Sustainability Report 2007 Towards a New Future for People, Society and the Planet Hybrid Vehicles—1,000,000 Sold Sustainability Report 2007 A New Future for People, Society and the Planet Toyota Motor Corporation (TMC) is pleased to publish the Sustainability Report 2007 — A New Future for People, Society, and the Planet, a report on our business activities from the perspective of achieving harmonious relationships with society and the earth. In accordance with the Fourth Toyota Environmental Action Plan, which began in FY2006, the section on environmental aspects is divided into chapters that address four main topics—energy/global warming, recycling of resources, substances of concern, and atmospheric quality—and environmental management conducted to promote initiatives in each area. The section on social aspects explains activities undertaken during FY2006 with respect to each category of stakeholder and explains in detail the background, development, history, and approaches to those activities. The report also incorporates information on best practices by overseas affiliates in both the environmental and social sections as well as the comments and opinions of various stakeholders. We have also added a page of past initiatives to enhance understanding of Toyota's prior activities. In order to make further improvements and enhance the quality of future reports, a questionnaire is included at the end of the report. We look forward to receiving your frank comments and thoughts. Environmental Aspects Social Aspects Economic Aspects Sustainability Report 2007 A New Future for People, Society and the Planet http://www.toyota.co.jp/SR/en07repo/ Annual Report http://www.toyota.co.jp/en/ir/library/annual/index.html 1) Period covered: The period covered in the data is from April 2006 to March 2007, and major developments are described as of June 2007. 2) Scope of report Environmental Aspects: TMC’s initiatives on an unconsolidated basis, and examples of activities by overseas consolidated subsidiaries, as well as the progress of consolidated environmental management both in Japan and overseas. Social Aspects: TMC’s initiatives on an unconsolidated basis, and examples of activities by overseas consolidated subsidiaries. Economic Aspects: A summary of the TMC Annual Report. 3) Sustainability Report 2007 Supplement Toyota Motor Corporation Site Data Includes detailed information concerning environmental activities http://www.toyota.co.jp/SR/en07plantdata/ at individual plants and other sites. Reports by Overseas Affiliates With the publication of a report by Brazil in 2006, twelve countries and regions, including Japan, now publish local environmental reports. The regions in which reports are issued account for about 86% of Toyota vehicles sold throughout the world. North America Taiwan Australia Europe Thailand India Canada Argentina South Africa The Philippines New Zealand Brazil Please see P. 88 for URLs of overseas reports Cover: Cumulative worldwide sales of Toyota hybrid vehicles between December 1997 and the end of May 2007, including the Prius, the world’s first mass-produced hybrid passenger car, topped one million units. Contents Executive Message 2 Appendix 44-50 Vision and Structures Fourth Toyota Environmental Action Plan 44 Environmental Accounting 46 Corporate Philosophy 4 Status of Major Environmental Data for FY2006 47 Vision and Structures Corporate Governance 7 Volume of Resources Input and Volume of Substances Discharged from Production Plants and Logistics Activities in FY2006 47 Compliance 8 CO2 Conversion Coefficients to Calculate CO2 Emissions Volume 47 Environmental Aspects Environmental Data for FY2006 Japanese New Models and Redesigns (Passenger Vehicles) 48 Environment-related Awards (FY2006) 48 Highlights in FY2006 9 Main Companies Subject to Consolidated EMS in Japan, Continued Reporting 49 Status of ISO 14001 Certification, Energy/Global Warming 10-18 List of Overseas Affiliates in the Report, Environmental Glossary 50 Further reduce CO2 emissions in Toyota’s global operations 10 Social Aspects Promote the development of technologies to achieve the best fuel efficiency performance in each country and region 12 Highlights in FY2006 51 Environmental Aspects Promote the development of clean-energy vehicles, and encourage their effective introduction to ensure wider market acceptance 13 Develop technologies to respond to Relations with Customers 52-56 the diversification of energy and fuel sources 14 Aiming to Achieve Zero Customer Complaints 52 Promote initiatives to improve traffic flows using a variety of networking technologies 14 Initiatives to Enhance Quality 53 Reduce CO2 emissions in TMC’s production activities 15 Universal Design 56 Reduce CO2 emissions in the logistics activities of each country and region 16 Examples of Overseas Initiatives 56 Examples of Overseas Initiatives (CO2 emissions reduction) 17 Relations with Employees 57-63 Recycling of Resources 19-23 Sharing the Toyota Way 57 TMC initiatives to promote the effective use of resources to Human Resource Development 58 further contribute to the realization of a recycling-based society 19 Respect for Diversity 60 Further promote and expand the use of designs based on the designs for recycling concept 21 Safety and Health 62 Social Aspects Economic Aspects Steadily implement recycling systems in Japan and Europe 21 Examples of Overseas Initiatives 63 Examples of Overseas Initiatives (Volume of waste, water consumption) 23 Relations with Business Partners 64-68 Substances of Concern 24-25 Collaboration with Suppliers 64 Promote management and further reductions in the use of substances of concern 24 Collaboration with Sales Networks 66 Reduce the discharge of substances subject to PRTR due to TMC production activities 24 Examples of Overseas Initiatives 68 Examples of Overseas Initiatives 25 Relations with Shareholders 69 Atmospheric Quality 26-27 Global Society/Local Communities 70-83 Reduce emissions to improve air quality in urban areas in all countries and regions 26 TMC’s VOC emissions reduction activities 27 Initiatives toward Improving Traffic Safety 70 Examples of Overseas Initiatives 27 Basic Principles and Policies of Social Contribution Activities 72 The Environment 73 Environmental Management 28-39 Traffic Safety 74 Education 75 Basic concepts with regard to the environment 28 Culture and the Arts 76 Implementation structure 29 Community Care 77 Strengthen consolidated environmental management 30 Examples of Overseas Social Contribution Initiatives 78 Further promotion of environmental management at business partners 33 Communication 82 Enhance the content of environmental education 34 Examples of Overseas Initiatives (Communication) 83 Promote new businesses that contribute to environmental improvement 35 Steadily reduce environmental impact over the entire vehicle lifecycle Special Story 84-85 through implementation of Eco-VAS (Eco-Vehicle Assessment System) 36 TMC’s production environment management 36 Self-reliance for Overseas Production Affiliates through Human Resources Development Examples of Overseas Initiatives 37 Economic Aspects FY2006 status of company-wide environmental policies 38 Business Results and Geographic Segment Information 86-87 Other Businesses 40-41 Housing Business 40 Three-Year Chronology Summary of Overseas Initiatives (Social Aspects) by Stakeholder Group, Websites for Overseas Affiliate’s Reports 88 Independent Report 89 Special Story 42-43 Opening of Toyota Motor Thailand's Third Plant This mark indicates the website where more information can be found with the Goal of Achieving World-leading Environmental Performance Sustainability Report 2007 1 Expanding Initiatives Under the Banner of “Achieving Sustainability” Toyota Motor Corporation will celebrate the 70th anniversary of its establishment in November of this year. I would like to take this opportunity to express my sincere thanks to our various stakeholders around the world, including customers and business partners, for their longstanding support. I do not believe, however, that Toyota’s continued existence is guaranteed. Corporations are not permanent entities, and only those businesses that can accurately anticipate changes in the business environment and respond appropriately will survive. One of the greatest changes in the business environment in recent years is the heightened expectations towards corporate social responsibility resulting from global environmental issues. Awareness is rising concerning such issues as global warming, resource depletion, and atmospheric pollution, and there are strong demands for businesses to develop harmonious relationships with society and the global environment. As such, achieving harmony with society and the environment is also a top priority for automakers, leading the various automakers to become engaged in fierce competition with a focus on the development of environmental technologies. Since its foundation, Toyota has conducted business with “contributing to the development of a prosperous society through the manufacture of automobiles” as a guiding principle. When I became president two years ago, I called on all employees to work with me in returning to our origins and asking earnestly whether Toyota is truly contributing to society and whether we are doing everything we should be doing. On the occasion of Toyota’s 70th anniversary, we will reinforce our measures designed to return to our core principle, which is to “repay the earth and society through technological innovation (and contribute