4 | Sustainability Report 2020 Toyota Sustainability Report 2020 | 5

Our sustainability context

The is experiencing a pivotal transition, propelled by Aligning to UN Sustainable Development Goals a variety of disruptive forces. Demographic trends, increased congestion in The UN Sustainable Development Goals (SDGs), agreed by 193 countries in September 2015, set out the key cities, environmental and climate impacts, are influencing how consumers challenges for the global community to address in the coming decade. These challenges include issues related interact with vehicles. Market disruptors such as rideshare services are to poverty, inequality, climate change, environmental degradation, peace and justice. growing and provide consumers with a convenient alternative to vehicle Toyota Japan is working on initiatives that contribute to the sustainable development of a global society through ownership. Technological innovations are spurring competition to achieve all its business activities. Toyota Australia business activities are aligned to these initiatives. the most environmentally sustainable and connected mobility products. Throughout the report we highlight how Toyota Australia initiatives, directly and indirectly align with particular Toyota is committed to being a leader in not just responding to, but shaping SDGs. these trends towards a low-emission mobility future.

Some of the trends shaping our future direction include: Through businesses

Improving value by adopting our CASE framework. Connected, Autonomous/Automated, Shared and Electric. The sharing economy

Many customers are looking to the ‘sharing economy’ for mobility solutions. In cities Safe and reliable Environment in particular, more options are becoming available for short-term vehicle use, or

ridesharing. These alternatives appeal to customers as affordable options that reduce Zero deaths and injuries from Zero CO2 emissions the strains of vehicle ownership in built-up areas. traffic accidents Recycling/reuse of Comfortable and congestion- resources free travels Customer preferences Accessibility to means of Online purchasing is becoming increasingly popular, and this has been accelerated transportation for all by the impact of COVID-19. However, we find that most customers still want an in- Spread of cars serving also as person interaction when purchasing a vehicle. Our dealers are the touch point for our power sources customers, and our partners in providing ideal mobility solutions for our customers. Meanwhile, our customers now live in a world of constant connectivity through devices Use of hydrogen to promote and apps that are seamlessly integrated in vehicles. energy diversification

Connected, autonomous vehicles By social contribution activities

Vehicles with autonomous capabilities are developing rapidly and have the potential Aiming to become a reliable corporate citizen to increase safety on the roads. While not a current reality in our product range, connected, autonomous vehicles are a constant in our forward-thinking.

Life cycle environmental impacts

We recognise the need to address climate change and other pressing environmental challenges. We understand how vehicles contribute to these challenges. Therefore, Toyota is driven to apply our skills in design and innovation to reduce emissions and other impacts from vehicle production, use, and end of life. Enhancing environmental, social and corporate governance

Large and unique fleet market Tackling human rights issues Around half of our sales are to government and business buyers. With sustainability Promoting diversity goals of their own, these customers are important partners in accelerating the take-up of innovative vehicle technologies. How we create value

What we draw on What we do The value we create

Designing the future

Our vehicles’ emissions (and their production and KEY TRENDS disposal) contribute to climate change and other Technological innovation Social shifts environmental impacts. In line with the Toyota Environmental Challenge, we work constantly to minimise these impacts. Through innovation, partnership, advocacy and education, we are helping Pricing landscape Climate change to realise a future of Connected cars, Autonomous/ Automated driving, Sharing and Electric (‘CASE’).

Ever better vehicles

We deliver the vehicles Australians need, with more Our brand on the road than any other vehicle. Our vehicles create Toyota fans for life, because of our SECURING OUR BRAND ability to develop and manufacture vehicles with FOR TOMORROW technological features that meet the needs of our customers. Our customers and their needs are Our customers Develop mobility solutions always our focus. Help create a zero carbon society

ONE Toyota MAINTAINING OUR partners, Toyota BRAND TODAY Enriching communities affiliates and our Toyota Australia is embedded in the Australian dealer network Engage with and support the community community through trust in our vehicles, and wide- ranging engagement. We support grassroots to Our people, Develop our people elite sport; local communities and not-for-profits. culture and Delight our customers with the right product Our vehicles are also involved in congestion and capabilities in the right place at the right time traffic accidents, so we constantly work towards safer vehicles and a future of equal access to mobility.

Our vehicles

Building capabilities

We build skills and careers. Our work on building capabilities internally is reflected in our community investment, with a focus on sharing our knowhow Governance Education & with Australian not-for-profits and small businesses advocacy through the Toyota Production System Support Centre (TSSC), and building the STEM skills that we depend on in our future employees.

Partnerships ENA K R&D, Innovation BLERS: HOW WE WOR

Wide-reaching economic impacts

Our business is at the heart of an ecosystem of dealers, suppliers and partners. Our vehicles keep thousands of Australian businesses on the road, with a low total cost of ownership. Our community investment contributes to the not-for-profit economy. We are helping to build the skills and technologies for the economy of the future. Toyota 2019/2020 Performance

Designing the future Ever better vehicles Enriching communities Wide-reaching economic impacts 100,000+ 215,722 RAV4 $2.8 million 60 years 224 Australian hybrid vehicle sales Toyota vehicle sales CarsGuide 2019 Car of the Year Community contributions Toyota operations in Australia Toyota and dealerships (cumulative) 13,501 Car Service Building capabilities Gold Winner Toyota and Lexus dealer employees Reader’s Digest Quality Service Award 2020 1,722 Toyota employees 8.29 (headcount of full-time, part-time, Dealer satisfaction index employees and contractors) Toyota 17% Hybrid RAV4 82.6 78 $129 million Australian hybrid vehicle sales (%) Drive Car of the Year Net Promoter Score – sales Employee engagement score After-tax profit

10 vehicles Ranked #1 65 $1.2 billion Hydrogen vehicle – Most trusted automotive company – Annual Trusted Brand Survey Employee enablement score Supplier spend Mirai demonstration model Stage 1 complete 29% 1,456 Female representation in workforce Number of suppliers Hydrogen Centre 1,156kW 21 Solar capacity – Australia wide Lost time injuries Toyota Sustainability Report 2020 | 11 Our approach to sustainability

Since its foundation in 1937, globally, Toyota has strived to contribute Overview of sustainability at Toyota Australia to the sustainable development of society and the planet through its business operations. It’s a principle that we have continued since Toyota Australia started in 1963 and has helped to cement our position Toyota Global Vision as Australia’s leading automotive company.

Motor vehicles greatly expand the freedom of mobility. However, Toyota will lead the future Through our commitment We will meet we recognise that they also have some less desirable impacts on mobility society, enriching to quality, endless challenging goals by our society and the environment. With this in mind, sustainability is lives around the world innovation, and respect engaging the talent and embedded throughout Toyota Australia’s approach, from our vision with the safest and most for the planet, we strive to passion of people who to our Company Hoshin. responsible ways of exceed expectations and be believe there is always a moving people. rewarded with a smile. better way.

Toyota Guiding Principles

Toyota Way

Toyota Global CSR Policy

Toyota 2050 Environmental Challenge

Toyota Australia Vision Creating innovative mobility solutions for all Australians

2025 Direction Mid-term Company Hoshin TMCA Environmental Business Plan Action Plan

10 | Toyota Sustainability Report 2019 12 | Toyota Sustainability Report 2020 Toyota Sustainability Report 2020 | 13

Our Guiding Principles The Toyota Way Toyota Global Corporate Social Responsibility (CSR) • Expanding the positive customer experience and The decisions we make, the way we treat our We apply these principles to every aspect of our day-to- Policy offering mobility solutions employees and customers, and our involvement in local day work through our simple framework ‘The Toyota Way’: In 2005, TMC announced the ‘Contribution toward • Leveraging our brand strengths. communities are all informed by the Toyota Guiding Sustainable Development’, an interpretation of In order to translate our vision into action, we have Principles. These principles, which have been in place Continuous improvement the Guiding Principles at Toyota that takes into since 1997, build on the five main principles set down by consideration Toyota’s relations with stakeholders. This established key performance indicators (KPI) with Challenge When we embrace a challenge, we also our founder, Sakichi Toyoda, in 1935. was revised in 2008 to become a CSR Policy. The policy targets for each financial year. These targets are commit ourselves to challenging what we takes into account subsequent environmental changes monitored, measured and feed into our Mid-term know and do to complete it. This means and increased societal interest in CSR. TMC CSR global Business Plan and Company Hoshin. we have to approach each challenge, not Honour the language and spirit of the law policy feeds in to TMCA business activities. 1. only with creativity, but also with courage. The Mid-term Business Plan is our five year whole-of- of every nation and undertake open and fair company action plan that outlines the product line-up business activities to be a good corporate Kaizen Kaizen is the essence of continuous Toyota Environmental Challenge 2050 and the profit outlook for the business. citizen of the world. improvement. It is a way of thinking which In October 2015, Toyota set out a bold plan involving encourages and empowers everyone six challenges to achieve zero CO emissions and a net Our Company Hoshin is TMCA’s annual strategy which to identify where and how even small 2 outlines our objectives and targets and aligns with our Respect the culture and customs of every positive impact on the environment and society by 2050. changes can be made to benefit the 2025 vision. The 2020 Hoshin establishes activities and nation and contribute to economic and In Australia, these translate in our TMCA Environmental 2. business, their team or their individual indicators against four key objectives: social development through corporate Action Plan. performance. activities in their respective communities. • People first and zero harm (safety) Genchi “Going to the source” – is about checking Genbutsu the facts yourself, so you can be sure you • Customer-focused organisation Dedicate our business to providing clean have the right information you need to and safe products and to enhancing the • Business model for sustainable growth 3. make a good decision. quality of life everywhere through all of our • Realise year 3 of 2025 Direction (product, customer, activities. Respect for people brand).

Respect It is important everyone is respected both The Hoshin is widely communicated throughout Create and develop advanced technologies for what they contribute and who they are. the organisation at the beginning of each financial and provide outstanding products and 4. That includes their ideas and their cultural year, and guides the activities of all employees, from services that fulfill the needs of customers and personal beliefs. Through ‘Respect’ management to frontline staff. worldwide. we accept personal responsibility for what we do and build mutual trust and understanding with those around us. Foster a corporate culture that enhances Governance 5. both individual creativity and the value of Teamwork Successful teamwork is about everyone teamwork, while honouring mutual trust and understanding our goals and working Toyota Australia is overseen by a focused and respect between labour and management. together to achieve them. Every member experienced Board, who brings combined experience of a team is given the opportunity to of over 128 years with Toyota worldwide. The Board of directors comprises of two Toyota Australia executives Pursue growth through harmony with do their best and the accountability to Toyota Australia’s vision and two Toyota Motor Corporation executives. the global community via innovative achieve results. We strive to give them 6. stable employment and opportunities to Toyota’s Guiding Principles, the Toyota Way and the management. The Board’s key functions are to: develop their skills, responsibilities and global vision are the foundation of Toyota Australia’s commitment as individuals and committed 2025 direction, which is our roadmap to ‘Creating • Agree on TMCA’s strategic direction and ensure this Work with business partners in research and team members. innovative mobility solutions for all Australians’. This is aligned with the interests and values of our parent manufacture to achieve stable, long-term 7. vision will be achieved through our three strategic company growth and mutual benefits, while keeping priorities: ourselves open to new partnerships. • Oversee TMCA’s risk management and its compliance • Creating an innovative product range that reduces obligations, guided by the Risk and Compliance

CO2 emissions Committee. The Board met twice during the reporting period. 14 | Toyota Sustainability Report 2020 Toyota Sustainability Report 2020 | 15

Board membership as at 31 March 2020 Operational structure External codes and charters Toyota Australia has three operating arms: In addition to our internal values and policies, Toyota Directors Role Appointment 1. National Sales and Marketing Operations Australia is aligned to various external charters and principles, including: Matthew John Callachor TMCA President and CEO 1 June 2016 2. Product and Corporate Operations 3. Regional and Guest Operations. • Occupational Health and Safety (OHS) National Audit Tetsuo Mori TMCA Treasurer and Chief Coordinating Executive 1 January 2016 Tool for OHS Management Systems OHS ISO 18001 Each arm is led by a Vice President, and supported by • Self-Insurance () Chief Coordinating Executive inpatriates from TMC, who Nobuhiko Murakami TMC non-resident director 1 January 2018 provide close liaison between TMC and Toyota Australia. • Environmental Management System ISO 14001 (Port During the reporting period, a new Vice President was Melbourne Office and Melbourne Parts Centre, Altona) Mitsuhiro Amo TMC non-resident director 1 January 2019 appointed to the Product and Corporate Operations arm. • Federal Chamber of Automotive Industries (FCAI) Code Lexus Australia is managed as a separate division. of Practice for: Governance committees governance-related matters for TMCA. It maintains – Motor Vehicle Advertising our risk register, in line with our risk management Compliance TMCA Governance Committees are shown below. – Conduct of an Automotive Safety Recall framework. The register is reviewed bi-monthly to One of Toyota’s Guiding Principles is to ‘Honour the ensure TMCA are able to recognise and respond quickly – Access to Service and Repair Information for Motor While the Board sets the strategic direction for TMCA, language and spirit of the law of every nation and to any potential issues. The committee met six times Vehicles implementation is led by our seven-member Executive undertake open and fair corporate activities to be a good during the reporting period. Management Committee, which meets monthly and is citizen of the world’. TMCA views compliance activities as – Technical Statement on EV Charging Standards for a vital part of running a safe and ethical organisation. chaired by the President and CEO. The Sustainability and Environment Committee oversee Public Recharging Infrastructure Our Code of Ethics and Code of Conduct provides the The Risk and Compliance Committee reports directly the Environmental Action Plan which stipulates how we • Australian Hydrogen Council: basis for our approach to conducting our business to the Board, and is comprised of six senior TMCA are tackling each challenge set out in the Environmental ethically. These can be viewed on the TMC website. – Social Licence Principles members, chaired by a TMCA director. The committee Challenge 2050. This committee meets bi-annually, takes responsibility for all risk, compliance, ethics and is comprised of our Executive leadership team, and During the reporting period, TMCA did not record any – Regulatory Principles reinforces the importance assigned to these topics. significant fines or non-monetary sanctions for non- compliance with laws and regulations. Industry associations and memberships We strive to respond quickly and openly to any TMCA Governance issues that may impact our customers or the broader We remain an active and supportive member of a range of Committees community, in accordance with our principle of respect automotive industry associations and other groups, this for people. We also seek to keep our customers and includes: community well informed through our TMCA website, • Australian Industry Group TMCA BOD which provides the latest news including recall updates. The issues we addressed during the reporting period can • Committee for Economic Development of Australia be found in more detail on p. 64. • Federal Chamber of Automotive Industries Executive Management Committee Toyota Australia is committed to encourage and • Victorian Employers’ Chamber of Commerce and support ethical conduct and foster a positive and open Industry Formal Constitution environment. Fraud and corruption are not tolerated, we Charter from BOD Project/Operational Basis • Committee of Melbourne maintain robust global, and local policies and controls to manage any issues ethically. We encourage the • Green Building Council of Australia reporting of actual or suspected wrongdoing through • CitySwitch Green Office program our whistleblower protection policy. The policy sets out the kinds of reporting that are covered, the reporting • TAKE2 Signatory mechanisms, and a free independent third-party phone • Australian Hydrogen Council Risk & Executive Sustainability General Information Company 2025 Mobility line. Compliance Finance & Environment Managers Security Quality Working Executive • ITS Australia TMCA is currently working on initiatives to ensure Committee Committee Committee Committee Management Meeting Group Committee • Pro Bono Australia Committee employees within our supply chain are properly protected in line with the Modern Slavery Act 2018 (Cth) (see further • Philanthropy Australia p. 52). Toyota Sustainability Report 2020 | 17 Our material sustainability topics

and stakeholders Our materiality process Zero carbon transition Each year we assess our material Operational environmental impacts sustainability topics through a Vehicle life cycle In accordance with our core principle of continuous improvement, we process guided principally by focus on the environmental, social and governance issues that are most the Global Reporting Initiative Standards (GRI) 2016. We important to our business and our stakeholders. conducted a desktop review of Community investments and partnerships internal documents from Toyota Customer engagement and satisfaction Australia, TMC, and external Dealer engagement sources including our peers, the Indirect social and economic impacts media, industry bodies and non- Supply chain sustainability government organisations (NGOs). Through this process we identified relevant topics and assessed their relative importance to Toyota Mobility Australia’s business performance Automated driving and intelligent transport systems and to its stakeholders. Sharing services We also assessed our impacts Data privacy and security against the United Nations SDGs Advocacy and lobbying taking into account both our actual and potential ability to either create positive impacts or to mitigate negative impacts. Product safety and quality

The resulting material topics are outlined below, categorised according to the ‘capitals’ of the Integrated Reporting framework. Our most material topics are shown Employee health, safety and wellbeing in bold. Employee engagement Diversity and inclusion Employee planning and development Labour relations

16 | Toyota Sustainability Report 2019 Our value chain

We connect with our TMC designs vehicles customers using many appealing to customers, different tools and focusing on quality, channels throughout innovation and respect the lifecycle of a Toyota for the planet. Investment vehicle. These tools in innovation and enable consumers to be research enables Toyota informed and educated We work with our to be at the forefront about the product they distribution partners to TMC mitigates some of current and future are using. Delivery is move vehicles and parts environmental impacts advances in vehicle TMCA promotes the through dealerships, around the country to through its vehicle design technology. Toyota and Lexus our Guest Experience Toyota dealers. The and life cycle processes. brand through Centre, and multiple Although TMCA Toyota Production The Toyota Global 100 different marketing online platforms. imports vehicles from System (TPS), provides Dismantlers project and and communication Customers can now view Toyota affiliates, we efficient processes Toyota Global Car-to-Car channels. We also work vehicle specifications, retain a strong hand in TMCA sources vehicles that also minimise the Recycle Project are two closely with our dealers book a test drive and designing, selecting and from Austria, Japan, carbon footprint of global projects initiated to promote our brands. make purchases from customising vehicles to TMC promotes the Thailand, and the United transporting vehicles. by TMC to minimise the our dealers online. meet the unique needs development and States, while parts are This system is supported Our primary sales environmental impacts of of the Australian market. introduction of low- sourced internationally TMCA has four by sophisticated channel is through Toyota dealerships vehicle end of their life.

TMCA has a role to play in CO2 technologies, daily and locally. TMC warehouses located planning, alignment national dealerships, nationally provide TMCA has implemented selecting models, taking kaizen, utilisation of and TMCA policies nationally for parts and cooperation while our customers vehicle servicing a Hybrid Vehicle Battery into account Australian renewable energy and encourage sustainable storage. They are between TMCA and also have the option for our customers. Recycling Program and legislation and industry use of hydrogen at all and efficient shipping equipped with systems our dealer network so of purchasing online. TMCA works with our most of our dealers work regulations, customer production plants, in and logistics of our to bring in warehouse that our consumers can We serve our fleet dealers to manage with tyre recyclers that preferences, and keeping in line with products and parts efficiencies, minimising access the right product customers directly and the environmental are members of Tyre TMCA’s overall strategic Toyota Environmental to reduce our carbon both safety risks and when and where they via our specialised fleet impacts through their Stewardship Australia objectives. Challenge 2050. footprint. damage to parts. require it. dealerships. operations. (TSA).

Product planning Logistics & Storage & Marketing Use & Manufacturing Distribution End of life and design transport processing & sales servicing SDGs Challenge 2050 Challenge Toyota Environmental Environmental Toyota