Environment Report2014

Front Cover 1

Contents 2

1. Company Overview 3

2. Message 4

3. Yorozu Products 5

4. Yorozu Charter of Corporate Behavior

7

5. Environmental Challenge

1) Group Environmental Philosophy 8

2) Environmental Policy 8

3) Group Environmental Slogan 8

4) Group Environmental Target 8

5) Environmental Management Structure 9

6) Group ISO14001 Accreditation Status 10

7) Environmental Education 11

8) Environmental Proposals 11

9) Compliance with Environmental Laws and Regulations

12

10) Green Procurement 13

11) Energy-Saving Initiatives 14

12) Use of Renewable Energy 16

13) Waste Recycling 17

14) Biodiversity Conservation 18

15) Contribution to Society 20

16) Environmental Data 21

17) Environmental Accounting 25

Contents

Business Development, design, manufacture and sale of auto parts, agricultural machinery parts, and production equipment

Address 3-7-60 Tarumachi, Kohoku-ku, Yokohama, Kanagawa-ken 222-8560 Japan

Established April 1, 1948

Employees 6,411 (consolidated) / 438 （as of March 2015）

ISO certification November 2009 (acquired by the Yorozu Group)

Site area 2,126 m2

Building area 726 m2

YOROZU Global Technical Center (YGTC）

YOROZU Oita Corporation

Shonai YOROZU Corporation

YOROZU Hiroshima Office

YOROZU America Corporation (YA)

YOROZU Automotive Tennessee, Inc. (YAT)

YOROZU Mexicana S.A. de C.V. (YMEX)

YOROZU Automotiva do Brasil Ltda. (YAB)

Y-Ogura Automotive (Thailand) Co., Ltd. (Y-OAT)

YOROZU Bao Mit Automotive Co., Ltd. (G-YBM)

YOROZU JBM Automotive Tamil Nadu Pvt. Ltd. (YJAT)

YOROZU Corporation, Head Office（YC）

YOROZU Tochigi Corporation

YOROZU Aichi Corporation

YOROZU Engineering Corporation

YOROZU Service Corporation

YOROZU Automotive North America, Inc. (YANA)

YOROZU Automotive Guanajuato de Mexico, S.A. de C.V. (YAGM)

YOROZU (Thailand) Co., Ltd. (YTC)

YOROZU Engineering Systems (Thailand) Co., Ltd. (YEST)

Wuhan YOROZU Bao Mit Automotive Co., Ltd. (W-YBM)

PT. YOROZU Automotive Indonesia (YAI)

1. Company Overview

Yorozu Global Network

3

Since its foundation in 1948, Yorozu has been devoted to working day and night as a manufacturer of automotive parts focusing on suspensions. This commitment to hard work has earned us a reputation that links the Yorozu name with quality suspensions. As we all know, suspensions require a highly advanced technology as they play a major role in determining the safety of vehicles. At Yorozu, we make full use of our development and technical capabilities to ensure consistency throughout the entire manufacturing process - from development to production. It is this consistency that leads to efficiency that translates to cost reductions, shorter delivery lead times, and stable superior quality. Today, our competencies are recognized not only by Japanese automakers but also by leading makers outside Japan, resulting in higher demand for our suspensions around the world.

Yorozu has also strengthened its supply system in response to automakers’ global platform requirements. At present, the Group has production sites with development capabilities in Japan and the U.S. in addition to sales and production sites in Japan, the Americas, China, and Southeast Asia. This framework ensures that we have sufficient resources in place to meet automakers’ demands.

Going forward, Yorozu will continue its Monozukuri with pride based on its “basic business creed to conduct reliable management,” create new value through suspension systems, and build the presence of the “Yorozu Brand” throughout the world. In the process, Yorozu will strengthen its business ethics, tackle environmental issues, and achieve sustainable growth so as to instill the value of Yorozu in the minds of the customers. Yorozu aims to become a company that contributes to the well-being of the society.

As initiatives for the environmental management system, the Group will develop light-weight products with less negative impact on the environment as well as other competitive products unrivalled in the industry while complying with laws & regulations and giving consideration to our surroundings.

Yorozu’s Environmental Challenges

Yorozu considers environmental conservation as one of the top priority challenges. By acting proactively to preserve the earth’s environment, Yorozu contributes to the betterment of the people’s lives throughout the world.

Kazumi SATO President & COO

Yorozu Corporation

2. Message

The Environment Surrounding Yorozu

4

Modules

The suspension is one of the key technologies that enable cars to demonstrate the required high performance. Not only does it support the car’s function to “run, stop and turn,” it also adds significant value to the ever-evolving cars. Yorozu makes use of its advanced development technology to supply suspension members and links - the key structural components of a suspension - in various modular forms.

The Group has now gained the reputation as “Yorozu for Suspensions” in and outside Japan. We have reached a point beyond simply being an auto part maker. Yorozu is contributing to the new era of car making as a good partner of car makers with development capabilities and as a member of the automotive industry that is moving toward a low-carbon society.

Links

3. Yorozu Products

5

Brake Pedal

Rear Suspension Member

Rear Beam

Link

Front Suspension Member

Link

Oil Pan

Car Products

① Parts made from high tensile materials Weight can be trimmed by use of high tensile materials in the design of auto parts. This is because tensile materials provide the same strength as regular steel sheets, even when they are thinner. While high tensile materials come with the challenge of lower press formability, their adoption in main structural members such as the frame and arms has expanded thanks to the refinement of their design and forming technologies. ② Side-rail structuring of front suspension member This is a front suspension member comprising three sections: Stiff right/left side-rail parts and a thin cross member in the middle. Because the side-rails, that cut across the car lengthwise, efficiently transmit input from the road to the body, the thickness of the cross member can be reduced, thereby trimming the weight.

Side-rail area

Front Suspension Member

6

Development of Energy-Saving Products

Our basic philosophy at Yorozu is to engage in fair and transparent corporate activities based on high ethical standards and respect for the law. Grounded in this philosophy, we recognized the need to increase our corporate value by fulfilling our social responsibility as a good corporate citizen and earning the trust of our stakeholders, in addition to abiding by relevant laws and ordinances. Accordingly, the Yorozu Group Charter of Corporate Behavior and the Code of Conduct was established, which we use as guidelines in our day-to-day operations. １）Customer Satisfaction and New Technologies The company earns customer satisfaction and confidence by developing new technologies and offering beneficial and reliable products and services and by paying careful attention to safety. ２）Observance of Laws and Regulations The company respects the company rules, the laws and regulations of the countries where it does business, and will pursue the highest standard of ethical behavior in its business. ３）The Environment The company places high priority on the preservation of the earth’s natural environment, and by acting positively contributes to the betterment of quality of life in the world. ４）Globalization The company respects the cultures and customs of all countries in which it operates, and seeks to enhance regional prosperity thorough Yorozu Group business activities. ５）Disclosure The company values communication with its shareholders, other stakeholders and the public at large, and fulfills its duty to make full, fair and timely disclosure of corporate information. ６）Respect for Human Rights The company respects human rights, abstains from discrimination on any basis, and from engaging in any form of harassment. And also respects each employee's individuality and creates work environments where all its employees can fully demonstrate their abilities and carry out their job with enthusiasm. ７）Fair Trade The company recognizes that free and fair competition is a fundamental principle of the market economy and will engage in transactions by adhering to this principle. ８）Commitment by Executives The Company management will lead in the implementation and enforcement of the Charter of Corporate Behavior, and should a breach of this charter arises, will vigorously address the violations by themselves to investigate the causes and prevent recurrence of such breach. Also the management will make timely and accurate disclosure of information to the public and take disciplinary actions against persons involved (including themselves), identifying the responsibility and authority of the person(s) in question.

4. Yorozu (Group) Charter of Corporate Behavior

7

Basic Philosophy

1) Group Environmental Philosophy Yorozu Group places high priority on the preservation of the earth’s natural environment, and

by acting positively contributes to the betterment of quality of life in the world.

2) Environmental Policy 1. Accurately grasping the effects of our corporate activities on the environment, we will establish environmental goals and targets while enhancing and continuously improving our environmental management system. 2. We will prevent environmental pollution by complying with environment-related laws, regulations, agreements, and requirements. 3. We will work toward resource and energy conservation, recycling, and the reduction of waste in all areas of our corporate activities. 4. We will practice product manufacturing and technological development in ways that reduce environmental impact. 5. We will work to reduce substances that have an impact on the environment. 6. We will coexist in harmony with local communities and actively exchange and provide information related to environmental conservation.

3) Group Environmental Slogan We will appreciate the bounty of nature as we pursue growth in harmony with the natural

environment, based on CSR.

4) Group Environmental Target（7 sites in Japan） 1. Maintain ISO 14001 certification

2. Comply with environmental laws/regulations and the control value of each company 3. Save energy: Reduce carbon emissions intensity by 1% in 2015 from 2014 4. Reduce waste: Reduce waste intensity by 1% in 2015 from 2014 5. Reduce water: Reduce water intensity by 1% in 2015 from 2014 6. Continue to be certified as an excellent company for waste separation (Yokohama HQ) 7. Develop products with less weight 8. Reduce tooling costs by 10% 9. Select materials free of restricted substances, and control information by IMDS 10. Participate in environmental protection activities, at least 100% of the planned activities 11. Report on 'Environmental Management Survey' / October 2015

Not a single day goes by without hearing some news related to the environment, whether it is about climate change or extreme weather conditions attributed to global warming, or environmental pollution. We must view and treat these issues as our own problems at government, business, and individual levels. At the same time, those with sustainability responsibilities must, at all times, see things from the earth’s perspective, and think what is best for the earth’s ecosystem in the execution of business activities.

Masaki TAMURA, Chief Vice President and General Manager of Internal Auditing Office

5. Environmental Challenge

8

Message from the Chief Sustainability Officer

5) Environmental Management Structure

9

Group Environmental Management Organization

Group Environmental Management and Internal Audit Structure

６）Yorozu Group ISO14001 Accreditation Status

New overseas sites other than above are in the process of certification.

Company ISO

certification acquired

Integrated certification for 6 Yorozu Group companies

November

2009

YOROZU Corporation

YOROZU Tochigi corporation

YOROZU Oita Corporation

YOROZU Aichi Corporation

Shonai YOROZU Corporation

YOROZU Engineering Corporation

Company Certification acquired

YOROZU Automotive Tennessee, Inc. (YAT) October 2001

YOROZU Mexicana S.A. de C.V. (YMEX) August 2002

YOROZU (Thailand) Co., Ltd. (YTC) July 2002

YOROZU Automotive North America, Inc. (YANA) July 2003

YOROZU Bao Mit Automotive Co., Ltd. (G-YBM) October 2007

YOROZU JBM Automotive Tamil Nadu Pvt. Ltd. (YJAT) December 2013

Wuhan YOROZU Bao Mit Automotive Co., Ltd. (W-YBM) June 2014

YOROZU Automotive Guanajuato de Mexico, S.A. de C.V. (YAGM) September 2014

10

Japan

Outside Japan

７）Environmental Education Environmental education programs are in place to increase environmental awareness.

Contents of the environmental education General education ・Education of environmental managers ・Education of environmental impact assessors ・Education on ISO 14001 internal environmental audit (total 57 participants in FY2014) Education on changes associated with environment ・Chemical substances management ・Energy conservation initiatives ・Education on biodiversity, others ・Freon Emission Control Law ・E-Learning

Fiscal year

First Prize for Environmental Proposal Proposal Summary Effect

FY2013 Recycle/reuse lubricating oil

Refine used lubricating oil for sliding surfaces in machine tools by filtering it with a lubricating oil recycling device developed in-house and then reusing it as lubricating oil.

・Less waste oil ・Reduction in purchased lubricating oil

FY2014 Re-use of scrapped packaging materials

Instead of disposing of packaging materials for RR MBR panels delivered from suppliers (400 cases per month), reuse them as packaging materials for products delivered to customers.

・Less waste ・Reduction in packaging material

FY2015 Abolish air blowing after using forming taps (Taflet)

Make use of the air generated from tapping to remove paint chips instead of manual air blow

・Less work load ・Less air

８）Environmental Proposals Members of the Group are encouraged to submit

new ideas to improve the environment during Environment Month in June every year. Awards are given to the best ideas.

11

Number of Proposals (Group: Japan)

FY2016 target

9) Compliance with Environmental Laws and Regulations

Initiatives to prevent air pollution To reduce sulfur oxides (SOX) emitted from production processes, we are making efforts to clean exhaust gases by switching to the use of fuels such as kerosene and LPG.

Compliance with environmental regulations There were no environmental accidents or incidents in the entire Group in Fiscal 2014.

Initiatives to reduce the amount of waste processed We are maintaining zero landfill waste as a result of ongoing efforts to practice the 3Rs. We are also maintaining a waste-recycling rate of 100%. All companies in the Yorozu Group have been making efforts to reduce waste generation and have achieved a 4.2% reduction in the waste output rate against a reduction goal of 1%. We will continue these efforts in the next fiscal year.

Initiatives to prevent water pollution We regard the water used at our plants as a precious resource. Accordingly, we try to reduce water usage by reusing it within production processes and process wastewater in water treatment facilities before releasing it to rivers and other bodies of water.

Management of chemical substances With respect to materials such as grease and oil, chemicals, and paints used in production processes, we have had a standing policy of obtaining SDSs before adoption to conduct an environmental assessment. Based on the assessment we would either adopt the material or switch to a substance with a lower environmental impact. We will also continue to comply with the PRTR law and REACH regulations.

12

The Group is committed to eco-friendly purchasing based on the Green Purchasing Law. The following is an excerpt from Yorozu Green Procurement Guideline.

【Requests to Suppliers】 We request the following environmental initiatives from suppliers: 1. Establishment and operation of an environmental management system 2. Management of substances that impact the environment 3. Resource recycling efforts 1 Establishment and operation of an environmental management system （a）We ask that all suppliers carry out environmental conservation efforts as well as establish and operate an environmental management system in order to continuously make improvements. ・Obtain and continually renew external certifications, such as ISO 14001 ・Or, implement similar environmental initiatives （b）We ask that suppliers comply with all environmental laws and regulations in their business operations. ・Environmental laws and regulations in each country ・Relevant norms and standards of customer automakers （c）We ask that all suppliers appoint an environmental supervisor and personnel charged with implementing environmental initiatives. Suppliers are to carry out environmental initiatives with Yorozu through these employees. 2 Management of substances that impact the environment We ask that all suppliers make efforts to improve their environmental performance. <Environmental Initiatives> ・Monitor GHG (CO2), waste, and water usage ・Once monitoring is in place, implement reduction measures (formulate targets, draft reduction plans, take action, and confirm results) Note: When establishing reduction targets, we suggest a goal of “at least 1% compared to the previous year.” 3 Resource recycling efforts We encourage suppliers to use recycled materials in order to make more effective use of limited resources. ・Consider using mill ends from parts ・Consider using material recycled from scrap in parts ・Consider reusing packaging materials

13

10) Green Procurement

Yorozu is making efforts to reduce greenhouse gases (GHG), working toward the goal to reduce GHG emissions by 1% every year in the period covered by the medium-term plan from 2012 to 2017 (a 5% reduction over five years). Yorozu will continue its efforts to reduce emissions by 1% each year until 2020. In addition, Yorozu has set the goal of reducing GHG emissions integrity by 25.4% (compared to 2005) by 2030 and is keen to achieve this goal for the realization of a low-carbon society.

<Equipment improvements> Achieving efficiency through compressor integration Installing energy-efficient air conditioners Converting to LED lighting, among others

<Small improvements> Reducing air leaks Shutting down equipment on days off and between shifts

By upgrading the servomotor for the transfer press feeder, efficiency of the motor increased by 25%, achieving energy efficiency.

3000t Transfer Press

14

11) Energy-Saving Initiatives

Main Initiatives

Equipment Kaizen Example: Upgrade Transfer Press Servomotor

The Group is working to reduce stand-by power while equipment is not in operation particularly on non-operating days. Visual control is exercised to compare the stand-by power (as percentage of the contract demand for peak hours) of all domestic sites.

※2 Certain production facilities were operated to meet the increased customer demand.

For effective power management, all operation sites in Japan report their peak electricity consumption of the previous day. Yorozu makes sure that contract demand is appropriate and that no energy is being wasted.

15

Power consumed on a non-operating day by operation sites in Japan (Calculated as percentage against contract demand for peak hours)

Power Management

Power Reduction during Non-Operating Hours

12) Use of Renewable Energy The new Yorozu Global Technical Center (YGTC), housing the Group’s R&D units, is equipped with a renewable energy system (photovoltaic power generator). Power generation data is monitored and processed through this system.

Yorozu is promoting low carbon emission energy to its Group sites which will be in use by the end of FY2015.

Power Generation Monitoring and the Solar Panels at YGTC

16

Monthly Power Generation

Previous year

Monthly solar power generation

Previous year mean 1,220 kWh

August 1,180 kWh

Current year GOOD

BAD

13) Waste Recycling Yorozu has been and will be working to reduce waste intensity by 1% every year (5% reduction in 5 years) based on the medium term plan over the period from 2012 to 2017. The Company succeeded in recycling 100% of its industrial waste (zero emissions) in 2006, and its effort to develop a sustainable society continues.

Garbage separation rules Inspection at supplier

Yorozu HQ has been named Excellent 3R Enterprise for four straight years by the City of Yokohama. (This is also the eighth year since Yorozu was first awarded Excellent Enterprise for Garbage Separation.) About the Certifying System The City of Yokohama awards companies that have made significant contributions to the reduction of general waste and re-use of waste as resources. The ecological efforts are introduced widely to promote separation of business-generated waste and encourage 3R activities.

エコハウス

17

Eco House Garbage collection point

Inspection at pickup

Certification from the City of Yokohama for Excellent 3R Enterprise

14) Biodiversity Conservation

Basic Approach to Conservation of Biodiversity Yorozu recognizes the impact that it’s business activities have on biodiversity and is committed to contributing to the sustainable development of the society.

Agenda for Actions 1. Internal education on biodiversity conservation

Lectures will be given to understand biodiversity laws and to share the initiatives taken by the Group.

2. Biodiversity conservation activities in collaboration with the community Yorozu will take part in community activities and events related to biodiversity. (such as ecosystem surveys and community clean-up campaigns) 3. Biodiversity conservation initiatives on the Company premises Yorozu will keep the premises clean, the greenery in good condition, and work to preserve the ecosystem. 4. Contribution to developing a society that nurtures biodiversity Yorozu will actively participate in nature protection activities in collaboration with outside groups and organizations.

18

Yorozu actively takes part in community events to stay in touch with the community. (Participation in community clean-up days and biological surveys)

Twice a year, the neighborhood association sponsors a biological survey of the area. Yorozu Tochigi joins in the event which is a good opportunity to get to know the community members as well as the surrounding nature.

Yorozu members took part in a forestation project sponsored by Kanagawa Trust Midori Foundation to plant trees in Hakone-machi. This event takes place in fall every year.

Environment-friendly activities are also carried out by the Group’s overseas sites. Please see the Environment Report – Overseas Version for details.

19

Biodiversity in Oyama Industrial Park, Tochigi Prefecture

Participation in Forestation Project, Kanagawa Prefecture

Environmental Undertakings by Yorozu Overseas Sites

What is the Eco Business Certification system? The City of Nagoya certifies businesses that are willingly and actively engaged in environmentally friendly activities in their operations as “Eco Businesses” as part of the city’s measures to support voluntary efforts.

Yorozu supports the Student Formula Competition, the aim of which is to develop next generation engineers, and offers aid through its sponsorship program.

15) Contribution to Society

Yorozu Aichi was named “Eco Business” by the City of Nagoya in FY2015 for its environmental initiatives and its role in the activities that contribute to the community. The Company is making continuous efforts to be certified as an “Excellent Eco Business.”

Student Formula Japan Competition brochure and

the sponsor companies

20

Student Support

Eco Business Certification, the City of Nagoya

16）Environmental Data

CO2

Waste

Water

21

Total Water Use Water Use Intensity

Yorozu Group - Japan

Total CO2 Emissions CO2 Emissions Intensity

Waste Generation Waste Volume Intensity

16）Environmental Data

CO2 Emissions from Vehicle Travel and Waste Disposal

CO2 Emissions from Yorozu Private Truck Service

22

CO2 Emissions from Product Distribution

General Course Specialized Course

Fleet Vehicles (Scope1) CO2 Emissions

Product Distribution (Scope3)

Environmental Education

Employee Commuting by Car・Waste Disposal (Scope3)

23

Yorozu Group – Outside Japan

16）Environmental Data

CO2

Total CO2 Emissions CO2 Emissions Intensity

Waste

Water Total Water Use Water Use Intensity

Waste Generation Waste Volume Intensity

24

16）Environmental Data

CO2 Emissions from Yorozu Private Truck Service

CO2 Emissions from Product Distribution

General Course Specialized Course

Fleet Vehicles (Scope1) CO2 Emissions

Product Distribution (Scope3)

Environmental Education

Employee Commuting by Car・Waste Disposal (Scope3)

17）Environmental Accounting

Investments and Costs Related to Environmental Protection Unit: JPY

Classification Investment Expense

Business Area Costs Pollution Prevention 2,504,000 34,728,781

Global Environmental Preservation

0 5,236,870

Resource Recycling 110,000 52,612,576

Upstream/Downstream Costs 0 16,023,000

Administration Costs 0 11,207,022

R&D Costs 46,160,936 1,971,685,897

Social Activity Costs 0 881,800

Environmental Remediation Costs 0 0

Subtotal 48,774,936 2,092,375,946

Total 2,141,150,882

Reporting Year

April 1, 2014 ～ March 31, 2015 （with exceptions）

Reporting Companies

Yorozu Group Companies (20 companies worldwide)

25

Complete Data Across the Group (Including Yorozu HQ and overseas sites)

The environmental costs arising from the Group’s business operations are shown below.