Message on Sustainability from the CEO

Achieving sustainability for the SUBARU Group and society by leveraging our strengths and values

In FYE March 2024, the global economic outlook remained uncertain due to the prolonged Russia–Ukraine conflict and the outbreak of hostilities in the Middle East, as well as interest rate hikes in response to rising prices. On the other hand, in Japan, both demand and supply were on a recovery trend due to the easing of various restrictions brought about by the reclassification of COVID-19 as a Class 5 infectious disease.
To achieve our vision of becoming a company "delivering happiness to all" amid this business environment, we aim to deliver our value of "Enjoyment and Peace of Mind" and to be a compelling company with a strong market presence built upon our customer-first principle. Under the New Management Policies announced in August 2023, we will powerfully drive each initiative forward to become the world's leading company in "Monozukuri Innovation" and "Value Creation", in the aim to achieve our vision, keeping in mind the perspective of “flexibility and expandability” even under non-linear changes at an unprecedented pace.
Also, our three future directives expressed in the previous Mid-term Management Vision “STEP” are unchanged: become a brand that is “different” from others by enhancing distinctiveness; engage in business activities that resonate with customers by putting them center-stage, and; fulfill corporate social responsibilities by contributing to diversifying social needs. Going forward, SUBARU will not only fulfill its corporate social responsibility, but also meet society's expectations in a manner that leverages its strengths and values, in pursuit of the sustainability of the SUBARU Group and of society.

Strengthening management and addressing human rights risks to become a company "delivering happiness to all"

We must take a long, hard look at whether we, as the SUBARU Group, are performing well in our businesses aimed at enhancing sustainability and achieving a sustainable society. To this end, the Sustainability Committee, which is chaired by the President and Representative Director and includes all executive officers as members, discusses sustainability strategies, policies, and initiatives, and submits reports on these discussions to the Board of Directors. The committee also considers specific initiatives in light of investor feedback and points raised by ESG evaluation organizations, and each business is carried out under the management purview of the Executive Meeting and the Board of Directors.

Also, based on the belief that respect for the rights and characteristics of individuals is an important management issue, we at the SUBARU Group established our Human Rights Policy in April 2020, and have been advancing initiatives accordingly for the respect of human rights. Based on this policy, from FYE March 2021 to FYE March 2022, we carried out human rights due diligence in the domains of human resources and procurement to identify business-related human rights risks and formulate measures to address them. Since FYE March 2023, we have transitioned into a phase of ensuring the implementation of our response measures, not only within SUBARU but also collaborating with our business partners to address various challenges.
We will continue to carry out efforts to respect human rights together with our business partners and other stakeholders, including those in our supply chain, to create happiness for these various stakeholders.

Evolution into the Six Priority Areas for Sustainability to further contribute to the sustainability of the SUBARU Group and society

Until recently, the SUBARU Group has been promoting various initiatives under the Six Priority Areas for CSR. Now, we are evolving these Six Priority Areas for CSR into the Six Priority Areas for Sustainability in response to the changing social environment and shifting mindsets toward sustainability. With these new areas, we will further contribute to the sustainability of the SUBARU Group and society by going beyond CSR perspectives to further leverage SUBARU's values and strengths. This evolution also updates our People-oriented Car Culture to a People-oriented Mobility Culture, while Diversity is updated to Diversity, Equity & Inclusion (DE&I). We are continuing discussions to further deepen our efforts and management in each area, with the aim of creating further social and economic value by taking a more appropriate approach that also incorporates a long-term perspective.
In terms of Peace of Mind among the initiatives for FYE March 2024, we are continuing our efforts by positioning quality enhancements as fundamental to SUBARU's sustainable growth. Another point regarding Peace of Mind is that we will also be strengthening our collaboration with business partners in order to increase safety in more complex and unpredictable situations found in the real world. For example, in our safety functions provided through EyeSight, we are working with U.S.-based AMD to optimize a SoC* that can output optimal judgments in an emergency by combining stereo camera recognition processing and AI inference processing. In this way, we will continue to provide products that customers can use with more Peace of Mind and accelerate our efforts to achieve zero fatal traffic accidents in 2030.
To make these products that customers can use with Peace of Mind, we are firmly aware of the essential nature of acting to ensure health and safety, both physical and mental, so that our employees, their families, and everyone else involved with the SUBARU Group can act with that same Peace of Mind. Looking ahead, we will continue our efforts to build a better workplace environment.

*

SoC: System on a Chip. Refers to a single semiconductor chip featuring a number of functions.

Since assuming the position of CEO in 2023, I have consistently said that human capital is the foundation of everything. Within this concept, we consider DE&I to be particularly important for generating innovation in the SUBARU Group, and as part of this effort, we have been working very hard over the past year toward the empowerment of female employees in particular. Toward the goal of more than doubling the 2021 number of female managers by 2025, we conducted various training programs for female employees aspiring to become managers, dialogue sessions with female executives, and messages to employees regarding the empowerment of women. As a result, the number of female managers as of April 2024 has increased 1.8 times compared to 2021. In the future, we will create an environment that empowers not only female employees but also a variety of employees, including foreign nationals and employees with disabilities. Moreover, since change is unlikely to occur in a homogenized organization, we will leverage the individuality and strengths of each employee to drive further innovation. This will result in our continuous provision of products that are "different" and deliver happiness to our customers.

For the Environment, we regard the protection of SUBARU’s fields of business—the global environment comprising the earth, the sky, and nature—as a crucial theme. In order to contribute to a decarbonized society, in 2023, we raised our medium-term goals for products (Scope 3) to aiming to make BEVs 50% of all automobiles sold in 2030, and for plants and offices (Scope 1 and 2) to reducing CO₂ emissions by 60% in FYE March 2036 versus FYE March 2017.
In addition, in order to mitigate risk and ensure flexibility for development and production in an era of future uncertainty, we will strengthen our alliance with Toyota Motor Corporation (hereinafter, "Toyota") through joint development, mutual production, and mutual supply of BEVs. Specifically, we are jointly developing the four BEV models to be added to our lineup by the end of 2026 with Toyota bringing together the knowledge and expertise of both companies. In addition, we are planning to start mixed production of ICE vehicles and BEVs at the Yajima Plant, and BEVs produced here will be supplied to Toyota, and BEVs produced at Toyota's U.S. plant will be supplied to SUBARU. Other actions regarding vehicle production include plans to install a new dedicated BEV production line at the Oizumi Plant to launch in 2027 or later.
We will continue to make preparations to flexibly adapt to the varying pace of the spread of BEVs and to market trends, thereby contributing to a decarbonized society.

Creating a chain of happiness from resonance by our communities

Though SUBARU is not large by any means as an automaker, it has strengths in its ability to create strong connections with customers and communities based on products that are "different" from others and not available from our industry peers. We aim to leverage these strengths and work together with our customers and dealerships to create even more resonance in our communities and help solve their local issues. I can see the momentum to achieve this within SUBARU, and I would like to take a leading role in building this momentum into a powerful wave. We want to be there for our customers at every milestone in their lives and bring them happiness. So, too do we want to bring happiness to our employees who make these products, and furthermore build an entire chain of happiness extending to the communities and business partners who resonate with SUBARU's commitment as well.
In the past year since I assumed the role as President, I have been keenly reminded that all answers lie in the field. For me, the field is where we engage not only with employees at our plants and dealerships, but also engage in dialogue with investors and other stakeholders. We will continue to engage in close communication, aiming to become a SUBARU, which is even more attentive to all of its stakeholders.

Representative Director, President and CEO