TEL's Sustainability

Sustainability and Framework of Corporate Principles

Sustainability initiatives

Initiatives for Sustainable Development Goals (SDGs)

New Medium-term Management Plan

Participation in Global Initiatives

Third-party Recognition

Stakeholder Engagement

Sustainability and Framework of Corporate Principles

Tokyo Electron’s sustainability initiatives are the practice of its Corporate Philosophy through achieving its vision. We make clear the material issues in our growth and promote these initiatives. Together with the building of a resilient management foundation, by providing high-value-added products and services, we contribute to the resolution of issues and development of industry and society as well as the achievement of the SDGs.

To be a company that is highly trusted and loved by society, we work on medium- to long-term profit expansion and continuous corporate value enhancement.

Framework of Corporate Principles Corporate Philosophy: Purpose of Tokyo Electron’s existence and its mission in society We strive to contribute to the development of a dream-inspiring society through our leading-edge technologies and reliable service and support. Vision: Top priorities to be addressed to realize the Corporate Philosophy A company filled with dreams and vitality that contributes to technological innovation in semiconductors TEL Values: Attitudes, codes of conduct, and values to be observed by each employee Pride/Challenge/Ownership/Teamwork/Awareness

Sustainability initiatives

Our approach to sustainability is to practice our Corporate Philosophy through realizing our Vision. We conduct activities for sustainability initiatives that we have organized into the following four frameworks: Governance, Strategy, Risk Management, and Metrics and Targets.

Main Initiatives in the Four Frameworks

Governance	Corporate Sustainability Management Department established at headquarters and the sustainability initiatives are promoted throughout the entire Group Meetings of the Sustainability Committee, chaired by the executive officer in charge of sustainability, are held twice a year. Corporate Officers, Division Officers and presidents of domestic Group companies and overseas subsidiaries attend the meetings to set short-, medium-, and long-term sustainability goals, manage progress, formulate sustainability-related policies and discuss individual themes. Decisions on important matters are made at Corporate Officers Meetings, the highest decision-making body on the executive side Group-wide sustainability initiatives are reported on as necessary at meetings of the Board of Directors, and the Board of Directors supervises those initiatives
Strategy	Focus on the creation of social and economic value of business activities based on the idea of TSV (TEL’s Shared Value), which is the same as CSV, to solve social issues using our unique corporate resources and expertise Identify key items to be worked on with priority as material issues*¹ and develop the value chain through business activities anchored around material issues while leveraging the strengths built by the driving forces of growth behind our company While implementing a range of sustainability initiatives through business activities, contribute to solving issues in industry and society and achieving the SDGs by providing the Best Products with innovative technology, and the Best Technical Service with high added value, and achieve medium- to long-term profit expansion and continuous corporate value enhancement
Risk Management*²	Respond appropriately and promptly to a diverse range of risks related to semiconductors, including geopolitics and market changes, develop a risk management structure for achieving sustainable growth, and carry out enterprise risk management to promote more effective activities In addition to minimizing the impact of risks, that may be faced when conducting business, by giving them full consideration from a future perspective, also view them as business opportunities and appropriately address them Uncover Group-wide comprehensive risks, identify high-impact and high-probability risks as material risks for the Company, and appoint a risk owner for each risk. Focus on risks that are particular issues in meetings of the CEO and Division Officers, confirm status of related initiates and discuss improvement measures
Metrics and Targets	Set key indicators for continuous corporate value enhancement³ in our Medium-term Management Plan and annual sustainability goals⁴ The results and status of the achievement of key indicators and annual goals are reviewed at the review meeting Conduct activities to achieve each indicator and goal under the persons responsible for each indicator and goal

Material issues were revised in fiscal 2024.Refer to Material issues

Refer to Risk Management

Refer to Integrated Report Key Indicators for Continuous Corporate Value Enhancement

Refer to Annual Sustainability goals and result

Sustainability Promotion Framework

We promote sustainability activities throughout the entire Group through the following committees.

Conference Name	Participants	Function	Meeting Frequency
Sustainability Committee	Corporate Officers and Division Officers Presidents of the Group companies in Japan and overseas companies	Set and manage progress of sustainability goal (short-, medium-, and long-term) Promote company-wide projects^*1	Twice annually
Sustainability Global Committee	The executive officer in charge of the sustainability promotion Heads of related departments Sustainability managers of the Group companies in Japan and overseas companies^*2	Promote activities for achieving annual sustainability goals (short- and medium-term) Implement global projects	Twice annually
Sustainability Monthly Meeting	Person in charge of sustainability at relate divisions	Share information on sustainability activities Discuss cross-division sustainability initiatives	Monthly

Report and discuss important issues at the Corporate Officers Meeting, the highest decision-making body on the executive side Corporate Officers' Meeting: Refer to the Corporate Governance System

Sustainability Manager: Person responsible for coordinating all aspects of sustainability at the Group companies in Japan and overseas companies

In addition to these committees, we invite all employees to submit examples of sustainability in the workplace, toward issue resolution and advancement of industry and society, and practice of our Corporate Philosophy. Outstanding initiatives are awarded the TEL Sustainability Award by the CEO and shared throughout the entire Group as best practices.

Initiatives for Sustainable Development Goals (SDGs)

The SDGs are a universal set of goals to achieve by 2030, which were unanimously adopted by the United Nations Sustainable Development Summit in 2015.We conduct activities on a company-wide basis, and for each CSR fiscal year and medium-term goal, and each material issue, we clarified the SDGs it is working toward through business.

Additionally, we regularly hold SDGs workshops where employees working in a variety of fields come together autonomously to share activities through business and discuss issues such as future prospects toward the achievement of the SDGs.

Tokyo Electron Supports the SDGs

In fiscal year 2022, we reaffirmed the 17 goals and 169 targets^* being undertaken by the priority themes of our material issues.

169 targets reaffirmed: Our initiatives toward the 17 goals and 169 targets that make up the SDGs. Refer to 169 Targets of the SDGs

Medium-term Management Plan

In addition to pursuing sustainable operations in line with our approach to sustainability, we also strive to generate medium- to long-term profit expansion and continuing corporate value enhancement by creating new value through our business and contributing to the resolution of industrial and social issues and to the development of industry and society. In June 2022, we revised our vision and set new financial targets in the new Medium-term Management Plan and also announced our main initiatives for the future to achieve the new Medium-term Management Plan as well as our capital policy, shareholder return policy and other measures.

Financial Model Targets in the New Medium-Term Management Plan

In addition, we have expressed our approval of the recommendations offered by the Task Force on Climate-related Financial Disclosures (TCFD^*3) and are pursuing initiatives based on the framework of governance, strategy, risk management, indicators and targets relating to the risks and opportunities that climate change presents to its business.

Financial Targets

Financial Targets(by FY2027)
Net Sales	3 trillion yen or more
Operating Margin	35% or more
ROE^*	30% or more

ROE: Return On Equity

Participation in Global Initiatives

We actively participate in a variety of global initiatives and practice sustainability in our business activities.

We signed onto the United Nations Global Compact (UNGC) in 2013 and are working to contribute to the realization of sound globalization and a sustainable society in accordance with its Ten Principles.

United Nations Global Compact

We joined the Responsible Business Alliance (RBA) in 2015, and we work together with suppliers to ensure compliance with the RBA Code of Conduct comprised of “labor”, “environment”, “health and safety”, “ethics” and “management systems”.

Responsible Business Alliance

In 2020, we expressed our approval of the recommendations offered by the Task Force on Climate-related Financial Disclosures (TCFD)*¹ and are conducting disclosures based on the framework of governance, strategy, risk management and metrics and targets relating to the risks and opportunities that climate change presents to our overall business.

Task Force on Climate-related Financial Disclosures

We concur with the vision of the Taskforce on Nature-related Financial Disclosures (TNFD) and in 2023, joined the TNFD Forum, which appropriately evaluates risks and opportunities related to natural capital and biodiversity.

Taskforce on Nature-related Financial Disclosures

We joined a global industry association, SEMI*² which aims for the global development of the semiconductor industry, in 1978 as a member company, and engage in the promotion of the establishment and standardization of international guidelines as well as the promotion of sustainability.

Refer to TCFD

SEMI：Semiconductor Equipment and Materials International

Third-party Recognition

Our sustainability initiatives have allowed us to continue to be selected as a constituent stock under leading global ESG indices. Some examples are, the Dow Jones Sustainability™ Asia/Pacific Index*¹, FTSE4Good Index Series*², MSCI ESG Leaders Indexes*³, Euronext Vigeo World 120 Index*⁴ and STOXX Global ESG Leaders indices*⁵. We were evaluated as a Low Risk company in Sustainaltics’ ESG Risk Ratings*⁶, continuing from the previous year. In May of 2024, we were also selected as an SX Brand*⁷ as a progressive company that engages in long-term and sustainable corporate value.
The Tokyo Electron Integrated Report 2023 was selected again as an “Excellent Integrated Report” by the Government Pension Investment Fund (GPIF)’s external asset managers entrusted with domestic equity investment for the third consecutive year, and we were selected for the Excellence Award at the Third NIKKEI Integrated Report Award.

DJSI: Dow Jones Sustainability Indices. An ESG investment index of S&P Dow Jones Indices LLC. The DJSI Asia Pacific covers companies in that region.

FTSE4Good Index Series: An index related to environmental performance and corporate social responsibility developed by FTSE Russell.

MSCI ESG Leaders Indexes: Companies that have high ESG performance are selected from the MSCI Global Sustainability Index, an ESG investment index developed by Morgan Stanley Capital International (MSCI). Please refer to the link for the logo’s disclaimer.Please refer to the link for the logo’s disclaimer.

Euronext Vigeo World 120 Index: An index selected by NYSE Euronext and Vigeo Eiris composed of 120 companies that excel from an ESG perspective.

STOXX Global ESG Leaders indices: STOXX, a subsidiary of Deutsche Börse, selects companies that meet its evaluation standards based on the results of research from the ESG research company Sustainalytics.

Sustainalytics’ ESG Risk Ratings: An ESG risk measured for institutional investors by Sustainalytics in the Netherlands. The rating is based on a company’s exposure to industry-specific material ESG risks and how well a company is managing those risks. ©2024 Sustainalytics. All rights reserved. This article contains information developed by Sustainalytics (www.sustainalytics.com).Such information and data are proprietary of Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legal-disclaimers.

SX Brands: Brands established by the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange in 2024

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Stakeholder Engagement

We actively create opportunities for dialogue and hold mutual communication with our stakeholders to allow us to accurately comprehend their demands and expectations as we deploy our business activities. We strive to build a solid relationship of mutual trust with all the stakeholders surrounding our company by working steadily to fulfill our roles and responsibilities in society.

Shareholders/Investors

Relationship with Stakeholders	Shareholders and investors provide our company’s capital, while expressing their opinions, demands and expectations of our company from the shareholder/investor perspective through constructive dialogue and through exercising their voting rights at the Shareholders’ Meeting We share our management vision and growth scenario with shareholders and investors, and incorporate the opinions and demands we hear from them into our management in an effort to enhance our corporate value
Value Provided to Stakeholders	Return of profit generated from business activities Enhanced corporate value through the realization of our medium- and long-term growth
Main Engagement Opportunities	Earnings release conference, Medium-term Management Plan briefing, IR Day IR conference, IR road show*, individual IR interview Shareholders’ Meeting

IR road show: IR activities presented directly to shareholders and investors

Customers

Relationship with Stakeholders	Customers purchase the semiconductor production equipment we provide and also utilize services necessary for maintaining that equipment We not only provide products, services and solutions but also create technology roadmaps spanning multiple generations and carry out joint technology development with customers
Value Provided to Stakeholders	Best Products with innovative technology Best Technical Service with high added value Environmentally friendly products and services with a focus on safety and quality Solutions that satisfy a variety of application needs
Main Engagement Opportunities	Technology conference Joint development Customer Satisfaction Survey

Suppliers

Relationship with Stakeholders	Suppliers supply the materials and human resources necessary for our company’s business administration, and also perform customs clearance, logistics operations and other operational services In addition to purchasing these materials and operational services, we cooperate with our suppliers on the further development and improvement of these aspects and enhancement of their quality. We build a sustainable supply chain that takes into account labor, the environment, health and safety, ethics and the like
Value Provided to Stakeholders	Social issue initiatives and further improving added value of products and services through collaboration with our company Business opportunities in the semiconductor production equipment markets Maintaining soundness and strengthening competitiveness throughout the entire supply chain
Main Engagement Opportunities	Production update briefing TEL Partners’ Day/TEL E-COMPASS Day Sustainability Assessment STQA* audit

STQA: Supplier Total Quality Assessment

Governments/Associations

Relationship with Stakeholders	Governments and associations not only require companies to comply with laws, regulations, industry codes of conduct and other rules, but also aim to work in partnership with companies to bring about development at the industrywide, national and community level While carrying out our business activities in compliance with such laws, regulations, industry codes of conduct and the like in the countries and communities where we operate, we contribute to social development and the resolution of societal issues by accurately grasping social needs
Value Provided to Stakeholders	Solutions that help the industry and society solve issues and develop Business activities that comply with laws, regulations, industry codes of conduct and other rules
Main Engagement Opportunities	Cooperation with government and administrative agencies Collaboration with global initiatives and NGOs etc. Industry group activities

Local Communities

Relationship with Stakeholders	Local communities are striving to offer more value by working to foster local industry and educate human resources We contribute to the development of the local communities where we operate through employment opportunities, initiatives to preserve the local environment and paying taxes to local municipalities
Value Provided to Stakeholders	Human resources development and employment opportunities Promotion of environmental preservation in communities Financial contributions through tax payments
Main Engagement Opportunities	TEL FOR GOOD (Social contribution activities) Tours of plants and offices Environmental debriefing

Employees

Relationship with Stakeholders	Our employees contribute to enhancing our corporate value by demonstrating their individual capabilities and pursuing personal growth through making use of opportunities for education We promote the improvement of employee engagement under management that emphasizes employee motivation
Value Provided to Stakeholders	A workplace environment replete with dreams and vitality that respects diversity and enables employees to realize their full potential based on mutual trust between the organization and individuals Opportunities for career development and skill improvement Fair performance review and remuneration commensurate with results
Main Engagement Opportunities	Employee meeting Global engagement survey Training and workshops

Engagement with Governments, Industry Groups,
and Other External Stakeholders

Basic Stance on “Engagement with Governments, Industry Groups, and Other External Stakeholders”

We have formulated a vision to become "a company filled with dreams and vitality that contributes to technological innovation in semiconductors." We are engaged in business activities based on TEL's Shared Value (TSV), aiming for sustainable corporate value enhancement through the advancement of semiconductor technological innovation. This is based on the idea of Creating Shared Value (CSV). The concept behind CSV is that, by using their unique resources and expertise to help resolve societal issues , companies can realize sustainable growth through the creation of social and economic value.
We believe that, for sustainable corporate value enhancement, it is important to build trusting relationships with a wide variety of stakeholders. As such, we engage with governments, industry groups, and a variety of other relevant external stakeholders in each country and region where we do business. In doing so, we aim to increase medium- to long-term profit, enhance sustainable corporate value, and help resolve issues that meet the demands of society and contribute to societal development.

Engagement with Governments

As a company that is expanding its business globally, our activities are influenced by the various polices and regulatory measures that the governments in each country and /region where we do business implement. To respond appropriately and quickly to policy and regulatory developments, we have established specialized organizations and representatives in each major country and /region where we operate. These organizations create opportunities for us to engage with relevant government personnel and communicate information about our business activities accurately and appropriately. In these ways, we are indirectly involved in policy-making processes. In addition to protecting our business interests, we seek to leverage our unique resources and expertise to help find solutions to societal problems while considering the various policies in each country or region.

Examples of Engagement with Governments
- Outreach to promote the understanding of our business operations
- Explanation of our business to government officials and policymakers in Japan, Europe, the U.S., Asia, and elsewhere*¹
- Participation in workforce training and development initiatives, such as the UPWARDS Program*²
- Participation in side events held during inter-governmental discussions

In the U.S., we disclose information in accordance with the Lobbying Disclosure Act.　See here for details.

UPWARDS: U.S.- Japan University Partnership for Workforce Advancement and Research & Development in Semiconductors

Engagement with Industry Groups and Other External Stakeholders

We participate in a variety of trade associations and semiconductor and electronics-related industry groups to collect information relevant to our operations, including future business opportunities, policy trends and risks, and important societal issues.
In addition, through discussions with other industry group member companies, we share perspectives and acknowledge the effects of common issues on industry.
For example, through our involvement in trade associations and industry groups,*¹ including SEMI and the Semiconductor Equipment Association of Japan,*² several of our executives and employees participate in committee activities, analyze industry studies, and contribute to the formulation of policy recommendations while collaborating with other domestic and international stakeholders. In addition to facilitating the healthy development of the semiconductor equipment manufacturing industry and related industries, we aim to contribute to solutions to global issues that cannot be handled by individual companies alone, such as climate change, human rights, supply chain resilience, workforce training, and research and development.

This includes organizations that make recommendations on political and societal issues, but does not mean that we support all of the policy positions of those organizations.

Tokyo Electron’s Representative Director, President & CEO Toshiki Kawai has served as Chairman of the Semiconductor Equipment Association of Japan since May 2023.