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Third-Party Opinions on TOTO CORPORATE REPORT

Mizue Unno Managing Director So-Tech Consulting Inc.
Mizue Unno
Managing Director
So-Tech Consulting Inc.

So-Tech Consulting Inc. provides comprehensive consulting services on management in the fields of the environment and CSR. The company uses its unique analytical capabilities to provide practical guidance on CSR-related management based on the fundamental idea that a company's set of values forms the foundation of CSR and raises corporate value.
TOTO is steadily expanding its business activities that began in technological innovation based on the TOTO V-Plan 2017 at the TOTO Group. In the future, ESG (Environment, Society, and Governance) factors will become the key to the markets of developing countries which are expected to grow.

Global expansion

In emerging countries, the upcoming challenges will not only be high-end markets centered upon WASHLET® but also the expansion to insufficient markets building social infrastructure. TOTO cannot simply introduce Japanese products and technology in places with differing penetration of sewage systems and toilet habits. Therefore, the key word is “sanitation”. Directly confronting sanitation issues is important as a global social issue, and it has also been included even from the standpoint of Sustainable Development Goals (SDGs) of the United Nations. Positioning sanitation at the same level as saving water and preventing global warming is necessary in the Global Environmental Vision.

Supply Chain

The requirements for CSR procurement that includes not only biodiversity but also social aspects are becoming stricter in the supply chain of natural resources. The problem of deforestation is of particular interest overseas and even closer attention is paid to the procurement of timber. TOTO has been conducting surveys at its procurement partners in regards to the raw materials of stone and timber up until now, but more in depth initiatives such as surveys and monitoring of the realities in procurement regions are required.

Community and Social Activities

TOTO has enhanced practical examples overseas that utilize the TOTO Water Environment Fund. Activities focusing on water resource conservation in Japan differs with the focus on conducting activities that are related to solving sanitation and health issues of community residents in developing countries. I expect strategic growth connected to product development and marketing by creating contact points with communities through social contribution activities while utilizing the trust earned with these efforts to build the brand.

Improving Key Performance Indicators (KPI)

The results of CSR activities are visually understood by organizing and systemizing ESG factors. The next challenge is to re-examine the target values and what to work toward for items that have already been mostly achieved. Please also consider both substantial target settings in additional to numerical targets.

Employees

TOTO is sufficiently expanding the configuration of a human resource platform such as a framework for the workplace and labor management. Next, recognizing strategic strengths for measures to reinforce human assets such as diversity and globalization as well as an emphasis from the perspective of creating added value in TOTO’s businesses are important.

Stakeholder Engagement

TOTO should expand engagement with stakeholders in overseas business regions suitable to further global growth. Actively creating links by utilizing the contact points of social activities in each region is necessary. Moreover, the company needs to execute the element of communication by have dialogue with the various representatives who want contact points such as in the supply chain and overseas natural conservation fields following the growth in business expansion regions.

Responding to Third Party Opinions in the TOTO Corporate Report 2015

We hereby report the activities undertaken in connection to the opinions and suggestions from third parties in the Corporate Report published in fiscal 2015.
Opinions and suggestions from Ms. Unno Activities developed for fiscal 2015 Similar pages
<Clarify a vision for society and the environment>
  1. (1)Sustainable directionality to operationalize a philosophical system
    There is need to express a sustainable directionality that includes society. "Universal Design", "Environment" and "Bonds" are already positioned as elements of the business mission and the three areas that form the base of these social and environmental factors lead to link to the business plan. We must keep this in mind when developing future business plans, because the Corporate Philosophy must link to actual practice.
  2. (2)To a system with increased awareness of "water" and its deployment
    The conditions of being a "Truly global company" are not only the ongoing internationalization of business, but gaining the trust from the community by collaborating with regions in the world. The approach is to strategically position social contribution activities in order to strengthen them within the business plan supported by Toto's "Water Business". The current TOTO Water Environment Fund should be expanded to improve the lifestyles and sanitation worldwide and be further put into practice. The fact that such initiatives are not solely undertaken by our company, but engage the collaboration of civil organizations, public institutions and a variety of stakeholders give the value of enabling these activities to be described in a systematic way.

  1. (1)The TOTO Group considers CSR management as the use of CSR initiatives for the purpose of realizing the TOTO Group Corporate Philosophy. Each mission of UD, environment, and bonds has been addressed in the implementation of the medium to long-term management plan TOTO V Plan 2017. Through these activities, our goal is to be a company trusted by everyone in each of our global business regions and to strive for the realization of a sustainable society.

  2. (2)As a company that offers plumbing products, we not only spread water conservation products worldwide, but also support the preservation of the water environment through the TOTO Water Environment Fund. In order to expand these activities to the global level, we decided in FY 2015 to sponsor an overseas organization (in India) for the first time. Also, we reviewed the Global Environment Goals and expanded the scope of activities for local communities to encompass volunteer activities that contribute to solutions to social challenges.

  1. (1) TOTO Guide    P4-P12
    Corporate Report P7-P18









  2. (2) TOTO Guide    P17
    Corporate Report P28

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     Grobal Environment Goals
<Core Business and Innovation Activities>
  1. (3)Domestic Housing Equipment Business
    In addition to tangible improvements such as development of attractive products and improved marketing, activities for further collaboration with the customer, i.e. practical improvement to "Bonds", will be key. Further promote business brands that the customer can rely on.
  2. (4)Overseas Housing Equipment Business
    This sector will be the future pillar of our business, which makes it necessary that each regional strategy be described. For emerging markets in particular, we must formulate a hygienic and cultural approach for TOTO to offer toilets in regions with underdeveloped social infrastructures as well as a method to reflect this approach in marketing. Given the region-specific challenges that exist, the widespread introduction of a new business model that conforms to them is important.



  3. (5)Demand Chain Innovation
    The former Supply Chain Innovation and Manufacturing Innovation philosophies have been merged to create an improved version. The new version considers not only customer, but supplier CSR as well in what are comprehensive value chain innovations. Continue to put into practice expanded procurement not only in terms of efficiency, but in long-term relationships built on trust as well.



  4. (6)Management Resource Innovation
    Strengthening the abilities of human resources is an important foundation of our business. On the diversity front, remember the pluses of a strong strategy of business improvement that is not simply putting systems in place. The success of the overseas offices can fall on the local human resources management; therefore improve human resources development at the global level more than ever before.

  1. (3)For the purpose of deepening our bonds beyond services, we improved the showrooms and the remodeling networks. We developed cooperative showrooms with TDY (TOTO, Daiken, YKK AP) throughout Japan as sites to share information about remodeling.

  2. (4)While closely watching the economic and social developments in each country and region, we steadily promoted growth strategies. With a view to strengthening the global expansion of our businesses, we integrated the Housing Equipment Businesses from a global perspective and established a new system composed of three pillars: the Japan Housing Equipment Business, China and Asia Housing Equipment Business, and the Americas and Europe Housing Equipment Business. Under this reorganization, we enhanced the production systems in Vietnam and Thailand and reinforced our sales capabilities in emerging markets.
  3. (5)In light of developing a more robust relationship with suppliers, we endeavor to enhance two-way communication, and we have ongoing opportunities for domestic and overseas suppliers to explain our policies and to engage in outreach activities. For FY 2015, we confirmed the legality and sustainability at all mines where we procure earth and stone materials used in Japan using questionnaires or the results of informational interviews via trading companies; consequently, we verified that all of the mines fully achieved the procurement standards required by TOTO.
  4. (6)With an attempt to evolve into a truly global company, we are developing human resources who can play active roles in Japan and overseas. We have strengthened the globalization of our employees by sponsoring an overseas internship program that offers young employees in Japan opportunities to work overseas and that offers executive training in Japan for executive candidates. For FY 2015, we invited overseas executives to Japan to discuss what TOTO represents and to share the Corporate Philosophy on a global basis. We also invited employees who contributed to our businesses to Japan to be awarded direct commendations from management. These actions were aimed at raising motivation. We also provided opportunities for active interactions between employees. In the future, we will further the understanding and prevalence of our Corporate Philosophy.

  1. (3) TOTO Guide    P11-P12
    Corporate Report P10





  2. (4) Corporate Report P11-P12













  3. (5) Corporate Report P10

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     Together with Suppliers








  4. (6) Corporate Report P25

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     Human Resource Development
<Key Performance Indicators (KPI)>
  1. (7)Disclosing the ESG KPI together with financial indicators makes the figures easier to understand, but there is still not enough interpretation of the results. Include not only design ingenuity in your report, but also organize and include ESG activities based on these indicators. TOTO is also engaged in the development of indicators to measure social contribution activities and will continue in plans to release comprehensive assessments both internally and externally to the public.

  1. (7)We have worked to quantify our achievements in business and CSR activities as much as possible to help stakeholders easily understand them. Identifying the major themes under the TOTO Global Environment Vision reflects the materiality of TOTO as a symbol of our CSR activities, we announce the actual performance as indexed KPIs under the Global Environment Goals. For FY 2015, with respect to the TOTO Water Environment Fund, which is one of the key commitments of social contribution activities, we improved disclosure by indexing the extent of contribution to the natural environment and the change of participants’ awareness, in addition to the number of participants.

  1. (7) Corporate Report P17-P18

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     Grobal Environment Goals
<Reporting System>
  1. (8)Future issues are the need to extract valid messages and content from the tools and reports of the system currently in development for each of the targets measured. An interest has arisen among investors in disclosure of non-financial information that impacts performance, which has prompted demand for interpretation of ESG factors that will lead to the creation of corporate value. It has become necessary to weave this demand into the Corporate View and sift through the information to report. Systematically review KPI for use as internal management indicators, as well as the backbone of messages released external.

  1. (8)Clarifying the roles of the different communication tools, we strive to deliver messages easier to understand by making use of a variety of tools. For FY 2015, we improved the display of information on smartphones in response to the evolving social environment along with the organization of uploaded information and improvement of searches. We have actively pursued the transformation of achievements into KPIs. As a result of these efforts, we have received high evaluations from rating organizations in Japan and overseas.

  1. (8) Corporate Report P2

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     Together with Shareholders