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10 Sustainability Report 2006

Environmental Aspects

Environmental Management

Basic Concepts with Regard to the Environment

To ensure that its products are accepted and well received around the world, Toyota has positioned the environment as a priority management issue. Further, as outlined in the Global Vision 2010, Toyota seeks to become a leader of global regeneration through its outstanding environmental technologies.

In addition to working to reduce environmental impact at all stages from vehicle development to production, use, disposal, and recycling, Toyota undertakes environmental activities in all its business areas, including housing, information, biotechnology, and afforestation. Additionally, in order to conduct environmental activities at the highest levels in every country and region, Toyota has established environmental management systems in all regions and areas of operation and works with related companies in Japan and overseas to implement consolidated environmental management and promote environmental management on a global scale.

This chapter discusses Toyota’s environmental activities and the current progress status in achieving goals set for each phase of the automobile lifecycle. Also discussed is the status of consolidated environmental management and global activities, including examples of environmental activities by consolidated subsidiaries overseas.

Principles and PoliciesThe Toyota Earth Charter (adopted in 1992,

revised in 2000) is based on the Guiding Principles at Toyota adopted in 1992 (revised in 1997), and embodies the comprehensive approach to global environmental issues. The Toyota Earth Charter is currently shared by approximately 560 affi liates worldwide. The Toyota Environmental Action Plan is a medium- to long-term plan that summarizes specifi c activities and goals in order to promote environmental preservation activities in accordance with the Toyota Earth Charter.

Reuse

Customer

Extractionof resources

EnergyRaw

materials WaterFuel

Dealer

Parts and materials supplier

Recycling company

Toyota

Disposal

Procurement

Logistics

Logistics

Recycling

Use

Production

Global warming (CO2 emissions)Resource conservation (packaging materials, etc.)Substances of concern

Global warming (CO2 emissions)Resource conservation(packaging materials, etc.)

Waste(waste oil, used parts, etc., resulting from maintenance)

Global warming (CO2, HFC)Released into the atmosphere(HC, CO, NOx, PM, etc.)

Waste(shredder residue, waste oil, used parts, including batteries, etc.)

Global warming (CO2

emissions)Substances released into the atmosphere and discharged to waterways, noise, odor, waste, etc.

Developmentand Design

Annual Plan

Environmental Management System

The Toyota Earth Charter

GuidingPrinciplesat Toyota

Toyota Environmental Action Plan(five-year plan)

The business spirit since inception

Shared by approximately 560 affiliates

Drafted by approximately 220 companies subject to consolidated environmental management

Conceptual Diagram of the Toyota Environmental Action Plan

I. Basic Policy II. Action Guidelines

2. Pursuit of environmental technologiesPursue all possible environmental technologies, developing and establishing new technologies to enable the environment and economy to coexist harmoniously.

1. Contribution toward a prosperous 21st century societyContribute toward a prosperous 21st century society.Aim for growth that is in harmony with the environment, and set as a challenge the achievement of zero emissions throughout all areas of business activities.

4. Working in cooperation with societyBuild close and cooperative relationships with a wide spectrum of individuals and organizations involved in environmental preservation including governments, local municipalities, related companies and industries.

3. Voluntary actionsDevelop a voluntary improvement plan, based on thorough preventive measures and compliance with laws, that addresses environmental issues on the global, national, and regional scales, and promotes continuous implementation.

1. Always be concerned about the environmentTake on the challenge of achieving zero emissions at all stages, i.e., production, utilization, and disposal

2. Business partners are partners in creating a better environmentCooperate with associated companies

3. As a member of societyActively participate in social actions

4. Toward better understandingActively disclose information and promote environmental awareness

(2) Pursue production activities that do not generate waste

(1) Develop and provide products with top-level environmental performance

(3) Implement thorough preventive measures

(1) Participate in the creation of a recycling-based society

(2) Support government environmental policies

(3) Contribute also to non-profit activities

(4) Promote businesses that contribute toward environmental improvement

Toyota Earth Charter

Promotion by the Toyota Environment Committee which consists of top management (chaired by the president)

III. Organization in Charge

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Implementation StructureThree committees were established under the Toyota

Environment Committee, which is chaired by the president and meets twice a year to address issues and response policies in each area. The Environmental Affairs Division functions as a secretariat for committee operation. All related departments promote company-wide environmental action in cooperation with each other.

At a Toyota Environment Committee meeting held in FY2005, there were discussions regarding reduction and control of CO2 emissions and other issues, and the Fourth Toyota Environmental Action Plan.

In FY2000, TMC introduced consolidated environmental management and has been implementing environmental action in concert with consolidated affi liates in Japan and overseas. In addition, Environment Committees were established in Europe in FY2003, North America in FY2004 and South America in FY2006 to reinforce local environmental activities.

All-Toyota Production Environment ConferenceAll-Toyota Production Environment Meeting

Environmental Product Design Assessment Committee

Fuel Efficiency and Exhaust Emissions Committee

Noise Reduction Subcommittee

Clean-energy Vehicle Subcommittee

Working Group by Topics

ISO 14001 Promotion Subcommittee

Eco-VAS Subcommittee

Production Environment Technology Subcommittee

Overseas Production Environmental Subcommittee

Plant Production Environmental Subcommittee

Production Environment Logistics Subcommittee

Environmental Manager by Region (Plant General Manager)

Environmental Preservation Secretariat by Plant

Research and Development Subcommittee

Domestic Subcommittee

Overseas Subcommittee

Production Environment Committee

Recycling Committee

Toyota Environment Committee

Environmental Affairs Division

SOC Subcommittee

Chairman: President Katsuaki Watanabe

Established in 1992Directs Toyota’s priority environmental action issues

Chairman: Managing Officer Tatehito Ueda

Established in 1973Studies key environmental preservation issues related to development and design of Toyota vehicles

Chairman: Senior Managing Director Atsushi NiimiVice Chairman: Senior Managing Director Shoji Iikawa

Established in 1963Discusses and determines important issues for environmental preservation in the area of production and logistics

Chairman: Senior Managing Director Yoshio ShiraiVice Chairman: Managing Officer Masamoto Maekawa

Established in 1990Implements responses to recycling laws and studies the development of technology and designs for recycling

Development of new air conditioning coolants, reduction of VOC emissions inside vehicles, etc.

Promotes the manifest system and compliance by dealers with CFC and other substance regulations

Promotes the reduction of usage of substances of concern

Promotes development of designs for recycling, the prior assessment of 3Rs (reduce, reuse, recycle) and the reduction of substances of concern

Secretariat of Environmental CommitteesEstablished in 1998Manages action policies and goals. Drafts environmental action plans and annual company-wide environmental policies

Executives in charge of Environmental Affairs DivisionExecutive Vice President Takeshi Uchiyamada Senior Managing Director Yoshio ShiraiManaging Officer Tatehito UedaManaging Officer Tetsuo AgataManaging Officer Masayuki Nakai

South American Environment Committee (set up in May 2006 in Brazil)

Organization Framework (Positions and Areas of Responsibility as of March 2006)

Promotion Structure for Global Environmental Management

South AmericanEnvironment Committee

(May 2006 -)

EuropeanEnvironment Committee

(2003 -)(2003 -)Toyota

Environment Committee(1992 -)

North AmericanEnvironment Committee

(2004 -)(2004 -)


Environmental Aspects Environmental Management

Status of Achievement of the Third Toyota Environmental Action PlanThe Third Toyota Environmental Action Plan was adopted as an action plan covering the fi ve-year period from FY2001 to FY2005.

Goals were achieved in all 23 categories adopted as action items. FY2006 marked the start of the Fourth Toyota Environmental Action Plan, which will continue until FY2010. Based on the Environmental Action Plan, an Annual Environmental Action Plan is drafted every year, and environmental initiatives steadily promoted.

Results of Third Toyota Environmental Action Plan (FY2001 - FY2005)Item Action policy / Specifi c goal Results

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1. Fuel effi ciency • Achievement of the top level within the class in all countries and all regionsAchievement of the Japanese 2010 Fuel Effi ciency Standards by 2005Responses toward realizing Japan Automobile Manufacturers Association’s (JAMA) commitment to reduce CO2 emissions to 140g/km by 2009

• Japan: Achieved the 2010 Fuel Effi ciency Standards in all seven weight categories for gasoline-engine passenger vehicles in FY2005, ahead of schedule

• Europe: Steady progress toward realizing JAMA’s commitment to reduce CO2 emissions to 140g/km by 2009

2. Exhaust emissions • Taking appropriate measures based on assessment of the urban environmental conditions in each country and region

• The percentage of vehicle series that meet or surpass the Ultra Low-Emission Vehicle level in FY2005 reached 96% of total production

3. Clean-energy vehicles

• Further enhancements to hybrid systems and an increase in the number of vehicle series equipped with hybrid systems

• Development of fuel cell vehicles and early introduction

• Equipped 10 vehicle series with hybrid systems. Completed development of the Toyota Hybrid, System II (THS II), a next-generation hybrid system, in 2003.

• Began limited marketing of Toyota FCHVs in 2002 (world’s fi rst) • Cumulative hybrid vehicle sales top 610,000 units in FY2005

4. Recoverability • Designs for recycling (DfR) toward a 2015 vehicle recovery rate of 95% • Developed new DfR in 2003 and incorporated its features in new models, starting with the new Raum

5. Substances of concern

• Promotion of elimination of four substances (lead, mercury, cadmium and hexavalent chromium)

• Achieved JAMA’s voluntary goals of eliminating lead, mercury and cadmium. The goal to eliminate hexavalent chromium was largely achieved in June 2006.

• Measures for the complete elimination of these four substances by 2007 is underway globally

6. Automobile noise • Further reduction of all automobile-related noise • Achieved the goal of 100% compliance with the latest standards (from 1998 to 2001)

7. Air conditioning systems

• Development of an air conditioner that uses a new refrigerant instead of HFC134a

• Air conditioner that uses CO2 as a refrigerant adopted on the Toyota FCHV. However, issues such as performance, cost, etc. still remain.

8. Prior-assessment systems

• Promotion of environmentally conscious designs starting at the development stage

• Implemented Eco-VAS (Eco-Vehicle Assessment System) in all vehicles in FY2005 starting with the redesigned Vitz launched in 2005

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9. Global warming threat

• FY2005 CO2 emissions level: Reduction by 5% from the FY1990 level • Actively carried out merging and discontinuance of processes and introduced innovative energy-conserving technologies, etc. CO2 emissions in FY2005 reduced by 19% from the FY1990 level.

10. Waste and resource conservation

• Promotion of waste reduction and resource conservation actions to achieve zero emissionsAchievement of zero landfi ll waste at all plants by the end of FY2003 and reduction of combustible waste to 1/3 or less of the FY1990 level

• Achieved zero landfi ll waste at all plants by December 2000

• Combustible waste: 87% reduction compared to the FY1990 level

11. Water resources • New measures for conserving water resources with a focus on vehicle production plantsWater consumption per vehicle: Reduction by 20% from the FY1995 level

• Systematically implemented reduction and management of water consumption to achieve a reduction of 36% from the FY1995 level

12. Substances of concern

• Reduction of VOC emissions from body painting linesVOC emissions: Average of 35g/m2 or less on all lines

• Reduction of the discharge of substances subject to the PRTR (Pollutant Release and Transfer Register) law: Reduction by 50% from the FY1998 level

• Reduced to average of 30g/m2 on all lines by systematically switching to water-borne paints or other methods

• The discharge of substances subject to the PRTR law was reduced by 68% from the FY1998 level

13. Logistics* • Stabilization of CO2 emissions to the FY1990 level or lower

• Reduction of packaging and wrapping material usage by 20% from the FY1995 level

• Reduced CO2 emissions by 5.9% from the FY1990 level through improvements in loading rates, modal shifts and other measures

• 44% reduction from the FY1995 level through conversion to returnable containers

Coop

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with

soc

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14. Environment-oriented business ventures

• Active promotion of businesses that help improve the environment, such as ITS (Intelligent Transport Systems) and afforestation businesses

• Promoted an ITS model project. Also promoted afforestation in Australia, roof garden businesses, etc.

15. Suppliers • Support and accelerate the creation of environmental management systems

• Ensure thorough management of substances of concern based on Toyota’s standards

• About 450 companies subject to consolidated environmental management acquired ISO 14001 certifi cation

• A revised version of the TOYOTA Green Purchasing Guidelines was created in March 2006• Proceeded with measures to ensure that the substances (464 substances) banned by Toyota were

not contained in primary and supplementary materials

16. Dealers’ cooperation • Promotion of actions to establish and achieve full compliance with the Toyota Japanese Dealer Environmental Guidelines created in 1999

• All dealers achieved the goals defi ned in the guidelines by FY2002• Adopted the Toyota Japanese Dealer CSR Guidelines in FY2005. The Toyota Dealers Association

issue a CSR declaration.

17. Recycling system(Japan, Europe)

• Participation in the creation of recycling systems in Japan and Europe, through cooperation with the industry

• Development of recycling/recovery technologies

• Systems were launched in 2005 in response to the Japanese Automobile Recycling Law • Recycling systems for end-of-life vehicles are under construction in Europe in preparation for

recycling/recovery of all end-of-life vehicles beginning in 2007• Announced the Toyota Recycle Vision in 2003 and developed a new automobile shredder residue

recycling/recovery technology and new dismantling technology• The number of vehicles featuring RSPP (Recycled Sound-Proofi ng Products), a high-quality insulating

material made from recycled automobile shredder residue passed the 10 million mark at the end of FY2005

18. Transportation systems

• Promotion of and proposal on research related to “the ideal transportation environment”

• Cooperated in issuing “Mobility 2030: Meeting the challenges to sustainability”

19. Related basic research

• Promotion of and proposal on basic research that can help improve the environment

• Promoted research via the World Business Council for Sustainable Development (WBCSD) and JAMA

20. Socially-contributing activities

• Promotion of global support of environmental education, tree-planting activities and basic academic research, etc.

• Grants provided to a cumulative total of 89 projects under the Toyota Environmental Activities Grant Program (from 2000)

• Founded the TOYOTA Shirakawa-Go Eco-Institute in April 2005, which had 14,000 visitors in its fi rst year

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ent 21. Among the public • Enhanced cooperation with society (communication) • Published local environmental reports in 12 countries/regions

• The “Environmental Report” becomes the “Environmental & Social Report” from 2003, with enhanced information on the social aspects of Toyota’s activities

• Drafted and made public the Contributtion towards Sustainable Development, which interprets the Guiding Principles at Toyota, in January 2005

22. Among employees • Enhancements to environmental education • Provided education to employees in key positions, environmental leaders and new employees, etc.

23. Global consolidated environmental management

• Implementation of consolidated environmental management that includes automobile-related production companies in Japan and overseas(Establishment of a system to consolidate numerical data and follow up annually)

• Began collecting and publishing production-related environmental data from all companies subject to consolidated environmental management in FY2002

• Developed and implemented the Environmental Performance Information (EPI) System

*In FY2005 Toyota switched from the ton-kilometers method of calculating CO2 emissions volumes to the fuel method. Target values that were previously indicated using the ton-kilometers method have been recalculated using the fuel method.


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The Fourth Toyota Environmental Action PlanThe Fourth Toyota Environmental Action Plan is a clear statement of the activities that Toyota must undertake between FY2006 and

FY2010. It seeks to achieve a balance between Toyota’s growth and harmony with society and to contribute to the development of a sustainable society. In adopting the plan, Toyota addressed four main topics:

1. Energy/Global warming2. Recycling of resources3. Substances of concern4. Atmospheric qualityFor each of these four topics, Toyota has adopted action items, specifi c measures, and goals in the areas of development and

design, procurement and production, logistics, sales and marketing, and recycling, and will continue to implement its environmental management.

The Fourth Toyota Environmental Action Plan

Unconsolidated

Individual entities

Domestic scale

Single year

Consolidated

Business partners

Global scale

Medium- long-term

Environmental Management

Cooperation with SocietyManagement

Energy/Global

warming

Recycling ofresources

Substances of concern

Atmosphericquality

Developmentand

Design

Productionand

Logistics

AutomobileRecycling

Further reduce CO2

emissions in Toyota’s global operations

Promote the effective use of resources to further contribute to the realization of a recycling-based society

Reduce water consumption

Reduce the discharge of substances subject to the Pollutant Release and Transfer Register (PRTR) law*

Reduce emissions to improve air quality in urban areas in all countries and regions

Implementinitiatives to reduce VOC emissions

Promote the development of technologies to achieve the best fuel efficiency performance in each country and region

Develop technologies to respond to the diversification of energy and fuel sources

Reduce CO2 emissions in the production and logistics activities of each country and region

Further promote and expand the use of designs based on the designs for recycling (DfR) concept

Strengthen consolidated environmental management

Enhance environmental education Contribute to the development of a recycling-based society

Improve disclosures of environmental information and two-way communications

Actively contribute to and propose environmental policies based on sustainable development

Further promote environmental management to business partners

Promote new businesses that contribute to environmental improvement

Steadily reduce environmental impact over the entire lifecycle of the product through full-scale implementation and establishment of Eco-Vehicle Assessment System (Eco-VAS)

Steadily implement recycling systems in Japan and Europe• Steadily implement initiatives to

increase vehicle recovery rates in Japan and Europe to reach 95% by 2015

Recovery rates:Japan: equivalent to 92% in FY2010Europe: 85% in 2006

Promote management and further reductions in the use of substances of concern (SOC)• Eliminate use of four

SOCs (lead, mercury, cadmium and hexavalent chromium) globally

Promote initiatives to improve traffic flows using a variety of networking technologies

Promote the development of clean-energy vehicles, encourage their effective introduction and ensure wider market acceptance

*PRTR Law:Law Concerning Reporting, etc. of Releases to the Environment of Specific Chemical Substances and Promoting Improvements in Their Management



FY2005 Status of Company-wide Environmental PoliciesIn accordance with the Third Toyota Environmental Action Plan, Toyota set goals for FY2005 in each area and took action. The

FY2005 goals were achieved in all areas.1) In the area of management, all goals specifi ed in the Third Toyota Environmental Action Plan were achieved and initiatives begun

towards achieving the Fourth Toyota Environmental Action Plan goals.2) In the area of development and design, Toyota achieved the 2010 Fuel Effi ciency Standards for all vehicle weight categories. The

percentage of total production that meets the Ultra Low-Emission Vehicle level reached 96%. In March 2006, the Lexus GS450h equipped with a newly developed dedicated hybrid system for rear-wheel drive passenger vehicles was launched. Cumulative worldwide sales of Toyota hybrid vehicles exceeded 610,000 units.

3) In the area of production, goals for reduction of CO2 and VOC emissions were achieved. The Toyota Environmental Management System (TOYOTA-EMS) that incorporates the Toyota Way was defi ned and expanded to affi liates worldwide.

4) In the area of recycling, initiatives to reduce the usage of four substances of concern at Toyota operations were implemented worldwide. Toyota also continued the development of easy-to-dismantle technologies and steadily promoted recovery and recycling initiatives in response to the Automobile Recycling Law.

Management FY2005 action policy Action results FY2006 action policy Related

pages

1. Achievement of goals outlined in the Third Toyota Environmental Action Plan (FY2001 - FY2005) and start of initiatives towards achieving the Fourth Toyota Environmental Action Plan

• All Third Toyota Environmental Action Plan goals were achieved• Environmental initiatives are steadily being promoted toward

achieving the Fourth Toyota Environmental Action Plan goals

1. Steady promotion of the Fourth Toyota Environmental Action Plan (2006 - 2010)

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2. Prepare and implement scenarios to control global CO2 emissions • Studied environmental strategies from the three aspects of energy conservation, air quality and CO2 emissions and presented a report to the President in September and to the Toyota Environment Committee in October 2005 and March 2006

2. Prepare and implement medium- to long-term management of global CO2 emissions 11

3. Enhance responsibilities and roles and strengthen communication with society to respond to Toyota’s growing global presence

• Compiled the Toyota National Dealers’ Advisory Council CSR Guidelines and issued the CSR Declaration toward establishment of the Contribution towards Sustainable Development which interprets and explains the Guiding Principles at Toyota

3. Enhance communication with society based on Toyota’s CSR activities 58

Development and DesignFY2005 action policy Action results FY2006 action policy Related

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1. Early and steady responses to fuel effi ciency goals• Achieve 2010 Fuel Effi ciency Standard in all vehicle weight

categories ahead of schedule by 2005• Steadily introduced vehicles that meet fuel effi ciency standards in

all seven weight categories

1. Early and steady responses to fuel effi ciency goals• Achieve 2010 Fuel Effi ciency Standard in all vehicle weight

categories

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2. Active promotion of measures to reduce emissions• Achieve Ultra Low-Emission levels in most vehicle series by

2005• Develop and introduce clean diesel vehicles

• Introduced eighteen SU-LEV compliant vehicle series• The number of vehicle series that meet or surpass the Ultra Low-

Emission Vehicle level reached 96% of total production• The DPNR-equipped Dyna/Toyoace are certifi ed Ultra Low-

Emission Vehicles

2. Active promotion of measures to reduce emissions • Achieve Ultra Low-Emission levels in most vehicle series (gradually introduce and expand the SU-LEV line-up) 26–

27

3. Promotion of actions toward commercialization of clean-energy vehicles• Enhance development and popularization of hybrid vehicles• Promote the development of fuel cell hybrid vehicles

• Introduced the GS Hybrid equipped with THS II• The improved FCHV receives vehicle type certifi cation; Toyota

begins limited marketing • FCHV-BUS begins trial operation in the area around the Central

Japan International Airport (Centrair) and EXPO 2005, Aichi, Japan

3. Promotion of actions toward commercialization of clean-energy vehicles• Enhance development and popularization of hybrid vehicles• Promote the development of fuel cell hybrid vehicles

28

4. Promotion of environmental management and provision of information• Phased implementation of Eco-VAS in vehicle series currently

under development

• Implemented LCA at the vehicle development stage in ten vehicle series, and included LCA results in product catalogs

4. Promotion of environmental management and provision of information• Phased implementation of Eco-VAS in vehicle series currently

under development

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Production and LogisticsFY2005 action policy Action results FY2006 action policy Related

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1. Reduction of CO2 emissions• Steady introduction of innovative technologies• Promote measures to further reduce energy loss

Goal: Total CO2 emissions volume: 1.8 million tons/year or less

• Energy conservation measuresPromoted merging and discontinuance of processes at plantsSteady expansion and sharing of innovative technologies

CO2 emissions: 1.71 million tons/year

• Steady introduction of innovative technologies• Further promotion of measures to reduce energy loss

Goal: Total CO2 emissions volume: 1.7 million tons/year or less

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2. Reduction of substances of concern• Implementation of action plan to achieve PRTR/VOC goals

Goal: VOC emissions (average):Vehicle body painting: 35g/m2 or less Resin parts painting: 715g/m2 or less

Goal: Substances subject to PRTR: 2,000 tons/year or less

• Introduction of water-borne paints and reduction of purge solventsVOC emissions (average):Vehicle body painting: 30g/m2

Bumper painting: 706g/m2

Substances subject to PRTR: 1,980 tons/year

• Implement reduction measures based on the 10-year plan for VOC emissions reductions

• Reduce usage volume of purge solventsGoal: VOC emissions (average):

Vehicle body painting: 30g/m2 or less

Goal: Substances subject to PRTR: 1,950 tons/year or less

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3. Reduction of waste and conservation of resources• Promotion of actions to reduce both waste disposal costs and

CO2 emissions during waste transport/disposalGoal: Generation of combustible waste: 10,660 tons/year or less

• Implementation of measures and plans based on the scenario for FY2005Goal: Reduction of primary raw materials usage: 9,100 tons/

year or moreGoal: Usage of foundry sand: 19,000 tons/year or lessGoal: Usage of oils: 10,700kl/year or less

Generation of combustible waste: 8,200 tons/year

Reduction of primary raw materials usage: 14,300 tons/year

Usage of foundry sand: 17,500 tonsUsage of oils: 9,800kl

• Implement reduction measures based on the 10-year plan for reduction of substances dischargedInitiatives to reduce substances discharged(Waste + amount recycled for a fee + money-back recycling)Goal: Volume discharged outside the company 515,000 tons/

year or less33

4. Conservation of water resources• Meticulous control of water consumptionGoal: Water consumption of 4.1m3 or less per vehicle Water consumption per vehicle: 4.2m3 Continue activities to maintain water consumption at plants at

4.1m3 per vehicle or less

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FY2005 action policy Action results FY2006 action policy Related pages

5. Further promotion of proactive prevention measures• Follow-up on implementation results and thoroughly institute

necessary corrections• Further strengthening of activities to prevent non-compliance

and complaintsGoal: Zero non-compliance or complaints

Implementation of a plan for proactive prevention measuresNumber of cases of legal non-compliance: Two

1. Implement proactive prevention measures for non-compliance and complaints• Revisit foundations and starting points, ensure thorough

compliance with work rules (including maintenance inspections)

• Measures to prevent drainage into waterways2. Expand and establish implementation of Toyota EMS

Goal: Zero non-compliance or complaints

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6. Environmental initiatives at overseas production affi liates• Expansion of Toyota EMS and fi rm establishment (continue

implementation of Eco-Factory audits)Goal: 100% implementation rateGoal: Achieve FY2005 goals

• Implementation of Eco-Factory audits• Training held to improve the EMS implementation level (30

employees from 26 affi liates)• Goals were generally achieved for implementation rates and

performance

• Expansion of Toyota EMS and fi rm establishment (continue implementation of Eco-Factory audits)

Goal: 100% implementation rateGoal: Achieve FY2006 goals

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7. Reduction of environmental impact in logisticsCO2 emissions• Promotion of activities that will lead to reductions in both CO2

emissions volume per vehicle and distance driven• Promotion of shift to transport modes with lower emissions

volume per vehicle• Fuel effi ciency improvement activities• Expansion of shared transportation*Goal: 435,000 tons total per year or less

Reduction of wrapping and packaging material• Comprehensive reassessment of packaging specifi cations,

involving suppliers and receiving partiesGoal: Total volume: 48,700 tons/year or less

• Increased loading rates by switching to low-fl oor trucks• Promoted Eco Driving through driver education, etc.• Reduced the number of truck runs by sharing truck space with

TACTI and Hino

Total CO2 emissions: 414,000 tons/year

• Expanded the use of returnable containers for transport

Total CO2 emissions: 49,800 tons/year

• Promotion of activities that will lead to reductions in both CO2 emissions volume per vehicle and distance driven• Promote a shift to transport modes with lower emissions

volume per vehicle (e.g., railway transport)• Promotion of activities in cooperation with logistics companies• Fuel effi ciency improvement activitiesGoal: Total volume: 501,000 tons/year or less (The total volume is higher because of increases in production at remote sites- Toyota Motor Kyushu, Inc. and the Iwate Plant of Kanto Auto Works , Ltd.)

• Comprehensive reassessment of packaging specifi cations, involving suppliers and receiving partiesGoal: Total volume: 49,800 tons/year or less(The total volume is higher because of increases in production in Japan and overseas)

34–

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*Toyota switched from the ton-kilometers method of calculating CO2 emissions volumes to the fuel method in FY2005. Target values that were previously indicated using the ton-kilometers method have been recalculated using the fuel method.

RecyclingFY2005 action policy Action results FY2006 action policy Related

pages

1. Firm establishment of responses to the Automobile Recycling Law in Japan• Establish the use of collection/recycling systems and reduce

costs

• Ensure steady operation of an in-house information processing system

• Implement proper management of income and expenses and smooth information disclosure (June 2005)

• Firmly establish responses to the Automobile Recycling Law at vehicle dealers and conduct follow-up checks

• Achieved a balance between cost and recycling/recovery rate through measures such as optimization of ASR sent to ASR recycling/recovery facilities and landfi ll sites

• Airbags: Almost achieved goals for on-board deployment rates• In-house information-processing system improvements

completed. Made timely responses to setting individual fees.• Smooth disclosure of results of responses to the Automobile

Recycling Law in FY2004 (June 2005)• Status check of collection companies working at dealers followed

up individually

1. Promotion of low-cost recycling/recovery and steady responses to recycling laws in Japan• Promote low-cost recycling

Reduce ASR recycling/recovery costsReduce airbag recycling costs by improving technologies for on-board deployment

• Conduct voluntary audits in cooperation with related designated corporations

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2. Responses to the EU ELV Directive• Construct an ELV take-back network in the 25 EU member states• Create system for assessing and reducing recycling/ recovery

costs based on Toyota vehicle dismantling data• Solid response to obligatory reporting of recycling/recovery

results in each country

• Created a low-cost network based on the regulations/current situation in each nation (complete in 15/25 nations)

• Considered cost assessment in Germany, UK, Hungary and Poland

• Published recycling/recovery rate results in three nations

2. Responses to automobile recycling legislation overseas• Support overseas distributors in creating end-of-life vehicle

take-back and recycling/recovery systems in all EU member states

• Conduct appropriate lobbying for an effective system in the working group assessing China’s recycling laws

• Understand the status of recycling legislation creation in South Korea and Taiwan and conduct lobbying activities

• Gather information on future trends of recycling legislation in the U.S.

3. Responses to automobile recycling laws in other countries• Lobbying activities in countries considering automobile recycling

legislation (China, Taiwan, South Korea and other countries)• Conduct surveys on waste disposal laws and infrastructure in

the U.S., China and other countries

• Participated in government working groups considering recycling legislation in China

• Conducted surveys regarding the status of legislation in countries such as the U.S. 3. Promote recycling of HV batteries

• Promote lower battery recycling costs• Study designs for recycling (DfR) for HV batteries and move

forward with response plan4. HV battery recycling

• Ensure implementation of HV battery recycling and cost reduction (in Japan)

• Promoted the use of electric furnaces as a plan to lower costs

5. Promotion of recycling technologies and reduction of SOCs• Develop new designs based on the concept of DfR• Develop dismantling and recycling technologies that are suitable

for the market• Global expansion of activities to eliminate usage of the four

SOCs• Prompt response to EU Cr+6 regulations that come into effect in

2007

• Implemented in all vehicles from the initial development stage according to the Eco-VAS technical notice

• Established dismantling methods in cooperation with design divisions to enable greater LLC recovery

• Completed practical development in Australia and also in China, Taiwan and six other Asian countries

• Japan: Switchover completed one year before regulations came into effect; Europe/IMV production countries: design changes for switchover currently being implemented

4. Promote the development of recycling technologies and the reduction of substances of concern• Develop dismantling technologies that is suited to the market• Develop new designs for recycling (DfR) and incorporate into

products• Respond to requirement for recoverability rate certifi cation in

Europe• Implement measures to reduce substances of concern globally(Work to complete the SOC-free goal for all business affi liates by the end of 2007)

Production and Logistics

Environment-related AccidentsIn FY2005, an accident occurred in the production area in

September involving spillage of water tainted with coal. Turbid water containing coal was discharged when a wastewater transfer gutter containing rinse water overfl owed due to a clog. After taking steps to prevent the water from fl owing outside, vacuum trucks were brought in and approximately 400 tons of water was recovered.

In December in the Yamanashi Housing Works, an accident occurred where manganese concentration levels in wastewater surpassed standard values. The cause was speculated to be insuffi cient coagulation and sedimentation in wastewater treatment. Procedures to measure manganese levels before discharge were strengthened, and a system to cope with such an accident (stop water discharge emergency containment of water) was established.


Consolidated Environmental Management Unites Japanese and Overseas Consolidated Companies in Concerted Environmental Action

To conduct business on a global level it is important that initiatives to reduce environmental impact are not implemented by TMC alone, but rather carried out with the involvement of all consolidated subsidiaries. As part of TMC’s environmental management, Toyota started full-scale implementation of consolidated EMS in FY2000, which unites group companies subject to consolidation all over the world in concerted action. TMC presents its global environmental policy to all companies subject to consolidated EMS and offers guidance and support in sharing of best practices, exchange of information, training on how to conduct audits, and on-site checks. The percentage of vehicles produced and sold by companies subject to consolidated EMS was 99% and 91% respectively worldwide. This chapter details some of TMC’s activities to support consolidated subsidiaries and individual activities being carried out by overseas affi liates.

Companies Subject to Consolidated EMSThe consolidated EMS covers a total of 582 companies.

This includes not only all fi nancially consolidated subsidiaries, but also major production companies, overseas distributors and others not subject to consolidated accounting. Specifi cally, companies subject to consolidated EMS fall into the following four major categories:

1) 175 subsidiaries which are fi nancially consolidated and under the direct control of TMC

2) 54 major production companies and overseas distributors which are not subject to consolidated accounting (including one production/sales company)

3) 6 corporations from other types of businesses, including universities and cooperative societies

4) 348 subsidiaries which are fi nancially consolidated and under the indirect control of TMCIncluded are production and sales companies that are not

subject to consolidated accounting, but are above a certain operational scale and have voluntarily participated in response to an invitation from TMC.

TMC’s Requirements from Companies Subject to Consolidated EMS

1. Jointly adopt the Toyota Earth Charter and draft individual environmental policies

2. In production, set quantitative goals and follow up on those goals

3. In sales, create an environmental management system; reduce environmental impact, make social contributions, and carry out environmental communication in line with the nature of business

In FY2006 begin quantitative management of environmental impact such as CO2 emissions during logistics activities

4. Implement top level environmental responses based on actual conditions in each country and region

Note: TMC’s requirements from companies not subject to consolidated accounting may vary according to region and the nature of business

Main Companies Subject to Consolidated EMS (As of the End of March 2006)

Please see p. 44 for a list of major consolidatedcompaniesin Japan

European affiliates that have voluntarily participated

Toyota Hellas (Greece)Toyota Ireland (Ireland)Louwman & Parqui (Holland)Toyota AG (Switzerland)Toyota SA (Turkey)and 11 other companies.

16 non-consolidated distributors in Europe are voluntarily implementing an EMS, including acquisition of ISO certification, with TME support TMMT (Turkey)

TGB(U.K.)

TMUK(U.K.)

TMMF (France)

TFR (France)

Production/Sales companies

Productioncompanies Sales companies

Other types of businesses(regional manufacturing headquarters, etc.)

*Companies whose names are underlined and are indicated in black are financially consolidated subsidiaries

*Companies indicated in blue are not subject to consolidated accounting

*Companies indicated in bold were newly included in FY2005

TDV(Venezuela)

TDB(Brazil)

TASA(Argentina)

TMS (U.S.A.)TMA (U.S.A.)

CAPTIN(Canada)

TABC (U.S.A.)

TMMC (Canada)

TMMWV(U.S.A.)

TMMK (U.S.A.)

TMMI (U.S.A.)

TTC (U.S.A.)

Bodine (U.S.A.)

TMMNA (U.S.A.)

TME (Belgium)

TMPL (Poland)

TMR (Russia)

TMIP (Poland)

TCZ (Czech Republic)

TES (Spain)

TDK (Denmark)TSWE (Sweden)TDG (Germany)TAF (Finland)

TTFC (China)TFAP (China)

Kuozui (Taiwan)

TAP (the Philippines)

STM (Thailand)

TMCI (China)

TTCC (China)

TMKR(Korea)

TSAM (South Africa)

TMCA (Australia)

TTC-AP-TH (Thailand)

TMMIN (Indonesia)

TMV (Vietnam)

TMT (Thailand)

TKM (India)

TKAP (India)

TMAP (Singapore) TNZ (New Zealand)

TSA (South Africa)

GTMC (China)

TMI (Italy)

TTC-AP-AU (Australia)

TMMP (Poland)

TMMR (Russia)

ED2 (France)

Toyota Norge (Norway)

GTE (China)

TFTD (China)

CALTY (U.S.A.)

TMMTX (U.S.A.)

TMMBC (Mexico)

TMMAL (U.S.A.)

NUMMI (U.S.A.)

TCI (Canada)

SFTM (China)

TFTE (China)TFTM (China)

INDUS(Pakistan)

ASSB (Malaysia)

TAM (Indonesia)

TMP (the Philippines)

TTPI (India)

Ho Tai (Taiwan)

BMS (Singapore)

UMWT (Malaysia)

ALJ (Saudi Arabia)SERVCO (U.S.A.)

FTMS (China)TPCA (Czech Republic)

Europe

North America

South America

Japan

Asia, Oceania, Middle East and Africa

TMC, etc


Initiatives for Consolidated Environmental Management


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FY2005 Action Policies and ResultsFY2005 marked the last year of the Third Toyota Environmental Action Plan. Toyota promoted initiatives to ensure the achievement

of goals. In the area of production, results were achieved in respect to continual actions to reduce CO2 emissions and waste volumes, improve

environmental performance and strengthen risk management. With respect to sales and other areas, each company in Japan and overseas formulated environmental action plans with quantitative

goals for the next term. In Japan, Toyota created the Toyota Dealer CSR Guidelines and distributed them to all dealers in Japan. The environmental information network system that uses Environmental Performance Indicators (EPI) was initially created for use only by production companies. In FY2005, Toyota expanded the use of the system to include non-production companies, thus creating a system to tabulate and disclose the environmental performance of consolidated companies worldwide.

FY2005 Results of Activities and FY2006 Action Policy

Company type No. of companies

FY2005 action policy and results FY2006 action policy

Goal Activity results Action policy Goal

Overall

• Create structures for regional environment committees in regions where a committee has not yet been formed

• In August 2005, an agreement was reached with a local affi liate to set up the South American Environment CommitteeThe fi rst environment committee meeting was held in May 2006

• In Asia, measures are being promoted using Toyota Motor Thailand (TMT) as a model affi liate

• Revitalization of regional environment committees and enhanced communication with the Toyota Environment Committee and other committees • Hold periodic regional

environment committee meetings

Production(81

companies)

Japan(36

companies) • Achieve FY2005 goals set by all production companies and reduce cases of non-compliance and complaints

• Complete formulation of activity plans aimed at meeting 2010 goals

• Complete installation of follow-up system

• Consolidated production companies in Japan and overseas implemented systematic measures to achieve FY2005 goals, and almost all goals were achieved

• Proactive measures were taken to prevent non-compliance and complaints. There were, however, fi ve instances of minor non-compliance and two complaints. Relevant response measures have been completed.

• Creation of an action plan towards 2010 was completed

• Activities were implemented systematically to achieve FY2005 goals

• Achieve goals (CO2, emissions, substances discharged, VOC emissions, PRTR substances, water) by fully implementing 2006 action plans at each company

• Strengthen efforts to reduce cases of non-compliance and complaints to zero

• Create and strengthen implementation structure to achieve 2010 goals

• All companies to achieve FY2006 goals and eliminate cases of non-compliance and complaints

Overseas*(45

companies)

Sales(86

companies)

Japan(37

companies)

• Create next action plan and implement quantitative management at each company

• All companies created an action plan by February 2006

• Assist each company to promote the environmental action plan; establish global environmental performance management

• Achieve FY2006 plan goals

• (Dealers in Japan)Adopt the CSR Guidelines, which consider and promote specifi c measures to respond to medium term environmental issues

• Established a special CSR study group by Toyota Dealers Association (to meet four times annually: April, June, September, November)

• Completed distribution of Toyota Dealers Association CSR Guidelines in December 2005

• CSR declaration made at January 2006 Toyota Dealers Association meeting; started CO2 reduction efforts such as energy conservation

• Establish the Toyota Dealers Association CSR Guidelines at dealers

• Implement measures to support establishment of the Guidelines through briefi ngs and other means

• Establishment of EPI at consolidated dealers

• CSR action declaration at all dealers by July 2006

Overseas*(49

companies)

• (Overseas Distributors)Create the next action plan and implement quantitative management at each company

• (Overseas Dealers)Continue to promote voluntary environmental audit programs; work to meet the fi ve categories at 60% of dealers

• Created the next Environmental Action Plan at the 49 overseas distributors, and submitted to TMC by February 2006

• Total countries conducting audits: 48 out of 66

• Assist each distributor to promote their environmental action plan; establish global management of environmental performance data

• Conduct a dealer environmental education campaign to help establish environmental management systems at each dealer

• Establish EPI at distributors

• Conduct voluntary audits at all dealers and work towards corrections in 20 key countries

Other(76

companies)

Japan(59

companies) • Create the next action plan for each company and include quantitative goals for CO2 emissions and other indicators and introduce quantitative management of environmental performance data

• Created an environmental action policy for non-production affi liates and distributed and made requests to each company in May 2005

• All companies created a new Environmental Action Plan, and submitted it to TMC

• Held information meetings on action plans and global management of environmental performance data in May 2005

• Held EPI briefi ng (November 2005 in Japan; visited other countries individually)

• Assist each company to promote its environmental action plan; establish global management of environmental performance data

• Explore new environmental performance improvement measures, such as reducing energy consumption, and share information

• Achieve FY2006 plan goals

• Establish EPIOverseas(17

companies)

*Nine companies that perform both production and sales are included in both categories


ProductsDecision to Start Camry Hybrid Production in North America

In March 2005, Toyota announced the Camry Hybrid would be produced in North America. Imports from Japan began in May 2006, and plans call for about 4,000 units per month to be produced at Toyota Motor Manufacturing, Kentucky (TMMK) starting in autumn. Since the fi rst generation Prius was launched in 2000, cumulative sales of Toyota hybrid vehicles in North America have reached 310,000 units (as of the end of March 2006).

Production of the Prius to Begin in ChinaIn October 2005, 30 units

of the Prius produced in Japan were imported into China, and in December production began at Sichuan FAW Toyota Motor (SFTM), Changchun. These were the fi rst hybrid vehicles to be produced locally under the country’s national hybrid vehicle certifi cation system, which came into effect in October.

Clean Diesel Vehicle Introduced in EuropeThe Avensis, Corolla Verso, RAV4, and IS have all been

equipped with clean diesel engines. The 2.2-liter engine 2AD-FHV equipped with the D-CAT (Diesel Clean Advanced Technology) system meets the Euro4 emissions standard. The exhaust emissions cleaning system is fi tted with the DPNR (Diesel Particulate-NOx active Reduction) system which continuously and simultaneously reduces emissions of PM and NOx. The new piezoelectric common-rail system uses piezoelectric technology in the injection system to promote greater fuel atomization than in conventional solenoid injectors, thus improving combustion and fuel effi ciency.

ProductionEco-Factory Activities Conducted at Overseas Affi liates

Toyota is implementing on an ongoing basis Eco-Factory Activities designed to ensure that environmental measures are properly incorporated when new plants are built or major renovation or extension work is carried out. This involves confi rming environmental responses at each stage, from planning and design through to trial and initial operation by means of on-site checks using actual materials. In FY2005, checklist items for equipment were added to strengthen the fi rst and second stages of the three-stage check.

The table below shows activities results for FY2005. Plants completing the three-stage check to begin stable operations are subject to the Global Audit carried out once every three years by both TMC and the respective affi liate to further promote improvements.

Second Global EMS Training Conducted In order to strengthen environmental initiatives at overseas

production companies, Toyota adopted the Global Toyota Production Environment Management System in FY2004, and to promote implementation of this system held Global EMS Training for internal auditors at each company. In October 2005, the Second Global EMS Training was conducted over a period of fi ve days, attended by 30 participants from 26 affi liates representing 19 countries. The training included: 1) a presentation about Toyota production environment policies, achieving zero instances of non-compliance and complaints, minimizing risk, improving environmental performance, the Fourth Environmental Action Plan, and EMS; 2) hands-on training (genchi genbutsu) at plants; and 3) a fi nal examination. The training seminar was well rated by participants with an average score of 4.6 out of 5.

Camry Hybrid

D-CAT-equipped engine

Numbers indicate planned year of completionImplementation completed by FY2004Implementation completed in FY2005

BODI

NE

TMM

TX

TMM

C Pl

ant 2

TPCA

TMM

P

TMIP

FTCE

TFTM

Pla

nt 2

TFTD GT

E

GTM

C

TFTE

Pla

nt 2

TFTM

Pla

nt 3

GTE

Plan

t 2

TMT

Plan

t 3

TMM

R

North America Europe China Thailand Russia

0708 06

060606

0606

0708

0606

0607

0607

060606

0607

Audit 1 (paper audit)

Audit 2 (on-site audit)Audit 3 (performance evaluation)

Planning stage

Eco-Factory Activities in New Plants

Prius produced at the Changchun Plant BODINE : Bodine AluminumTMMTX : Toyota Motor Manufacturing, TexasTMMC : Toyota Motor Manufacturing CanadaTPCA : Toyota Peugeot Citroen Automobile CzechTMMP : Toyota Motor Manufacturing PolandTMIP : Toyota Motor Industries PolandFTCE : FAW Toyota (Changchun) EngineTFTD : Toyota FAW (Tianjin) DiesGTMC : Guangzhou Toyota Motor CompanyTFTE : Tianjin FAW Toyota EngineTFTM : Tianjin FAW Toyota MotorGTE : Guangqi Toyota EngineTMT : Toyota Motor ThailandTMMR : Toyota Motor Manufacturing Russia


TMC Initiatives at Overseas Affi liates


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LogisticsInitiatives to Reduce CO2 Emissions in Logistics Activities

Starting in FY2004, measures to determine CO2 emissions volumes from logistics activities were expanded to North America and Europe. At the Global EMS Liaison held in May 2005 (with the participation of 67 affi liates), environmental initiatives and examples of environmental best practices in the area of logistics were explained to raise awareness among affi liates in regions other than North America and Europe.

In the future, North America and Europe will shift their focus to goal management and other regions will work on determining CO2 emissions volumes.

Sales Overseas Dealer Environmental Risk Audit Program

The Dealer Environmental Risk Audit Program (DERAP) was implemented once again in FY2005. The aim was to put in place the following systems in order to establish the basis for the introduction of an environmental management system and to reduce environmental risks through proactive prevention of environmental accidents and other environment-related issues.1. Appointment of staff in charge of promoting environment-

related initiatives2. Declaration of compliance with environmental laws3. Proper disposal of hazardous waste (waste oil, LLC,1 etc.)4. Proper treatment of wastewater5. Recovery of air-conditioner coolant

In FY2005, the DERAP was held at 4,998 dealers across 66 countries, including at 18 distributors in countries where the program was not held earlier. Based on requests from EMS managers at overseas distributors, who are in charge of providing guidance to dealers, TMC’s know-how regarding improvements and information on best practices at dealers, as well as best practices of TMC support to dealers, were published on the TMC and distributor intranet to promote information sharing with distributors in different countries. This information was also made available to dealers. In FY2005, the percentage of dealers that met requirements in all fi ve categories2 rose from 41% in the previous fi scal year to 53%. To further promote implementation of DERAP, TMC plans to conduct a dealer environmental education campaign in FY2006.

1. LLC:Long-life Coolant (engine coolant)

2. Between FY2004 and FY2006, systems for requirements that must be met in fi ve basic categories were established as the fi rst step towards environmental management at dealers

The Intra Company Transferee (ICT) program hosts employees from overseas affi liates at TMC to develop overseas human resources and to promote closer communication with TMC. Transferees spend roughly between 12 and 18 months at TMC, working right alongside regular TMC employees and taking charge of several overseas projects during that time. As of March 2006, there were 432 transferees undergoing training in Japan at various TMC workplaces.

“Since the scale of overseas companies is small, the scope of what one individual is in charge of is broad. As I don’t come from an engineering background, this program has afforded me the opportunity to probe one area at a time and deepen my knowledge every day” (Yin Chi Liang from Kuozui Motors, Ltd., Taiwan). “I came with the goal of expanding my understanding of environmental technology. I am able to see how things work at many different plants. This has made the program truly worthwhile for me.” (Andrzej Depta from Toyota Motor Manufacturing Poland, (TMMP)). “I came at the recommendation of my boss, who was one of the fi rst ICT program participants. I am planning on taking what I have learned here back home and teaching others in the company there. I’m sure that there will be many things I won’t know, but I feel reassured by the network of people I have created here in Japan.” (Saori Yano from Toyota do Brasil (TDB)).

Activities Begin to Work Towards 2010 Goals at Companies Subject to Consolidated EMS

TMC holds the All-Toyota Production Environment Conference (22 participating companies) and the All-Toyota Production Environment Meeting (13 participating companies) annually to enhance the environmental performance of consolidated production companies in Japan. In FY2005, participants visited the Tsutsumi Plant to observe the status of reduction in VOC emissions as a result of the introduction of water-borne paints.

Senior Managing Director Shoji Ikawa, who serves as the chairman of the Production Environment Committee, expresses his hopes that “We must implement further group-wide initiatives to achieve our 2010 goals and aim to be at leading levels in the industry.”

Gaining Knowledge and Building Networks In Focus

Participants observe a painting line that uses water-borne paint

DERAP Implementation StatusPercentage of dealers meeting requirements in all fi ve categories

Countries where all dealers passedFY2004

resultsFY2005 results

Overseas(all countries) 41 53 7 12

Other countries* 14 19 2 4

Europe (TME) 58 74 5 8

*Other countries:Includes all countries except those under the jurisdiction of the three North American distributors and TME. The three distributors in North America conduct their own program.

A CD-ROM on environmental best practices was distributed

Mr. Yin, Mr. Depta and Ms. Yano


Safety, Environmental Issues and Quality Focused on at Annual Policies Meeting

Toyota Motor Thailand Co., Ltd. (TMT) holds biannual briefi ngs for over 800 assistant managers to promote adherence to the annual company-wide policies. In December 2005, a briefi ng was held, in which a guest speaker from TMC participated, to explain the objectives for FY2006 with an emphasis on occupational safety and health, environmental issues and quality. After President Ryoichi Sasaki discussed the company-wide policies, the heads of management, production and marketing discussed their policies and responded to questions. Various comments were voiced, such as “I realize now that the direction the company should be moving towards matches the needs of society.”

TMMNA Receives Energy Star Award Toyota Motor Manufacturing North

America, Inc. (TMMNA)* conducts many unique activities to conserve energy such as “hunting for energy-saving treasures.” In 2005 and 2006, TMMNA was honored with an ENERGY STAR® award from the United States Environmental Protection Agency (EPA) and Department of Energy (DOE) for the leadership demonstrated in operations to reduce energy consumption.

Water Consumption Reduced by Using Rainwater

In Australia, where water is one of the most precious resources, Toyota Motor Corporation Australia Limited (TMCA) is making efforts to utilize rainwater. A 45,000-liter rainwater storage collection system was installed and the collected rainwater is used to provide water for toilet cisterns and to garden ponds. To reduce greenhouse gas emissions from the pumping system, 12 newly installed solar panels and two wind turbine generators are used to supply the electricity necessary to pump the rainwater. Further, by reusing the water used in the assembly shop and other means, TMCA reduced water consumption per vehicle produced by 25% compared to 2000.

Senior Management Conducts On-site Environmental Inspections

At Toyota Motor Philippines Corporation (TMP), the president conducts on-site inspections of environmental activities to stimulate employee motivation towards kaizen. In FY2005, a presentation was made to the president concerning reductions in paint sludge, the adoption of returnable boxes for parts, and reductions in the volume of purge solvents used. The president commented on areas of focus and the feasibility of sharing these practices.

Zero Waste to Landfi ll Goal Achieved in Two Years

Toyota Motor Manufacturing Poland SP.zo.o. (TMMP) drafted a plan to achieve zero waste to landfi ll in 2003, when it acquired ISO 14001 certifi cation. First, TMMP identifi ed all possible sources of landfi ll waste, and then made process improvements to reduce the volume of waste generated, found new contractors and buyers, and carried out training of employees. The goal of zero waste to landfi ll was achieved in February 2005. This accomplishment was recognized by the Polish government and TMMP was awarded the “Environmentally Friendly Company” Award in February 2006.

VOC Emissions Reduced by Recycling Purge Solvents

Toyota Argentina SA (TASA) has been working, as part of a global initiative, to reduce VOC emissions by focusing on purge solvents, which contribute greatly to the generation of VOC emissions on the production line. Thorough management is carried out through measures such as the recovery and recycling of purge solvents that are used to clean auxiliary equipment inside the painting booths.

*In April 2006, TMMNA and Toyota Technical Center U.S.A. Inc. (TTC) were integrated to form Toyota Motor Engineering & Manufacturing North America (TEMA)

TMC’s overseas affi liates are implementing many unique initiatives to reduce environmental impact. The following best practices are from the environmental reports of these affi liates with regard to environmental management, energy conservation, waste reduction and recycling, and VOC emissions reduction.

The rainwater utilization project was planned by a company-wide project team

Recovery and recycling of purge solvents

President Ryoichi Sasaki discusses company-wide policies

An on-site inspection by President Hiroshi Ito

The ENERGY STAR® awardThorough sorting and recycling of waste


Examples of Initiatives at Overseas Affi liates

TMP, Philippines

TMMP, Poland

TASA, Argentina

TMT, Thailand

TMMNA, North America

TMCA, Australia


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Replacement of Picking Slips by Electronically Transmitted Data

At Toyota Motor Europe (TME), spare parts and accessories in logistics centers were previously shipped to retailers using picking slips, containing information related to the shipping destination and so on. A project to terminate the use of picking slips was launched in 2003. This project has been rolled out to most European markets and in 2005 resulted in a savings of 2.5 million sheets of A4-sized paper.

Reducing the Four Substances of Concern

TMT exports IMV Project vehicles to various parts of the world, and as such is promoting activities to reduce usage of lead, mercury, cadmium and hexavalent chromium, including introduction of equipment to measure the content of the banned substances, checking of actual parts, and conducting audits at suppliers.

Kenaf Used in the Avalon Produced in North America

Toyota Technical Center U.S.A. Inc. (TTC)* is taking action to improve recoverability and promote the effective use of resources. The upper door trim of the new Avalon uses thermoplastic resin that is reinforced with natural kenaf fi bers. A fi berglass-free material is used in the fabric that covers the inside of the vehicle roof, and replaceable oil fi lter elements have been introduced.

All Dealers Acquire ISO 14001 Certifi cation

By 2003, all eight dealers had acquired ISO 14001 certifi cation with support from Hotai Motor Co., Ltd. By the end of FY2005, 64 service shops had acquired certifi cation, and plans are underway for all 133 service shops to acquire certifi cation by the end of FY2007. Dealers have commented that the inspections required in acquiring certifi cation provided good motivation to review environmental measures.

Expanding ISO 14001 Certifi cation Acquisition

In FY2005, distributors TDG (Germany), TCZ (Czech Republic), TMR (Russia) and TNZ (New Zealand), all acquired ISO 14001 certifi cation. Toyota T&S Construction Co., Ltd. in Japan acquired joint ISO 14001 and 9000 certifi cation. The number of subsidiaries in Japan and overseas that acquired ISO certification increased to 113 companies out of a total of 234. The total number of overseas dealers and service shops to acquire certifi cation with support from distributors has increased to approximately 300 across 13 countries.

Global Environmental DataIn FY2005, worldwide production of Toyota vehicles increased

by approximately 10% from the previous fi scal year. However, due to steady implementation of initiatives by all companies to reduce CO2 emissions, the volume of waste generated and water consumption per vehicle, increases in total volumes were controlled.

TME, Europe

TMT, Thailand

TTC, U.S.A.

Hotai, Taiwan

Number of Companies in Japan and Overseas that have Acquired ISO 14001 Certifi cation

Production companies

Production/Sales

companies

Sales companies/

Other types of businesses

Japa

n

34 24*

Over

seas

24 9 22

Product information is now stored as digital data

Parts with reduced use of substances of concern

Training at dealers based on ISO standards

The upper door trim on the new Avalon that uses kenaf

’01 ’02 ’03 ’04 ’05 (FY)

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

500

400

300

200

100

0

Total CO2 volume (Thousand tons) Per sales unit (Tons/Billion Yen)

Per sales unit

420 410 390 370330

5,900 6,160 6,300 6,400 6,500

CO2 Emissions Volume

’01 ’02 ’03 ’04 ’05 (FY)

120

100

80

60

40

20

0

10,000

8,000

6,000

4,000

2,000

0

Total waste volume (Thousand tons) Per sales unit (kg/Billion Yen)

Per sales unit

8,300

6,3005,200

4,500

11594

83 77

4,200

81

Volume of Waste Generated

TMC Japan(excluding TMC)

NorthAmerica

Europe Asia, Australia, the Middle East, South Africa and Latin America

’01 ’02 ’03 ’04 ’05 (FY)

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

7.0

5.0

4.0

6.0

3.0

2.0

1.0

0

Water consumption (Thousand m3) (m3/Vehicle)

Averagefor plants

5.1 5.14.6 4.2

29,60029,80028,500 28,000

3.6

28,800

Water Consumption (Vehicle Assembly Plants)

*The status of ISO certifi cation was re-confi rmed. Two companies (Toyota Tokyo Parts Distributor Co.,

Ltd. and Toyota Aichi Parts Distributor Co., Ltd.) which had previously acquired certifi cation have been included.

Please see p. 42 for further details on CO2 conversion coeffi cients

22 Sustainability Report 2006 Sustainability Report 2006

The Innovative International Multi-Purpose Vehicle (IMV) Project is part of Toyota’s global operations and all processes leading up to the introduction of new models including purchasing, parts manufacturing, vehicle production and sales are being conducted outside Japan. The Project aims to develop unified models that will be recognized as the best globally, while also maintaining highly reliable performance in a wide range of particular locales that may possess unpaved surfaces or flooded roads. Vehicles manufactured at the four main production bases of Thailand, Indonesia, South Africa and Argentina will be exported to more than 140 countries worldwide. An optimized global manufacturing and supply system that incorporates environmental performance improvement has been created to enable customers to enjoy the highest “Made by Toyota” quality no matter where IMV Project vehicles are assembled or sold. Toyota aims to achieve 100% local procurement to contribute to the economic development of these countries while developing local human resources to be able to attain and maintain the same quality standards as in Japan. In FY2005, production got under way in Thailand, Indonesia, South America, South Africa and India, with output totaling 500,000 vehicles.

Using Low-emission and Fuel Efficient Engines A total of six engine types are being used for IMV Project

vehicles — three diesel engines and three gasoline engines. There is a high demand (about 80%) for diesel-powered IMV Project vehicles, and a common-rail (electronically controlled fuel injection) system is used in most regions. This system keeps PM and NOx emissions in check, and complies with the latest emissions regulations, while achieving high fuel efficiency. The gasoline engines are equipped with VVT-i (Variable Valve Timing–intelligent) to increase air intake efficiency, and achieve high fuel efficiency.

Increasing Logistics Efficiency and Working towards Energy Conservation

In Thailand, to deal with the increase in the number of suppliers resulting from the launch of the IMV Project, TMT increased the number of trips by employees to supplier sites to collect parts and other items, and improved the container packing rate. As a result, the number of truck dispatches increased only twofold

compared to a threefold increase in the volume of production parts, improving transportation efficiency. Further, to offset the increase in warehouse space for parts, TMT took measures to conserve energy by using natural lighting though the installation of skylights and by redesigning lighting configurations.

Reducing VOC EmissionsToyota is taking numerous steps to reduce VOC emissions

from IMV Project vehicles. These include activities in Thailand, Argentina and other countries such as switching to the use of decal coloring instead of paint on the pillar sections, reducing the total surface area of the vehicle to be painted, installing regenerative thermal oxidizers (RTO), improving electrodeposition painting and reducing the painting time for the top coating.

Use of Easy-to-recycle Materials Toyota uses TSOP, which is rigid, durable and easy to recycle,

in parts such as bumpers and fender covers.

Reducing the Use of Substances of Concern to Meet Global Standards

The IMV Project global production bases collaborate in manufacturing mutually complementary vehicles and parts. It is thus necessary to comply with global environmental standards with regards to usage of lead, mercury, cadmium and hexavalent chromium.

TMC’s overseas affiliates work together to support local suppliers through the provision of technology to analyze the content of substances of concern in parts, to introduce alternative materials, and other measures to ensure that locally procured parts do not contain substances of concern.

VehicleSuppliesfromtheFourGlobalProductionBases

Researching the Finer Details of Fuel In Focus

To get the most out of the common-rail system, it is important to ensure the use of quality fuel. Kaoru Hosokawa, Chief Engineer of the Product Development Group explains, “We have conducted diesel fuel sampling worldwide, and have made requests to improve fuel quality in countries where it is not as high as it should be. Nonetheless, in some countries sulfur and water are found in the diesel; there is simply no way to avoid differences in fuel quality. It has been a major challenge for us to make the engines compatible with a wide range of harsh environments.”

Thailand(Pickup truck/

SUV)

South Africa(Pickup truck/SUV)

Argentina(Pickup truck/SUV)

Indonesia(Minivan)

An open air gas station

The Hilux Vigo (left) and the Kijang Innova


Improving Environmental Performance Through Global Projects

Sustainability Report 2006 Sustainability Report 2006

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23

Environmental Aspects

Environmental Accounting

Basic PolicyToyota defines environmental costs as “expenditures for

the purpose of reducing the environmental impact caused by the company’s business activities” and “related expenditures.” Accounting is based on a classification of environmental costs into “environmental investments”1 and “maintenance costs.”2 Toyota also calculates economic effects and eco-efficiency.

1. Environmental investments: Environmental costs whose effects are judged to extend beyond the current term into the future

2. Maintenance costs: Environmental costs other than environmental investments

Environmental Costs in FY2005Total environmental costs were 237.8 billion yen. This

represents an increase of 6.7 billion yen from the previous fiscal year and accounts for 2.3% of net sales. The increase was the result of greater investment in equipment and facilities for environmental responses, among other factors.

Economic Effects in FY20051) Actual Effects

Toyota calculates actual effects by adding savings, such as from “reduction in energy costs” achieved through energy conservation, to income, such as that from “sales of recyclable goods.” In FY2005, total actual effects were 10.4 billion yen, an increase of 0.6 billion yen from FY2004.

2) Customer EffectsIn FY2005, total customer effects resulting from the

introduction of new models and models that underwent complete redesign were 4.3 billion yen and total effects through to the end-of-life vehicle stage were approximately 46.6 billion yen.3) Inferred Effects

Since FY2003, Toyota has determined inferred effects based on trial calculations of the “contribution to profits from environmental responses.” In FY2005, total inferred effects were 390 billion yen.

Eco-efficiencyToyota calculates eco-efficiency using the formula below and

monitors the results in the form of the eco-efficiency index. CO2 emissions volume and the volume of waste generated by the Production Group were used to determine the environmental impact starting with data from FY1990. Over 15 years, the CO2 index has increased by about 60%, and the waste index by approximately 280%. In the future, Toyota will continue to pursue production that minimizes environmental impact and to enhance eco-efficiency.

EconomicEffects(ActualEffects)(Unit: Billion Yen)

FY2003

FY2004

FY2005

FY2005 results of 6 body

manufacturers*

Reduction in energy costs 1.1 1.1 2.1 1.9Reduction in waste processing costs 0.6 0.3 0.4 0.1Sales of recyclable goods 3.3 5.9 5.8 4.1Other (income from environment-related technologies, etc.)

0.8 2.5 2.1 0.1

Total 5.8 9.8 10.4 6.2

TrendinEco-efficiency

(FY)’90 ’99 ’00 ’01 ’02 ’03 ’04 ’05

(FY)’90 ’99 ’00 ’01 ’02 ’03 ’04 ’05

200

150

100

(Index) CO2 Index due to Automobile Production400

300350

250200150100

(Index) Waste Index due to Automobile Production

The “CO2 index” means the ratio of net sales to the volume of CO2

emissions, with a value of 100 assigned to the FY1990 level

The “waste index” means the ratio of net sales to the volume of waste generated, with a value of 100 assigned to the FY1990 level

ActualResultsofEnvironmentalExpensesActual Results Based on Toyota’s Format (Unit: Billion Yen)Classifi-cation Item Details FY2003 FY2004 FY2005

Envi

ronm

enta

linv

estm

ents

Research and development 166.1 192.3 191.5Recycling-related 1.2 1.3 2.1Other expenses (social contribution, ISO certification, educational & training, etc.) 2.2 4.9 2.8

Plan

t and

equ

ipm

ent

inve

stm

ent* Plant and equipment

investment primarily for environmental action

Prevention of global warming 0.8 0.8 1.4Waste processing 0.4 0.7 0.3Pollution prevention, etc 4.6 6.9 5.5

5.8 8.4 7.2Expenses for environmental action, included in normal plant and equipment investment 13.1 12.9 19.4

Subtotal for environmental investments 188.4 219.8 223.0

Mai

nten

ance

cos

ts

Expenses related to environmental measures

Waste processing 2.7 2.6 2.6Wastewater treatment 0.5 0.5 0.5Atmospheric pollution and odor abatement 1.4 1.2 0.9

Global environmental preservation 0.5 0.6 0.9Awareness-building Advertising, public relations, etc. 6.0 4.2 6.0Professional environmental staff Personnel 1.9 2.0 2.2

Environmental restoration Recall 1.5Soil and groundwater remediation 0.2 0.2 0.2

Subtotal for maintenance costs 13.2 11.3 14.8Total 201.6 231.1 237.8

*Depreciation expenses of investments in plant and equipment are not included in these costs(Reference) FY2005 Total R&D expenses: 704.5 billion yen Total plant and equipment investment: 351.6 billion yen

FY2005 Actual Results Based on the Ministry of the Environment’s Format (Unit: Billion Yen)

ClassificationToyota 6body

manufacturers*

Invest-ments Cost Invest-

ments Cost

(1) Business area costs

[1] Pollution prevention 4.2 1.4 2.9 2.4[2] Global environmental

preservation 21.6 0.9 3.5 0.4

[3] Resource circulation 0.3 2.6 2.3 2.3(2) Upstream/downstream

costsAmount allocated by recycling-related industry organizations 0 3.1 0 0.5

(3) Administration costsEnvironmental advertisements, environmental report publication, professional environmental staff, etc.

9.5 0 2.1

(4) Research and development costs

R&D for reducing substances of concern 191.5 0.5 32.9

(5) Social activity costs Contribution to environmental preservation organizations, etc. 0.5 0.1

(6) Environmental remediation costs

Soil and groundwater remediation, etc. 0.5 1.7 0.1

Total26.6 211.2 9.3 40.7

237.8 50*6 body manufacturers: Kanto Auto Works, Daihatsu Motor, Toyota Auto Body, Hino Motors, Toyota Motor

Kyushu, and Central Motor (Calculations made on the basis of standards used by each company)

Figures for environmental accounting by overseas affiliates• TMT (Thailand): Environmental costs: 319 million yen; economic effects: 205 million yen• Kuozui Motors (Taiwan): Environmental costs: 465 million yen; economic effects: 41 million yen


Improving Environmental Performance Through Global Projects

Eco-efficiencyFormula

Eco-efficiency = Net sales

Environmental impact

Information on the calculation method for customer effects and inferred effectshttp://www.toyota.co.jp/SR/en06repo/envac/

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