Sustainability Report 2018/2019 Table of Contents

2018/2019

SUSTAINABILITY REPORT 2018/2019 TABLE OF CONTENTS

Foreword 04 Highlights of the Year 06 A word from the President 08 About the Report 10 Toyota 14 Governance and Management 26 Strategy and Performance 30 Solutions for the Future 40 Stakeholders 44 Environmental Performance 64 GRI Standards Content Index 78

Toyota do Brasil’s proposal is to strengthen diversity in all areas of the company, without any distinction in filling administrative or operational positions.

Cover: Suellen Francine Sanches - Parts Procurement Area (Material Handling) 08 FOREWORD 2018/2019

In 2018, the company set new milestones in its history in Brazil by celebrating 60 60 YEARS years of its presence and intense operation in the country. Six decades of a history highlighted by the constant search for innovation and growth, while never forgetting values and principles that go back to the origins of the company in Japan. REINVENTING By completing these six decades in Brazil, Toyota takes another step towards its commitment to transforming the automotive industry with mobility solutions, adapting to a society that is increasingly concerned with the use of environmentally THE FUTURE responsible technologies. Therefore, in yet another edition of its Sustainability Report, the company shows all its stakeholders how it has been working to reduce its impacts and increase its contribution to the development of the Brazilian economy.

Enjoy your reading.

4 5 HIGHLIGHTS OF THE YEAR 2017/2018/2019 2018

• 4 units Indaiatuba • 60 years of the 2017: São Bernardo do Campo company in the country. 190,000 units sold. Sorocaba Porto Feliz • Investment of 2018: R$ 1 billion to 200,112 units sold. modernize the plant in Indaiatuba.

• Beginning of the car • 257 dealerships in sharing program – 2018. Growth of 10% the Toyota Mobility over the previous year. Service.

• 7,8% market share in 2018. 6 7 A WORD FROM THE PRESIDENT 2017/2018/2019 2018

<102-14> SUSTAINABLE GROWTH The last two years have been of intense work for Toyota do Toyota’s future is permeated by many long-term chal- Brasil. In our journey of a little more than 60 years in the lenges. In order to overcome each one of them, the brand country, we are very proud of the work done so far, a path made a commitment to list them all within the Toyota highlighted by our active participation in Brazil’s industri- 2050 Environmental Challenge. There, we established six al and economic development and presence in the lives major steps towards the full sustainable development of of thousands of people throughout the country: custom- our operations, to cooperate with the generation of an ers, employees, dealerships, and suppliers who helped us increasingly carbon-free society. Thus, the first and most create this story of success. important challenge listed is to reduce by 90% emissions Today, after just over two years as President of TDB from our vehicles by 2050. Objectively, we are commit- (Toyota do Brazil Ltda.), I am prouder than ever to be part ted to stopping production of vehicles that are exclusively of an innovative and motivated team that always seeks powered by fossil fuels. to put a smile on the faces of our customer by offering This goal reinforces Toyota Motor Corporation’s belief the best in services and products. With this team, we are that the automotive industry is changing and, to ade- increasingly focused on being more than an automaker, quately meet the challenges of mankind, the company but a company that is constantly changing and ready to must constantly innovate in an environmentally responsi- respond to the challenges of urban mobility. ble manner. We believe Toyota’s future is based on hybrid In 2017, the Brazilian automotive market began the technology For this reason, the strategy was to place in steps towards recovery. There were 2.24 million cars reg- the New Generation of the Corolla, one of the most iconic istered, while in 2018, the Brazilian market reached the cars in the entire industry, the new hybrid flex engine, de- mark of 2.56 million cars sold, up 14.6% over 2017. This veloped in partnership between Toyota Japan and Brazil. year, the market continues the pace of growth: until March Here in Brazil, I highlight the partnership between 2019 (the month in which we closed our fiscal year), just the Toyota Mobility Foundation and the WRI (World Re- over 607,000 units had been sold - an 11% increase over sources Institute) - two companies that seek to develop the 545,000 cars sold in the same period in 2018. And the a more accessible society and that together have created year was also one of investments, with the announcement the “Inovemob” challenge in order to identify proposals of R$ 1 billion to modernize the plant in Indaiatuba, which for innovative, inclusive, and viable urban mobility. Five is preparing for the next generation of the Corolla. startups received investments to implement a pilot proj- To support the sustainability of our business over the ect of their ideas, and the winner, chosen in December, long term, we are working in a more strategic and com- received a US$ 100,000 contribution for implementation petitive manner to ensure our development, especially (read more in our Solutions for the Future section). through exports. In 2017, we exported more than 57,000 In recent years, many obstacles have been overcome, units. In 2018, we broke the record of 65,000 cars sent but the challenges never end. Thus, Toyota invites every- to markets in the region. Today, we are proud to deliv- one to “reinvent the future” together, consolidating our er high-quality cars produced here in Brazil to countries legacy and writing the next chapters of this story. such as Argentina, Uruguay, Paraguay, Peru, Costa Rica, Honduras, Colombia, and Chile, which accounts for 30% of our production. For six decades in Brazil, we have worked tirelessly to bring novelties and complete our portfolio. We have al- Enjoy your reading. ways believed that our main goal is to seek smiles from our customers. It was like this in 2018, with the launch of the Yaris, a model in the B-premium segment that today Rafael Chang is a purchase option between the already consolidated President of Toyota do Brasil and Chairman of the Etios and Corolla. Board of Trustees of the Toyota do Brasil Foundation

8 9 ABOUT THE REPORT 2018/2019

ABOUT THE REPORT

<102-1, 102-40, 102-42, 102-44, 102-46, 102-47, 102-48, 102-49, 102-50, 102-54 >

Transparency and dialogue with stakeholders are its materiality process every two years. During values of great importance to Toyota. Thus, for the 2017/2018 cycle, an update was conducted another year, the company releases its Sustain- in order to align material topics with topics rel- ability Report, produced based on the guidelines evant to the sector. of the Global Reporting Initiative (GRI), Standards The process adopted to define the content of the version (Core option). This material contains the report included, in addition to the Global Vision, main data on the company’s performance during an initial consultation with RepRisk2, SASB3 e the last fiscal year, which covers the period from RobecoSAM4, the analysis of materiality results April 1, 2017 to March 31, 20191, and covers all from the previous cycle, and the benchmarking company units in operation in the country, as well of material topics published by companies in the as its social component, the Toyota Foundation. sector, in order to map potentially material topics. In order to identify the relevance of econom- This year, Toyota also took its first step towards ic, environmental, and social topics to the busi- the Sustainable Development Goals. The results ness, and to report results, Toyota carries out are presented in the following table.

1 GRI indicators refer to the fiscal year 2017/2019 period, but eventually extend beyond this period. 2 RepRisk (www.reprisk.com), tool that provides information about environmental and social issues that represent financial and reputational risks to a company. 3 Sustainability Accounting Standards Board (www.sasb.org) which defines specific standards for the reporting of corporate sustainability, ensuring that disclosure is material, comparable, and useful to investors. 4 Corporate Sustainability Assessment Methodology

Engagement <102-43> In order to guarantee transparency, ethics, and mutual development in the dialogue with its stakeholders, Toyota do Brasil periodically carries out consultation and engagement actions in order to understand the perception of its social, economic, and environmental topics and impacts. 10 11 ABOUT THE REPORT 2018/2019

VISION 2020 CORRELATION VISION 2020 CORRELATION MATERIAL TOPIC APPROACH STAKEHOLDERS MATERIAL TOPIC APPROACH STAKEHOLDERS PILLARS WITH SDG PILLARS WITH SDG 1. Show the way 1. Show the way Employees 2. The future Provide excellent 5. Commitment Customers Innovation and Be a leader in new of mobility services and to quality Dealerships Post-sales Customers cutting-edge technologies for the 6. Constant assistance to those 8. Exceed Suppliers strategies Dealerships technology automotive industry Innovation who purchase a expectations Trade 7. Respect for Toyota vehicle 9. Rewarded with Association the planet a smile

5. Commitment Create and Social and Ensure the best to quality share value in Customers environmental 3. Enriching lives Customer experience and 8. Exceed Customers communities within Communities responsibility in around the world satisfaction the smile of our expectations Dealerships our radius Dealerships communities customers 9. Rewarded with of influence a smile 4. Safer and more Work toward Management for 1. Show the way Customers responsible ways to Solutions for mobility in cities Occupational the safety, health, Employees 2. The future of Dealerships transport people urban mobility where our vehicles Health and Safety and quality of life of Unions mobility Communities 5. Commitment travel people on their job to quality Ensure the quality Customers of components, Strengthening 4. Safer and more Dealerships Vehicle safety parts, and vehicles, the relationship responsible ways to Suppliers 11. Employing the and quality and protect the with the supply transport people Trade Supply Chain talent and passion Suppliers integrity of our chain, ensuring Association of people customers compliance and quality Evaluate raw materials, Effective 10. Challenging Employees Customers Life cycle technologies, and 7. Respect for Economic management to Goals Dealerships Dealerships management processes in order the planet Performance ensure financial 12. There is always Trade Suppliers to control the life health and growth a better way Associations cycle of the vehicle 3. Enriching lives around the world Make emissions Employees Ensuring ethics, 7. Respect for the control of pollutants Communities Human rights integrity, and planet and greenhouse 6. Constant Unions Low-carbon gases a competitive Innovation Employees individual freedoms 11. Employing the strategy advantage and 7. Respect for Customers talent and passion a management the planet of people requirement Respect for the at Toyota environment and Employees Environmental contribution to 7. Respect for Communities Invest in training, performance the sustainable the planet 11. Employing the Dealerships talent retention, Employees development of Labor relations talent and passion and employee Unions the planet of people well-being 12 13 TOYOTA 2018/2019

Toyota 16 Milestones of a success story 18 TOYOTA Toyota do Brasil 22 Product portfolio 24

14 15 TOYOTA 2018/2019

GROWTH DRIVEN

BY INNOVATION MODERNITY AND HISTORY

To celebrate 110 years of Japanese immigration in Brazil and 60 years of the company in the In 60 years in Brazil, the history of Toyota has challenge of breaking the paradigms of the country, Toyota participated actively in the 21st Japan Festival, held in July 2018 in São Paulo. gone hand in hand with the development of automotive sector through environmentally the Brazilian automotive industry. Strongly responsible technologies and the creation At its booth, the company set up a diorama that alludes to the history of the first Japanese im- rooted in its Japanese origins, over the last of solutions that can contribute to the de- migrants to arrive in Brazil aboard the ship Kasato-Maru. In addition, a timeline showed visitors few decades the company has been rein- velopment of Brazilian society. the company’s 60-year history by displaying several models produced by Toyota, including the forcing its Toyota way of doing business - the By positioning itself as a company fo- prototype for the Prius flex, which combines the hybrid and ethanol technologies. Toyota Way - a philosophy that has continu- cused on mobility, Toyota works to bring In addition, in order to improve the efficiency of one of the most visited areas of the exhibition - ous improvement and respect for people as to its business strategy solutions that go the food court - Toyota worked in partnership with the associations to implement the Toyota Pro- pillars for building lasting relationships with beyond vehicle production, and move to- employees, customers, and communities. ward developing connectivity initiatives for duction System (TPS) method, which focuses on managing and optimizing industrial and service Headquartered in the city of São Bernardo customers and improving urban mobility processes, always prioritizing quality within the shortest possible time and at the lowest cost. do Campo (Greater São Paulo), since its ar- services. In line with the company’s global The initiative provided faster food preparation, less waste, and reduced customer waiting time. rival in Brazil, Toyota has sought to offer its guideline, in Brazil, Toyota is beginning to customers increasingly better cars and ser- study solutions and invest in partnerships vices. Thus, even during a time of economic that will help us understand the best way downturn, the company achieved its second forward toward a low-carbon, shared-econ- best sales performance in history, with re- omy future. [Learn more in the Strategy and sults 5% higher than the previous year. Performance section] <102-3> Driven by these guidelines and motivated by the transformation in the automotive industry, Toyota do Brasil continues to build REINVENTING THE FUTURE a consolidated business strategy in order to It is with this in mind that the company cel- successfully lead innovation projects that ebrates six decades in the country. A mes- provide mobility in the safest, most effective sage about innovation, that comes with the manner, in harmony with the environment.

Toyota seeks to bring to its business strategy solutions that go beyond vehicle production.

16 17 MILESTONES OF A SUCCESS STORY A 60-year history that begins during a period of great industrialization incentive in the country and that gained success by placing customers first and contrib- 2018/2019 uting to the development of Brazilian society.

1958 1962 1996 2000 2005 2009

Opening of the office in São Paulo Inauguration of the New plant Modernização Planned growth Creation of the Toyota Foundation On January 23, 1958, Toyota be- São Bernardo do Campo plant In an area of 1.5 million sqm and New investment of US$ 300 mil- With 2,500 sqm of built-up area, In order to concentrate its social gan operations in Brazil when it Toyota inaugurates its first indus- an investment of US$ 150 million, lion for the modernization and the inauguration of the Guaíba efforts and take on an important installed an office in the center trial unit outside of Japan and the company began construction structural expansion of the In- Distribution Center in Greater commitment with Brazil, in 2009, of the city of São Paulo. In De- begins to locally manufacture the of its second industrial unit in the daiatuba plant. Porto Alegre (RS) opens the door Toyota created the “Fundação cember of that same year, the Bandeirante model. city of Indaiatuba, in upstate São to Toyota’s logistics operations Toyota do Brasil” with the goal of company began its activities as Paulo. The plant was intended between Brazil and Argentina, promoting Sustainability through a vehicle manufacturer and, five for the production of the Corolla, to receive, by highway, the Hilux activities that promote environ- months later, launched the Ban- which began in September 1998. 2001 and SW4 utilities and spare parts mental preservation and civism. deirante - Toyota’s first iconic produced at the plant in Zárate model in the country. The end of the Bandeirante (Argentina). In that same year, we After celebrating the production opened a Government Affairs of- of 100,000 units of the Bandeiran- fice in Brasília. te in 1999, Toyota ends production of the vehicle. As a result, the São 2012 Bernardo plant concentrates on manufacturing auto parts. Sales success With an initial investment of US$ 600 million, the new Soro- caba unit (SP) is inaugurated, the third in the country. Created based on the Eco Factory concept (which establishes criteria for high-standard environmental efficiency), the plant is responsible 2013 for the production of the subcompact Etios in its hatchback and Clean technology sedan versions, and was respon- The Prius - the world’s first mass-produced hybrid car - ar- sible for significantly improving rives on the Brazilian market with the mission to showcase the Etios family, making the sub- the advance of this technology in the country. Since then, it has compact a sales success. become the undisputed leader in its segment. In addition, in the same year, the company began exporting the Etios to other markets in South America.

18 19 TOYOTAMILESTONES OF A SUCCESS STORY 2018/2019

2014 2015 2016 2017

One more Rebirth Proximity to customers Applied Research Center Toyota announces the construction Corporate headquarters moved to the São Bernardo do Campo Completion of the third stage of the revitalization The second stage of the project to revitalize the of a new plant to produce engines unit, beginning the “São Bernardo Reborn” project. Divided into project of the São Bernardo plant with the inaugu- São Bernardo unit is concluded with the inaugu- in the city of Porto Feliz, in upstate three phases, a total of R$ 70 million was invested in the initiative. ration of the company’s Visitor Center, one of Toyo- ration of Toyota’s first Applied Research Center São Paulo. The first phase was marked by the implementation of a third shift ta’s most technological visitor centers in the world. in Latin America, designed to integrate activities at the plant’s forging unit, which began producing parts to supply In less than a year, the Porto Feliz unit had al- related to the research and development of new the future engine plant in Porto Feliz (SP). ready surpassed 100,000 units produced of the products and suppliers. This is the fourth in the In order to improve the logistics operation in Brazil’s North- Etios 1.3L and 1.5L engines. world outside of Japan and helps TDB create spe- east region, in December a new vehicle distribution center was cial editions, evaluate new materials, and assess inaugurated near the port area of Suape, metropolitan region of the technical capacity of parts suppliers. Recife (PE). With an investment of R$ 508 million, Toyota inaugurates the Porto Feliz plant for the production of hatchback and sedan engines for the subcompact, the Etios. The plant was built to be flexible, allowing for expansion according to con- sumer demand.

2018

60 years in Brazil Focused on being a protagonist in the transformation of the automotive industry, Toyota celebrates six decades in the country with the theme “Reinventing the Future.” This year, the company is working on major projects, the most important of which is the launch of the Yaris, a model that fits between the subcompact Etios and the mid-size sedan Corolla in the company’s portfolio in Brazil. Celebration of the 20th anniversary of the Indaiatuba unit and announcement of the R$ 1 billion investment to modernize the plant, which is preparing for the next generation of the Corolla. Five years of the plant in Sorocaba, which has the capacity to produce 108,000 units of the Etios hatchback and sedan models. Launch of the Toyota Tour at the São Bernardo do Campo unit. The action relies on a partnership with the city’s Industrial Tourism Program and was created to bring the public closer to Toyota’s history, values, culture, and way of working. Toyota Foundation’s Ambientação Project completes 10 years. 20 21 8 6 3 7 TOYOTA 2 4 1 2018/2019 RIO GRANDE DO SUL ESPÍRITO SANTO 9

TOYOTA DO BRASIL 5 <102-1, 102-2, 102-4, 102-6> 6 Since 1958, when the company inaugurated its first office in the country, Toyota has written a story of con- 3 tinuous growth in Brazil. Today, the company has 6,993 7 employees in its four plants in the cities of Indaiatuba, 2 Sorocaba, Porto Feliz, and São Bernardo do Campo 4 (all in SP), in the three vehicle distribution centers in 8 1 Guaíba (RS), Vitória (ES), and Suape (PE), the parts distribution center in Votorantim (SP), and its representative office in Brasília (DF). 5 Guaíba 6 Vitória Distribution center Distribution center Start of Start of operations: operations: Opening 2005 5 2009

FÁBRICAS & SEDE 9

1 São Bernardo do Campo SÃO PAULO PERNAMBUCO DISTRITO FEDERAL Corporate Headquarters, Applied Research Center, Visitor Center and parts production Start of operations: 6 1962 3 7 8 4 2 2 Indaiatuba (SP) 1 Corolla production Start of operations: 1998 3 7 3 Sorocaba (SP) 4 Porto Feliz 9 7 Suape 8 Brasília 2 Production of the Etios (hatchback and sedan) Engine5 production (Etios) Distribution center Representative 4office 1 and the Yaris Start of Start of Start of Start of operations: operations: operations: operations: 2016 2015 2005 22 2012 6 23 3 7 TOYOTA 2018/2019 PRODUCT PORTFOLIO Toyota YARIS With a broad, diversified line of cars, Toyota works A global sales success, Yaris arrives in Brazil in the Altis, with a 2.0L engine and the same transmis- works to provide customers to provide customers with better, more efficient, hatchback and sedan versions with optional sun- sion. Recently, Toyota has improved the XEi ver- sustainable and, above all, safe cars. In the last roof, automatic CVT transmission or manual six- sion with a black interior trim, giving the model with better, more efficient, edition of the Motor Show, held in São Paulo in speed transmission, as well as an extensive list of a more modern look. Marketed in Brazil since November 2018, the company highlighted the ben- convenience, technology, and safety items in all its 1994, more than 870,000 units of the Corolla have sustainable, and safe cars efits of hybrid technology and presented innova- versions. Its modern design is perfect for consum- already been sold. tions such as the Yaris X-Way, the new version of ers looking for a car with an urban appeal, without the Hilux pickup truck, and the new Lexus hybrid compromising on quality, reliability, or durability. HILUX RAV4 models that have just arrived in the country. The new X-Way version arrives on the market in The best-selling mid-size pickup truck in the SUV Crossover with bold lines and powerful 2019 with black alloy wheels, roof rack, bumper country celebrates its 50th anniversary with a new engine, the RAV4 is sold in Brazil in two versions: and fender application, exclusive side trims, and front-end design on the SR, SRV, and SRX models, 2.0 VVT-i 16V with 143 hp and 19.1 kgfm, with ETIOS items similar to those from higher-end segments. available in seven versions with a 2.8L four-cyl- CVT transmission simulating seven speeds and In its 2018 line, the Etios was redesigned and fully inder diesel engine with variable geometry tur- 4x2 wheel drive, with a single version. Among its developed by the innovation center at the São bocharger and intercooler, and four versions with standard features are leather seats, seven air- Bernardo do Campo unit. In hatchback and sedan COROLLA Dual VVT-i Flex 2.7L 16V DOHC engine. Recognized bags, dashboard with colored TFT display, and versions, it maintains the Dual VVT -i engine with The company’s sales leader in the country and for its robustness, in Brazil the Hilux family gains 17-inch alloy wheels. 1.3L and 98 cv as entry model, and offers options in the mid-range sedan category worldwide, the another model developed regionally by Toyota such as automatic transmission and Toyota Corolla is offered in GLi 1.8L versions with leather do Brasil and Toyota Argentina with the support Smart Screen dashboard, unique in the subcom- trim and Multi-Drive transmission, XEi; XRS and of the company GR: Hilux GAZOO Racing. Based CAMRY pact segment. on SRX top-of-the-line configuration, the version With luxury and elegance in every detail of its was adjusted to improve drivability and stability in design, this premium Toyota sedan gained off-road conditions, and will be available in Brazil bolder lines also based on the TNGA platform beginning in 2019. adopted by the Prius. Available in Brazil with a 3.5 V6 engine and a 2.5-liter four-cylinder engine, an eight-speed automatic transmission, PRIUS and Entune, Toyota’s new multimedia system. Sold in Brazil since 2013, the Prius is one of Toy- ota’s biggest bets for expanding the hybrid vehicle market in the country. With 3,246 units marketed LEXUS since its launch, the Prius represents Toyota’s With almost 30 years of success, the Lexus ES vision of how mobility will be in the future, with the debuts its 7th generation in Brazil and arrives development of ever better and more environmen- with a new platform in a hybrid version with 2.5L tally friendly cars. In its new generation, the vehicle four-cylinder engine coupled with a Hybrid Tran- was built on Toyota’s New Global Architecture con- saxle transmission, guaranteeing performance cept, with improved comfort and drivability, lower and fuel efficiency. The new Lexus UX was center of gravity, and reduced aerodynamic drag. developed under the new GA-C platform, with low center of gravity, lightweight structure, and adjustable suspension. In Brazil, it will be sold SW4 in the 250h 4x2 version with 2.0L gasoline engine With a sophisticated design, enhanced cabin, and coupled with an electric motor in a next-gener- high-performance engine, the SW4 is perfect for ation hybrid transaxle, as well as the new Hybrid those looking for strength combined with elegance. Transaxle transmission. With Dual VVT-i technology specially designed for the Brazilian market, the sport utility vehicle includes in its latest version a flex line with SR 4x2 five-seat and SR 4x2 seven-seat options, both with To learn about all our awards and certifications, a renewed list of standard equipment. visit www.toyota.com.br/mundo-toyota/premios

24 25 GOVERNANCE AND MANAGEMENT 2018/2019 GOVERNANCE AND MANAGEMENT

Trust and reputation 28 Ethics, transparency, and integrity 29

26 27 GOVERNANCE AND MANAGEMENT 2018/2019

TRUST AND REPUTATION GOVERNANCE STRUCTURE <102-17, 102-18, 102-20, 102-22, 102-23, 102-26, 102-28> ETHICS, TRANSPARENCY, AND INTEGRITY Operating in 160 countries, Toyota is recognized With strong indicators and internal controls re- analyzing the results and defining strategies for worldwide for its respect for people, ethical atti- garding transparency, ethics, and anti-corruption the Brazilian market during its monthly meetings. tude, and transparency in its relationships. Among practices, Toyota do Brasil has in place a gover- While directly responsible for the decisions made in its principles is respect for the laws of all countries nance model in line with its parent company in Brazil, the BOD must inform or gain formal approval in which it operates, with transparent and fair ac- Japan and with the Latin American and Caribbe- from the parent company any measures considered tivities, as well as respect for the culture and cus- an region. This model, which since 2015 has had more sensitive or strategic. toms of the places where it is present and contrib- a dedicated leadership in the region, seeks to The Directors Meeting is made up of Vice Pres- uting to economic and social development through strengthen the synergy between the subsidiaries. idents and Directors, and is responsible for man- business activities.<102-16> In Brazil, the governance structure is comprised aging projects focused on the company’s strategic In Brazil, the company has in place a robust of the Board of Directors (BOD) and the Directors objectives in the country. There are also thematic Masahiro Inoue structure to analyze, handle, and respond to Meeting, directly reporting to TDB President Ra- working groups that support leadership in decision grievances, complaints, and claims related to fael Chang and to Toyota’s CEO for Latin America making, all of which are guided by the Code of Eth- Toyota’s CEO for Latin noncompliance with the Code of Conduct. To and the Caribbean, Masahiro Inoue. Composed of ics and the Authorization Policy, a document that America and the Caribbean reinforce this commitment, in the previous fis- a Chairman, the President, and specific Vice Pres- establishes the main working guidelines for com- cal year (2016/2017), the Code was strategically idents, the Board of Directors is responsible for pany executives. revised and presented, through campaigns and actions, to all company employees. It deals with topics related to human rights, diversity, Toyota is recognized anti-corruption, ethical deviations, and prevention of conflict of interest. Along with the Internal worldwide for its respect Regulation, the Code is the main guide for those for people, ethical attitude, who work or represent Toyota. and transparency in Rafael Chang In addition, TDB provides an Ethics Channel President of Toyota do Brasil for employees and business partners. Available its relationships. via telephone, Internet, or email, this channel registers reports about deviations, fraud, conflicts of interest, and corruption, all evaluated by the company’s Ethics Committee, with guaran- teed anonymity. Board of Directors Directors Meeting Formed by Managers and Directors of areas such as Legal and Human Resources and coordi- nated by the Internal Audit area, this committee evaluates the cases reported, prepares expert opinions, and communicates them to the Pres- idency and the Human Resources Department. For those cases involving the senior leadership of TDB (President or Chief Financial Officer), the As a wholly-owned subsidiary controlled by the analysis is carried out by the parent company. Toyota Motor Company (TMC), in Brazil the com- In addition to coordinating the Ethics Chan- pany does not have independent or non-executive nel, the company’s internal auditing department members in its governance structure, following executes, manages, and monitors internal con- the criteria set out by the parent company regard- trol structures according to the guidelines estab- ing the requirements related to the presence of the lished by the Sarbanes-Oxley Act (SOX) 5and in company on the New York (United States), London the process involving risk management, controls, (United Kingdom), Nagoya, Tokyo, Osaka, Fukuoka, and safety inspection defined locally or with TMC, and Sapporo (Japan) stock exchanges. <102-5> which performs periodic audits in Brazil.

5American law intended to ensure the creation of reliable auditing and security mechanisms to mitigate business risks, prevent fraud, or ensure that there are ways to identify them 28 29 2018/2019

Toyota’s way of producing 32 Toyota Global Vision 2020 33 Strategy linked to sustainable development 34 Results and performance 36 STRATEGY AND Goals achieved 39 PERFORMANCE

30 31 TOYOTA GLOBAL VISION 2020 <102-16> STRATEGY AND PERFORMANCE Always focusing on creating and developing state-of-the-art technologies and offering customers excellent products and services, in an environment that promotes individual creativity and the value of teamwork, Toyota Motor Company designed, in 2011, its vision of the future of the business. Known 2018/2019 as 2020 Vision, this cascaded strategy for all subsidiaries around the world reinforces organizational culture, is part of the company’s annual goals, and lists a number of commitments in order to maintain the business’s reputation and sustainability in its processes and relationships.

Show the way: Toyota will take the lead. We will Respect for the planet: in everything we do, we 1 seize opportunities and invest in the future. 7 show consideration for the planet. We investi- gate and promote systems and solutions that The future of mobility: we will develop new do not harm the environment. 2 forms of transportation and pursue new ways of connecting technology to people. Exceed expectations: our attitude is to antic- VISION AND 8 ipate and meet the needs of those we serve. Enriching lives around the world: through the 3 concept of monozukuri (manufacturing), we Rewarded with a smile: customer satisfaction BUSINESS STRATEGY will create jobs, develop people, and contrib- 9 is best expressed by a smile. This promotes a ute to society. behavior of gratitude and appreciation for ev- Celebrating 60 years of operation in Brazil and over 80 years in the world, erything we do. Toyota continues to look toward the future by positioning itself not only as a Safer and more responsible ways of trans- pioneer in the production of hybrid cars, but also as a mobility company and 4 porting people: safety is our priority for our Challenging goals: we aim high and work to- protagonist in the transformation of the automotive industry. employees and our customers. Nothing is 10 gether... That’s who we are. Strongly integrated into the company’s new Hoshin (2018/2019), the mobil- more important ity vision has been structured internally since the beginning of 2018 and is al- Engaging the talent and passion of people: ready part of corporate planning goals for the coming years. Today, the work is Commitment to quality: we constantly raise 11 The power of our organization comes from still in its early stages and involves research - both in Brazil and in partnership 5 our standards of trust, credibility, and custom- the skills and differences of our employees with Toyota subsidiaries in other countries - to understand the opportunities er satisfaction. and business partners... Solving problems and and services that may be created and offered by the company. creating new ideas. Constant innovation: our goal - “Always better 6 cars.” We continue to reinvent ourselves, intro- There is always a better way: the spirit of kai- ducing new technologies and staying ahead of 12 zen – reaching higher levels and challenging our competition. us to find a better way in everything we do... TOYOTA’S WAY OF PRODUCING Every day. <102-16 > In order to develop this new model while continuing the Toyota way of working, the company uses tools such as the Toyota Production System (TPS) and the Toyota Way. Developed by Toyota in Japan in the last century - and refined over the decades - TPS is part of the company’s organizational culture and was created to raise the maximum levels of productivity, standardization, and quality of 3 the company’s processes. Today it is applied in various types of business. The Toyota Way is a philosophy that defines the fundamental values and 5 4 business methods that must be applied in all aspects and phases of work. 2 Based on the company’s corporate culture, its pillars are Continuous Im- provement and Respect for the People. Finally, kaizen methodology (continu- 6 ous improvement) completes this way of working and assists in the constant search for efficiency in reducing risks and incidents, increasing quality, and 1 10 safety along the value chain. 9 Represented by a tree, 2020 Vision has the Toyota 11 7 Way as its “trunk.” The 8 roots are the principles Learn more about how the Toyota Production System (TPS) works at and values of the company. www.toyota.com.br/mundo-toyota/toyota-production-system/ Designed “from root to fruit,” symbolizing working 12 together to achieve success.

13 14 15 16 VALUES PRINCIPLES PHILOSOPHY PRECEPTS 32 33 TOYOTA WAY 7. POST-USE 6. USE STRATEGY LINKED The Toyota Way expresses our culture, beliefs, and values through two cross-cutting pillars: continuous improvement and respect for people. These values and methods CONCEPT PROCESSES CONCEPT TO SUSTAINABLE are applied in all aspects and phases of our work. Monitoring the life cycle of the product - Life Cycle Management Use of the vehicle by the customer - Social and environmental development, VALUE PROPOSITION MAIN RESOURCES through projects run by the Toyota MAIN RESOURCES DEVELOPMENT STRATEGIC DRIVERS Customer first - Guidelines from the parent company in Japan Foundation, its social component - Relationship with customers and What we aim for >> Sustainable growth: - Launch of the visitors program, in 2018, Continuous improvement to make the disposal processes faster and Dealerships based on continuous improvement, our to strengthen the relationship with society Challenge: facing challenges with more efficient - Service model and network For Toyota, sustainability is closely linked not only to values, and our culture, we seek to reflect - Partnerships for reverse logistics and share the company's best practices - Toyota Way courage and creativity. our evolution in the community. environmental concepts, but also to social and Kaizen: we can evolve, improving What drives us >> Continuous RESULTS PROCESSES economic strategies that ensure business continuity operations and business. improvement: through Kaizen, a vital Genchi Genbutsu: identify concrete - Projects of vehicles adapted - Management of Customer and growth. element of our culture, we apply for recycling Satisfaction facts in order to make appropriate continuous improvement in operation, decisions. - Reverse logistics of tires and batteries - Best in Town Program environmental aspects, and in the - Circular economy, such as the - Post-sales strategies The following infographic shows how the company community. development of sewing cooperatives, RESPECT FOR PEOPLE which produces gifts with waste delivered RESULTS creates, generates, and captures value. In this by the company Respect: seeking understanding STAKEHOLDERS ENGAGED - Solutions for mobility model, we present the main resources related to and mutual trust at all levels - Toyota tour in partnership with industrial - Reduced Carbon Footprint Trade associations | Customers| Teamwork: encouraging the tourism in the city of SBC - Contribution to improving Air Quality business operation and the impacts generated by the Employees| Communities| development of all employees. (Low Carbon Strategy) company's activities, as well as their economic and Dealerships | Suppliers| VALUES - Customer safety Press | Unions social benefits. - Reputation and image in the market - Establishment of a society in harmony VALUES with the environment. - Vehicles that are safe for society - Constant innovation and exceeding expectations 2018/2019 - Offering better products and services - Customer first - Commitment to society through

1. DESIGN CONCEPT Planning, research, and adapting to local needs

MAIN RESOURCES -Organizational structure 5. SALES - Employees - Applied Research Center 2. SUPPLY CONCEPT - Toyota Way Supply of products and services to CHAIN the end customer, ensuring the PROCESSES best experience - Benchmarking and industry surveys CONCEPT - Study of solutions for adapting cars Acquiring materials, parts, components, MAIN RESOURCES to regional needs and developing partnerships in services - Relationship with customers - Study of new applications of and products and Dealerships - Management and information materials to reduce environmental 34 35 impacts, improve mobility, and for the MAIN RESOURCES systems safe use of vehicles - Relationship with suppliers and contractors - Customer service center - Kaizen Culture - Toyota Way RESULTS - Generation of internal knowledge PROCESSES 3. MANUFACTURING PROCESSES - Limited editions of vehicles - Approval and control processes in the - Marketing of vehicles by authorized - Prototyping accessories and supply chain CONCEPT RESULTS dealerships analysis of raw materials - Environmental Guide to Purchasing, Excellence in vehicle manufacturing - Productivity and goals met - Best in Town Program - Pioneering hybrid vehicles in Brazil Guide to Corporate Responsibility, - Supply of vehicles for the country 4. DISTRIBUTION - Qualification and training programs, and Procurement Policy MAIN RESOURCES - Energy efficiency and sales competitions VALUES - Production infrastructure. - Retention of qualified people CONCEPT RESULTS - ECO Dealer - Internal knowledge bank RESULTS - Employees and contractors - Trade union negotiations Distribution of finished vehicles to - Logistics reach - Fostering a research and - Structured supply chain management - Materials, parts, and components the authorized dealerships, and of - Multi-modal transportation. RESULTS development culture - Awards for suppliers in the categories - Natural resources VALUES parts for production and service - Control of air emissions - Competitive, admirable, and - Vehicles adapted to the reality of quality, logistics, and cost - Toyota Way - Operation that is safe for society - Impact on climate change profitable brand of the region - BRASA activity, with environmental and - System and solutions that do not MAIN RESOURCES - Increase in market share. safety committee PROCESSES harm the environment - Distribution center VALUES - Business based on ethical principles - Transformation of materials, parts, - Employees and contractors - Logistics optimization - Financial strength and customer VALUES and components - Toyota Way - Energy efficiency through better loyalty - Responsible delivery of materials, goods, - Plant operation and maintenance routes and modes and services - Monitoring and mitigation of PROCESSES VALUES - Contribution to local economies environmental impacts - Transportation of vehicles - High-performance culture - Development of the dealership network - Occupational health and safety to dealers - Contribution to the development of management - Operation and maintenance the economy - Dialogue with unions of distribution centers - Reputation and image in the market - Consolidated STRATEGY AND PERFORMANCE 2018/2019

RESULTS AND PERFORMANCE <102-7> Toyota’s 60th anniversary celebration achieved the best sales volume, came with its second-best perfor- exceeding 70,000 units sold - an in- mance since the company has been crease of 8% over the previous year. in Brazil. In a year still affected by Light commercial vehicles, Hilux the country’s crisis and economic and SW4 closed 2017 as leaders in downturn, the company posted re- their categories. The Hilux ended cord sales since the beginning of the year with a 1% sales volume production and, driven by Corolla higher than in the previous peri- sales, recorded a 5% increase over od and 34,354 units sold. Up 6% in the previous year. The 2017 calendar sales, the SW4 achieved over 50% Etios for export year was also the second consecutive market share in its category, total- period of growth in sales in the doing 12,943 vehicles sold. In the first months of fiscal mestic market, the result of a brand And in the year that Toyota Motor year 2017/2018, Toyota began strategy based on sustainable growth Corporation announced the mile- in operations. stone of 1.52 million hybrid vehicles marketing the subcompact One of the main highlights of the sold around the world, Toyota do company’s portfolio, with 66,200 Brasil also achieved great results Etios in Costa Rica and units sold, the Corolla achieved a in the country. One of the compa- sales result 2% higher than in 2016, ny’s great contributions to clean Honduras - now selling in a reaching a market share close to and sustainable technology, the 50% in the category. Another re- Prius hybrid had a strong increase total of seven Latin American cord in the year was with the Toy- in sales in 2018: with 2,446 units of countries. Produced at the unit ota Etios. Considering both hatch- the model sold in the year, today it back and sedan models, the Etios is a leader in this market in Brazil. in Sorocaba (SP), the model is a key element in complementing the strategy to expand exports.

INVEST TO GROW Throughout its history in Brazil, Toyota has been constantly investing in the modernization and development of its production units in order to offer products that are increasingly efficient and safe for its customers. In this last fiscal year, the company announced an investment of R$ 600 million to expand the engine production unit in Porto Feliz and R$ 1 billion to modernize the Sorocaba plant, to prepare for the production of the new Yaris model. And, to celebrate 20 years of the Indaiatuba unit, in September 2018, the company announced an investment of R$ 1 billion to modernize the plant. The investment is focused on preparing the unit for a modernization process that will make it more flexible and competitive.

36 37 STRATEGY AND PERFORMANCE 2018/2019

GOALS ACHIEVED Each year, Toyota sets goals that guide the actions of employees and leadership in order to materialize the company’s business vision. Called hoshins, these goals are directed by the NEW YARIS TMC and developed with the support of the global (hoshin TMC), regional (Latin America A sales success in several countries, the Yaris arrives in Brazil to fill a market gap between and Caribbean) and national (TDB) leaders. the Etios and the Corolla sedan. Available as hatchback and sedan, the new model arrived on Throughout the 2017/2018 fiscal year, all goals proposed for Toyota do Brasil were achieved: the market with the concept “One Class Above” - a product of superior category and excel- • Pursue sustainable growth by building a consolidated business strategy (product portfolio, production process, sales, engineering, and results). lent level of standard features. In the second month after its launch, the Yaris already placed • Maximize TDB profits, in line with the original plan. among the 20 best sold vehicles in the country. • Strengthen our competitiveness in the global market through a stable operation with more productivity and flexibility. • Improve the sustainability of the business in order to reduce the organization’s expo- LEXUS HYBRIDS sure to foreign exchange risk. Launched at the most recent edition of the São Paulo Motor Show, two new hybrid models • Successfully lead the three product innovation projects defined for the year. • Consolidate the basis for strengthening TDB’s business in pillars such as culture of of Toyota’s luxury brand arrived on the Brazilian market: the LS 500h sedan and the newly safety; customer first; internal controls and governance; satisfaction and employees; launched SUV NX 300h. This initiative reinforces Toyota’s global message for a paradigm shift and reinforcement of the Toyota Way. in the automotive market: investment in mobility and hybrid technologies that are less harmful • Modify working modes: business unit mindset; reinforcement of activities with value to the environment. added and labor allocation; adaptation to the new regional structure.

38 39 2018/2019

SOLUTIONS FOR THE FUTURE Time to reinvent ourselves 42 Applied Research Center 42 Hybrid flex 42 Rota 2030 43 Mobility for All 43

40 41 SOLUTIONS FOR THE FUTURE 2018/2019

TIME TO REINVENT OURSELVES

ROTA 2030 Today, technological and behavior- greater interaction between the areas, The government initiative known as Rota 2030 also projects, five were shortlisted and received US$ al changes strongly affect the way and is now an essential part of the brings several opportunities for innovation to the 20,000 each to implement a pilot project of their companies think about their busi- medium- and long-term goals related sector. Sanctioned by the government in December ideas over the following months. On December ness - especially the automotive to efficiency and mobility. 2018, the medium- to long-term policy establishes 5, the winner was announced: the corporate car- industry, one of the most affected tax incentives for manufacturers that invest up to pool app, bynd. by an increasingly service-oriented R$ 5 billion in Research and Development (R&D) Tested in Brasilia by the Ministry of Cities and market and the speed provided by HYBRID FLEX per year, improving the energy efficiency of their the company Valec, and the city of Juiz de Fora mobility solutions. At Toyota, commitment to the future vehicles by 11% by 2022. Among these incentives (MG), the carpool app creates a transportation Thinking about the future in a dif- and mobility closely matches the is reducing the Excise Tax (IPI) by up to three per- system for employees of the same company or ferent way today is a strategic theme goals set by the 2050 Environmen- centage points for hybrid cars with technology that organization. The team will receive US$ 100,000 for Toyota, which increasingly places tal Challenge to reduce the average allows the use of ethanol. (close to R$ 400,000) to scale up its project and itself - from the parent company to global CO2 emissions of new vehicles In addition to the various investments in expand its platform. its subsidiaries on all five continents by 90% by 2050 (learn more in the En- modernizing production units, Toyota’s ongoing - as a company focused on devel- vironmental Performance section) improvement in engine efficiency, and invest- oping solutions to provide mobility Pioneer in the introduction of ment in hybrid technology, the company also in the safest, most effective man- hybrid flex vehicles on the mar- seeks to broaden its spectrum in the program by ner that is the least harmful to the ket (the first Prius was launched in focusing on opportunities for improvement in its environment possible. Throughout Japan in 1997), in 2018, the com- supply chain, with a greater requirement for cer- the last fiscal year, Toyota do Brasil pany began practical tests with a tificates (such as ISO 14000), closer monitoring incorporated this global guidelines new prototype of a hybrid vehicle to avoid the use of substances harmful to health into its hoshins and its business equipped with a flexfuel internal and the environment, and other standards that START YOUR IMPOSSIBLE strategy, by initiating several pilot combustion engine. The project, are essential to the company’s relationship with Toyota believes that being able to exercise the right to come projects, studies, and partnerships which combines an electric drive these stakeholders (learn more in the Stake- and go broadens horizons and allows for a more productive to better understand the urban with a flexible gasoline and etha- holders section). mobility scenario in the country and nol engine, was developed in part- and prosperous society. And to develop solutions within this decide on the best paths to take. nership between the engineering ambition, Toyota has been inspired to create the means to teams of Toyota Motor Corporation enable people to reach higher levels of freedom and mobil- and Toyota do Brasil. MOBILITY FOR ALL ity for any journey in their lives. This is Toyota’s mission for APPLIED RESEARCH CENTER Preliminary studies indicate that Created in 2014 to seek mobility solutions in part- the new times, challenging all the impossible. It was this Part of the renovation of the São the flex hybrid has one of the high- nership with universities, governments, non-gov- long-term vision that gave rise to the Start Your Impossible Bernardo do Campo unit, the com- est CO2 compensation and absorp- ernmental organizations, research institutions and pany’s first Applied Research Center tion potentials generated since the other companies, in 2018 the Toyota Mobility Foun- initiative within Toyota’s innovation. Under this premise, the (CPA) in Latin America was designed beginning of the use cycle of ethanol dation, through a partnership with WRI Brasil and brand aims to share with all its stakeholders the belief that to improve the Toyota’s competitive- extracted from sugarcane. The first the National Front of Mayors (FNP - Frente Nacion- mobility goes beyond cars and seeks to develop innovations ness by integrating activities related tests were performed during a course al de Prefeitos), launched the InoveMob challenge. to bring more quality of life to people in a more inclusive to research and development of new of over 1,500 kilometers between the Composed of five phases, the project invited partic- and sustainable society. As the first mobility partner of the products and suppliers. With the in- states of São Paulo and the Federal ipants from all over Brazil to send ideas to improve Olympic and Paralympic Games (Japan 2020), the purpose auguration of this research center, the District, which tested the durability mobility in areas with a large number of people company is streamlining the develop- of the car and helped evaluate the commuting, such as public transportation stations of the initiative is to offer mobility services and logistics ment and nationalization of materials powertrain when fueled with ethanol and terminals, industrial districts, schools, shop- expertise, and will include a variety of additional programs that are better suited to local needs, on Brazilian roads. One test aimed ping centers, universities, and hospitals. focused on employees, dealers, and consumers, and col- and facilitating the communication toward extracting the maximum About one hundred projects were submit- laborate with the Toyota Mobility Foundation. and validation process with the parent potential of each solution by using ted, and 12 semifinalist teams participated in company in Japan. The CPA encom- fuel from a 100% renewable source: workshops to improve their projects. Of the 12 To learn more about the initiative, passes the departments of Engineer- high efficiency, very low emission lev- ing, Procurement, Vehicle Regulation, els, and capacity to reabsorb impacts visit www.MobilityForAll.com and Quality Assurance, allowing for from carbon monoxide. To learn more about the initiative, visit desafioinovemob.org 42 43 2018/2019

Employees 46 Customers and dealershipss 51 Suppliers 56 Toyota Brazil Foundation STAKEHOLDERS and Communities 58

44 45 STAKEHOLDERS 2018/2019 EMPLOYEES

Total number of employees <102-8> <103-1, 103-2 e 103-3> One of Toyota’s main work pillars around the world is focused on respect for people. This 2016/2017 2017/2018 2018/2019* involves building a culture based on mutual trust, safety, valuing teamwork, and encouraging creativity and well-being. In line with its business strategy for Brazil and with the Global 2020 Vision to create jobs and develop people, even with the crisis that has struck the Brazilian market in recent Temporary 284 146 5,410 527 5,675 529 years, Toyota maintains its growth pace by reinforcing the kaizen culture in all stages of its work process and focusing on production for both the domestic and regional markets. Permanent 4,805 409 243 33 765 132 Although this was a challenging period due to the effects of the crisis, the 2017/2018 Total by gender 5,089 555 5,653 560 6,440 661 fiscal year brought good results for the Human Resources area by reinforcing communi- Total 5,644 6,213 7,101 cation activities, internal development programs, and strengthening a good relationship with trade unions in order to protect jobs. 2016/2017 2017/2018 2018/2019*

Full time 4,906 424 5,511 469 6,255 561

FEMALE PRESENCE Part time 183 131 142 91 185 100 The automotive sector is still recognized as an area with a majority of male Total by gender 5,089 555 5,653 560 6,440 661 professionals. Something that is gradually changing at the initiative of the Total 5,644 6,213 7,101 companies themselves, which seek more gender diversity in their staff *Data from March 2019 in order to ensure a creative and balanced environment. At Toyota, these numbers are still discrepant, but Human Resources has been working on initiatives - such as the Female program - started in 2017 to understand women’s professional aspirations and expectations regarding their ca- reers within the company. Today, our challenge is to create an authentically egalitarian environment, driving change in our culture, in addition to awareness, engagement and development through dialogue and actions between men and women. Today, 26% of our workforce (in the administrative area) and 12% of leadership positions are held by women (base March/19). No internal goals have yet been defined, but the diagnostic phase for other potential female executives is underway. In addition, in July 2018 we held a lecture on Unconscious Bias at the Sorocaba plant, which, at the time, was hiring approximately 130 women to work in the production area. The feedback received regarding this initiative was very positive, with the testimony of female employees about this work that is being done by Toyota. Toyota also supports the participation of its female professionals in the North America Women’s Conference, an opportunity for people around the world to share experiences about women’s challenges in the job market, opportunity for professional development and sharing of ideas. For Toyota, this initiative is an opportunity to recognize the value and increase the visibility of women across the organization.

46 47 STAKEHOLDERS 2018/2019

PERFORMANCE EVALUATION <404-3> At Toyota, all employees undergo performance evaluations, which are structured according to the different employment levels. It is worth men- tioning that hourly employees at the units of Guaíba (RS) and Indaiatuba (SP) do not undergo this evaluation.

2016/2017 2017/2018 2018/2019

CLIMATE SURVEY The results of the Climate Survey conducted in 2017 also provided greater direction on the main Management 1.36% 0.07% 1.09% 0.04% 0.65% 0.03% needs of the teams on issues concerning career development and work environment. Based on the Leadership/ 1.79% 0.23% 1.38% 0.20% 2.00% 0.24% data collected, the Human Resources team set up focus groups to identify the root causes of the coordination problems raised in the survey and begin implementing countermeasures. Technical / 8.91% 8.91% 7.81% 1.34% 1.70% 0.30% supervision Administration 10.99% 5.21% 6.13% 4.58% 11.20% 5.25% Total by gender 23.05% 14.42% 16.41% 6.16% 15.55% 5.82% CONTINUOUS DEVELOPMENT Total 37.47% 22.57% 21.36% <404-1> In addition to the traditional qualifications, such as safety in production processes, dissemination of the TPS, Toyota Way and the company’s Global Vision, based on the results of the most recent climate survey conducted in 2017, the Human Resources area has been developing training for the leadership and the way they communicate and interact with their teams. The goal is to have - and prepare - leaders who are more able to manage conflicts, prioritize improvement activities, and keep the team motivated and engaged so that the company’s goals can be met. Throughout the fiscal year, Toyota also invested in implementing other professional development fronts. Among them are language, undergraduate, and postgraduate scholarships.

Average number of training hours

2016/2017 2017/2018 2018/2019

12.4 14.0 19

1.2 1.8 12

Total 13.63 15.8 31

2016/2017 2017/2018 2018/2019 Management n/a 0.009 4.2 Leadership/ coordination n/a 0.052 5.2 Technical / supervision n/a 3.5 37.9 Administration n/a 12.2 8.1 Total 13.63 15.8 13.86 48 49 STAKEHOLDERS 2018/2019

HEALTH AND SAFETY <403-4> CUSTOMERS AND With safety as a priority for employees and customers and part of the DEALERSHIPS Global 2020 Vision, Toyota develops its processes based on an Occupational Safety and Health Management Sys- For Toyota, quality, safety and customer satisfaction are funda- tem (OSHMS) and applies strict risk mental commitments to ensure the sustainability of its opera- control, training, and awareness cam- tions. To further strengthen these pillars that sustain the com- paigns that reinforce the culture of pany’s work in an increasingly competitive and fast changing safe behavior and engages employees market, the company strives to be close to customers - with ag- and leaders through periodic meet- ile and quality service - and to its entire network of dealerships. ings, campaigns, and training ses- In order to ensure the best customer experience, Toyota’s sions. Following the local legislation, Sales and Post-Sales areas monitor various indicators - such all units have in place commissions as service time, volume of complaints, and speed of response for work accident prevention (CIPA), - and, based on the results, these areas take countermeasures a calendar, campaigns, patrols, and in order to avoid recurring events. More complex cases are es- plant inspections calated to a specific group of engineers to be handled as quick- ly and assertively as possible, thus exceeding expectations and increasing customer loyalty: TDB today is second only to Japan UNIONS in terms of customer loyalty. <102-41> Toyota treats all unions with the same principle of respect and dialogue, and believes that this cycle of cooperation can only bring positive results for employee safety (physical and financial) and for company productivity. Today, within the negotiations, Toyota works to clearly develop trust and mutual respect, always demonstrating needs, difficulties, and opportunities. It is worth noting that TDB has union representatives within each plant and all employees are covered by collec- In 2018, Toyota regained its leading tive bargaining agreements. position in terms of Customer Satisfaction, disclosed by J.D. Power Brasil. Published by J.D. Power Brasil, the survey posted record-high satisfaction over previous years and put Toyota back in the lead with the highest satisfaction rate ever.

50 51 STAKEHOLDERS 2018/2019

NEW VISITOR CENTER With the changing profile of consumers who are increasingly active on social networks, today Toyota also has in place a process to monitor all its chan- Part of the revitalization process of the São Bernardo nels on the Internet as well as websites such as Reclame Aqui. Last fiscal do Campo unit, Toyota inaugurated one of the com- year, even with the launch of Yaris, there was a reduction in the number of pany’s most technological Visitor Centers world- complaints - the result of a constant process of getting closer to these cus- wide. With an investment of US$ 5 million and built tomers, improved with the inauguration of the new Visitor Center at the São on an area of 750 sqm, the center was designed to Bernardo do Campo plant (see box). offer participants an immersion experience into the Toyota universe, taking people on a journey through CUSTOMER SERVICE (SAC) INDICATORS the history of the company. All customers who access customer services are invited to participate in a The space also displays commemorative vehicles survey at the end to evaluate the quality of the service. The goal established produced by the company, such as the last Bandei- by TMC is 70%. In 2018, this number was exceeded at TDB, reaching 78% rante, and puts Toyota’s vision for the future as part customer satisfaction. of the experience: details of the technology linking electric motor and combustion engine and interactive games simulating urban routes aboard the Mi- rai, a vehicle that releases only water vapor through the exhaust pipe. In addition, in 2018, Toyota launched the Toyo- Calls Information Complaints Customers Rate of Average ta do Brasil Visitors Program in all its plants in the served in up to satisfaction service time country. Through this initiative, the company works 20 seconds with service to bring the public closer to the Toyota’s history, by sharing information so that visitors can have access to Toyota’s values, culture, and way of working. 12 8,4 6,4 Visits may be scheduled on the website www.toy- 87% 79% 95% 83% 77% 78% 91,322 74,533 22,931 79,078 94,723 62,926 16,789 17,909 ota.com.br/programa-de-visitas 117,654

2016 2017 2018

Customer Service (SAC) If there are any questions or needs, customers may contact Toyota in various ways through SAC. Toll-free number (0800-703-0206) Email: [email protected] Facebook, Instagram, YouTube and LinkedIn

52 53 STAKEHOLDERS 2018/2019 SAFETY FIRST VALUABLE PARTNERSHIPS < 103-1, 103-2, 103-3, 416-1> Dealerships are the customer’s gateway to the Producing and marketing quality vehicles are among Toyota’s basic op- Toyota world. They represent the excellence of the erating principles. Risk and safety assessments are present in all stages brand and are the first contact with the quality and of the vehicle’s life cycle - from its design, to the development of parts, agility of the services offered by the company. This components, and industrialization. Part of this work, and in line with partnership is constantly strengthened by increas- TMC guidelines, Toyota do Brasil has a specialized team to handle the ing training hours and reformulating content to most complex customer calls - the Swift Market Analysis Response Team better meet the needs of dealerships and improve (Smart) - that assesses each situation in order to discover the risks and the Toyota culture. Today, the network of autho- eliminate them. rized dealerships includes 256 units in 26 states and in the Federal District. In 2017, focusing on improving customer ex- To produce perience and dealership performance, Toyota began implementing a new philosophy called Best in Town at the Nova Quality dealership, in Gua- and sell the best LATIN NCAP rulhos (SP). This global concept, which goes be- The New Car Assessment Program for Latin America and the Caribbean (Latin NCAP) is yond the already established Toyota quality, aims quality vehicles is responsible for evaluating and classifying cars according to their resistance to collision and to provide a unique experience to each custom- impact tests (zero to five stars) and guaranteeing the integrity of the driver and passengers. er throughout their journey with the brand (Pur- among Toyota’s All tests are performed by external experts and are voluntarily carried out by the automak- chase, Ownership, Repurchase). This philosophy, which is based on the Convenience, Transparency ers. See the performance of Toyota’s top models: and Hospitality pillars, helps increase customer core principles. Corolla Hilux retention, turning them into fans of the brand. In addition, the company created a new tool known as SAC Preventivo (Preventive Customer for passengers in front and for adults and children. Service). The idea is to avoid waiting for the cus- back seats. tomer to contact the SAC to register a complaint or to ask a question. Thus, through a trained SAC Etios SW4 Fortuner representative within each dealership, it is possible to monitor, in real time, and assess irregu- for the hatchback and sedan versions. on the same levels as the Hilux. larities that may cause dissatisfaction, handling them before they become a real problem.

SALES TRAINING PROGRAM All professionals on the Sales team who have direct Technical and general training: in the 2017/2018 or indirect contact with customers have develop- fiscal year, these training sessions were improved ment plans, with distance and face-to-face training. and extended to four days, promoting greater immersion in Toyota’s universe and philosophy. One Toyota: Toyota unified its quality programs A total of 1,658 people (1,152 technicians and 506 (TSW-Toyota Sales Way and TSM - Toyota Ser- consultants) participated in the modules. vice Management) and created ONE TOYOTA. The purpose of the unified program is to ensure the Environmental aspects are also taken into quality of all sales and service processes of the account in the distribution network. Since 2006, dealership network ensuring excellence in serv- Toyota has had in place the Dealer Environmen- ing our customers. tal Risk Audit Program (DERAP) - now known as the ECO Dealer. The program evaluates several Skill Contest: competition promoted by the requirements, such as adequate waste manage- Post-Sales area. Recognizes results in ser- ment, the presence of an environmental officer vice, diagnostics, and repairs. In 2017/2018, the in each dealer, compliance with current envi- 23rd edition of the National Skills Competition ronmental policy, and others. In addition, Toyo- awarded 10 service and technical consultants ta recommends that all partners be ISO 14001 among 1,633 participants from 92 dealerships certified, proving the existence of environmental in the country. management systems at the dealerships.

54 55 STAKEHOLDERS 2018/2019

SUPPLIERS

<103-1, 103-2, 103-3, 102-9, 308-2, 414-2> One of the most important stakeholders ensuring the continuity and sustainability of the business, Toyota’s supply chain is comprised of approximately 100 companies in the categories of parts and raw material. In order to integrate the company’s culture of quality, all partners are assessed according to criteria regarding quality, logistics process, service capacity, cost, and compliance with Environmental Procurement Guide requirements. To this end, the area responsible for contracting at TDB takes into account internal drivers such as the Environmental Procurement Guide, the Corporate Responsibility Guide, and the Toyota Procurement Policy. Toyota has been advancing year after year in the evaluation and monitoring of several criteria that help the company to ensure lasting and ethical relationships. To this end, the company also developed engagement ac- All partners are tions in topics related to social, fiscal, TPS, FMDS/Quality Safety aspects, and Environmental Awareness. In the last fiscal year (2017/2018), over 35 companies were involved. assessed for criteria of quality, logistics, services, cost, and compliance with THE BEST IN 2018 Working in partnership also means recognizing those who excel in pro- the Environmental viding services to Toyota do Brasil. Thus, in April 2017, the company held the 16th edition of the “Suppliers Conference,” an award recognizing Procurement Guide. suppliers who reached the goals and exceeded expectations regarding services and products delivered during the year. In all, 21 suppliers received the excellence degree in four categories: Quality, Logistics, Cost Reduction, and Special Recognition, as well as two other categories, Value Engineering and Value Analysis (VA/VE), and Envi- ronment. Among them, the company Pioneer was awarded Best Supplier in 2017 - having reached 100% of the goals in each of the categories proposed by the award. Here are the winning companies in each category: • Quality: Dana, G-KT Brasil, Mahle, NSK Brasil, Plastic Omnium, Schaef- fler, and TPR • Logistics: Bosal, Casco, G-KT Brasil, NSK Brasil, Sanko, and ZF Lemforder • Cost reduction: Aisin AI, Denso, Panasonic, SGBR, Stanley, Tyco, Yazaki, and Zanettini Barossi • Best Value Engineering and Value Analysis (VA/VE): Yazaki • Environment: Kanjiko

56 57 STAKEHOLDERS 2018/2019 TOYOTA BRAZIL FOUNDATION AND COMMUNITIES

<103-1, 103-2, 103-3, 203-1, 203-2, 413-1> Toyota’s strategic vision of sustainable develop- include the conservation of the Brazilian biome and ment includes respect for people, and growth in of the environment, education, citizenship, and pro- harmony with the communities surrounding its moting environmental responsibility. operations, through innovative management and The Social Responsibility area reviewed its strat- with minimal impact on the planet. egy in order to ensure greater engagement of all With investments of R$ 4.4 million from April to leaders and guide Toyota in making the decisions December 2017 and R$ 4.6 million from January to related to social and environmental responsibility. December 2018, the Toyota do Brasil Foundation The analysis, carried out by an external consulting currently operates as one of the company’s main firm, will contribute to strengthening the strategic pillars of social and environmental actions. Through vision of the projects within the company. For this the Foundation, the company works to develop citi- next fiscal year, the company will set up working zens and create opportunities for growth, always in groups within the recommended pillars to define 740 nests spread harmony with the environment. Today, its activities new action plans. across 57 farms

COMPANIES AND THE ENVIRONMENT During the sustainability event called Virada Sustentável in São Paulo, held in August 2018, the Toyota do Brasil Foun- ARARA AZUL (BLUE MACAW) dation held a discussion panel addressing the topic “Com- OF THE 17 SDGS, THE ARARA AZUL panies and the Environment: far beyond their own impact” One of Toyota’s oldest projects, Ar- ara Azul now monitors over 740 nests PROJECT ADHERES TO: (“Empresas e Meio Ambiente: muito além do próprio im- spread across 57 farms in the wetlands pacto”) to discuss business models based on social and en- (Pantanal) - located in Miranda, Aquid- vironmental sustainability. During the event, the company auana, and Bonito (MS) and the Barão also promoted an interactive game, which proposed a Trea- de Melgaço (MT) region - and helped re- sure Hunt in Brazil inspired by the Arara Azul, Costa dos Co- move the species from the list of endan- rais and Águas da Mantiqueira projects. gered species. Headquartered in Campo Grande (MS), the Arara Azul Institute has logistical support provided by Toyota with four Hilux pickup trucks. With 4X4 wheel drive, the pickup trucks allow the team of biologists to move about the preservation regions to monitor the nests. The main focus of the Toyota Foun- dation regarding the Arara Azul Insti- tute is to execute a long-term sustainability plan, which allows the entity to continue contributing to the community through awareness workshops, lec- tures, bird-watching tourism in the city, research, and activities to preserve the Pantanal biome.

The Toyota Foundation used to work with a fiscal year from April to December 2017. Since January 2018, the Foundation started to base use the calendar year. 58 59 STAKEHOLDERS 2018/2019

TOYOTA ENVIRONMENTAL PROTECTION AREA (APA) COSTA DOS CORAIS Public-private initiative between the Toyota Bra- provided for in the Government Management zil Foundation, SOS Mata Atlântica Foundation and Plan, protection and sustainability of the Envi- ICMBio (Chico Mendes Institute for Biodiversity Con- ronmental Preservation Area (APA) and support PROJECT AMBIENTAÇÃO servation), the project was created to guarantee the in activities developed by local organizations and Today, when water scarcity and constant increases in elec- In 2018, the Toyota Foundation also closed the first edi- conservation and sustainability of the Environmental communities, which already work for the conser- tricity prices are increasingly common, Project Ambien- tion of the Ambientação project in the Metropolitan Region Protection Area (APA) Costa dos Corais, which covers vation of the area, encouraging community-based tação helps promote the development and implementation of Campinas (SP). In all, 13 municipalities developed 18 nine municipalities in Alagoas and three in Pernam- economic activities with low impact. of projects that foster education on environmental issues projects with the training of public officials to identify prob- buco. The project helps preserve coral reefs, protect In addition to ICMBio and the SOS Mata Atlântica such as the conscious consumption of natural resourc- lems in water consumption in the units where they work mangrove areas, and conserve the habitat and eco- Foundation, the Toyota Foundation relies on several es (water and electricity) and waste management among and propose sustainable solutions. systems associated with the manatee - one of the local partners, who are independent entities exe- public entities in the community. Divided into eight steps, The program now also has a partnership with Fundação most endangered aquatic mammals in Brazil. cuting projects that focus on the actions of the ar- Project Ambientação uses Toyota Business Practices Espaço ECO® (FEE®), which will use the data already col- One of the priorities of Toyota APA Costa dos ea’s Management Plan. Once a year, these partners (TBP), an operational troubleshooting tool, and has already lected by Ambientação in the last 10 years for an analysis Corais is the creation of an investment fund that gather in a collaborative workshop, promoted by the reached over half a million people over its 10-year history. based on the Life Cycle Assessment (LCA) concept, which will ensure ongoing support to management, Toyota Foundation, to discuss current results and One of the highlights of 2017 was training 40 public may enhance the environmental and economic benefits which includes the performance of the activities plan the priorities for the following year. servants of city hall in Sorocaba (SP). After a series of that had already been identified by the project. Results al- surveys, the employees of the largest school in Capela do ready obtained show that 29 initiatives carried out between Alto (SP), “Maria Elza Lazara Lopes” Elementary School, 2010 and 2018 in the cities in the interior of the state of São identified that the kitchen consumed, on average, 320 Paulo (SP) saved 698 million liters of water, equivalent to liters of water per person, per day, in dishwashing, while 3.4 million washing machine loads, i.e., enough water to the UN (United Nations) suggestion is 110 liters of water wash the clothes of 268,000 people for one year. THE TOYOTA APA COSTA DOS CORAIS ADHERES TO THE FOLLOWING SDG: per person per day. The simple change of plastic ma- Today, the project serves over 14 cities in the region: Artur terials to porcelain, which are easier to wash, allowed Nogueira, Bom Jesus dos Perdões, Campinas, Cosmópolis, a reduction of 20% in daily water consumption. In total, Hortolândia, Indaiatuba, Iracemápolis, Itatiba, Jaguariúna, participating municipalities have reduced spending of Jundiaí, Nova Odessa, Paulínia, Pedreira, Morungaba, Santa End poverty Reduce public funds by R$ 70,000. Barbara d’Oeste, Valinhos, Várzea Paulista, and Vinhedo. in all its forms inequality within everywhere and among countries

Ensure Make inclusive and equitable cities and human quality education settlements inclusive

PROJECT AMBIENTAÇÃO ADHERES TO 7 SUSTAINABLE DEVELOPMENT GOALS Ensure availability Take urgent action and sustainable to combat climate change management of water and its impacts

Promote Conserve and inclusive and sustainable sustainably use the oceans, economic growth seas and marine resources

Strengthen means

Reduce of implementation and revitalize inequality within the global partnership for and among countries sustainable development 60 61 STAKEHOLDERS 2018/2019

ÁGUAS DA MANTIQUEIRA FAZ ACONTECER (MAKE IT HAPPEN) In June 2017, the Toyota Brazil Foundation launched the A social project carried out by ADC Toyota of São Ber- Águas da Mantiqueira project in partnership with FUNDE- nardo do Campo since 2014, Faz Acontecer offers PAG (Agribusiness Research Development Foundation). opportunities to needy children in the region to have The biodiversity conservation research initiative focuses on access to education and discipline through sports sustainable land planning and social and economic devel- practice, with 153 students in futsal and 111 students opment in the municipality of São Antônio do Pinhal (SP), in Serra da Mantiqueira. in rhythmic gymnastics. In 2016, the project was ex- Researchers carried out diagnostics of Atlantic Rainforest panded to the Indaiatuba unit, where we have 86 foot- remnants, distributed over 10 watersheds in Santo Antônio do ball 7-a-side students. Pinhal (SP), essential to the maintenance of environmental services - especially water resources - and their direct influence on the sustainability of rural and urban areas through studies on biodiversity, agriculture, education, solid waste, tourism, and others. As a result, the research may guide territorial planning and the organization of social and economic development guidelines that guarantee the conservation of local biodiversi- WINTER CLOTHING DRIVE ty and the continuity of water supply to the community and the millions of people who depend on Águas da Mantiqueira. Since 2014, Toyota do Brasil has been carrying out In 2018, the project was presented at the 8th World Water the Winter Clothing Drive in all its units. In 2018 Forum - the largest global event on the topic - during the table alone, 18,534 pieces of clothing, 594 blankets and of international financing projects related to water resources. In 6,339 diapers were collected. The company matched addition to presenting the experience, best practices and previ- the donations with around 6,000 cans of whole milk ous results that are being collected, the importance of financing and 475 personal hygiene kits (shampoo, soap and innovative technologies and research capable of saving water and increasing water security was discussed. toothpaste). Donations were made to social entities in the cities where we have operations. PROJECT RETORNAR Uniforms worn by the employees of Toyota do Brasil gain a noble role after their time of use. They are donated to a THE ÁGUAS DA MANTIQUEIRA PROJECT ADHERES TO seamstress cooperative in Indaiatuba, Uni Arte Costura, 16 SUSTAINABLE DEVELOPMENT GOALS. and to ASCA (Associação Social Comunidade de Amor) to be transformed into other objects. Inspired by upcycling, a creative reuse methodology, the action encourages the SOW TO REAP generation of new products, is an alternative for disposal In July 2018, Toyota inaugurated another communi- of materials, minimizes environmental impacts, and is a ty vegetable garden at its plant in the city of Sorocaba. way of generating income. Started in 2013 at the São Bernardo unit and 2015 in In- In 2018, our Communication and Sustainability area began training courses, using Toyota methodologies, daiatuba, the project aims to be an environmental and creation of their own visual identity, and a business educational activity for employee volunteers, their family and sustainability plan in order to improve the profes- members, and the community. Through the dissemina- sional and personal development of the members of tion of handling techniques (soil preparation, planting, the cooperative. treatment, and harvesting), the garden helps create a Three tons of materials have already been donated - greener, healthier, and more sustainable environment by by all Toyota units in Brazil - which resulted in the production of more than 26,000 pieces, including purses, cultivating produce (lettuce, arugula, beetroot, and zuc- toiletry bags, keychains, and waste pouches for cars. On chini), seasonings (green onions, parsley, and rosemary) average, 700 people are directly impacted by the manu- and herbs (mint, chamomile, and lemon balm). al work of the seamstresses. All reused materials go through a cleaning process and are properly prepared for their final destination. All of these products are purchased by Toyota do Brasil, To learn more about the Toyota Foundation’s social and envi- which offers them to its stakeholders. ronmental actions, visit www.fundacaotoyotadobrasil.org.br 62 63 2018/20192018/2019

ENVIRONMENTAL PERFORMANCE

Environmental Challenge 2050 66 Eco-efficiency of operations 68 Low-carbon strategy 74

64 65 ENVIRONMENTAL PERFORMANCE 2018/2019 ENVIRONMENTAL CHALLENGE 2050

Limitation of natural resources, air pollution, global Several activities to be implemented by 2020 fo- warming. The need to reduce the impacts caused by cus on meeting the challenges of the Toyota Envi- human action on the planet is already increasing- ronmental Action Plan, steering the company to- ly widespread and a part of government decisions, ward the Toyota Environmental Challenge 2050. In as well as those of companies that are engaged in formulating the plan, environmental activities were creating solutions less harmful to the environment. classified into six challenges (see illustration be-

One of Toyota's strategic pillars around the low) with three challenges associated with zero CO2 world since its foundation, environmental protec- emissions (vehicle use, life cycle, and production), tion, gained momentum in 2015 with the launch of and another three linked to generating positive im- the Global Environmental Challenge 2050, which pacts (water, recycling, and harmony with nature). seeks to minimize the negative impact of vehicle By embracing these six topics, Toyota will con- manufacturing and use, as well as contribute to tribute to the sustainable development of society the development of a sustainable society. Among and the planet, ensuring harmony with the global

the main goals is to reduce average CO2 emissions environment in its monozukuri (production), kuru- from new vehicles worldwide by 90%, considering mazukuri (vehicle production) and the delivery of the levels in 2010. But with environmental chal- products and services. lenges growing every year, the company wants to go beyond, challenging itself in all initiatives.

1 "ZERO" CHALLENGE

4 0 5 Challenge of New Vehicles with Zero CO2 Emissions In Brazil, the performance of operations has Challenge of Challenge of continuously improved based on obtaining and Establishing a Society Minimizing and maintaining certifications in management stan- Zero Impact of Systems Based on Optimizing dards (in particular the ISO 14001 standard), invest- FRIEND OF THE ENVIRONMENT Environmental Challenge Recycling Water Use ing in technological modernization, environmental The automobile electrification strategy is directly linked TOYOTA 2050 protection, and adapting plants to the ecofactory to Toyota's goals in its 2050 Environmental Challenge. ENVIRONMENTAL model, and the engagement and awareness of em- Since the introduction of the first commercially available 3 2 ployees on the culture of continuous improvement, electric motor in the Prius in Japan in 1997, TCM has been Contributing to a better with kaizens in different areas. society through positive working to improve this technology to achieve an annu- real impact Goals in Brazil contributing to Challenge 2050 al sales of electric vehicles of 5.5 million units by 2030. 0 0 • Zero CO2 emissions in plants by 2020, through Worldwide, in just 20 years, sales of new electric vehicles Challenge of Zero Challenge of Life the purchase of energy (eletricity) generated have increased from 500 units to over 1.5 million. 6 Cycles with Zero Emissions of CO2 by renewable in Factories CO2 Emissions • Minimize water use in plants, by implementing continuous improvement projects developed by employees • Better regional performance in waste generated CHALLENGE OF POSITIVE Challenge of by the plants REAL IMPACT Establishing a Future Society in Harmony with Nature 66 67 ENVIRONMENTAL PERFORMANCE 2018/2019

ECO-EFFICIENCY OF OPERATIONS

<103-1, 103-2 e 103-3> Energy consumption within the organization Coming from Japan, the concept of tory: the use of inorganic sand in its ecofactory has as its main pillar the construction, the compact production Unit 2016/2017 2017/2018 2018/2019 Morizukuri Project, a Japanese word system, and the use of solar energy to Natural Gas GJ 197,533.43 208,723.93 221.9 meaning "to create a forest." In addition illuminate outside areas are just a few LPG GJ 107,752.95 2,143.64* 2.07 to production aspects, plants built or of the highlights. adapted within this concept adopt world- Electricity consumption GJ 276,659.00 322,852.49 330.9 class eco-efficiency goals, establish- *Indaiatuba's LPG consumption began to be recorded in the logistics operation. ing a series of environmental improve- ENERGY ments in energy, emissions, and waste, <302-1, 302-3, 302-4> and combine cutting-edge technology Reduced energy consumption in op- The goals for reduction in energy consumption are established in two areas: total consumption, and and efficiency and productivity kaizens - erations and the use of renewable consumption intensity (GJ/vehicle). In this way, Toyota uses a methodology that ensures compliance with all without impacting the quality of life resources are two of the main focus- the commitment to reduce emissions annually. Energy intensity in the last fiscal year was 1.59 GJ/vehi- of the residents of the municipality and es of the TDB units. In the 2017/2018 cle. This index is higher compared to the previous period due to the start of Porto Feliz operations. neighboring cities or generating risk of fiscal year, there was an increase in any environmental contamination. total electricity consumption due to The goal for the Toyota Motor Cor- the start-up of the Porto Feliz engine Energy intensity poration is to adapt or open 100% of plant and the expansion of the Soro- its production units around the world caba plant. Natural gas consumption Unidade 2016/2017 2017/2018 2018/2019 based on this model. In Brazil, the also increased due to the start-up of first ecofactory plant was the Soro- the Porto Feliz engine plant, which Natural Gas GJ/ vehicle 1.12 1.03 0.98 caba plant, built in 2012. The Porto uses gas to melt aluminum ingots and LPG GJ/ vehicle 0.61 0.01* 0.01 Feliz unit was designed as an ecofac- build engine blocks and motor heads. Electricity consumption GJ/ vehicle 1.56 1.59 1.56 * Indaiatuba's LPG consumption began to be recorded in the logistics operation.

The activities to reduce energy consumption were well developed at the Indaiatuba plant, following the example of the Sorocaba plant in 2017. Improvements implemented were: • Shutting off the chiller in case of low tempera- ture in the air house (the same kaizen implemented at Sorocaba, adapted at Indaiatuba). The goal for the Toyota Motor • Optimization of equipment operation (chiller) by the enthalpy curve (also the same kaizen im- Corporation is to adapt or plemented at Sorocaba, adapted at Indaiatuba). • Reduction in gas consumption in the ED oven. open 100% of its production • Replacement of 100% fluorescent lamps with units around the world based LED lamps, activity that was also replicated at the Sorocaba plant. on the ecofactory model.

68 69 ENVIRONMENTAL PERFORMANCE 2018/2019

Reduced energy consumption

Unidade 2016/2017 2017/2018 2018/2019 Improvements in energy GJ 23,137.00 14,671.03 4,773.14 conservation and efficiency

Redesign of processes GJ 290.00 462.60 323.22

Modernization of equipment GJ 1,866.00 2,171.34 2,240.01

Changes in employee behavior GJ 1,205.00 205.58 8.84

Total GJ 26,498.00 17,510.55 6,272.87

WATER <303-1> Toyota do Brasil's commitment is to reduce water consumption in the production of its vehicles and components by at least 1% per year. This basic goal is developed across organization layer by layer, so that each section knows exactly how much it is contributing to the goal, stimulating the practice of continuous improvement by the employees.

Total volume of water withdrawn, broken down by sources

Unidade 2016/2017 2017/2018 2018/2019

Groundwater m3 158,307.00 202,713.06 218,818.00

Supply from public or m3 123,319.00 119,616.93 96,165.00 private water utilities

Total water consumption m3 281,626.00 322,328.99 314,983.00

As with energy consumption, Toyota also monitors water consumption per vehicle produced (m3/ vehicle). Last fiscal year this rate remained stable, even with the start of operations of the new engine factory (Porto Feliz).

70 71 ENVIRONMENTAL PERFORMANCE 2018/2019

Effluents generated in processes Water consumption in plants (m3/ unit) 2016/2017 2017/2018 2018/2019 Unit 2016/2017 2017/2018 2018/2019 São Bernardo do Campo 0.18 0.12 0.12 Indaiatuba m³ 93,175.00 86,513.00 76.354.00 Indaiatuba 1.63 1.42 1.37 São Bernardo do Campo m³ 6,794.00 6,815.00 7.378.00 Sorocaba 1.21 1.15 1.09 Sorocaba m³ 77,940.00 95,401.00 106.509.00 Porto Feliz Not operational 0.21 0.20 Porto Feliz m³ Not operational 207.11 8.902.00 Total m³ 177,909.00 188,936.11 199.143 Water consumption (m3/ Vehicle Produced)

2016/2017 2017/2018 2018/2019 Waste generated at Toyota do Brasil is classified according to NBR 10.004/2004 of the ABNT, due to the potential risks to the environment and public health, ensuring that its management is carried out properly and in compliance with the applicable legal requirements. Based on the results of the last fiscal year (2016/2017), the company determined a 1% reduction in waste generation for 2017/2018. 1.40 1.39 1.32 Generation and collection data are monitored on a daily basis, and for indices that are outside the established targets, a case study is carried out to take corrective measures. The targets are established individually for each production sector, based on data from the previous year in a more restrictive manner, aiming toward continuous improvement and achievement of results.

Waste generated at plants (kg/unit) During the fiscal year, several improvement projects were implemented, such as the moderniza- 2016/2017 2017/2018 2018/2019 tion of the Motoring Bench System in Porto Feliz, with a reduction of 34 m³/year in the volume of wa- São Bernardo do Campo 1.43 1.13 1.11 ter used for engine flow tests. At the São Bernardo Indaiatuba 9.35 7.72 7.16 do Campo plant, the installation of the water reuse system began treating the effluents generated at Sorocaba 6.29 5.84 5.72 the restaurant for industrial use in the cooling tow- Porto Feliz Not operational 1.93 1.92 er of the forging plant for exports. The Sorocaba plant also implemented several projects, such as the reduction of water consumption in the Shower Test Audit process (6.87 m³/year), Waste generated (kg/Vehicle Produced) urinals (3.48 m³/year), and flushing (3,007.06 m³/ year), as well as the application of reclaimed water 2016/2017 2017/2018 2018/2019 in the preparation of polymers (2,700 m³/year).

In all plants, the WASTE AND EFFLUENTS <306-1, 306-2> effluents generated in In all plants, effluents generated in the production process are sent to the Effluent Treatment Station the production process (ETE), where they undergo treatment through a is sent to the Effluent Generation and physical-chemical process, and are then returned 9.06 8.98 8.42 collection data are to the public network within the defined parame- Treatment Station (ETE). ters. These parameters are monitored monthly by monitored daily. a qualified laboratory. 72 ENVIRONMENTAL PERFORMANCE 2018/2019

VOC EMISSIONS The emissions indicator for volatile organic compounds is applicable to vehicle painting processes. For Toyota do Brasil, the Indaiatuba and Sorocaba plants are monitored to reduce emissions by 1% per year, measured in g/sqm. The Indaiatuba plant was recognized in 2017 by the parent company as Best In Class among the subsidiaries that use solvent-based paint on vehicles. The efforts of employees in Indaiatuba's painting process also earned the award for Best Environmental Kaizen (Global Eco Platinum Award), for the set of improvements implemented.

VOC emissions at plants (g/unit)

2016/2017 2017/2018 2018/2019 São Bernardo do Campo n/a n/a n/a Indaiatuba 32.87 32.21 31.05 Sorocaba 12.15 12.02 11.73 Porto Feliz n/a n/a n/a

VOC Emissions (g/sqm of vehicle area)

2016/2017 2017/2018 2018/2019

22.45 21.40 19.87

Toyota's strategy for a low carbon economy is centered on the 2050 Environmental Challenge guidelines.

74 75 ENVIRONMENTAL PERFORMANCE 2018/2019

Toyota do Brasil continually invests in projects and LOW-CARBON STRATEGY processes that help reduce greenhouse gas emissions.

<201-2, 305-4, 305-5, 305-7>

Aware of climate change processes and their impacts on industry and society, Toyota do Toyota do Brasil's commitment is to reduce CO2 emissions in the production of its vehicles Brasil invests continuously in projects and processes that help reduce greenhouse gas and components by least 2% per year. This basic goal is developed across organization layer by emissions. Its greatest and main strategy for a low-carbon economy is focused on the Envi- layer, so that each section knows exactly how much it is contributing to the goal, stimulating the ronmental Challenge 2050 guidelines which, among its six major challenges in the country, practice of continuous improvement by the employees.

three are focused on reducing CO2 emissions (vehicle use, life cycle, and production). These challenges are being translated into concrete actions, such as the first prototype of the hybrid Prius FFV, investments made in manufacturing that result in reduced energy 2016/2017 2017/2018 2018/2019 consumption and consequent reduction in CO2 emissions, in the purchase of 100% renewable energy since 2015, reducing consumption of water for vehicle production. Reduction of GHG emissions 628.25 1.218.75 99.9 It should be pointed out that the improvements implemented at Toyota, in addition to the (tons of CO2) environmental impact, have an economic impact, with a financial return in less than two years. From this standpoint, all disbursements are considered investments rather than costs.

In the 2018/2019 fiscal year, Toyota released 54.7 kg of CO2 per vehicle produced - down EMISSIONS IN LOGISTICS

4.03% from the 57 kg of CO2/vehicle from the previous period. Today, a large part of Toyota do Brasil's emissions are related to vehicle distribution logistics. That is why the focus in recent years has been on obtaining gains in this phase of the chain. One of the actions that has been helping reduce emissions was the inauguration of the Suape distribution center in the municipality of Cabo de Santo Agostinho (PE). Another recent advance was the implementation of a railroad modal between Santos and Suzano (SP) to transport imported parts to the plants in the state of São Paulo.

GHG Emissions at plants (Kg/unit) Areas of impact (kton de CO2) 2016/2017 2017/2018 2018/2019 2016/2017 2017/2018 2018/2019 São Bernardo do Campo 4.95 4.21 3.48 Vehicle Distribution 25.70 35.20 40.0 Indaiatuba 63.78 51.85 50.28 Production Parts 9.40 8.70 9.44 Sorocaba 55.48 43.48 40.45 Service Parts 1.70 1.80 2.0 Porto Feliz Not operational 9.34 9.62 Total 36.80 45.70 51.44

CO emissions per ton of cargo and kilometer traveled GHG Emissions (Kg of CO2 / Vehicle Produced) 2

2016/2017 2017/2018 2018/2019 2016/2017 2017/2018 2018/2019

64.39 57.00 54.70

77.00 g CO2 / 65.40 g CO2 / 69.3 g CO2 / ton x km ton x km ton x km 76 77 2018/2019

GRI STANDARDS CONTENT INDEX 78 79 GRI STANDARDS CONTENT INDEX 2018/2019

STANDARD DISCLOSURE COMMENT / PAGE STANDARD DISCLOSURE COMMENT / PAGE GRI GRI

GRI 101: 2016 fundamentals 102-25 - Conflicts of interest

102-26 - Role of highest governance body in 102-1 - Name of the organization 22 and 43 13 setting purpose, values, and strategy 102-2 - Activities, brands, products, and services 22 102-28 - Nominating and selecting the 13 102-3 - Location of headquarters 16 highest governance body

102-4 - Location of operations 22 102-38 - Annual total compensation ratio

102-5 - Ownership and legal form 29 102-39 - Percentage increase in annual total compensation ratio 102-6 - Markets served 22 102-40 - List of stakeholder groups 40 102-7 - Scale of the organization 37 102-41 - Collective bargaining agreements 50

102-8 - Information on employees and other workers 47 102-42 - Indentifying and selection stakeholders 40

102-9 - Supply chain 56 102-43 - Approach to stakeholder engagement 40

102-10 - Significant changes to the None. 102-44 - Key topics and concerns raised 40 organization and its supply chain GRI 102: General 102-45 - Entities includes in the consolidated GRI 102: 102-11 - Precautionary Principle or approach financial statements General disclosures disclosures 102-12 - External initiatives 2016 2016 102-46 - Defining report content and topic Boundaries 40 102-13 - Membership of associations 102-47 - List of material topics 40 102-14 - Statement from senior decision-maker 9 102-48 - Restatements of information 40 102-15 - Key impacts, risks and opportunities 102-49 - Changes in reporting 40 102-16 - Values, principles, standards, 29, 32 and 33 and norms of behavior 102-50 - Reporting period 40

102-17 - Mechanisms for advice and 13 Refers April 1st 2017 to concerns about ethics 102-51 - Date of most recent report March 31st 2019 cycle. 102-18 - Governance structure 13 102-52 - Reporting cycle Biennial. 102-20 - Executive-level responsibility for 13 economic, environmental and social For questions regarding 102-53 - Contact point for questions the report, send an email 102-22 - Composition of the highest governance regarding the report to sustentabilidade@ 13 body and its committees toyota.com.br. 102-54 - Claims of reporting in 40 102-23 - Chair of the highest governance body 13 accordance with the GRI Standards 80 81 GRI STANDARDS CONTENT INDEX 2018/2019

STANDARD DISCLOSURE COMMENT / PAGE STANDARD DISCLOSURE COMMENT / PAGE GRI GRI 103-1 - Explanation of the material 102-55 - GRI content index 80 68 GRI 102: topic and its boundary General GRI 103: disclosures Toyota does not submit Management 103-2 - Management approach and its components 68 2016 102-56 - External assurance its Sustainability Report approach for external verification. 103-3 - Evaluation of the management approach 68

Material topics 302-1 - Energy consumption inside of the organization 68

103-1 - Explanation of the material topic GRI 302: _ 302-3 - Energy intensity 68 and its boundary topic and its boundary Energy GRI 103: Management 103-2 - Management approach and its components _ 302-4 - Reduction of energy consumption 68 approach 103-1 - Explanation of the material 68 103-3 - Evaluation of the management approach – topic and its boundary GRI 103: Toyota do Brasil is a Management 103-2 - Management approach and its components 68 limited liability company approach and, therefore, according to Law No. 11,368/2007, it 103-3 - Evaluation of the management approach 68 is not obligated to disclose GRI 303: its balance of economic 303-1 - Water withdrawal by source 71 and financial indicators. Water As a strategy, the company 103-1 - Explanation of the material 74 201-1 - Direct economic value generated and distributed has always sought to topic and its boundary GRI 201: protect its numbers from GRI 103: Economic any publicity and avoids Management 103-2 - Management approach and its components 74 performance making its Balance Sheet, approach or any data from the 103-3 - Evaluation of the management approach 74 balance sheet, available to third parties, except in exceptional cases and with 305-4 - GHG emissions intensity 74 a confidentiality clause. GRI 305: 305-5 - GHG emission reduction 74 201-2 - Financial implications and other risks and Emissions 74 opportunities arising from climate change 305-7 - NOx, SOx and other significant 74 atmospheric emissions 103-1 - Explanation of thematerial topic and is boundary 58 103-1 - Explanation of the material 68 GRI 103: topic and its boundary Management 103-2 - Management approach and its components 58 GRI 103: approach Management 103-2 - Management approach and its components 68 103-3 - Evaluation of the management approach 58 approach 103-3 - Evaluation of the management approach 68 203-1 - Infrastructure investments GRI 203: 58 Indirect and services supported GRI 306: 306-1 - Water disposal by quality and destination 72 Economic Effluents Impacts 203-2 - Significant indirect economic impacts 58 and waste 306-2 - Waste by type and disposal method 72

82 83 GRI STANDARDS CONTENT INDEX 2018/2019

STANDARD DISCLOSURE COMMENT / PAGE STANDARD DISCLOSURE COMMENT / PAGE GRI GRI

103-1 - Explanation of the material 58 topic and its boundary Operational changes are carried out in accordance GRI 103: with internal policies Management 103-2 - Management approach and its components 56 in line with current approach legislation, always GRI 402: focused on maintaining 402-1 - Minimum notice periods regarding Labor a healthy and productive 103-3 - Evaluation of the management approach 56 operational changes Relations work environment. Each negotiation requires a GRI 308: specific term as a result Environ- 308-2 - Negative environmental impacts on the of the changes to be made mental 56 chain of suppliers and actions taken and possible impacts on Assessment the routine of employees. of Suppliers 103-1 - Explanation of the material 103-1 - Explanation of the material 46 47 topic and its boundary topic and its boundary GRI 103: GRI 103: Management 103-2 - Management approach and its components 46 Management 103-2 - Management approach and its components 47 approach approach 103-3 - Evaluation of the management approach 46 103-3 - Evaluation of the management approach 47

GRI 403: Health and 403-4 - Health and safety topics covered by 401-1 - New hires and employee turnover 47 50 safety at formal agreements with unions Work

The benefits offered by 103-1 - Explanation of the material 46 Toyota are available to all topic and its boundary employees and include, GRI 401: between mandatory GRI 103: Employment 401-2 - Benefits provided to full-time and voluntary benefits: Management 103-2 - Management approach and its components 46 employees that are not provided to transportation allowance, approach temporary or part-time employees life insurance, health insurance, disability 103-3 - Evaluation of the management approach 46 coverage, maternity/ paternity leave, and retirement fund. 404-1 - Average hours of training per year per employee 49

103-1 - Explanation of the material – topic and its boundary TDB does not have in GRI 404: 404-2 - Programs for upgrading employee skills place programs to support GRI 103: Training and and transition assistance programs the preparation of its Management 103-2 - Management approach and its components – Education employees for retirement. approach

103-3 - Evaluation of the management approach – 404-3 - Percentage of employees receiving regular 48 performance reviews and career development...

84 85 GRI STANDARDS CONTENT INDEX 2018/2019

STANDARD DISCLOSURE COMMENT / PAGE STANDARD DISCLOSURE COMMENT / PAGE GRI GRI 103-1 - Explanation of the material – topic and its boundary Every year, we require GRI 103: GRI 412: our direct suppliers of Management 103-2 - Management approach and its components – Human 412-1 - Operations that have been subject to human parts to verify this and approach Rights rights reviews or impact assessments we inform TMC of the Assessment result, which summarizes 103-3 - Evaluation of the management approach – this indicator globally.

103-1 - Explanation of the material Every year, we require our 58 direct suppliers of parts to topic and its boundary verify this and we inform GRI 408: 408-1 - Operations and suppliers at significant GRI 103: TMC of the result, which Child labor risk for incidents of child labor Management 103-2 - Management approach and its components 58 summarizes this indicator approach globally. So far, we have had no significant reports. 103-3 - Evaluation of the management approach 58

GRI 413: 413-1 - Operations with local community 103-1 - Explanation of the material – Local engagement, impact assessment and 58 topic and its boundary Communities local development programs GRI 103: Management 103-2 - Management approach and its components – 103-1 - Explanation of the material 54 approach topic and its boundary 103-3 - Evaluation of the management approach – GRI 103: Management 103-2 - Management approach and its components 54 approach GRI 409: Forced or 409-1 - Report countries or geographies considered 103-3 - Evaluation of the management approach 54 None. slave-like at risk of forced or compulsory labor labor GRI 416: Customer 416-1 - Health and safety impact assessment 54 103-1 - Explanation of the material Health and of product and service categories – topic and its boundary Safety GRI 103: Management 103-2 - Management approach and its components – approach

103-3 - Evaluation of the management approach –

86 87 2018/2019

CREDITS AND CORPORATE INFORMATION

Toyota do Brasil Av. Max Mangels Senior, 1.024 – Bairro Planalto ZIP CODE 09895-510 São Bernardo do Campo – SP Brazil Telephone: +55 11 4390-5100

Coordination Communication and Sustainability Department Project Coordination: Juliana Dias and Ayres Takashi Abe

Consulting and Content Keyassociados

Graphic Design Magenta Lab