1. Blending Manufacturing Operations With The Surrounding Environment “It’s Not Easy Being Green—Maintaining Environmentally Friendly Supply Chains in the Electronics Industry.” Kevin Butt, General Manager Chief Environmental Officer Toyota Motor Engineering & Manufacturing North America Environmental & Safety Engineering Production Engineering Division April 19, 2006

2. Outline  Organization Structure For Sustainability  Sustainability Concepts for Manufacturing  Application to Automobile Manufacturing  Conclusions

3. Environmental Front Wheel Drive Supplier Profit Customer Environmental Corporate Citizenship Safety & Health One Toyota Self Reliance Business Process Kaizen Supplier Enhancement Cost Reduction Customer Satisfaction All Team Members People Development

4. 2010 NA Environmental Vision environmental leadership/sustainability To become the most admired/respected automobile manufacturer by demonstrating continuous environmental performance improvements resulting in environmental leadership/sustainability

5. How do we get there? Environmental Management Systems ISO 14001 Certification Enhanced Environmental Management System Committed Team Members and Management Professional Environmental Staff

6. Enhanced EMS & “Internal Auditing” Level of EMS ISO14001 Requirement Before ISO certification After ISO certification Achieve Zero violation/complaint = TOYOTA Requirement EMS did not prevent violations/complaints or did it assure performance improvements High (Relatively) Need to achieve Hoshin Targets = Enhance current EMS Enhanced EMS Low

7. ENV Manager K. Aldrich PE-FAC Manager B. Bremer Energy Engineer J. Russell Environmental Working Group GM K. Butt SA N. Ueda ENV Engineer M. Benz ENV Coord Komatsu PE-FAC Coord Maeda Ê*Å*Ë*¿*È*Ã* *Engineers from each section will be asked to join on a case-by-case basis to provide expertise on development of targets, standards, and vision. Core Members Working Group Members Chairman Mr. Tanigawa VP-PE Secretariat K. Butt Environmental Planning Members General Managers from all PE Sections Production Engineering Environmental Steering Committee (PE ESC) Role and Responsibilities of the PE ESC are to provide resources to assure that NA PE achieves the action Plan targets by assuring the development of short /long term plans, risk standards, and equipment standards so that cost effective implementation can take place in a timely manner.

8. Sustainability Concepts Renewable Resources Recyclable Resources Assimilative Capacity

9. Renewable Resources To be considered Renewable, resources must regenerate at or greater than the rate that they are consumed: Oil => not renewable only because rate of regeneration is less than rate of consumption Biomass => may be renewable depending upon how it is used

10. Recyclable Resources Basic extraction of non-renewable resources is minimized through reprocessing and reuse many times Aluminum Iron/steel Many Plastics Other Chemicals

11. Assimilative Capacity Return to the natural environment is done without disruption by controlling the time, location and quantity of the release Requires careful study and control to establish proper balance

12. Automobile Manufacturing Applications Sustainability Initiatives for Automobile Products Sustainability Initiatives for Automobile Manufacturing Byproducts Innovative Business Initiatives to Improve Sustainability

13. Sustainability Initiatives for Automobile Products World Business Council for Sustainable Development (WBCSD) Sustainable Mobility Project Fuel Economy Improvement Vehicle Recycling After Sales

14. Sustainable Mobility Project The Sustainable Mobility Project, a sector project of WBCSD, includes participation from 12 auto/energy companies globally The project is tasked with developing a vision for sustainable mobility 30 years from now and identifying the pathways to get there

15. Sustainable Mobility Project Workstreams Include: Sustainability indicators Vehicle design and technology Fuels Infrastructure Demand for personal mobility Demand for goods and services mobility Policy measures Urban and Long Distance mobility etc.

16. Sustainable Mobility Project Factors for Sustainable Mobility: Access to mobility User costs Travel time Reliability and comfort Safety Security Greenhouse gas emissions

17. Sustainable Mobility Project Factors for Sustainable Mobility (cont.): Impact on the environment and public well- being Conventional emissions Impact on eco-system Transport-related noise Resource Use Transport-related energy use and security Transport-related land & material use

18. Sustainable Mobility Project Factors for Sustainable Mobility (cont.): Impact on public revenues and expenditures Equity Implications Prospective rate of return to private business

19. Fuel Economy Improvement Vehicles are the largest consumer of petroleum fuels in the world Increasing Engine Efficiency Variable Valve Timing High Efficiency Diesel Improving Power Transmission Improved transmission technologies Efficient subsystem design Improved Aerodynamics

20. Vehicle Recycling After Sales Target of achieving 95% Vehicle Recovery Rate: Develop dismantling technology Develop recycling/recovery technology Use recycled material Material selection with consideration for recycling Use renewable resources Expanded reuse of parts

21. Vehicle Recycling After Sales Target of achieving 95% Vehicle Recovery Rate (cont.): Reduce substances of environmental concern >90% reduction in Lead usage/vehicle FY2011 target to eliminate lead, mercury, cadmium and hexavalent chromium globally Cadmium – Eliminated the cadmium paste used in some electronic parts Toyota developed mercury-free discharge lamps and began using them in the Porte Develop recyclable structures for vehicles

23. Sustainability Initiatives for Manufacturing Byproducts Global Warming Prevention Reducing Substances of Environmental Concern Reducing Waste Conserving Resources

24. Sustainability Initiatives for Manufacturing Byproducts Note: Data for 10 Japan Production Plants and Logistics Operations in FY2004

25. Global Warming Prevention Heat Recovery Non-production energy use reduction Improved efficiency of utility systems

26. Reducing Substances of Environmental Concern R&D for new paints and solvents High efficiency process technologies Improved production line operating techniques

27. Reducing Waste Material substitution Improve process technologies Reuse material in the same process Recycle to beneficial reuse Recover energy

28. Earth Care Center

29. Conserving Resources Reduce primary raw materials Reduce Water Use: recycling systems low flow/no flow processes recover condensate

30. Biotechnology and Afforestation Business Began in 1998 with only seven members Areas of activity:

32. Conclusions Sustainablility concerns exist at all stages of manufacturing Environmental Management Design Production Sales/after sales Incremental improvement is making progress in many areas Innovation and risk will lead to new technologies and dramatic advances toward sustainable future