota is working to develop Studies at the University of California, Irvine. cleaner burning fuels with ExxonMobil, and with other T ARGET: Toyota is excited about the potential for hybrid technolo- The ZEV•NET program offers commuters in Southern automobile manufacturers on the development and diffu- INTRODUCE ADDITIONAL NEW HYBRID gy’s contributions to a cleaner world. We are committed sion of advanced technology vehicles. California zero- and low-emissions vehicles to get from a rail ELECTRIC VEHICLES BY 2005 to improving the Toyota Hybrid System’s performance. station to their place of employment. Once there, fellow Toyota has been at the forefront of gasoline-electric Soon we will be using this technology across a greater vari- In addition, we continue to explore the market poten- hybrid powertrain technology — an efficient, powerful, ety of models, including fuel cell vehicles. tial for shared-use and so-called “station car programs” employees share the cars for short trips during business that combine mass transit with environmentally gasoline-fueled internal combustion engine combined T ARGET: hours. At the end of the day, the vehicles are driven back to with a quiet electric drive system. Toyota was first to DEMONSTRATE FUEL CELL TECHNOLOGY BY advanced commuter vehicles. In California, Toyota is a the rail station, where other commuters can use them for the mass-produce and globally market a practical, competi- EVALUATING PROTOTYPE BEGINNING IN 2001 partner in the largest station car project in the United tively-priced, four-door hybrid passenger car, the Prius, Toyota has long been at the forefront of automotive fuel States — ZEV•NET (Zero Emission Vehicle Network trip home. Global positioning system (GPS) technology Enabled Transport) (see adjacent story). which we began selling in North America in July 2000. cell technology development and application. Unlike installed in each vehicle, together with a web-based reserva- Prius combines Toyota’s highly sophisticated gasoline- most of our competitors, Toyota began developing its At the same time, we are testing power-generation meth- tion system, makes efficient sharing possible. ZEV•NET helps electric hybrid powertrain technology with familiar vehi- own fuel cell system in 1992, and first demonstrated a ods, such as stationary fuel cells, to reduce the environ- eliminate the pollution associated with a one-person-per-car cle conveniences. It never needs to be plugged in for running prototype in October 1996. Additionally, Toyota mental impact associated with charging electric vehicles. charging and has an EPA-estimated fuel economy rating has led other automakers in developing its fuel cell vehi- Although we believe new technology will eventually sur- freeway commute. of 52 mpg in the city, 45 mpg on the highway and 48 mpg cle using hybrid techniques to capture motion energy, for pass electric vehicle (EV) systems, Toyota continues to combined. To date, over 100,000 Prius model hybrids even greater efficiency. We are confident that this emerg- offer its RAV4-EV to commercial fleets and California The program was launched on April 18, 2002, with 50 Toyota have been sold globally, with sales of over 35,000 in the ing technology holds great promise for reducing pollu- retail customers. There are now over 1,000 RAV4-EVs in cars — the RAV4-EV, the e-com, and the hybrid Prius. United States alone. Prius was the first automobile to tants and the world’s dependence on fossil fuels. operation on U.S. highways. qualify for the Internal Revenue Service’s tax deduction of Since 2000, Toyota has been a member of the California up to $2,000 for hybrid vehicles. Fuel Cell Partnership, an organization of industry and The current Toyota Hybrid System (THS) is technologi- government agencies, whose goal is to promote fuel cell cally superior to competitor systems in a variety of ways. vehicle awareness by demonstrating both the technology Most notably, the THS architecture allows independent and the infrastructure’s viability. We began testing our electric or internal combustion propulsion, or simultane- Fuel Cell Hybrid Vechicle (FCHV-4) on public roads in ous combinations of both gasoline and electric power. June 2001. So far, FCHV-4s have accumulated over The Prius hybrid system is much cleaner for emissions 110,000 km, providing valuable insight toward the com- than current competitive systems, because other systems mercialization of this technology. With significant

page twenty-two TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page twenty-three LIFE CYCLE I

Electric Motor & Engine Motor & Engine Battery Charging Engine Automatically Electric Motor Only (Additional power Shuts Off Motor Only passenger car, the Prius. drawn from battery)

page twenty-two TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page twenty-three LIFE CYCLE II “Toyota’s commitment to ISO 14001 and the quality of its environmental management systems in North America reflects its dedication to excellence beyond the manufacturing of automobiles and components. It includes a genuine concern for the community in

which it operates.” – Russell Thornton ISO Auditor and Manager of Environmental MANUFACTURING Certification, Det Norske Veritas Certification, Inc. We recognize that our manufacturing operations have T ARGET: potentially significant environmental impacts on air, land REDUCE ENERGY USAGE 15 PERCENT and water. Our five-year environmental action plan estab- PER UNIT OF PRODUCTION lishes specific goals to minimize the most significant Our action plan sets an energy reduction target of 15 impacts — energy use/emissions of greenhouse gases, percent per unit of production by the end of FY2005 volatile organic compounds, toxic chemicals, hazardous from the base year of 2000. This reduction in energy

waste disposed at landfills and water consumption. In corresponds to a 15 percent reduction in CO2 emissions. addition, our plan also addresses our suppliers’ environ- In order to achieve this goal, we plan to reduce energy

mental impacts through our Green Supplier Guidelines consumption (as well as CO2) by three percent per program. In the following section we review progress year until FY2005. towards those goals during FY2002. We are currently on Even though production volumes have increased and our track to meet or exceed all of our action plan goals. North American plants have increased in size, we Key to our environmental management program is certi- surpassed our FY2002 target of three percent. In fact, fication to ISO 14001, a voluntary standard that ensures we achieved a reduction of seven percent in energy development of a comprehensive environmental manage- consumption per vehicle from the base year 2000, as ment system. The ISO certification process verifies that shown in Figure P. The figure illustrates our decreasing Toyota’s plants each have a formal environmental policy, a energy usage expressed in units of Gigajoules (GJ)/vehicle system designed to track the plant’s environmental per- (or GJ/unit of production). formance and established mechanisms for continuous improvement. All of our manufacturing plants in North 15 Figure P America, as well as the corporate manufacturing head- Average GJ/Vehicle

quarters, have achieved certification to ISO 14001. 10 10.4 10 10 9.9 9.2 G OAL: NERGY EDUCTION E R GJ/Vehicle 5 We need to reduce our energy use in order to reduce

greenhouse gases — primarily carbon dioxide (CO2) — 1997 1998 1999 2000 2002* originating from our manufacturing operations. 0 *Fiscal year 2002: April ‘01 - March ‘02.

Note: The data presented in the chart are based on averages of site-wide energy use from all of Toyota’s manufacturing facilities in North America.

Main: In the body weld area, leading-edge robotic welders make most welds. Here, Jerry Craig performs custom welding on the body of a Toyota Camry. Inset: Rolls of steel to be turned into Toyota automobile body components by giant hydraulic presses.

page twenty-five LIFE CYCLE II “Toyota’s commitment to ISO 14001 and the quality of its environmental management systems in North America reflects its dedication to excellence beyond the manufacturing of automobiles and components. It includes a genuine concern for the community in

quarters, have achieved certification to ISO 14001. 10 10.4 10 10 9.9 9.2 G OAL: NERGY EDUCTION E R GJ/Vehicle 5 We need to reduce our energy use in order to reduce

greenhouse gases — primarily carbon dioxide (CO2) — 1997 1998 1999 2000 2002* originating from our manufacturing operations. 0 *Fiscal year 2002: April ‘01 - March ‘02.

Note: The data presented in the chart are based on averages of site-wide energy use from all of Toyota’s manufacturing facilities in North America.

page twenty-five LIFE CYCLE II The introduction of new materials, new technology and improved process controls have enabled Toyota to reduce VOCs from body painting by more than 33 percent since 1997.

Figure Q Average VOC g/m2 T ARGET: 40 REDUCE TOXIC CHEMICALS EMITTED Danny Jackson,Team Leader, inspects an air compressor that is part of Toyota’s intensive leak detection program. Reducing the running time of such 37.3 compressors reduces the company’s consumption of energy. 35.4 BY VEHICLE ASSEMBLY PLANTS

2 29.9 28.1 Our action plan calls for us to reduce the TRI/NPRI toxic 20 24.8

g/m chemicals emitted by each vehicle assembly plant to We achieved our energy reduction target through conti- Our environmental action plan sets three targets for 1.0 Kg/vehicle or less. nous improvement (kaizen) activities, including: reduction of these emissions. To achieve our targets, we 1997 1998 1999 2000 2002* developed and implemented a Toxic Release Reduction As a result of our reduction program, we have been • Reducing compressed air usage by improving 0 *Fiscal year 2002: April ‘01 - March ‘02 program that includes: exceeding the 1.0 Kg/vehicle (or less) target since 2000. system-operating control VOCs/Toxic Air Release • Average VOC g/m2 • Researching and developing paints and solvents • Developing waste heat recovery systems in our that help reduce harm to the environment In order to achieve the VOC reductions shown in Figure Q, painting shops KAIZEN REDUCES USE OF CLEANING SOLVENTS we pursued several approaches, including: • Introducing new, high-efficiency • Enhancing lighting control systems for process technologies • Investigating low VOC/Hazardous Air Pollutant Improved technology for capture systems now allows us improved efficiencies (HAP) cleaning solvents • Employing improved production line • Setting criteria for new project development • Introducing new robotics to optimize to recapture more used solvents after cleaning painting operating techniques spray efficiencies equipment. Following the recapture, recyclers seperate paint KAIZEN SAVES ENERGY • Improving data management to quickly check • Installing electrostatic guns to improve our progress and project the impacts of each painting efficiencies materials from the used solvent so we can reuse it, thereby At our plant in Georgetown, Ky., and several others, we improvement strategy • Removing/streamlining painting operations reduced the use of compressed air through leak-detection T ARGET: reducing emissions. • Removing manual spray painting guns from paint programs and re-evaluating part-cleaning operations REDUCE BODY-PAINTING EMISSIONS booths to prevent unnecessary usage of chemicals requiring compressed air. These changes eliminated the OF VOLATILE ORGANIC COMPOUNDS • Reducing use of cleaning solvents need to install additional air compressors, saving energy Volatile Organic Compounds are a category of chemicals that can react photochemically in the atmosphere to form • Increasing tracking of performance data for early and reducing CO2 emissions. ground level ozone — a primary component of smog. Our evaluation of trends/opportunities for improvement environmental action plan sets a target for reducing VOCs • Introducing waterborne painting technology emissions to less than 30 g/m2 for all body paint shops. As • Developing specific targets for new projects G OAL: a measure of progress Figure Q demonstrates that, as a corporation, we have surpassed our goal of 30 g/m2 since DEVELOP EXTENSIVE REDUCTION STRATEGIES 1999, achieving a value of 29.9 g/m2 in that year. In FY2002, TO REDUCE EMISSIONS OF CONCERN we lowered VOC emissions even further to 24.8 g/m2. Our manufacturing facilities release a range of air pollutants into the atmosphere. The majority of these emissions are Volatile Organic Compounds (VOCs) from auto

body painting operations. A portion of the VOCs fall into Toyota continues to reduce solvent emissions by installing the latest the category of toxic air pollutants as identified under the painting technology, such as this state-of-the-art paint booth. U.S. Environmental Protection Agency’s Toxic Release Inventory (TRI) and Environment Canada’s National Pollutant Release Inventory (NPRI).

page twenty-six TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page twenty-seven LIFE CYCLE II The introduction of new materials, new technology and improved process controls have enabled Toyota to reduce VOCs from body painting by more than 33 percent since 1997.

2 29.9 28.1 Our action plan calls for us to reduce the TRI/NPRI toxic 20 24.8

page twenty-six TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page twenty-seven LIFE CYCLE II Since Toyota implemented its action plan our North American plants have already reduced the amount of waste that is disposed at landfills by more than 9,000 tons. TOYOTA PLANT WINS GOVERNOR’S AWARD FOR POLLUTION PREVENTION

Toyota Motor Manufacturing, Indiana, Inc. (TMMI) recently

received the 2002 Governor’s Award for Environmental T ARGETS: REDUCE HAZARDOUS WASTE DISPOSAL AT Excellence in Pollution Prevention. One example of the plant’s Angela Wess (Ky. Plant) pulls parts from a returnable box on the assembly line.Toyota has reduced packaging waste by converting to returnable containers. LANDFILLS BY 95 PERCENT AND LANDFILL success was eliminating lead from a process essential to coat- OF OTHER WASTES T ARGET: G OAL: ing welded cars.The process, known as Electro-Deposition In North America, waste is characterized as hazardous or CONTINUE RESEARCH AND DEVELOPMENT AIMED REDUCE WASTE AND PROMOTE RESOURCE non-hazardous. Hazardous waste is ignitable (i.e. burns (ED), consists of immersing an entire vehicle body in an AT ELIMINATING VOCS/TOXIC CHEMICALS FROM CONSERVATION ACTIVITIES readily), corrosive, or reactive (e.g. explosive) or contains COOLANTS AND CUTTING OILS Our manufacturing facilities continually strive to reduce aqueous solution of ED primer.The ED mixture bonds to all certain amounts of toxic chemicals. In the past, when new or reformulated coolants were waste, especially hazardous waste. Our Toyota “5 Rs” exposed metal surfaces, serving two purposes: developed, coolants were evaluated based on specific cri- Program for Waste Reduction is key to our efforts. The Our North American action plan targets a 95 percent 1) providing rust protection to all exposed metal on the body, teria such as ability to promote tool life, resistance to bio- program continuously challenges our team members to reduction in hazardous waste disposal at landfills by logical fouling and cost, to name a few. Over the past ten find new ways to limit waste generation. FY2005 from a 1999 base year. The plan also commits us and 2) providing for a strong bond between the metal body to continuing research and development activities aimed years, we have worked together with our suppliers to T OYOTA’ S “ 5RS ” P ROGRAM and primer. at reducing the landfill of other wastes. reformulate many of the coolants and cutting oils that we FOR W ASTE R EDUCTION use. Coolants with toxins have been reformulated or Since we implemented our action plan in 2000, our North Though the ED process is essential to the manufacture of our • Refine: Substitute materials and change replaced with non-toxic materials. We also reduced VOC American plants have already reduced the amount of waste designs to expand “Reduce, Reuse and vehicles, the resultant waste stream contained lead silicate. emissions as a result of these reformulations. In one that is disposed at landfills by more than 9,000 tons: instance, VOC emissions resulting from the use of one Recycle” capabilities The U.S. Environmental Protection Agency designates lead as • Hazardous waste disposed at landfills by coolant type were reduced from 18 to six percent by • Reduce: Develop and design production a toxic chemical.Toyota’s technical division and paint suppliers 11 percent to 0.20 Kg/vehicle reformulating the coolant with less volatile components. technologies that generate less waste have worked together to formulate a lead-free ED pigment.We In addition, Toyota’s coolant suppliers help maintain • Non-hazardous trash disposed at landfills • Reuse: Reuse waste materials in the same coolant systems within the plant. By doing so, the life of by 40 percent are working to replicate this experience throughout our North production process the material is extended, in some cases up to three years. • Landfill disposal of sand from casting operations American plants. This eliminates the need to frequently dump the system • Recycle: Utilize waste materials in by 70 percent a different capacity and clean it out. It also reduces the demand on natural As a result, the Indiana facility not only reduced the amount of We employed many techniques in order to achieve these resources and potential impacts to the environment. • Retrieve Energy: Utilize waste energy resources reductions, including: waste generated per vehicle by 20 percent from 2000, but also, • Eliminating some disposable packaging and using all ED waste generated after October 2001 was lead-free and Figure R NAMC TRI/NPRI Air Release per Vehicle returnable packaging materials 2 non-hazardous. As a result, lead containing waste was reduced 1.7 • Segregating materials such as wood, cardboard, by 100,000 pounds in 2002, and disposal costs were reduced plastic and metal, and recycling them 1.2 by 95 percent. 1 1.1 1.0 • Developing alternative waste management tech- 0.9 niques (e.g. providing sand wastes to cement kilns Kg/vehicle 1997 1998 1999 2000 2001 to be used as a raw material in the production 0 of cement) Calendar Year TRI/NPRI Summary North America • Kg/Vehicle

page twenty-eight TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page twenty-nine LIFE CYCLE II Since Toyota implemented its action plan our North American plants have already reduced the amount of waste that is disposed at landfills by more than 9,000 tons. TOYOTA PLANT WINS GOVERNOR’S AWARD FOR POLLUTION PREVENTION

Toyota Motor Manufacturing, Indiana, Inc. (TMMI) recently

page twenty-eight TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page twenty-nine LIFE CYCLE II We work with our suppliers to promote business

activities that better protect the environment.

In June 2000, we issued Green Supplier Guidelines

that promote “greener” purchasing activities.

G OAL: T ARGET: ESTABLISH GREEN SUPPLIER GUIDELINES COMPLY WITH CHEMICAL BAN We work with our suppliers to promote business activities LIST/ENVIRONMENTAL DATA SHEET Figure S KAIZEN SAVES WATER Landfill Waste Kg/Vehicle that better protect the environment. In June 2000, we North American suppliers must eliminate use of chemi- 40 issued Green Supplier Guidelines that promote “greener” cals on Toyota’s global chemical ban list from new and/or At Toyota’s plant in Cambridge, Ontario, a system was 30 34 32 purchasing activities. Under this program, we require reformulated materials. Our corporate and plant selected suppliers to: Environmental Affairs departments check environmental installed to allow recycling of water.The system 20 24 data sheets prior to approving new materials from suppli- • Obtain ISO 14001 certification by the end of 2003 removes process waste materials from the wastewaters ers. If they find a banned chemical, they reject the order Kg/Vehicle 10 (we will allow new suppliers as of January 2002 two 1999 2001* 2002* and require the supplier to find an alternative material. and allows the clean water to be reused in certain years in which to obtain ISO 14001 certification) 0 *Fiscal year 2001: April ‘00 - March ‘01. *Fiscal year 2002 April ‘01 - March ‘02. painting operations.This kaizen has reduced the • Comply with Toyota’s Chemical Ban List Landfill Waste Summary North America • Kg/Vehicle ISO 14001 PROGRAM SAVES WASTE AND MONEY • Develop procedures that ensure compliance with amount of water we purchase from the water company. hazardous materials transportation guidelines Bodine Aluminum, Inc., with plants in St. Louis and Troy, Mo., • Provide Toyota with Environmental Data Sheets on Figure T Average m3/Vehicle provides Toyota with cast aluminum parts.When Bodine began 6 select materials beginning August 2000 its ISO 14001 program, it targeted two production-related areas 4.6 4.6 4 4.3 4.2 4.3 Select suppliers have been identified using potential for environmental impact and purchasing criteria. for improvement.The company began measuring core scrap and /Vehicle 3 2 T ARGET: the melting pigging ratio (the weight of metal pigged within the m 1997 1998 1999 2000 2002* CERTIFY KEY SUPPLIERS TO furnace that is not used for production after melting).The former 0 ISO 14001 BY DECEMBER 2003 *Fiscal year 2002: April ‘01 - March ‘02. measured about 14 percent and the latter about 22 percent. We require key suppliers of raw materials and/or parts Summary of Water Conservation • m3/Vehicle and components to develop and implement an environ- Within a year, ISO 14001 management systems enabled the G OAL: mental management system that conforms to the company to reduce the core scrap to about six percent and IMPLEMENT AGGRESSIVE PLANS TO REDUCE CONSUMPTION OF WATER ISO 14001 standard. Their systems must be certified by the melting pigging ratio to about one percent, saving We continuously strive to conserve and protect water resources throughout end of 2003. Toyota is providing instructional assistance our manufacturing processes. Our primary use of water is during painting to suppliers during the certification process. In addition, significant energy and nearly $3 million a year. operations, where a protective coating is applied to the vehicle. ISO 14001 requires facilities to conduct periodic internal compliance reviews of their environmental manage- T ARGET: ment systems. REDUCE TOTAL WATER USAGE BY 15 PERCENT PER UNIT OF PRODUCTION Our North American environmental action plan calls for a reduction in total water use by 15 percent per unit of production from the 2000 base year by the end of FY2005. Figure T illustrates the results of our water management efforts, as expressed in m3/vehicle. We reduced water consumption from 4.6 m3/vehicle in 1997 to 4.3 cubic meters (m3/vehicle) in FY2002.

page thirty TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page thirty-one LIFE CYCLE II We work with our suppliers to promote business

activities that better protect the environment.

In June 2000, we issued Green Supplier Guidelines

that promote “greener” purchasing activities.

page thirty TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page thirty-one LIFE CYCLE III “Our greatest challenge is maintaining our momentum with new products that are right for our customers and right for the environment.” – Jim Press Chief Operating Officer,Toyota Motor Sales, U.S.A., Inc.

ALES We are always looking for ways to minimize the envi- Most of our sales-related suppliers are covered under the S ronmental impact of our sales, distribution and after-sales same “Green Supplier Guidelines” as described in Life servicing operations. Our five-year action plan sets specif- Cycle II (page 31). However, smaller sales-related suppli- ic goals related to sales and distribution, which are dis- ers who decide not to certify under ISO 14001 are encour- cussed in the following section.1 While we do not have aged to align their environmental practices with ours. direct control over our franchised Toyota and Lexus dealers, we do encourage environmental excellence at their dealerships. Toyota U.S. Vehicle and Parts Distribution Centers with ISO 14001 Certification

G OAL: 18 Figure U ESTABLISH AN ENVIRONMENTAL MANAGEMENT SYSTEM 16 An environmental management system encourages companies to incorporate environmental management into 14 long-term and short-term business strategies and every- day operations. We are in the process of establishing 12 environmental management systems at all of our

operational facilities. 10 T ARGET: ISO 14001 CERTIFICATION AT ALL PARTS AND 8 VEHICLE DISTRIBUTION CENTERS BY FY2005 Toyota is committed to achieving ISO 14001 certification 6 at all vehicle and parts distribution centers by FY2005, and, currently 82 percent of our sites are certified. All of Certified # Sites (cumulative) Total 4 our on-going vehicle distribution centers are currently certified, and eight of 11 of our parts distribution facili- 2 ties have ISO 14001 certified environmental management systems in place. Our Chicago and New York parts distri- 0 bution centers (PDCs), located in Aurora, Ill., and West 1998 1999 2000 2001 2002 Caldwell, N.J., respectively, and our North American Parts Calendar Year Center, Hebron, Ky., are scheduled for certification in Number of Sites Uncertified Number of Sites Certified 2003 and 2004.

1Toyota Canada Inc.’s goals and actions related to sales and distribution operations in Canada can be found at www.toyota.ca.

Main: Kenneth Cartier performs a final quality check on a Camry assembled at Toyota’s Kentucky plant. Inset: Ernie Lopez, ISO coordinator for Toyota’s Los Angeles parts distribution center, checks returnable packaging containers, part of the company’s returnable parts programs.

TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page thirty-three LIFE CYCLE III “Our greatest challenge is maintaining our momentum with new products that are right for our customers and right for the environment.” – Jim Press Chief Operating Officer,Toyota Motor Sales, U.S.A., Inc.

1Toyota Canada Inc.’s goals and actions related to sales and distribution operations in Canada can be found at www.toyota.ca.

TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page thirty-three LIFE CYCLE III In 2001, improvements in bulk shipping and returnable packaging saved Toyota more than 412,000 pounds of cardboard, 107,000 pounds of wood and more than $1 million.

F ACILITY C OMPLIANCE AND T ARGET: Attendees and speakers at Toyota’s Third Annual Environmental Compliance Conference, from February 25 – March 1, 2002 in Torrance, Calif. C ONFORMANCE R EVIEWS IMPLEMENT NATIONWIDE To help keep our sales and service operations in compli- WASTE-TRACKING PROGRAM G OAL: We continue to improve our automated HAZMAT parts ance with regulations, we conduct annual, scheduled We are on track to complete this first target by the end of compliance reviews, as well as surprise reviews. If the PROMOTE EXCELLENCE IN HANDLING AND identification and transportation shipping system, in FY2003. This year we established waste-tracking metrics facility has been ISO certified, we perform an additional TRANSPORTING HAZARDOUS MATERIALS coordination with Toyota Motor Corporation and Toyota and began monitoring those metrics in our field opera- ISO conformance review. In 2001, we performed such We receive, ship and store hazardous materials Motor Manufacturing North America. tions. We are implementing a Web-based tracking system reviews at 44 Toyota facilities across North America. (HAZMAT) contained in components such as air bag to collect and analyze data more easily and systematically. We also take an active role in industry associations such During these compliance review visits, we take the oppor- modules, seat-belt pretensioners, paint and refrigerants. T ARGET: as the Council on the Safe Transport of Hazardous tunity to provide the appropriate training to all applicable In 1998, we developed a comprehensive HAZMAT SET NATIONWIDE WASTE-REDUCTION TARGETS Articles and the Dangerous Goods Advisory Council. In associates at the facility. compliance plan. The key objectives of our HAZMAT addition, we have taken a leadership position in creating Our second target is to set nationwide waste-reduction plan are to: the North American Automotive Hazardous Action G OAL: targets. We will measure progress at vehicle distribution REDUCE WASTE AND CONSERVE RESOURCES • Protect customers, TMS associates, Committee (NAAHAC), an organization comprised of centers by kilograms of waste sent to landfill per vehicle the community and the environment U.S. automotive manufacturers. We are actively working to reduce waste from our sales distributed, and at our parts distribution centers by kilo- and service operations and have set four key targets: grams of waste sent to landfill per million dollars of parts • Establish the best practices in TOYOTA MOTOR SALES HOSTS THIRD ANNUAL distributed. Since we are still developing baseline waste/ our industry ENVIRONMENTAL COMPLIANCE CONFERENCE RESOURCE MANAGEMENT WORKING GROUP recycling information, we have not yet set company-wide • Maintain 100 percent compliance with all COLLECTING DATA waste reduction targets. We anticipate publishing these applicable HAZMAT regulations More than 100 associates from Toyota Motor Sales, U.S.A., Inc. targets by the end of FY2003. (TMS) facilities and private distributors nationwide — mostly T ARGET: In 2001,Toyota established the Resource Management Working Within our sales operations, the Information Systems HAZMAT and environmental coordinators — attended an MAINTAIN 100 PERCENT COMPLIANCE WITH ALL Group as one of five TMS environmental issue working groups. department has also put into operation a nationwide pro- APPLICABLE HAZMAT REGULATIONS Environmental Compliance Conference, hosted by TMS, from gram to recycle computer equipment, including desktops, This group has focused on collecting baseline data about In accordance with U.S. Department of Transportation February 25 – March 1, 2002, in Torrance, Calif. The five-day laptops, servers, monitors and printers. In FY2002, requirements, we established a nationwide network of conference consisted of environmental, ISO 14001 and HAZMAT recycling and resource conservation activities, and has through this program we recycled 11,316 pieces of com- HAZMAT facility coordinators and HAZMAT associates. training, working group sessions and presentations from developed standardized metrics to measure our progress. puter equipment weighing a total of approximately 196,000 pounds. All of our sales and distribution opera- The facility coordinators direct HAZMAT transportation TMS management and pertinent regulatory agencies. activities in their facilities while the associates include In addition, the working group is implementing a Web-based tions, excluding dealerships, participate in this program. those who load, unload or prepare hazardous materials Speakers and presenters included representatives from the environmental data tracking system that will allow TMS to track T ARGET: for transportation. We develop and run training pro- California Environmental Protection Agency, Federal Aviation IMPLEMENT A RETURNABLE-PACKAGING PROGRAM environmental data more easily and systematically.This will help grams to keep coordinators and associates up-to-date and Administration, United States Coast Guard, Ford, Nissan, Autoliv AT PARTS DISTRIBUTION CENTERS fully informed. We also conduct HAZMAT transportation and Denso.Visitors attended from Toyota Motor Corporation, the company develop appropriate resource conservation goals Our third waste reduction target is to establish a return- and environmental compliance reviews at all sales-related Toyota Motor Manufacturing North America,Toyota Technical and enhance the information we report in future issues of our able-packaging program at all parts distribution centers, facilities that ship hazardous materials, including those at where volume warrants by FY2005. We will measure suc- Center,Toyota Canada Inc.,Toyota Motor Europe, private private distributors. For the fourth consecutive year, we corporate environmental report. cess against this target by the percentage of parts centers distributors Gulf States Toyota, and Southeast Toyota, as achieved our target of zero Notices of Violation for participating in the program. This project is currently on HAZMAT regulations. well as Servco, the Toyota distributor in Hawaii.

page thirty-four TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page thirty-five LIFE CYCLE III In 2001, improvements in bulk shipping and returnable packaging saved Toyota more than 412,000 pounds of cardboard, 107,000 pounds of wood and more than $1 million.

page thirty-four TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page thirty-five LIFE CYCLE III Toyota is exploring opportunities to use Figure V Waste Wood Pallets • Metal • Paper • Plastic Corrugated Cardboard • Waste Oil renewable energy sources. As a first step, we Antifreeze • Paint-related Waste are using photovoltaic solar panels in our new Manufacturing Vehicle Distribution Centers Plants (6) Parts Torrance, Calif., south campus buildings. Centers Dealerships (2) Regional Parts Parts Distribution Centers (9) Suppliers

KAIZEN IMPROVES SHIPMENT OF WIND DEFLECTORS G OAL: REDUCE GREENHOUSE GASES Waste The TMS North American Parts Operations Division evaluates We have set a goal to reduce greenhouse gas emissions, Metal • Paper • Wood Pallets Returnable Plastic • Corrugated Cardboard packaging in place packaging for parts sent to vehicle distribution centers, identifies which are associated with climate change, from our parts used in the greatest volume and then looks for improvements, North American sales and service operations. Initially, or kaizens, in packaging those parts. For example, the division we are collecting data to gain insight into the scale of track to reach our goal – we now have ongoing returnable our impacts. packaging programs at each level in the distribution sys- PORTLAND VEHICLE DISTRIBUTION CENTER found that suppliers of rear wind deflectors installed on certain NAMED RECYCLING LEADER ARGET tem (Figure V). At this point, not all materials going Toyota 4-Runner trucks had been sending the deflectors individu- T : COMPILE GREENHOUSE GAS INVENTORY through the system are packaged in returnable containers. The Association of Oregon Recyclers recently named Toyota’s ally packaged. After kaizen, the supplier used bulk packaging of the We are committed to completing a greenhouse gas However, both of our large-parts centers receive some Vehicle Distribution Center, Portland, Ore.,“Company Recycler of parts, reducing the amount of cardboard boxes and wood pallets the Year” for 2001.The center’s early recycling efforts blossomed (GHG) inventory by FY2004. It will measure total tons of parts in returnable containers. Both also send parts in needed, and saving time and money. returnable containers to seven of our nine regional parts into a facility-wide program that helps the environment and GHG emissions, tons of GHG emissions per vehicle dis- distribution centers. All nine centers now ship some parts saves money. In 1998, the facility adopted a four-step plan: 1) tributed and tons of GHG emissions per million dollars “dumpster diving” to evaluate potential recyclables; 2) defining of auto parts distributed. to dealerships in returnable containers. G OAL: and adopting a mission statement; 3) educating associates about REDUCE ENERGY USE In the summer of 2002, we began collecting baseline data In addition, we have extended this program to two pri- recycling; and 4) working with recycling vendors to reduce waste. vate distributors that handle Toyota vehicles and parts in Toyota is strongly committed to conserving natural for 2000 and 2001, starting with a pilot study of the TMS the United States – Gulf States Toyota, Inc. and Southeast The center found recycling vendors for corrugated cardboard, resources, especially energy. Consequently, we added a headquarters campus. We then expanded the project to Toyota Distributors, LLC. The program is being extended metal, paper, wooden pallets, foam, RapGard®, Styrofoam™, new goal to our five-year environmental action plan that other sales facilities nationwide in the fall. When the data to Toyota Canada Inc. in 2002 and we will track our fluorescent light bulbs, batteries, used oil, and other items. challenges us to take action to reduce energy use. collection project is finished, we will develop a greenhouse gas reduction strategy for our sales-related operations. progress there. By 1999, these efforts enabled the site to reduce its average T ARGET: T ARGET: monthly garbage by 26 percent and divert an additional 107,928 ESTABLISH ENERGY USAGE DATABASE G OAL: pounds of solid waste away from landfills. In 2001, the center INCREASE RETURNABLE PACKAGING Our first step toward this new goal is to establish an ener- PROMOTE ENVIRONMENTAL RESPONSIBILITY saved more than $51,000 in landfill disposal costs and generated AND DIRECT SHIPMENT PROGRAMS gy usage database and measurement system. We are col- AMONG DEALERS more than $14,000 in revenue. Over time, the center has reduced TO VEHICLE DISTRIBUTION CENTERS lecting baseline electricity and natural gas consumption While Toyota and Lexus dealerships are independently the amount being recycled, reflecting the company’s upstream owned and operated, we strongly encourage them to We are employing many improvements to achieve this reduction programs, such as bulk packaging, as well as reuse of data from the utilities at all sales-related facilities nation- build and run environmentally advanced operations and fourth waste reduction target, including bulk shipments materials (see chart). wide for 2000 and 2001. To give us a more complete pic- and returnable packaging. In 2001, such improvements ture of our energy usage, we tested an advanced utilities offer our assistance in several important ways. In fact, Waste Reduction at many of our dealers have already taken a leadership role enabled us to save more than 412,000 pounds of card- Portland Vehicle Distribution Center metering system at seven facilities during the spring of

Pounds Per Vehicle Processed in this area. board, 107,000 pounds of wood and more than 160,000 12 2002 to obtain real-time data on electricity and natural gas usage. We will evaluate all this information so that we $1 million (see related storyon page 37). 150,000 10 can calculate the need for more detailed targets in 140,000 8 the future. 130,000 6

120,000 4 We are also exploring opportunities to use renewable energy sources. As a first step, we are using photovoltaic Vehicles Processed Vehicles 110,000 2 solar panels in our new Torrance, Calif., south campus 100,000 0 Calendar Year 1999 2000 2001 buildings (see related story on page 39).

Vehicles Processed Recycled Material Garbage

page thirty-six TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page thirty-seven LIFE CYCLE III Toyota is exploring opportunities to use Figure V Waste Wood Pallets • Metal • Paper • Plastic Corrugated Cardboard • Waste Oil renewable energy sources. As a first step, we Antifreeze • Paint-related Waste are using photovoltaic solar panels in our new Manufacturing Vehicle Distribution Centers Plants (6) Parts Torrance, Calif., south campus buildings. Centers Dealerships (2) Regional Parts Parts Distribution Centers (9) Suppliers

Vehicles Processed Recycled Material Garbage

page thirty-six TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page thirty-seven LIFE CYCLE III NEW TOYOTA HEADQUARTERS EXPANSION JOINS THE GREEN BUILDING INITIATIVE

Toyota’s 624,000 square-foot South Campus headquarters expansion in Torrance, Calif., is a leading national environmental building initiative.The design and construction of the new buildings include TOYOTA DEALERSHIP A GREEN FLAGSHIP many innovative “greener” building techniques. For example, the designers specified use of wood from certified sustainable forests Longo Toyota, located in El Monte, Calif., is the largest Toyota dealership in the world. It’s also a model for greener operations at all North for construction and interior finishes as well as steel from recycled American Toyota and Lexus dealerships.“Maintaining an environmentally safe dealership is a matter of social responsibility and legal compli- automobiles to form the buildings’ structural beams and columns. ance,” says Manager, Human Resources and Environmental/ Safety Compliance Coordination, Ken Rankin. And contractors are recycling more than 90 percent of the waste generated by demolition and construction activities. With support from Toyota’s Environmental Assistance Network, Longo Toyota assessed its compliance obligations and its environmental In addition, the buildings are high-performance envelopes that impacts.The dealership serviced 98,000 vehicles in 2001, accumulating approximately 1,600 gallons of waste oil and 400 gallons of waste will enable them to exceed state energy-efficiency mandates by antifreeze per week. Its body shop repaired and repainted more than 500 vehicles for its customers. 20 percent.The facility also will include 500 kW of roof-mounted photovoltaic solar panels, the largest privately funded photovoltaic The dealership recycles these waste fluids.Wastewater goes into clarifiers or oil-water separators. Hazardous materials such as refrigerants project in California to date. For future advances, the site plan Doug Tucker and Mark Yamaguchi in front of the building under construc- includes an alternative energy “yard”for possible on-site “greener” and parts containing mercury or lead are handled carefully and disposed of in accordance with applicable regulations. Monthly inspections tion at Toyota’s South Campus sales headquarters expansion,Torrance, power generation. Calif.The building incorporates 500 kW of photovoltaics, energy and ensure that Longo Toyota’s high environmental standards are maintained. water efficiency features, wood from sustainable forests and steel from Toyota hopes this project receives a gold LEED™ (Leadership in recycled automobiles. Energy and Environmental Design) award from the U.S. Green In addition, the dealership provides environmental education for all of its employees. All new hires attend a formal 20-hour training course at T ARGET: Building Council under its green building certification program. Penske College, where several hours of instruction are devoted to safety and environmental issues. All new hires also work with their supervi- ADD ENHANCED FEATURES TO THE The new facility will be the largest LEED™ certified project in the sors to complete a checklist addressing specific safety and environmental issues. ENVIRONMENTAL ASSISTANCE NETWORK United States to date. The following are some of the improvements we have The U.S. Green Building Council, headquartered in Washington, made to EAN Online during the past year: D.C., is a nonprofit coalition promoting the understanding, J AMES T OYOTA O UTLET regular communications kept dealer awareness high and development and accelerated implementation of green building In March 2001, U.S. Environmental Protection Agency provided dealerships with important information • Increased the database of searchable federal and policies, programs, technologies, standards and design practices. (EPA) Administrator Christie Whitman presented an about regulatory issues and waste stream management state compliance documentation 13 percent In June 2002,Toyota Motor Sales joined the Green Building “Environmental Quality Award” to James Botsacos, owner best practices. since 2001, offering information from all 50 states Council as a member.To learn more about the Green Building Council visit www.usgbc.org. of James Toyota Outlet, Flemington, N.J., for the In January 2001, we launched the Environmental • Made it easier for dealers to navigate the site, ask eco-friendly design and operation of his unique Assistance Network (EAN) Online to provide dealers questions and submit comments by e-mail or a automobile dealership. Botsacos ensured that develop- with instant access to comprehensive, accurate up-to-date toll-free phone number ment of the dealership was done with respect for the local waste stream management and compliance information. • Updated state regulatory contacts environment and with pollution prevention in mind. As a EAN Online is a partnership with CCAR-Greenlink, a To realize Process Green, REF has identified the result, building contractors disturbed the local topogra- not-for-profit organization partially funded and support- • Added all back issues of the newsletter in PDF following strategies: phy as little as possible during construction. In addition, ed by the U.S. Environmental Protection Agency. This format for printing, and added a simple search • Procure and use resources in the most environ- the dealership features a glass design that makes maxi- new program serves as a resource and planning tool with engine to make it easy for dealers to find indi- mentally intelligent, cost-effective and reliable mum use of natural light, a service bay area with no floor information from federal, state and many local regulatory vidual articles by topic drains and a wastewater system that recycles water until it manner possible agencies. We know from Web-usage statistics that the • Added some Spanish-language documents to is trucked off the premises for treatment. EAN site has averaged about 300 hits per day since the Web site • Participate in government and professional envi- Toyota’s five-year environmental action plan also set two January 2002. ronmental organizations and programs to share G OAL: targets for enhancing our dealer environmental knowledge and accomplishments In addition, Toyota prepared a 1,500-square-foot dealer- PROMOTE GREENER BUILDING CONSTRUCTION performance. We have achieved both. • Work to affect a similar shift in the organizations ship environmental management exhibit for the National AND MAINTENANCE OPERATIONS and culture of our business partners T ARGET: Automobile Dealers Association convention held in The Real Estate and Facilities Department (REF) of our LAUNCH THE TOYOTA ENVIRONMENTAL New Orleans during January 2002. The exhibit showcased sales organization has created Process Green to demon- T ARGET: ASSISTANCE NETWORK ONLINE waste stream management equipment, consumable prod- strate environmental leadership by utilizing practices, ACHIEVE LEED™ CERTIFICATION FOR THE SALES Toyota has provided dealers with environmental manage- ucts and techniques. The exhibit provided an opportunity processes and products that are sustainable, address end- HEADQUARTERS SOUTH CAMPUS EXPANSION ment tools since 1993. Initially, our program provided for dealers from the entire industry to use cost and meet business needs in a socially responsible BUILDINGS BY THE END OF 2003 every dealer with an information binder kept current by see Toyota’s commitment to helping manner. Conceptually, Process Green is the evolutionary In 2001, we received the Calibre award (see awards section) periodic, mailed updates. We also provided our dealers dealerships understand, implement and journey that tracks the migration from a disposable cul- for interior improvements at the Toyota Project Center build- with a special newsletter three times per year. These manage sound environmental programs. ture to a sustainable one. This process goes beyond building in Long Beach, Calif. More recently, we applied these envi- ing systems and materials and is inclusive of all REF ronmental methods during the expansion of our sales head- projects and ongoing facilities operations, as well as quarters campus in Torrance, Calif. (see related story). business partners.

page thirty-eight TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page thirty-nine LIFE CYCLE III NEW TOYOTA HEADQUARTERS EXPANSION JOINS THE GREEN BUILDING INITIATIVE

page thirty-eight TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page thirty-nine LIFE CYCLE IV

“Toyota will endeavor to become a leader of

global regeneration through its outstanding

environmental technologies.” – Fujio Cho President,Toyota Motor Corporation

ECYCLING Globally,Toyota is focused on efforts to ensure that Toyota already has a good track record in these areas. For R future Toyota vehicles have less environmental impact example, we have not used mercury in electrical switch when they reach the end of their useful lives. applications for convenience lighting because we recognized the potential health and environmental impacts. Currently, 75 to 80 percent, by weight, of each end-of-life Toyota vehicle is reused or recycled. Recent legislative T ARGET: initiatives in Europe and Japan have inspired automakers GATHER NORTH AMERICAN BASELINE DATA to continue improving the recyclability rates of their FOR SELECTED SOCS end-of-life vehicles. So, Toyota’s worldwide goal is for all Today, we are working to analyze the SOC content of a its vehicles to be 95 percent recyclable by 2015. typical North American-produced Toyota vehicle, and Additionally, European countries, as well as various states recently completed a study of the 2002 Model Year and provinces in North America, are developing legisla- Camry. Our research indicates that the 2002 Model Year tion that addresses automotive use of various Substances Camry has zero amounts of sodium azide, very small of Concern (SOCs). To meet the challenges posed by quantities of arsenic and cadmium, and mercury is these important initiatives, Toyota has set global targets contained only in displays. We have made significant for current and future vehicle development. reductions in chlorine (used in polyvinyl chloride) and lead, based on comparable 1996 Toyota vehicle data, but G OAL: we have not yet entirely eliminated either substance. M ANAGE S UBSTANCES OF C ONCERN Recent worldwide legislation has challenged automakers to become active partners in the drive to reduce or eliminate the use of SOCs — including mercury, hexavalent chrome, lead and cadmium — in vehicles, and to assist in the assurance of safe recycling or disposition of SOCs from current end-of-life vehicles.

Main: Rene L. Marquez inspects a Toyota Prius battery module at a battery recycling facility in Anaheim, Calif. The return program was set up to manage and recycle expired batteries from the Prius and Toyota electric vehicles, well in advance of their introduction to the market.

TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page forty-one LIFE CYCLE IV

“Toyota will endeavor to become a leader of

global regeneration through its outstanding

environmental technologies.” – Fujio Cho President,Toyota Motor Corporation

TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page forty-one LIFE CYCLE IV Toyota engineers work collaboratively with our suppliers to implement designs using components that can be reused or recycled in an economically viable manner.

G OAL: In mid 2002, company environmental experts conducted DEVELOP RECYCLING DESIGNS AND PROMOTE “Design for Recyclability” strategies training for the key The completely redesigned 2002 Toyota Corolla uses approximately 5 Kg more Toyota Super Olefin Polymer (TSOP) than the previous generation Corolla. TSOP, EXPANDED USE OF RECYCLED MATERIALS engineers working on the next generation Avalon’s a highly recyclable plastic material, can be used in everything from the bumper fascia to the instrument panel, improving the economies of scale for the potential collection and recycling of that material at the vehicle’s end-of-life. A vehicle’s recyclability at the end of its useful life is, in redesign. They based the training on extensive experience part, a reflection upon the design strategies used to create and materials provided by Toyota Motor Corporation. it. That’s why Toyota engineers in North America and T ARGET: W ORKING WITH S UPPLIERS As part of our recycling efforts, we have also developed Japan work collaboratively to implement designs using parts remanufacturing programs in North America to DEVELOP NORTH AMERICAN SOC Cooperation with our suppliers is key to our efforts to components that can be reused or recycled in an help minimize waste and dependence on raw materials. STRATEGY FOR BEYOND 2002 eliminate and reduce the use of SOCs in our vehicles. In economically viable manner. Currently, we have programs in place to collect and Having established a baseline for SOC use, we are setting many cases, our suppliers possess unique expertise remanufacture starters, alternators, air conditioning specific targets for continued management of SOC use regarding alternatives for various SOCs. We’ll continue to T ARGET: compressors, steering gears, transmissions, clutch covers beyond 2002. With each newly developed vehicle, we plan encourage them to seek out such alternatives. In addition, I NCORPORATE M ATERIAL AND D ESIGN and disks, computers, brake calipers and water pumps. to set increasingly aggressive targets for eliminating, we are currently working with them to develop our sec- STRATEGIES FOR INCREASED VEHICLE RECYCLABILITY replacing or reducing critical SOCs. These targets are ond generation Green Supplier Guidelines (described in Every four or five years, most Toyota vehicles undergo a based on Toyota’s global SOC guidelines. They not only Life Cycle II, page 31). We plan to add “Parts and major redesign. This timing offers our engineers a good will allow Toyota to comply with European and Japanese Components Guidelines” and issue the new version of the opportunity to consider and implement newly developed laws and regulations, but also will help us be a leader on North American guidelines in the near future. ideas for the improved recyclability of our North this issue in North America. American vehicles. We will make continuous improvements with each design in order to reach our 2015 goal. Thus far we have established the following targets to be reached by 2005:

Arsenic (As) Eliminate (except for semiconductors)

Hexavalent Reduce to less than one-half of 1998 levels Chrome (Cr+6)

Cadmium (Cd) Eliminate

Mercury (Hg) Eliminate (except for electric discharge tubes)

Lead (Pb) Reduce to less than one-third of 1996 levels

As part of our recycling efforts,Toyota has programs to collect and remanufacture starters, alternators, air conditioning compressors, steering gears, transmissions, clutch covers and disks, computers, brake calipers and water pumps.

page forty-two TOYOTA NORTH AMERICA TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page forty-three LIFE CYCLE IV Toyota engineers work collaboratively with our suppliers to implement designs using components that can be reused or recycled in an economically viable manner.

Arsenic (As) Eliminate (except for semiconductors)

Hexavalent Reduce to less than one-half of 1998 levels Chrome (Cr+6)

Cadmium (Cd) Eliminate

Mercury (Hg) Eliminate (except for electric discharge tubes)

Lead (Pb) Reduce to less than one-third of 1996 levels

page forty-two TOYOTA NORTH AMERICA TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page forty-three ENVIRONMENTAL CONTRIBUTIONS “Promoting preservation of the environment must not end with just one company’s efforts; it is important, as a corporate citizen, to communicate on a broader level with society.” – James Olson COOPERATION Senior Vice President,Toyota Motor North America As a global company,Toyota’s commitment to help Fifty annual grants to teams of teachers nationwide for create a cleaner and better world must extend beyond our innovative classroom environmental and physical products and manufacturing processes and to society as a science programs through the Toyota TAPESTRY whole. Each year, we invest millions of dollars toward program, in partnership with the National Science education and other social programs in the communities Teachers’ Association where we operate. We are increasingly focusing these Grants from the Toyota USA Foundation to several inno- philanthropic contributions on programs that enhance vative educational programs that improve the society’s understanding of our fragile planet and what can teaching of mathematics and science in classrooms be done to protect it. Additionally, we actively pursue partnerships with corporations, government and environ- Corporate sponsorship of National Public Lands Day, in mental groups to develop cleaner technologies. We sup- cooperation with the National Environmental Education port our employees’ volunteerism in improving the envi- and Training Foundation. 70,000 volunteers, including ronment of their communities and the nation. From time Toyota employees, clean and improve America’s public to time, Toyota has been recognized for our environmen- lands during this annual event tal achievements and such awards are among those of Sponsorship of numerous Earth Day 2002 activities which we are most proud. across the country, including an event at the United L OCAL AND N ATIONAL Nations where a Prius was auctioned via eBay to benefit P HILANTHROPY the Earth Day Network Toyota recently provided support to numerous science Creation of the Toyota Nature Centre by Toyota Motor and environmental programs including: Manufacturing Canada (TMMC), in partnership with Two endowment grants of $1 million each to the the Grand River Conservation Authority, allows children National Audubon Society for education programs in to learn about the environment in a natural setting New York and Los Angeles (see related story on page 46) Sponsorship of the Evergreen Learning Grounds pro- $1 million to the American Museum of Natural History, gram, turning school settings across Canada into natural New York City, in support of the AstroBulletin, a display learning environments of live high-definition views of the earth’s landforms and $200,000 grant to the Pratt Museum, Homer, Ala., oceans from space for its Kachemak Bay Discovery marine science A $1.1 million sponsorship of environmental education education program and tree-planting programs in partnership with the 26 RAV4-EVs provided for clean-up efforts in New York National Arbor Day Foundation City after the events of September 11

Main: Toyota is a corporate sponsor of National Public Lands Day, when 70,000 volunteers clean and improve America’s public lands on the last Saturday in September.

TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page forty-five ENVIRONMENTAL CONTRIBUTIONS “Promoting preservation of the environment must not end with just one company’s efforts; it is important, as a corporate citizen, to communicate on a broader level with society.” – James Olson COOPERATION Senior Vice President,Toyota Motor North America As a global company,Toyota’s commitment to help Fifty annual grants to teams of teachers nationwide for create a cleaner and better world must extend beyond our innovative classroom environmental and physical products and manufacturing processes and to society as a science programs through the Toyota TAPESTRY whole. Each year, we invest millions of dollars toward program, in partnership with the National Science education and other social programs in the communities Teachers’ Association where we operate. We are increasingly focusing these Grants from the Toyota USA Foundation to several inno- philanthropic contributions on programs that enhance vative educational programs that improve the society’s understanding of our fragile planet and what can teaching of mathematics and science in classrooms be done to protect it. Additionally, we actively pursue partnerships with corporations, government and environ- Corporate sponsorship of National Public Lands Day, in mental groups to develop cleaner technologies. We sup- cooperation with the National Environmental Education port our employees’ volunteerism in improving the envi- and Training Foundation. 70,000 volunteers, including ronment of their communities and the nation. From time Toyota employees, clean and improve America’s public to time, Toyota has been recognized for our environmen- lands during this annual event tal achievements and such awards are among those of Sponsorship of numerous Earth Day 2002 activities which we are most proud. across the country, including an event at the United L OCAL AND N ATIONAL Nations where a Prius was auctioned via eBay to benefit P HILANTHROPY the Earth Day Network Toyota recently provided support to numerous science Creation of the Toyota Nature Centre by Toyota Motor and environmental programs including: Manufacturing Canada (TMMC), in partnership with Two endowment grants of $1 million each to the the Grand River Conservation Authority, allows children National Audubon Society for education programs in to learn about the environment in a natural setting New York and Los Angeles (see related story on page 46) Sponsorship of the Evergreen Learning Grounds pro- $1 million to the American Museum of Natural History, gram, turning school settings across Canada into natural New York City, in support of the AstroBulletin, a display learning environments of live high-definition views of the earth’s landforms and $200,000 grant to the Pratt Museum, Homer, Ala., oceans from space for its Kachemak Bay Discovery marine science A $1.1 million sponsorship of environmental education education program and tree-planting programs in partnership with the 26 RAV4-EVs provided for clean-up efforts in New York National Arbor Day Foundation City after the events of September 11

Main: Toyota is a corporate sponsor of National Public Lands Day, when 70,000 volunteers clean and improve America’s public lands on the last Saturday in September.

TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page forty-five ENVIRONMENTAL CONTRIBUTIONS Since no single company can protect the environment on its own,Toyota teams up with leading organizations, including other automakers, on environmental initiatives.

Five RAV4-EVs supplied to San Francisco’s Presidio Trust E NVIRONMENTAL P ARTNERSHIPS United States Green Building Council, to promote the E NVIRONMENTAL A WARDS for a one-year demonstration project WITH S TAKEHOLDERS understanding, development and use of greener building Leading environmental media and business organizations policies, programs, standards and design practices have recently recognized Toyota’s environmental efforts Team Member Donation Programs that provide grants to Since no single company can protect the environment on with awards including: eligible non-profit organizations where Toyota its own, Toyota teams up with leading organizations, CCAR-Greenlink, to provide information about employees volunteer including other automakers, on environmental initiatives. environmental regulatory issues and waste stream man- “Best Engineered Car of 2001” (Toyota Prius) from Examples include: agement to car dealerships Automotive Engineering International, official publica- Toyota Motor Manufacturing, Kentucky’s annual Fall tion of the Society of Automotive Engineers Haul roundup of household hazardous waste in Owen Electric, to purchase renewable power for the NATIONAL WILDLIFE FEDERATION HONORS THE PRIUS central Kentucky quality lab at Toyota’s manufacturing headquarters in One of “10 Best Engines for 2001,” from AutoWorld Kentucky. Toyota estimates that annual usage under the Magazine, for the Prius’“benchmark executions of Sponsorship of numerous American Lung Association The National Wildlife Federation (NWF) presented its 2002 contract will be 1,560,000 kWhs, equal to the amount of engine design, innovation and manufacturing” events such as “Blow the Whistle on Asthma” power used annually by 1,300 average Kentucky homes National Conservation Achievement Award, the “Connie,” to “Corporate Conscience Award”, 2001, from the Center Toyota for Prius, the world’s first mass-produced hybrid vehicle. U.S. Environmental Protection Agency Green Power for Responsibility in Business, for the Prius, the develop- TOYOTA SUPPORTS URBAN AUDUBON CENTER Partnership, to share information about greener power The foundation, one of the largest member-supported conserva- ment of hybrid systems and partnerships with GM and and promote renewable energy. Toyota joined the tion education advocacy groups in the U.S, cited the Prius as a other companies to develop cleaner automotive engines Toyota has provided $2 million in endowment funding to the partnership in August 2002 real-world example of reducing use of fossil fuels.“With the Prius, and fuels National Audubon Society for its first urban education centers Clean Cities Program, sponsored by the U.S. Department Toyota has taken a giant step forward in producing a car that’s “Connie,” National Conservation Achievement Award, of Energy, to promote the use of advanced technology in New York and Los Angeles.The center, in New York’s Prospect 2001, from the National Wildlife Federation for the Prius easy on the environment, but attractive to consumers,” said and alternative fuel vehicles. Toyota also provided (see related story page 47) Park in Brooklyn, provides New York City children and their 10 RAV4-EVs Mark Van Putten, NWF president,“At a time when our nation and “Company Recycler of the Year,” 2001, from the families with hands-on nature education experiences. In Los Electric Vehicle Association of the Americas, to advance the world are struggling with the need to slash the use of fossil Association of Oregon Recyclers, for Toyota’s Portland, electric vehicle transportation technologies, including fuels, this car is an example that it can be done.” Ore., vehicle distribution center Angeles, the grant supports a similar urban center in Debs Park, battery, hybrid and fuel cell vehicles, and cleaner fuels “Calibre Award for Environmental Achievement, 2001,” scheduled to open in the fall of 2003. General Motors, to jointly develop alternative propulsion from the 13th Annual International Interior Designers methods and hybrid technologies Association, for interior improvements of Toyota’s Long Nissan, to supply state-of the-art hybrid system compo- Beach, Calif. Project Center Building nents and discuss future joint development “Green Power Leadership Award,” 2001, from the U.S. ExxonMobil, to develop more efficient internal combus- Department of Energy and the U.S. Environmental tion engines, hybrids and fuels for lower emission vehicles Protection Agency, for efforts to protect the environment through the purchase of green electric power ZEV•NET, in partnership with the University of California Irvine, to create a U.S. Department of Energy “Waste Reduction Award,” from the California Integrated shared-use vehicle demonstration project where com- Waste Management Board, for programs at Toyota’s muters drive Prius, RAV4-EV and e.com vehicles North American Parts Center, Ontario, Calif. (received in 2000, 2001 and 2002) City of Cambridge, Ont., to support its Green City From left to right, Bryan Pritchett, Chair of the NWF Board of Directors, Jim Olson, Senior Vice President of Toyota Motor North project which organizes and funds events for community America, and Mark Van Putten, President and CEO of the National environmental improvements Wildlife Federation.

page forty-six TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page forty-seven ENVIRONMENTAL CONTRIBUTIONS Since no single company can protect the environment on its own,Toyota teams up with leading organizations, including other automakers, on environmental initiatives.

page forty-six TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT 2002 page forty-seven LIST OF ACRONYMS NOV Notice of Violation As Arsenic (a Substance of Concern) NOx Nitrogen Oxides CAFE Corporate Average Fuel Economy NPRI National Pollutant Release Inventory (Canada) CARB California Air Resources Board NWF National Wildlife Federation CCAR® Coordinating Committee for Automotive Repair Pb Lead (a Substance of Concern) Cd Cadmium (a Substance of Concern) PDF Portable Document Format™ NFORMATION Cd Drag Coefficient SOC Substance of Concern I CO Carbon Monoxide SULEV Super Low Emission Vehicle CO2 Carbon Dioxide TRI Toxic Release Inventory (U.S. EPA) Cr+6 Hexavalent Chrome (a Substance of Concern) ULEV Ultra Low Emission Vehicle DOE U.S. Department of Energy VOC Volatile Organic Compound ED Electro Deposition ZEV Zero Emission Vehicle EMS Environmental Management System ZEV•NET Zero Emission Vehicle Network Enabled Transport EPA U.S. Environmental Protection Agency

EV Electric Vehicle T OYOTA-SPECIFIC A CRONYMS FCHV Fuel Cell Hybrid Vehicle EAN Environmental Assistance Network FY Fiscal Year NAEC North American Environmental Committee GHG Greenhouse Gas NAPM North American Planning Meeting GJ Gigajoules PDC Parts Distribution Center HAZMAT Hazardous Materials REF Real Estate and Facilities Department Hg Mercury (a Substance of Concern) TCI Toyota Canada Inc. GPS Global Positioning System TLS Toyota Logistical Services HAP Hazardous Air Pollutant TMA Toyota Motor North America, Inc. HC Hydrocarbon TMC Toyota Motor Corporation HEV Hybrid Electric Vehicle TMMC Toyota Motor Manufacturing Canada, Inc. ISO International Organization for Standardization TMMI Toyota Motor Manufacturing, Indiana, Inc. Kg Kilogram TMMK Toyota Motor Manufacturing, Kentucky, Inc. LEED™ Leadership in Energy & Environmental Design TMMNA Toyota Motor Manufacturing North America, Inc. LEV Low Emission Vehicle TMS Toyota Motor Sales, U.S.A., Inc. LEVII California’s Second Generation Low Emission Vehicle Program TSOP Toyota Super Olefin Polymer MPG Miles per Gallon TTC Toyota Technical Center, U.S.A., Inc. MY Model Year VDC Vehicle Distribution Center NMOG Non-Methane Organic Gas

For additional information or comments, please contact: TOYOTA MOTOR NORTH AMERICA, INC. Environmental Report Manager 1850 M Street NW, Suite 600 Washington, DC 20036 Email: [email protected] Or visit www.toyota.com/environment

page forty-nine LIST OF ACRONYMS NOV Notice of Violation As Arsenic (a Substance of Concern) NOx Nitrogen Oxides CAFE Corporate Average Fuel Economy NPRI National Pollutant Release Inventory (Canada) CARB California Air Resources Board NWF National Wildlife Federation CCAR® Coordinating Committee for Automotive Repair Pb Lead (a Substance of Concern) Cd Cadmium (a Substance of Concern) PDF Portable Document Format™ NFORMATION Cd Drag Coefficient SOC Substance of Concern I CO Carbon Monoxide SULEV Super Low Emission Vehicle CO2 Carbon Dioxide TRI Toxic Release Inventory (U.S. EPA) Cr+6 Hexavalent Chrome (a Substance of Concern) ULEV Ultra Low Emission Vehicle DOE U.S. Department of Energy VOC Volatile Organic Compound ED Electro Deposition ZEV Zero Emission Vehicle EMS Environmental Management System ZEV•NET Zero Emission Vehicle Network Enabled Transport EPA U.S. Environmental Protection Agency

page forty-nine TOYOTA NORTH AMERICA ENVIRONMENTAL REPORT TOYOTA 2002

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