In order to build new partnerships by promoting collaboration, coexistence, and co-prosperity with our supply chain business partners, as well as with business operators engaged in value creation, Toyota Systems declares our intent to prioritize our engagement in the following matters.

Coexistence and co-prosperity throughout the supply chain and new collaborations beyond the company size and the group

Toyota Systems will work to increase added value throughout the supply chain by reaching out to extended business partners through our direct business partners (from “Tier N” to “Tier N + 1”). At the same time, we aim to achieve coexistence and co-prosperity with our business partners through collaborations that transcend existing business relationships and the company size. From the perspective of business continuity in the event of a disaster and work style reforms, in doing so we will also provide support in the form of introducing remote work to business partners and of advice on the formulation of business continuity plans (BCPs).
In addition, while sharing information and improving operational efficiency throughout the supply chain, we will also engage in the following matters:

• - Well-being Management System (consideration for the safety, peace of mind, and health of those working in the supply chain)
• - Environmental Management System (consideration for environmental action and conservation)
• - Human resource development (improvement of IT skills throughout the supply chain)

Compliance with “Promotion Criteria”

Toyota Systems complies with desirable business practices between the main operator and its subcontractors (“Promotion Criteria” under the Act on the Promotion of Subcontracting Small and Medium-sized Enterprises), and actively works to correct business practices and customs that hinder the building of partnerships with business partners.

1. Pricing method
   We do NOT make any unreasonable requests for cost reductions. When determining payment for transactions, we address requests for consultation from subcontractors, and sufficiently consult with subcontractors to ensure that the appropriate interests of the subcontractor are included, for example by taking into account the impact of increased labor costs. When entering into an agreement, including determining payment for transactions, the main operator expresses and delivers the agreement terms and conditions in writing, etc.
2. Terms of payment for bills, etc.
   All subcontract payments for transactions with subcontractors are paid in cash.
3. Intellectual property and know-how
   The existence of the right to use, the right to own, and other rights involving intellectual property, as well as payments for the use, transfer, etc., of such, are determined through sufficient consultation with the subcontractor, and we make every effort to avoid any loss to the subcontractor.
4. Negative consequences associated with work style reforms, etc.
   We consider all impacts of our work style reforms on subcontractors. In addition, we endeavor to avoid transactions or requests that might impede or disadvantage the work style reforms of subcontractors. We strive to undertake any increased costs when short delivery deadlines, sudden changes to specifications, or additional orders are unavoidable. In the event of a disaster, we make every effort to avoid imposing a unilateral burden on subcontractors in terms of business transactions, and give consideration to maintaining business relationships whenever possible after operations resume.

Others

We conduct regular internal training in order to deepen the understanding of the relevant laws and regulations to be observed when conducting business with subcontractors.

July 1, 2022
Hiroaki Kitazawa, Representative Director, President and Chief Executive Officer