TOYOTA

2016 SUSTAINABILITY REPORT

Toyota is committed to contributing to society and the principles of sustainability. We understand our future success is dependent on a sustainable business model.

President's message

Toyota Australia's President, Dave Buttner says the company has made significant progress on a number of key items throughout 2015/16.

"As Toyota prepares to cease building cars in Australia by the end of 2017, a lot of work is being done to manage our exit, continue business as usual and develop our future business model.

Our aim is to ensure our transition to a national sales and distribution company is as smooth as possible."

Dave Buttner
President, Toyota Australia

President's message

"We understand that when we stop manufacturing it will mark the end of a once thriving local industry and, inevitably, the end of many jobs. That is why we are committed to providing our employees with as much certainty about their future as possible.

A key part of this commitment took place at the end of 2015 when we advised our employees whether they have a role in the 2018 structure.

For those who will not continue in the company, we are giving them the opportunity to receive individual career advice and company sponsored training. We want to make sure that when they leave Toyota Australia, they are confident within themselves and have a clear path ahead of them.

For those continuing at the company, they have two years to train and secure the knowledge transfer to ensure a seamless transition.

At the same time as we manage our exit, we must carefully balance our current and future business needs.

 

For me personally, I have been incredibly proud of our employees during the transition period. Regardless of whether they will continue with Toyota in the future or not, everyone has remained absolutely committed and dedicated to their jobs.

There is no doubt that this helped us achieve strong results.

In 2015 calendar year, Toyota was the market leader for the 13th consecutive year with 206,236 new vehicle sales and the Corolla was the country's best-selling car for the third year in a row. In further good news, Lexus achieved an all-time sales record on the back of great product, sales and marketing strategies.

This was a great result for us and proves that we are continuing to head in the right direction. However, the upcoming changes to our business have given us a once in a lifetime opportunity to transform our company even further.

To guide us through this journey we have established a clear vision for the future and that is to be the automotive company of tomorrow, today.

We must focus on being a customer - or as we like to call it, a 'guest' - focused organisation and ensure that we are delivering products and services that exceed our guests' expectations.

To ensure we continue to offer world-class vehicles, we have already added three new functions to our business in 2016 following the closure of Toyota Technical Center Australia - vehicle evaluation, multimedia and customer quality engineering.

This marks the beginning of our companywide transformation and I have no doubt that as we continue to enhance our business offerings, Toyota Australia will remain a formidable force in the future."

Dave Buttner
President, Toyota Australia

KEY FACTS

* Actual headcount - the definite number of employees, excluding contractors. As of 31/3/2014 there were 80 (35 female/ 45 male) contractors working within TMCA.

** Full time equivalent - the total of the number of employees on full-time schedules plus the number of employees on part-time schedules converted to a full-time basis, excluding contractors. This number may vary slightly due to rounding up or down of numbers.

TOYOTA AUSTRALIA AND SUSTAINABILITY

Toyota Australia, a wholly owned subsidiary of Japan's Toyota Motor Corporation, is a leading manufacturer, distributer and exporter of vehicles, operating under the Toyota and Lexus brands. We directly employ nearly 4,000 people in Australia.

Our vehicles are either imported from overseas Toyota plants or manufactured in Australia.

We also export vehicles manufactured in Australia to the Middle East, New Zealand and the South Pacific Islands.

Our guests are serviced by our extensive dealer network employing over 13,000 people.

 

Sustainability at Toyota

Toyota aims to contribute to the sustainable development of society through the manufacture and provision of innovative and quality products and services.

Toyota acknowledges that, while motor vehicles provide a range of mobility solutions, they also have social and environmental impacts. The company aims to seek harmony and balance between people, society and the global environment, while contributing to sustainable development through monozukuri (manufacturing).

Toyota's global commitment to sustainability is best articulated through seven guiding principles that reflect a commitment to fairness in all corporate activities, the provision of clean, safe and innovative products, and respect for the environment and the culture of the communities in which we operate.

ToyotaAustraliaSustainability

Stakeholders and Reporting

Our key stakeholders are those groups that are impacted by or have the potential to impact on Toyota Australia. They are:

Our shareholder - Toyota Motor Corporation
Employees
Guests
Dealers
Suppliers
Community groups
Government

Sustainability reporting allows us to demonstrate to them that we understand and are managing our key economic, environmental and social issues. Our approach to reporting is guided by the Global Reporting Initiative (GRI) G4, which emphasises the importance of identifying and reporting on material sustainability issues or opportunities.

OUR KEY SUSTAINABILITY ISSUES

A materiality assessment identified that the following issues were of most importance to our stakeholders and our business:

Our key sustainability issues

Economic performance and business transition

Our future business success is fundamentally connected to our ability to successfully transition to a sales and distribution business. During 2015/16, we continued to implement our central business transition program, as well as two other key programs aimed at strengthening our future business model.

Our focus for 2016/17 is to continue to deliver a smooth and respectful transition, and to concentrate on our guest-centric approach.

 

 

financial performance

We posted an after-tax profit of $236 million for the 2015/16 financial year. This represented an increase of 22 percent from the previous financial year, where we recorded an after-tax profit of $194 million.

Strong vehicle sales across all major segments contributed to these results, with 216,270. Toyota and Lexus vehicles sold locally and 64,605 vehicles exported during 2015/16.

The Altona plant manufactures Camry, Hybrid Camry and Aurion vehicles. During 2015/16, we produced 95,204 vehicles, compared with 88,470 the previous year. We also produced 101,428 engines during the period.

The Federal Chamber of Automotive Industries (FCAI) collects information on vehicle sales. Its annual report on the Australian market revealed that Toyota was the country's top-selling automotive brand in the calendar year 2015, with 17.8 percent of the market (206,236 sales). Toyota has maintained this position for thirteen years in a row.

EconomicPerformance

employees

We employ approximately 4,000 people directly, and thousands more indirectly through our network of Toyota and Lexus dealers.

As we undergo our business transition, our employees face many challenges including relocation, training for new roles and moving from employment with Toyota. Our aim is to make this a respectful transition and create an environment where employees feel secure, engaged and prepared for their next step.

We will continue to drive a safety mindset by maintaining our goal of zero harm for employees and stakeholders.

engaging with employees

To support employees through our business transition, we established a comprehensive career development program, DRIVE (dedicated, ready, individualised, vocational and energies).

DRIVE centres provide employees with information, resources, access to training and further education. They also provide job-seeking and preparation support for employment post-2017, as well as information for employees considering starting a small business or reflecting on retirement.

By March 2016, more than 1,300 employees had registered with the DRIVE program.

Focus on training

Guest Experience

We recognise that to grow our market share we need to revitalise our approach to customer engagement.

In addition to offering an extensive range of vehicles, in conjunction with our dealers we are developing and implementing a guest-centric approach to differentiate ourselves in a crowded market.

Changing the guest experience

Toyota Australia has made a new commitment. We will now refer to our customers as guests. The aim is to generate a cultural shift among our employees and our dealers to put guests at the centre of our business.

This commitment, to put guests at the forefront of everything we do, is the fundamental platform of our franchise of the future strategy. It means that we have moved away from a purely sales target model to one where guest satisfaction is the core measure.

Changing the guest experience

Dealer Support

Our dealers have a key role in our successful transition to a sales and marketing business.

The Toyota Institute Australia (TIA) is responsible for dealer training and capability development for the Toyota and Lexus dealer network. During 2015, the TIA team coordinated and rolled out 793 face-to-face training sessions throughout Australia as well as significant on line training, representing 328,576 hours of total training.

TIA offers courses on aftersales, sales, professional development and management qualifications.

In May 2015, dealers from across the country gathered at Toyota Australia's 'Power Up' national dealer meeting at the Melbourne Convention Centre and attended the new-look Camry roadshow.

Supporting the dealer network

Each year we hold an automotive skills development program to reward and recognise top-performing Toyota dealer employees for their expertise across technical, sales and customer service competencies.

Participants in the national skills development program begin by completing online quizzes before progressing to the regional finals and ultimately the national final. In 2015 there were 30 national finalists from a significant list of entrants.

The program aims to challenge all involved and help develop new and innovative training for the next generation.

Prizes are presented to the winning diagnosis technician, technician, service advisor, guest experience manager, parts sales person and sales walk-around.

During 2015/16, 19 employees from dealers across Australia and New Zealand also completed the future dealer leaders program and received an Advanced Diploma in Management. This program is our peak training program for senior managers within dealerships.

Employee community grants scheme

Community

We appreciate the important role we play in society and work to realise the expectations of our parent company to be active participants and supporters of the community.

Toyota Australia has a long tradition of supporting the community at both local and national levels. Toyota globally views the community as a key stakeholder, and community investment and support play a crucial role in our social license to operate.

Our community partnerships and investments are managed through the framework of the Toyota Community Foundation. In 2015/16, our contributions totalled two million dollars.

Legacy project at Kororoit Creek

After significant consideration and reviewing a range of opportunities, in 2015 we announced our decision to contribute $1.8 million towards the construction of a pedestrian and bike path along Kororoit Creek, Altona North..

Our funding will support the construction of two kilometres of a seven-kilometre path which will connect the Coastal Trail at Cherry Lake, Altona, with the Federation Trail in Brooklyn.

The Kororoit Creek shared trail will be a legacy for the community from Toyota, marking the end of manufacturing at the Altona North site, which backs onto Kororoit Creek.

The creek has been revitalised over the past 10 years by the Hobsons Bay City Council and the Friends of Kororoit Creek, which Toyota Australia has supported.

Legacy project at Kororoit Creek

Vehicles

We are committed to providing the Australian market with safe, quality vehicles.

Our safety technology program is working towards a society with no traffic accidents, while our environmental technology program designs eco-friendly driving vehicles using cutting-edge hybrid, electric and fuel cell technology.

Toyota strives to provide the safest vehicles possible for the Australian automotive market. Our focus is to prevent or mitigate the likelihood of accidents, while reducing potential impacts if an accident does occur.

Last Car = Best Car

In In April 2015, we unveiled the last model to be built at our Altona manufacturing plant - the new-look Camry.

Along with the facelift Aurion, the new-look Camry and Camry Hybrid will be in production until manufacturing stops by the end of 2017.

Having built more than 3.2 million Toyota vehicles locally since 1963, this marks the end of an era in the Australian automotive industry. A special ceremony was held to commemorate the event, attended by employees and key stakeholders.

As part of Toyota's commitment to continuous improvement, we aim to achieve the best safety, quality and efficiency results when compared to other Camry-manufacturing plants around the world. Our aim is to make the last car we produce at Altona our best car.

This upgrade reaffirms Toyota's commitment to Camry, which is now in its 22nd straight year as Australia's best-selling mid-size car.

last car best car

Environment

Toyota globally has a vision with environmental and societal responsibility at its core. Even after we cease manufacturing by the end of 2017, environmental duty and accountability will remain cornerstones of our business in Australia.

Toyota's philosophy and policies on the environment are based on our guiding principles, with company-wide environmental policies and initiatives formulated as the Toyota earth charter.

The Toyota environmental challenge, released in 2015, aims to move Toyota to a net positive impact rather than reducing negative impact to zero and is supported by the sixth Toyota environmental action plan.

National tree day

An action from the sixth Toyota environmental action plan is to promote nature conservation activities by connecting regional conservation activities with the region and community.

This comes to life through our annual support of National Tree Day, an event organised by Planet Ark in partnership with Toyota Australia and our dealer network.

In July 2015, Toyota employees teamed up with the Friends of Lower Kororoit Creek and Hobson Bay City Council to plant more than 2,000 indigenous trees and shrubs at Harris Reserve, Altona North. During the activity, we also announced our commitment to provide $1.8 million towards the construction of a shared trail along the creek for pedestrians and cyclists.

In Sydney, Planet Ark and Toyota Australia hosted an event at Sydney Park for hundreds of people who planted more than 6,000 native seedlings, some of which were endangered species, in an effort to re-establish native flora and fauna.

Environment

Corporate governance and compliance

The first of the Toyota guiding principles states that Toyota will "honour the language and spirit of the law of every nation and undertake open and fair corporate activities to be a good citizen of the world". This sets the tone for our corporate governance and compliance framework, which underpins Toyota Australia.

Toyota Australia has well-established governance structures and systems in place, including risk management frameworks, fraud and corruption controls, and a comprehensive code of ethics and code of conduct.

Management restructure

In May 2015, Toyota Australia Chairman Max Yasuda reaffirmed his commitment to the company and announced he would stay on in his role until at least the end of 2017. He also reaffirmed the board's commitment to facilitating as smooth a transition as possible as we cease manufacturing and become a national sales and distribution company.

Outside the reporting period, in May 2016, Toyota Australia announced a management restructure with the appointment of Matt Callachor as Vice President, effective 1 June 2016. In his new role, he is responsible for overseeing Toyota Australia's non-manufacturing operating arms, which include sales and marketing, product planning and development, corporate services, and finance. He will report directly to President Dave Buttner.

This restructure will allow Chairman Max Yasuda and President Dave Buttner to focus on strategic matters and long-term planning, while Mr Callachor will focus on day-to-day operations of his areas of responsibility.

Corporate Governance

GRI Index

Our approach to managing and reporting on sustainability performance reflects the principles of inclusivity, materiality and responsiveness as defined in the AA1000 Assurance Standard (2008).

Our approach is also guided by the Global Reporting Initiative (GRI) G4 reporting guidelines which were released in 2013. We report in accordance with GRI G4 core reporting requirements.

A crucial feature of the G4 guidelines is an emphasis on identifying and reporting on those issues or concerns that are material to the business and our stakeholders.

*Note: The 2011 and 2012 Sustainability Reports were published in full online, therefore copies of these reports are not currently available for download.