Management Message on Sustainability

Towards a "safe, secure, and comfortable society"

The global economy in 2023 is marked by recessionary concerns, which are increasing due to monetary tightening and soaring energy prices in major developed countries in Europe, the U.S., and Asia. In addition, the slowdown in growth due to the impact of COVID-19 pandemic and the tense situation in Ukraine, continuing from last year, has acted as a drag on economic activity, while sluggishness and financial risks are also coming into view in emerging economies and less-developed regions. Reforms to curb inflation and policies to stabilize the macroeconomic and financial situation are needed at the national level, especially in major countries, to establish a strong and sustainable economic foundation beyond 2024. In addition, challenges such as climate change and other global environmental issues, preservation of biodiversity, and labor market mobility in response to declining birthrates and aging populations, are becoming increasingly serious with each passing year. In this economic and social environment, Advantest strives to maximize customer satisfaction by accurately grasping customer needs and providing solutions in our core semiconductor test equipment business through fair and prudent corporate activities, all while improving our corporate value by ensuring sustainable management that emphasizes "Environmental," "Social," and "Governance."

The following are our ESG initiatives from the Second Mid-Term Management Plan (MTP2), which was formulated and launched in FY2021. We have evaluated and improved our KPIs for "E," the environmental aspect of ESG, and set goals focusing on key issues such as greenhouse gas reduction, the introduction of renewable energy, shortening production times by optimizing production processes, strengthening our development and sales of green products, resource recycling and biodiversity. For "S," the social aspect of ESG, we have enhanced our activities related to human rights and occupational health and safety, conflict minerals elimination, respecting and observing fair trade practices, and procurement policies aiming for increased transparency and reliability throughout the supply chain as a means to fulfill our corporate social responsibility. In addition, our global human resources initiatives aim to promote diversity, instill human rights policies and strengthen relevant education, and enhance employee engagement. These initiatives and measures also tie into improving customer satisfaction. Regarding "G," the governance aspect of ESG, our board has held frequent discussions based on business strategy briefings, considered how to increase its own efficiency and effectiveness, conducted detailed succession planning, and discussed how to further train employees worldwide in the Advantest Way. We are also working to reinforce our compliance and risk management systems.

Meanwhile, innovations in digital infrastructure such as communication networks and data centers are moving in tandem with rapid changes in technology, such as the evolution of the semiconductors used in these applications. The digital transformation of our world is accelerating. Amidst these changes, Advantest continues to deliver safety, security, and comfort to people worldwide through semiconductor test. Semiconductors are now incorporated into a wide variety of products and infrastructure, from industrial goods to commodities. They enrich people's lives, enhance convenience, and help to solve social issues. These same semiconductors are rapidly evolving to deliver even higher performance in their many roles. As semiconductors come to be used in more and more diverse applications, defective semiconductors no longer just cause inconvenience. Defects in the semiconductors used in automobiles, medical equipment, and data servers can lead to serious problems and even loss of life. Therefore, it is essential for semiconductor manufacturers to carefully check the quality of their devices during the verification process to ensure that they operate as designed, and inspect them thoroughly during mass production. Advantest's products are used for these processes. That is why we believe that our products play a key role in everyone's safe, secure, and comfortable lifestyles.

In the future, we plan to roll out new measures representing our commitment to "E," "S," and "G." We will create a roadmap for our participation in the RE100 initiatives to further strengthen our response to climate change issues, aiming to reduce greenhouse gas emissions by 60% by FY2030 compared to FY2018. We are determined to work together with our customers, business partners, and other stakeholders to help realize a carbon-neutral society. In terms of "Social," our human capital policy calls for the promotion of diversity from various perspectives, including not only race and gender, but also different cultures and backgrounds, and the reform of various personnel systems, including human resources education, skills development, human resources promotion, and compensation systems. This corporate culture transformation will be carried out in the spirit of our INTEGRITY core values, which help shape each employee’s actions. We are also committed to acting in a manner that protects our stakeholders’ human rights, and are working to eliminate any attendant risks to human rights from our corporate activities by strengthening our compliance and risk management systems. In terms of "Governance," in order to strengthen the CxO structure introduced in 2021, we shifted from one to three representative directors from January 2023, with the aim of enhancing our global management system. This transition is part of our succession plan, and we are also working to further strengthen our management structure by diversifying our human resources through the appointment of global human resources.

We have designated the further enhancement of ESG initiatives as one of the key strategies of our mid-/long-term management policy, and will continue to innovate on this axis, aiming to further grow our corporate value and contribute to our shared, sustainable future.

Thank you for your continued support.

September 2023
Yasuo Mihashi
Senior Excutive Officer, CFO & CSO
Executive Vice President, Corporate Strategy Group