Foster Group Sustainability

Foster Group Sustainability Charter

The Company issued the first version of its CSR Charter in 2006, and updated it to pursue global versatility and universality in 2010, by incorporating the EICC^* Code of Conduct, the CSR standards established by U.S. Electronic Industry Citizenship Coalition, as our basic policy.
Further, in 2022, we established the Sustainability Charter as a revision of the CSR Charter to clearly state that we will pursue sustainability of both the Group and society, in addition to continuing to work on corporate social responsibility (CSR). The Charter is aimed at making it known that all officers and employees regard corporate sustainability (mid- to long-term sustainability including ESG elements) to be an important issue and ensuring that they will be conscious of and achieve sustainability in their daily activities.

*Electronic Industry Citizenship Coalition (renamed Responsible Business Alliance in 2017)

Sustainability Promotion Structure

At its headquarters, the Foster Group has established the Sustainability Committee chaired by the president. The core members of the committee are representatives of related sections. The Sustainability Committee, including the sustainability representatives and staff from the headquarters and each site, meets every month with the sustainability officer who is the executive chairman of the committee in attendance. They monitor the activities of the Group as a whole for the promotion of sustainability and engage in collaborative activities. Important matters about which the Sustainability Committee is consulted are deliberated and approved during Board of Directors meetings which are attended by directors and independent directors. In addition, we have established the Environment Committee under the Sustainability Committee. The Environment Committee sets goals for each topic and action plans for achieving the goals and discusses and takes specific actions, including measures to address climate change issues.

Sustainability Promotion System

Materiality (Priority Issues)

We revised our ESG-related material issues in 2024 to respond to changes in the business environment and the growing demand for the transparent disclosure of information. Specifically, we analyzed and evaluated the financial, social and environmental aspects of our material issues.
We adopted the double materiality concept to identify priority issues from two perspectives: the impact of the company on society and the environment, and the impact of social and environmental issues on financial performance. We clarified our priority issues based on the reasons identified during the analyses. In addition, to ensure alignment with our management strategies, we incorporated the direction of our management policies and the midterm business plan into our existing ESG-related material issues, adding the Business (B) aspect, and identified issues in the B+ESG fields. Accordingly, we will implement initiatives with both management and sustainability at our core to enhance our corporate value and continue to strengthen and promote our long-term growth strategies.

Identification of Material Issues

Process of Identifying Material Issues

	(1)Value chain survey Identifying issues by clarifying the relationships between business, society, and the environment throughout the value chain		(4)Management and business analyses Identifying issues connected to our future plans by analyzing internal documents including management policies and the mid-term business plan
	(2)Stakeholder survey Identifying issues by analyzing the issues, concerns, and expectations by major stakeholders		(5)Assessment of financial, social and environmental impact (evaluation from a double materiality perspective) We organized and consolidated the identified issues and then had team members from different departments evaluate the degree of “the company’s impact on society and the environment (Impact)” and “the impact of social and environmental issues on financial performance (Risks and Opportunities)” from the perspectives of scale, probability of occurrence, and other factors.
	(3)Understanding megatrends Identifying issues by analyzing megatrends that will cause great change in the future business environment (in the period up to 2040)		(6)Finalization of material issues The Board of Directors deliberates the matter and approves the list of material issues after it is reviewed by the Sustainability Committee, which consists of staff members and managers in each of the B+ESG fields.

Our Material Issues

Background Behind the Selection of Materiality (Priority Issues)

		Materiality (Priority Issues)	Reason for selection
B (Business)		Providing comfortable spaces, amusement, and joy through sound and vibrations	Set as our Vision, this is one of our most fundamental themes. Achievements from initiatives in this field are important for creating future business opportunities, including Foster Electric’s potential expansion into other businesses. They also directly impact profit.
		Building a safe and secure society	With the popularization of next-generation automobiles such as EVs and HVs, demand for speakers for Acoustic Vehicle Alerting System (AVAS) is growing rapidly. It is expected they will contribute to society in terms of traffic safety. At the same time, this is an important field for the expansion of our businesses, including our OEM business, and for increasing revenue from one of our core product lines.
		Providing new value through partnerships with customers	Collaborating with customers to develop high value-added products in response to new technologies, including robotics and technologies that are a part of the shift to hybrid vehicles and EVs, will drive the growth of business. By creating value through these partnerships, we will achieve the sustainable improvement of our corporate value.
		Economic contribution to society by securing stable revenue	We understand that securing stable revenue makes it possible to appropriately return profits to our shareholders, and it also contributes to the economies of the local communities in which we operate around the world.
E (Environment)		Addressing climate change	With the intensification of natural disasters caused by climate change, there are concerns regarding risks of society and the supply chain being disrupted. This has made it even more important than ever to reduce greenhouse gas emissions from the entire value chain and take additional measures to address climate change. In addition, we understand that fulfilling the demand for environmentally friendly products, which is growing mainly in Europe, is an important initiative in the era of the circular economy.
		Conserving the global ecosystem by contributing to building a resource-recycling society	The use of chemical substances and water resources as well as the generation of waste at factories increases their environmental impact, and may affect local ecosystems, creating legal and social risks. Further, while demand for the use of recycled materials is rising particularly in Europe, actions to support a circular economy are essential for the future sustainability of the business.
S (Social)		Promoting Foster Electric’s philosophy and developing human resources	Promoting Foster Electric’s philosophy and developing human resources forms the foundation of our creation of value and competitiveness, significantly impacting the company’s growth and sustainable management over the mid- to long-term. We also understand that handing down the skills of our globally competitive talent and the development of these human resources are important for our future growth.
		Improving employee well-being	Improving employee well-being (good physical and mental health as well as happiness) has a positive impact on the company in various ways, such as by improving productivity, decreasing the turnover rate, increasing employee retention, and increasing innovation. We aim to improve employee well-being by increasing employee engagement through efforts such as workstyle reform, DE&I, safety and health and other initiatives to motivate employees to take the initiative and by providing them with opportunities for personal development.
		Promoting sustainability in the value chain	In recent years, the management of risks throughout the value chain, including risks related to human rights and environmental considerations, has grown more important than ever. The importance of risk management is continuing to increase for manufacturers who have broad-ranging supply chains, like Foster. They must act responsibly in every process, from upstream to downstream. Requests and survey inquiries from our business partners have been increasing and growing more sophisticated. This has made it essential for us to develop an internal system for responding to them appropriately and promptly as a company.
		Ensuring the safety, quality, and stable supply of products	Ensuring the safety and quality of our automotive products is a top priority, because these products are directly linked to human lives. In addition, because our supply of products directly affects customers’ production lines, it is essential that we build a system that enables us to respond promptly to unforeseen circumstances, such as rises in the prices of materials or social disruptions in the countries where the materials are procured.
G (Governance)		Strengthening governance to maintain and increase stakeholders’ trust in Foster Electric	An incident involving inappropriate corporate governance may not only affect our evaluation but also impact our shareholders, customers, suppliers and other stakeholders in wide-ranging way. This makes it vital for us to fulfill our social responsibilities as a company by complying with laws and regulations and ensuring that we appropriately disclose information.

Our Approach to Material Issues (Priority Issues) (Achievements until FY2024)

	Material issues	Subordinate issues	Target (KPI)		Achievements until FY2024	Corresponding SDGs
B (Business)	Providing comfortable spaces, amusement, and joy through sound and vibrations	-	-		Because the new mid-term business plan was launched in April 2025, achievements under the plan have not yet been reported at this stage.
	Building a safe and secure society	-	-
	Providing new value through partnerships with customers	-	-
	Economic contribution to society by securing stable revenue	-	-
E (Environment)	Addressing climate change	Improving resilience to climate change	Conduct BCP drills.	Joint BCP drills between HQ and sites during disasters, conducted annually with issue resolution	・Conducted joint BCP drill between HQ, Shizuoka, Osaka, and Iga. ・Completed initial response process and press release template. ・Updated disaster reporting format for sites.
		Reducing greenhouse gas emissions	Absolute Scope 1, 2 emissions	・FY2025 Target: Reduce by 30% from a FY2018 base-year ・FY2030 Target: Reduce by 50% from a FY2018 base-year	38% reduction from a FY2018 base-year
			Absolute Scope 3 emissions	・FY2025 Target: Reduce by 3% from a FY2018 base-year ・FY2030 Target: Reduce by 15% from a FY2018 base-year	10% reduction from a FY2018 base-year
		Reducing the use of energy and promoting the use of renewable energy	Increase the share of the renewable energy	-	Renewable energy ratio: 10%
	Conserving the global ecosystem by contributing to building a resource-recycling society	Realizing a circular economy	Complete proprietary products incorporating lightweight technology below 105 g.	-	Achieved the 2025 target ahead of schedule due to the completion of a 99.0 g proprietary product.
			Increase the ratio of environmentally friendly speakers*1 ・Percentage of Environmentally Friendly Automotive Audio Speakers (in terms of sales)	FY2024: 20% FY2025: 22%	19.9%
		Complying with environmental regulations of each country and reducing environmental impact	Percentage of new mobile audio products that are toluene-free	100%	100%(Achieved for all of the 4 newly launched models)
		Protecting and restoring natural ecosystems	Evaluate the dependency and impact of business activities on biodiversity	-	Considered actions based on case examples of other companies.
S (Social)	Promoting Foster Electric’s philosophy and developing human resources	-	Implementation rate of corporate philosophy training for new employees (headquarters)	100%	89%
			Annual training hours per employee (headquarters)	35.0 hours or longer	33.4 hours
			Average score for effectiveness and satisfaction of company-wide training (headquarters)	85 or higher	85.5
			Training cost per employee (headquarters)	70,000 yen	62,488 yen
	Improving employee well-being	Improving employee engagement	Percentage of employees who gave positive answers in the engagement survey (headquarters)	76.0% or higher	78.5%
		Promoting occupational health and safety	Number of high-consequence work-related injuries*2	0	0
		Developing fulfilling, comfortable workplaces	Total working hours per employee (headquarters)	Monthly average of 158 hours or less	159.7 hours
			Rate of participation in specific health guidance/post-health checkup interviews (headquarters)	80%	84.4%
			Rate of periodic health examinations taken (headquarters)	Maintain 100%	100%
			Ratio of care-related resignations (headquarters)	Maintain 0%	0%
		Promoting diversity, equity, and inclusion (DE&I)	Percentage of female managers (headquarters)	FY2025: 30%	13.7% (as of March 31, 2025)
					13.9% (as of April 1, 2025)
			Percentage of overseas human resources (headquarters)	FY2025: 30%	11.9%
			Employment rate of persons with disabilities (headquarters)	More than 2.5% of the legal employment rate	3.1%
			Rate of male employees taking paternity leave (headquarters)	100%	100%
			The male parental leave uptake rate (headquarters)	70%	125%
		Improving understanding of and preventing the violation of human rights	DE&I training, human rights training, and harassment training participation rates (headquarters)	100%	Training conducted ・Harassment prevention seminar: 100% ・Diversity management training for managers: 93.8% ・Roundtable discussion on women’s careers
	Promoting sustainability in the value chain	-	Percent of key suppliers *3 who conduct CSR self-assessments	100%	100%
			Percent of key suppliers who conform to our CSR standards*4	100%	100%
			Response rate from suppliers in the responsible minerals survey Existing suppliers New suppliers	99% or higher 100%	99% 100%
	Ensuring the safety, quality, and stable supply of products	Product safety	Major complaints*5 (prevented through proactive measures from order to mass production)	0	0
		Securing product and service quality	Customer satisfaction “A rank” rate*6	95% or higher	97%
		Stable product supply	Achieve target inventory turnover rates for speakers Headquarters Sites in the U.S. Sites in Europe	4 turns/year 4.8 turns/year 3.6 turns/year	3.4 turns/year 6.3 turns/year 3.8 turns/year
G (Governance)	Strengthening governance to maintain and increase stakeholders’ trust in Foster Electric	Reinforcement of compliance	Response rate of the compliance test and the compliance survey	Maintain 100%	100%
			Percentage of employees informed of the internal whistleblowing system	100%	100%
			Conduct compliance training and achieve the target employee satisfaction rate	Ensuring an average score of 4 or higher on a 5-point scale	Average score of 4 or higher
		Enhancing risk management systems	Improve the system and operation of risk and crisis management based on risk assessment.	-	・Identified risks at each overseas sites based on a risk control matrix and improved the completeness of the identified risks and our ability to handle them promptly. ・Improved risk and crisis management systems and operations by sharing top risks and risk topics and thereby examining predictable risks and identifying responsible departments and the status of implemented countermeasures.
			Completion rate of measures for key items*7within the fiscal year, which are identified through the monitoring of the items	100%	Completed 100% of the measures.
		Strengthening IT governance	Major incidents related to information security	0	0
		Managing and using intellectual property	Advancement of the intellectual property management cycle	-	Strengthened the process for discovering important inventions that are hidden. ・Held a seminar on the Intellectual Property Management Skills Test. ・Provided on-the-job training on the discovery of inventions. ・Regularly held brainstorming sessions with engineering departments.

• *1 Environmentally friendly speaker: A speaker with any environmentally friendly element, such as reduced applications of VOC or solder, and application of dry process
• *2 High-consequence work-related injuries: Injuries resulting in death or conditions where workers cannot fully recover to their pre-injury health within six months or are not expected to recover.
• *3 Key suppliers: Approx. 50 corporate suppliers that account for 80% of our total procurement value
• *4 Rate of conformity to our CSR standards: Suppliers who have achieved CSR self-assessment scores of 66% or higher are deemed conformant to our CSR standards (those with 65% or lower are deemed non-conforming).
• *5 Failures which give serious consequences to human life, properties, the environment, etc.
• *6 “A rank” rate: Status where customer satisfaction ratings show no issues or improvement requests, fully meeting requirements.
• *7 1. Expansion and development of a global logistics system 2. Continuation of the examination and global expansion of the BCP structure 3. Management of suppliers’ business continuity 4. Enhancement of the global information security management system 5. Other risks predicted based on events which occur during the fiscal year

Governance related to human rights

In 2003, we established the Foster Group Corporate Action Guidelines and the Foster Group Code of Conduct for Staff. They define our respect for human rights in compliance with all laws and regulations, international rules, and their spirit and intent, regarding aspects such as forced labor, child labor, discrimination, harassment, the protection of personal information, safety and health and responsible minerals sourcing. Further, we ensure respect for human rights throughout the entire supply chain with cooperation from suppliers under the Foster Group Supplier Sustainability Code of Conduct.
Further, in 2024, we established the Foster Group Human Rights Policy as our top-level human right policy, aiming to strengthen our human rights initiatives further. This policy applies to all employees and suppliers and it clarifies our responsibilities regarding human rights and our commitment to human rights. At the same time, it serves as guidelines as we promote sustainable business practices through internal and external control and improving human right risks.
In 2025, we revised our Harassment Prevention Regulations to address diverse types of harassment, including non-sexual harassment. We will continue to focus on initiatives to prevent harassment so as to create a workplace where employees with diverse attributes can work comfortably.

Respect for employees’ human rights and increasing employees’ awareness

We value employees’ well-being and work to ensure that their human rights are respected, from the perspectives of respect for employees’ human rights, the prohibition of discrimination, the prevention of harassment, the protection of personal information and privacy, workplace safety and health, compliance with labor laws, and other perspectives. Further, we provide harassment training for all employees, which is aimed at increasing their awareness of the issue, provide all employees with e-learning and raise their awareness regarding human rights and business in the Human Rights Week every year, and provide e-learning programs to enable them to increase their understanding of LGBTQ+ issues as part of our activities promoting diversity. We inform employees of our internal whistleblowing system using a compliance questionnaire, and the percentage of employees informed of the internal whistleblowing system has been kept at 100%.

Respecting human rights throughout the supply chain

We have our suppliers sign a letter of intent to comply with the Foster Group Supplier Sustainability Code of Conduct, conduct surveys on the status of initiatives taken including items related to human rights infringements (CSR self-assessments), and request that our suppliers take corrective actions as necessary. Further, in the sourcing of minerals, we conduct due diligence (a survey on responsible minerals sourcing) to confirm that the minerals we procure do not provide funding to armed forces/groups engaging in serious human rights violations, and are promoting to procure minerals only from certified smelters.

Consultation Contacts / Hotline

We have established contacts for consultation and reporting such as the Compliance Hotline and the Harassment Helpline, our internal whistleblowing system and advise various stakeholders (including employees and officers of the Foster Group, their families, and employees of our business associates). When a vigorous investigation confirms a violation of human rights, we take corrective and punitive actions ensuring that the whistleblower will not be retaliated against or treated disadvantageously.