Key Sustainability Issues (Materiality)
To clarify the social issues that Toyota Tsusho needs to focus on based on its management strategies, the company has identified the Key Sustainability Issues (Materiality) that it needs to be aware of as it pursues its corporate philosophy and Global Vision.
Since 2020, the committee has also been tasked with setting key performance indicators (KPIs) for the identified material issues and promoting activities by checking the progress of these KPIs.
When setting the KPIs, numerous discussions were carried out with the sales divisions, including the division CEOs, to reflect the approaches for solving social issues through business operations based on the Materialities and the SDGs in the policies of each sales division. Furthermore, the Sustainability Management Committee reflected the opinions of management and outside directors in the KPIs.
Furthermore, these Materialities are not intended to be unchanging, and they are reviewed periodically by the Sustainability Management Committee, taking into consideration changes in the group’s business environment and other factors, such as changing international trends and needs, and are appropriately revised.
Materiality KPIs are also being reviewed in the same manner, and the Sustainability Promotion Committee for FY2021 approved the greenhouse gas emissions reduction targets announced in July 2021 were approved for monitoring as Materiality KPIs.
We incorporated into our employee evaluation indicators "contribution to the community, society, and the future" to encourage individual employees to take action with an awareness of the need to solve social issues. In addition, in fiscal years in which there are topics of concern, we invite a guest from the sustainability department of a leading company to give a lecture to our management and employees on that company’s initiatives, which is attended by employees of Toyota Tsusho as well as employees of domestic consolidated subsidiaries. Training on sustainability and material issues is also conducted annually for new employees, including mid-career hires, to inform them of the importance.
Process of Identifying Key Sustainability Issues (Materiality)
1. Issue Identification
- We referred to guidelines such as CSR and ESG guidelines (GRI Standards, ISO 26000, United Nations Global Compact, FTSE, and MSCI) and the standards of Toyota Environmental Challenge 2050, focusing on the 17 goals and 169 targets of the SDGs, which are considered to comprehensively cover global social issues. From these, we identified and organized social issues that affect the company.
- We checked that these organized social issues aligned with our corporate philosophy, behavioral guidelines, Global Vision, and Mid-term Business Plan, and identified 43 social issues.
2. Prioritize Issues with Stakeholders
Through questionnaires and dialogue with stakeholders both inside and outside Toyota Tsusho regarding the identified 43 social issues, we prioritized expectations and requests for the company, as well as the importance of these social issues to the company, and created a Materiality matrix.
Stakeholders
- Internal: Interviews with individual sales divisions, and questionnaires administered to all company employees, CSR staff in Japanese-affiliated companies, and overseas staff
- External: Interviews with Japanese institutional investors, and questionnaires administered to general investors
Narrowing Down
Using a Materiality matrix, we created a Materiality proposal, focusing on social issues with a high level of importance inside and outside the company. While we are also addressing items that were not included in the proposal, those established as our material issues are items that we have identified as being the most important for the Toyota Tsusho.
3. Validation
The suitability of the identification process and the proposed material issues was confirmed.
Discussion Participants
- Discussion among management and division CEOs (current sales division CEOs)
- Individual interviews with outside members of the Board
Main Opinions from Participants
- It is noteworthy that the materialities are prepared after conducting a well-established process.
- This is no longer a time in which countries and governments can accomplish whatever they want on their own. It is necessary for society to change, and the Company needs to be aware of changing its systems and programs. It is necessary to refer to the knowledge of NGOs, NPOs, and other organizations.
- When viewed from the perspective of the materialities, we need to start a discussion on businesses that will become contradictory, businesses that should be slowed down, and businesses that we should terminate in the future. I want to establish materialities that will lead to an image of a set of guidelines for the future.
- It is necessary to change employee awareness so that we can expand perspectives from the Company's existing method of creating business by focusing on resolving customer problems and shifting from social issues that are global problems to a concept of business creation. Accumulating "quick hits" in the form of successful experiences will likely generate a virtuous cycle.
- The more amicable the language the vaguer it becomes, and this can give the impression that ultimately nothing will be done. So we need to use sharp language and adopt innovations.
- For employees, if the individual topics are narrowed down too far, the next step is difficult. But, if they are too general, it is difficult to know what to do. It is necessary to organize topics in a way that makes it easy for employees, as they are the ones who are to act.
4. Identify Our Material Issues
Our material issues were approved following discussions by the CSR Committee (currently, the Sustainability Management Committee) at meetings held at the end of March 2018. Our material issues were reported at a Board of Directors meeting.
5. Set KPIs
- KPIs were set in 2020 to track progress on the identified material issues.
- When setting the KPIs, numerous discussions were carried out with the sales divisions, including the division CEOs, to reflect the approaches for solving social issues in the policies of each sales division. Furthermore, the Sustainability Management Committee reflected the opinions of management and outside members of the Board in the KPIs.
- Quantitative/qualitative targets were set as an expression of the direction we should aim for.
6. Initiatives
- Materiality elements were reflected in the business strategies of each sales division.
- We established the specialized Task Force for Promoting Carbon Neutrality in April 2021 to accelerate efforts to address climate change. In April 2022, the Carbon Neutrality Promotion Department was formed.
7. Review of Progress and Contents
- At Sustainability Management Committee meetings, the sales division CEOs report on the progress made in their respective divisions.
- The material issues and KPIs are reviewed periodically and revised as appropriate, taking into consideration changes in Toyota Tsusho's business environment, international trends and needs, and issues that emerge during the plan-docheck-act (PDCA) cycle.
<Review of KPIs>
Materiality and Materiality KPIs are confirmed periodically by the Sustainability Management Committee to ensure their suitability in light of changes in the environment and are revised if necessary.
At the Sustainability Management Committee meeting held in December 2023, the committee discussed the review of KPIs in line with changes in the external environment and decided to change some of them.
Details of the changed KPIs are as follows.
| Materiality | Now | New | Reason for the changes |
|---|---|---|---|
| Contribute to the transition to a decarbonized society by reducing CO2 emissions from automobiles and factories/plants through the use of clean energy and innovative technologies | ー | Renewable Energy Business Total Generation Capacity | KPI for total electric power generating capacity has been added to demonstrate social impact in addition to the ratio of renewable energy. |
| ー | lithium production volume | lithium production was included in the “sales of products and services that contribute to energy saving and CO2 emissions reduction,” but given the social importance of lithium production volume, it has been set as a separate KPI. | |
| Grow with developing countries, including those in Africa, and endeavor to solve social issues through business operations | Sales from the Africa Division | 【Mobility】Number of unit sold of electrified vehicles in Africa | Sales from the Africa Division were used as a KPI, but a new KPI has been set to demonstrate initiatives to solve social issues through various businesses. |
| 【Healthcare】Sales of Medical supplies in Africa | |||
| 【Infrastructure】Renewable Energy Business in Africa Total Generation Capacity | |||
| 【Job Creation】Number of employees in Africa |
| Materialities | KPIs | |
|---|---|---|
| Strive for the elimination of traffic casualties and contribute to the creation of a safe and comfortable mobility society | Quantitative |
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| Qualitative |
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| Contribute to the transition to a decarbonized society by reducing CO2 emissions from automobiles and factories/plants through the use of clean energy and innovative technologies | Quantitative |
|
| Contribute to the development of a recycling-based society by transforming waste into resources for manufacturing | Quantitative |
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| Qualitative |
|
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| Grow with developing countries, including those in Africa, and endeavor to solve social issues through business operations | Quantitative |
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| Qualitative |
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| Begin everything we do with ensuring safety and compliance, and continue to be an organization trusted by society | Quantitative |
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| Qualitative |
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| Respect human rights, and actively develop people who will contribute to society by nurturing them and giving them opportunities to apply their skills | Qualitative |
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