Sustainability Management

Materiality Issues

Materiality issues at Aisin

Aisin has pursued sustainability management based on the Materiality Issues identified in FY2020, but in January 2025, we reviewed the Materiality Issues to respond to changes in the business environment and societal demands.
We define Materiality Issues as the issues that Aisin should address in light of the long-term business environment to realize the AISIN Group Philosophy. We position these Materiality Issues at the core of our management strategy and pursue them in an integrated manner with our growth strategy.

We have identified three priority issues and five paths toward realization as Aisin's Materiality Issues. We will work to resolve these issues in the course of our business activities.

Materiality assessment process

At Aisin, everyone from employees to executives reaffirms the essence of the AISIN Group Philosophy, and we identify Materiality Issues in light of medium-to-long-term changes in the business environment and social issues. Specifically, we took an exhaustive look at the entire value chain and organized issues related to the automotive industry and sustainability according to the dual perspectives of risk and opportunity. On that basis, we held employee workshops to isolate issues related to our business and, following discussions by outside directors and other executives, further narrowed down the key issues from the perspectives of impact on management concerns, risk, and opportunity. Furthermore, we validate the appropriateness of the identified draft materiality issues by way of stakeholder engagement. These results are deliberated and resolved at the Sustainability Conference and reported to the Board of Directors, thereby subjecting them to oversight by the Board of Directors. At the Sustainability Conference, we further evaluate their appropriateness each year to reflect changes in the business environment and other factors and revise them as necessary.

Issue extraction	STEP1	Catalog general business and ESG-related issues Reference guidelines and disclosure standards: ESRS, ISSB, SASB, GRI, etc.
Prioritize	STEP2	Conduct employee workshops to extract issues related to Aisin's business activities
Prioritize	STEP3	Narrow down key management issues through workshops for executives (including outside directors)
Engage stakeholder (Investors, external experts, local residents, suppliers, employees, etc.)	STEP4	Validate the materiality issues draft
Identify material issues	STEP5	Discuss and resolve the draft materiality issues at the Sustainability Conference; report them to the Board of Directors and receive oversight.

Recognition of the external environment and opportunities/risks

Aisin analyzes and evaluates opportunities and risks arising from medium-to-long-term changes in the business environment and uses these to identify materiality issues and formulate medium-to-long-term strategies. By evaluating the impact Aisin has on society and vice versa and incorporating our findings into our initiatives, we promote activities aimed at resolving materiality issues.

External environment	Opportunities and risks
1. Changes in the automotive market and customer needs	Opportunities	Expansion of demand for mobility, centered on emerging markets Expansion into new business domains through SDVs (Software Defined Vehicles) Easing of the declining ICE trend amid slowing BEV adoption
1. Changes in the automotive market and customer needs	Risks	Demand fluctuations due to slowing automotive market growth and declining car ownership Changes in the competitive environment due to emerging manufacturers Changes in the profit structure accompanying the advance of BEV
2. Rising geopolitical and economic security risks	Opportunities	Strengthening resilience through more robust supply chains and regional diversification
2. Rising geopolitical and economic security risks	Risks	Supply chain instability due to rising geopolitical risk Procurement constraints and price fluctuations affecting critical resources Impact on earnings from changes in trade policy
3. Advances in digital technology and other innovation	Opportunities	Creating value by applying AI and digital technologies Substantial productivity gains through the use of digital and robotics technologies
3. Advances in digital technology and other innovation	Risks	Impact on competitiveness due to delays in responding to technological innovation Rising cybersecurity risk
4. Uncertainty in environmental regulations and energy policy	Opportunities	Creating new value through responses to carbon neutrality and resource recirculation Flexible product offerings tailored to each region's energy circumstances
	Risks	Increasingly uncertain business conditions amid changing environmental regulations and policy Impact on competitiveness from delays in environmental responses
5. Changes in demographics, lifestyles, and values	Opportunities	Creating value by leveraging workforce diversity Creating businesses that respond to increasingly sophisticated and diverse social issues
5. Changes in demographics, lifestyles, and values	Risks	Greater difficulty securing talent due to the declining working-age population in developed countries Stagnation in propagating skills due to changes in workforce structure and diversifying attitudes toward work

Risks related to sustainability are integrated into our companywide enterprise risk management (ERM). For details on specific risks and responses, please refer to the Risk Management section of this website. Furthermore, opportunities related to sustainability are deliberated at various key meetings and the Executive Management Committee. Significant opportunities are submitted to and reported to the Board of Directors.

Materiality issues: key goal and performance indicators

We set KGIs and KPIs for our materiality issues and pursue their achievement by translating them into specific action plans. The FY2031 target values and FY2026 actual results are as follows.

Priority issues	Paths toward realization	Goals (KGI)	Indicators (KPI)	FY2026 actual results	FY2031 target values	Scope
Harmony with nature and contribution to a sustainable future	Reducing environmental impact across the value chain	[Carbon neutrality] Carbon neutrality by FY2051 Carbon-neutral in-house manufacturing by FY2036	Scope 1 & 2 emissions (compared with FY2020)	1.74 million t-CO₂e (37.4% decrease)	46.2% decrease	Consolidated
			Scope 3 emissions (compared with FY2020)	22.35 million t-CO₂e (3.8% decrease)	27.5% decrease
		[Circular economy] Achieve zero-emission plant by FY2041 (landfill waste: 1% or less)	Optimizing resource utilization	-^*1	10% efficiency improvement^*2
			Waste minimization Waste emissions (compared with FY2020)	-^*1	11% decrease
	Providing solutions for a clean energy society	Widespread use of cleantech^*3 products and services in the mobility and energy domains	CO₂ emission reduction via products and services ^*4 (cumulative from FY2026)	2.06 million t-CO₂	20 million t-CO₂ ^*5
Freedom of movement for people around the world	Providing solutions for a clean energy society		Number of cleantech products commercialized	Three business model proposals	Three or more
	Creating life-enriching value through mobility	Realizing safe, reliable, comfortable, and convenient mobility	Number of drive units sold ^*6 (cumulative since FY1970)	218.07 million units	270 million
			Number of newly adopted products and services (cumulative from FY2026)	71	500
			Build-out of aftermarket product and service lineup Number of Product and Service Categories	78	100 or more
			Total users of mobility-related services (MAU ^*7)	76,445	183,400
			Number of key new business domains	Internal agreement on business plans: 2 domains	Three domains
	Instilling a corporate culture that embraces challenge	Ongoing accumulation of new fundamental technologies	Number of inventions^*8 (One-year)	1,374	1,500
		Environment conducive to a proactive work style	Positive response rate for employee engagement ^*9	61%^*10	-^*11
Empowering diverse talents for personal fulfillment		Environment conducive to a proactive work style	Presenteeism performance Level ^*12	79.7%	85%	Aisin Corporation (parent)
	Respecting diversity and growing together	A work environment where diverse professionals can thrive	Positive response rate for an environment that empowers employees^*13	59%^*10	-^*11	Consolidated
	Respecting diversity and growing together	A work environment where diverse professionals can thrive	Ratio of female managers^*14	3.0%	4.5%	Domestic group companies
Laying a solid management foundation	Safety	A culture that prioritizes safety	Number of serious accidents ^*15	0	0	Consolidated
	Compliance	Zero serious violations of laws and compliance policies	Positive response rate for ethics survey	72%	80%^*16
	Human rights	Zero serious violations of human rights	Human rights risk assessment survey implementation rate^*17	100%	100%
	Human rights	Zero serious violations of human rights	Human rights training implementation rate^*18	93%	100%
	Governance	Achieved enhanced management transparency and internal controls by transitioning the Board of Directors to a Monitoring Board structure, thereby separating oversight and execution	Ratio of female directors	12.5%	30% or more	Aisin Corporation (parent)

Performance evaluation to begin in FY2027

Resource efficiency: sum of the waste discharge reduction rate and the rate of increase in waste recycled for use within the group

Cleantech: technological solutions that reduce environmental impact (e.g., renewable energy, efficiency improvements, resource recycling)

CO₂ emission reduction contribution: reduction in CO₂ emissions during product use achieved through improvements in product performance

Assumption: Based on projections as of July 2025

Drive unit sales: sales volume of AT, CVT, HEV, PHEV, and eAxle units

MAU: Monthly Active Users, number of people who used the service at least once per month

Number of inventions: Total number of patent applications along with confidential and publicly disclosed instances of intellectual property

Positive response rate for employee engagement: Percentage of employee engagement survey respondents who answered “I want to contribute to the company, feel loyal, and am motivated to put in proactive effort”

Scope of current fiscal year results: 68 domestic and 36 overseas companies

After the global rollout of the employee engagement survey is completed, a worldwide target is slated to be set in FY2028 based on actual results as well as regional, cultural, and other characteristics.

Presenteeism performance level: Percentage of employees who felt they could perform at 80% or more of their capacity over the past month, with 100% representing performance achievable while healthy.

Positive response rate for an environment that empowers employees: Percentage of employees who responded in the employee engagement survey that “There are opportunities to apply my skills and abilities, and a comfortable work environment is provided”

Manager: key position (section chief) and above

Serious accidents: Defined as those involving fatalities

Following the analysis accompanying the review of the ethics survey methodology (FY2026), target values were reset based on national and regional characteristics and external benchmarks.

Human rights risk assessment survey implementation rate: (Number of companies conducting human rights risk surveys / Number of consolidated companies) × 100

Human rights training implementation rate: (Number of employees who received training on compliance and human rights / Number of consolidated employees) × 100