As part of its fundamental philosophy, Toyota Tsusho Group declares as its corporate philosophy “Living and prospering together with people, society, and the planet, we aim to be a value-generating corporation that contributes to the creation of prosperous societies.” As a good corporate citizen, the group has also established behavioral guidelines as a fundamental code of conduct for realizing this philosophy in a legally compliant and appropriate manner.

In keeping with its fundamental philosophy, the company has set forth the Basic Policies on Establishing Internal Control Systems to pass on and add depth to the Toyota Tsusho DNA, which articulates the unique values, beliefs, and principles of day-to-day conduct of the Toyota Tsusho Group, implementing value creation from a customer perspective, and fulfilling our social mission by establishing systems that ensure proper business processes are followed.

Reflecting these basic policies, the company is actively driving forward with efforts to further improve its management efficiency and transparency, ensure full-fledged compliance, and enhance the soundness of its financial position. Moreover, while we are in full compliance with the various principles of Japan’s Corporate Governance Code, we also earnestly seek to achieve further enhancement to make the content of our actions more substantive, as well-rounded corporate governance is essential for continued corporate growth and a medium- to long-term increase in corporate value.

We believe that providing all our stakeholders with satisfactory added value and contributing to society through our businesses will accelerate the sustainable growth of the Toyota Tsusho Group and thereby lead to corporate value enhancement.

Corporate Governance Structure Organizational Chart (As of June 2024)

Toyota Tsusho has adopted the system of a company with an Audit & Supervisory Board to ensure transparent and sound management and has also introduced an executive officer system to improve management efficiency and strengthen internal control.

The company carries out consolidated management based on a divisional organization that comprises eight sales divisions under the leadership of divisional chief executive officers (CEOs) supplemented by the Administrative Unit.

To enhance independence from the execution of the company’s operations, a non-executive director serves as chairman of the board as well as chairperson of the Executive Compensation Committee and the Executive Appointment Committee. Members of the board includes three senior executive officers: the president & CEO, the chief strategy officer (CSO), and the chief financial officer (CFO). At least one-third of the members of the board are independent outside members to strengthen the soundness of management and the functioning and quality of the board, which makes decisions on top-priority management issues and monitors the execution of business. The four outside members of the board (outside directors) include an overseas national and a business entrepreneur, ensuring a continued high level of specialized knowledge, while the inclusion of two female members also contributes to enhancing its diversity.

The division CEOs and the heads of the various Administrative Unit functions are appointed from among the senior executive officers to enable fast-paced management that is in close contact with frontline operations. To boost expertise, we have established the positions of chief technology officer (CTO), chief strategy officer (CSO), chief financial officer (CFO), and chief human resources officer (CHRO), who bear ultimate responsibility for their respective functions. By reinforcing governance functions and clarifying roles and responsibilities, this facilitates the exercise of high levels of specialization and expedites decision-making.

Toyota Tsusho expressed its support for the "Challenge for 30 percent by 2030" promoted by the Japan Business Federation (Keidanren). This challenge sets a target of filling at least 30% of positions on the Board of Directors, a key corporate decision-making body, with women by 2030.

Number of Meetings in FY2023: 13

The Board of Directors meeting, which comprises eight members, including four outside members, makes decisions on top-priority management issues and monitors the execution of business. Furthermore, the Board of Directors periodically receives reports from division CEOs on the status of the execution of business by the sales divisions, which it monitors. The company has submitted notification that three of the four outside members of the board satisfy the criteria for independence as specified by Japanese stock exchanges. Moreover, the independence of the Board of Directors meeting is enhanced by having a non-executive director serve as chairman. Members of the board are appointed for a one-year term, and the Board of Directors meeting in principle meets once a month.

The company has established a support framework so that outside directors can participate in board discussions and satisfactorily fulfill their management advisory and supervisory functions. The Board of Directors Meeting Secretariat sends out board of directors meeting materials in advance and holds advance briefings with departments proposing agenda items so that outside directors have a firm understanding of business details.

For the main matters discussed at board of directors meetings, on-site observations for the outside directors/auditors are arranged to further improve their understanding of the Company. In addition to site visits in Japan, such observations during the fiscal year ended March 31, 2024, included a visit to CFAO, the regional headquarters for Africa, and visits to African operations, including supermarkets in Cote d’Ivoire. Observations were also conducted at a battery manufacturing plant in the United States, a lithium mining site and a lithium carbonate refining plant located about 4,000 meters above sea level near the Olaroz salt lake in Argentina.

The following meetings are also held to deepen the understanding of the respective business by outside directors/auditors and to receive advice from external perspectives:

Number of Meetings in FY2023: 3 (Executive Appointment Committee), 1 (Executive Compensation Committee)

Toyota Tsusho has established the Executive Appointment Committee and the Executive Compensation Committee as advisory bodies to the Board of Directors meeting. Both committees are chaired by the chairman of the board, who does not hold representative rights and has no involvement in operational execution. Each committee comprises five members—three independent outside members of the board and two internal members of the board. The majority of each committee being made up of independent outside members of the board enhances the objectivity and transparency of each committee.

The Executive Appointment Committee deliberates on the appointment and dismissal of members of the board and, Audit & Supervisory Board members and senior executive officers. It also discusses proposed executive personnel plans, as well as the formulation and operation of CEO successor development plans and other important matters related to executive appointments. The Executive Compensation Committee deliberates on the policy for determining the details of compensation for each member of the board, the compensation system, compensation proposals to be submitted to the General Meeting of Shareholders, and other important matters concerning the compensation of members of the board and Audit & Supervisory Board members.

< Members of Both Committees > As of June 21, 2024

Number of Meetings in FY2023: 14

The Audit & Supervisory Board, which comprises five members (three of whom are independent outside Audit & Supervisory Board members), provides a checking function from an external viewpoint. All Audit & Supervisory Board members regularly exchange opinions with board members, including outside members of the board, executive officers, and an independent auditor, as well as with the Audit Department and other entities. In this way, Audit & Supervisory Board members strive to ensure the legality, appropriateness, and efficiency of business execution. The Audit & Supervisory Board meets in principle once a month. Audits conducted by Audit & Supervisory Board members are carried out per the audit policies and plans approved by the Audit & Supervisory Board and reported to the Board of Directors meeting. Audit & Supervisory Board members implement audits on the execution of duties by members of the board, emphasizing internal control with a particular focus on compliance and risk management. An audit is also conducted regarding the appropriateness of the results of the inspection by the independent auditor. Dedicated staff members are assigned to assist with the duties of Audit & Supervisory Board members, including outside auditors.

Toyota Tsusho will pursue its “Be the Right ONE” vision to shape the future as it advances to its next new stage. By doing so it aims to create distinctive forms of value that contribute to society and protect the environment and thereby establish business domains linked to its unique strengths. Toward this goal, the Board of Directors meeting has established a skill matrix covering the expertise required of members of the Board and Audit & Supervisory Board members to enable the Board of Directors meeting to make decisions and supervise management appropriately.

The capabilities and experience of board and Audit & Supervisory Board members are as below.

In addition to their expertise and wealth of experience, the Board of Directors meeting boasts a diverse composition in terms of gender, nationality, and other attributes, providing a structure that can flexibly adapt to various changes in the business environment.

Toyota Tsusho has established a variety of committees and meetings to strengthen its corporate governance. The company has created a company-wide meeting system to deal with issues that affect the entire company. Members of the Board, senior executive officers, and executive officers consider countermeasures for each management issue and, where appropriate, consult the Board of Directors meeting.

Maintaining and strengthening business and collaborative relationships with a variety of companies is necessary for the sustainable enhancement of Toyota Tsusho’s corporate value. The company owns on a limited and strategic basis the stock of important suppliers and other partners where it believes that the ownership of this stock is beneficial and important from a medium- to long-term perspective (shareholding). Once every year, the Board of Directors meeting receives a report about the results of a reexamination of stock holdings and if stock should be retained or sold. It reduces holdings of stocks where ownership is not beneficial.

Toyota Tsusho uses an indicator of its own, which is based on the cost of capital, to determine comprehensive assessments of stock holdings. Assessments incorporate profitability; building, preserving, and reinforcing business relationships; contributions and cooperation for regional and social progress; and other considerations. This process is used to decide if the company should continue to hold a stock and to reexamine the number of shares held.

As needed, constructive dialogues take place with companies in which stock is held from the standpoint of preserving and increasing corporate value and achieving sustainable growth. These dialogues facilitate the sharing of information about management issues and making improvements.

Striving to maintain and strengthen partnership with investee companies, Toyota Tsusho engages in communications with these companies that contribute to enhancement of their shareholder interests and corporate value over the medium and long term. Toyota Tsusho’s departments that manage investments take that perspective and appropriately exercise voting rights on the basis of multifaceted and comprehensive consideration of the situation of each investee company.

If cross-shareholders (i.e. shareholders who hold a share of Toyota Tsusho for the purpose of cross-shareholding) seek to sell the shares, Toyota Tsusho will not hinder the sale of the cross-held shares. In such a case, if Toyota Tsusho has their shares for the purpose of cross-sharing, it will take appropriate measures to reduce those shares in accordance with the Company's policies on cross-shareholdings.