Materialities and the Sustainability Action Plan｜Sustainability

The Mid-Term Management Plan is an initiative to achieve our Grand Design and to continue sustainable growth thereafter. In order to contribute to a sustainable future through our business, we made the four strategies in the third Mid-Term Management Plan, which began in fiscal 2024.

One of the four strategies is "Enhance Sustainability". To promote this, we have set up the Sustainability Policy and formulated the Sustainability Action Plan 2024-2026 as the overall picture of our med-term sustainability initiatives and their respective medium-term targets from 2024 onwards in line with this policy.

In developing a new medium-term sustainability action plan, we have completely reorganised the themes to be addressed to be linked to the Grand Design and the third Med-Term Management Plan (MTP3), from the perspective of increasing the value provided to stakeholders, and have set new medium-term targets for each of these themes. New medium-term targets have been set for each of these themes. In conjunction with this, the name of the plan was changed to better reflect the content and scope of future initiatives. We are currently identifying materiality for the entire Advantest Group in line with the priority themes in the new Sustainability Action Plan 2024-2026.

The Sustainability Reort describes the new Sustainability Action Plan 2024-2026 and reports on the results of our sustainability initiatives to date, based on the ESG Action Plan 2021-2023.

We formulated the 'Sustainability Basic Policy' based on the 'Sustainability Basic Policy,' one of our Corporate Philosophy and Policies, and 'Strengthening Sustainability Initiatives,' one of our Materiality (four strategies). Based on this, we formulated the 'Sustainability Action Plan' within the Priority Measures (Corporate).

Sustainability Action Plan 2024-2026

Stakeholders	Priority Themes	Target	Executive in charge *1	KPIs	KPI Target (FY2026)
Shareholders and capital market	Mid-/long-term and sustainable enhancement of corporate value	Aiming further sales growth, improved profitability, and more efficient use of capital	CFO	In accordance with MTP3 Management Indicator	In accordance with MTP3 Management Indicator
Shareholders and capital market	Enhancement of sustainability information disclosure	Timely and appropriate disclosure of financial and non-financial information	CFO	ESG evaluation by rating agencies	Maintaining and improving evaluations by major ESG evaluation by rating agencies
Employees	Respect for diversity	Promoting gender diversity	CHO	Ratio of female managers *2	11%
	Respect for diversity	Promoting gender diversity	CHO	Ratio of female employees among candidates (Level6) for executive and managerial positions *3	16%
	Employee Engagement	Fostering and instilling an attractive corporate culture	CHO	Turnover rate	Below semiconductor industry average
			CHO	Gallup Survey Scores *4	3.8
			CHO	INTEGRITY Award nominations/year *5	400
	Investment in human capital	Promoting health and wellbeing management and work-life balance	CHO	Japan: White 500 Certified (Japan) Global: To be decided during FY2024 *6	Japan: Certified as White 500
	Investment in human capital	Promoting human capital development based on the Advantest Development Framework	CHO	Education and training expenses	0.8 (Billions of yen)
Customers	Providing superior solutions	Provision of new products and integrated solutions that solve customer issues	CTO	Market position	Maintaining 'No.1 position in the focus markets'
	Customer satisfaction and trust	Provision of more value added and comprehensive customer support quickly and accurately	CCRO	Market position	Maintaining 'No.1 position in the focus markets'
	Climate change countermeasures and reduction of environmental impact	Improving the environmental performance of our products	CTO	Development of “power optimized products”	To be decided during FY2024
			CCRO	Promotion of products with excellent environmental performance	To be decided during FY2024
			CSO	Enhanced Product Life Cycle Assessment	Expansion of the life cycle assessment management scope and data refinement
Suppliers	Respect for human rights and fair deals in the supply chain	Responsible Mineral Procurement	CSCO	Supplier response rate to conflict minerals survey	99%
		Penetrating Sustainability in the Supply Chain	CSCO	Due diligence implementation rate for designated business partners *7	100%
		Penetrating Sustainability in the Supply Chain	CSCO	Number of designated business partners *7	50 suppliers (Designated 42 suppliers as business partners in FY2023) *7
	Greenhouse Gas Emission Reduction (Scope 3)	Supply chain decarbonization	CSCO	Percentage of main business partners that have introduced renewable energy sources *8	60%
Partners	Creation of innovation and contribution to local communities and global society	Implementation of activities related to innovation and social good	CSO	The number of strategic partnerships	Maintain the same level as FY2023
Partners			CCO	The number of employees' activities contributing to local communities (both inside and outside of work)	180 (FY2024-FY2026 Cumulative Total）
Global Environment	Greenhouse gas emission reductions (Scope 1+2)	Reducing GHG emissions from Scope 1+2	CSO	GHG emissions reduction rate	65% (vs. FY2018)
		Raising renewable energy usage	CSO	Renewable energy coverage rate	80%
		Reducing energy consumption by shortening the production period of major products	CSCO	Reduction of production period by reviewing production processes	Reducing production period by 20% (vs. FY2020)
	Contribution to the Circular Economy	Improvement of recycling rate through promotion of 3Rs (Reduce, Reuse and Recycle)	CSO	Waste recycling rate (Japan and overseas)	Japan:90% or more Other regions: 73% or more
	Contribution to the Circular Economy	Maintaining company-wide water consumption at FY2016 levels	CSO	Water resource usage	Less than 288,000m³/year
	Conservation of biodiversity and natural capital	Preservation of biodiversity, promotion of nature conservation activities (protection of endangered species in biotopes, tree planting, beach cleanups, etc.)	CSO	Total number of participants in social contribution activities related to natural capital	600 (FY2024-FY2026 Cumulative Total）

	Priority Themes	Target	Executive in charge *1	KPIs	KPI Target (FY2026)
Governance	Promoting ethical management and business	Compliance with international/industry standards	CSO	Compliance with business codes of conduct and management system standards	Maintain and recertify ISO certification and pass RBA audit
		Implementation of Global Compliance Education Program (GCEP) *e-learning for all employees	CCO	e-learning participation rate	100%
		Fair and Transparent Workplace	CCO	Aiming to obtain third-party certification for whistleblowing system	Obtaining third-party certification for whistleblowing system
		Maintaining and improving occupational health and safety	CHO	Incidence of serious occupational accidents which result in absence from work (LTIR: Lost Time Incident Rate)	0%
		Fostering internal understanding of sustainability	CSO	Implementation of measures for different levels of the organization to promote understanding of sustainability	Implementation of the measures for different levels
	Continued enhancement of Corporate Governance structure	Enhancement of board structure and governance to increase effectiveness of corporate governance	COO	Ensuring the effectiveness of the Board of Directors	Enhancement of disclosure of effectiveness evaluation results
	Continued enhancement of Corporate Governance structure		COO	The board composition that satisfies the skill set required in line with management strategy and the business environment, and also ensures diversity	Periodic review by the Board of Directors and review and revision as necessary
	Enhancing risk management	Strengthening internal control	CCO	Risk clarification and response based on twice-yearly risk reviews	Implementation of risk review twice-yearly

*1

List of Executive in charge is described in the Securities Report under "Item4 Status of the Company 4. Corporate Governance (2) Directors 1) List of Directors,"
*2

The non-consolidated Female manager ratio and Differences in Wages between Male and Female Workers are described in “ Item 1. Company Overview 5. Status of Employee.”
*3

Advantest's qualification system is a 10-level system which is globally standardized, with Level 6 being the highest level of qualification for general employees."
*4

A group-wide survey is conducted every three years.
*5

This award system honors employees who embody INTEGRITY through nominations from other employees.
*6

As the White 500 is a certification system in Japan, the Company and its subsidiaries in Japan are subject to certification.
*7

Tier 1 suppliers, which represent the top 85% of suppliers in terms of transaction value, and Tier 2 suppliers, which are the main suppliers of the Tier 1 suppliers, are subject to due diligence. These suppliers are defined as designated business partners.
*8

The top 85% of suppliers by transaction value are defined as main business partners.