Message on Sustainability from the CEO

Steadfast pursuit of business activities even amid times of future uncertainty

In FYE March 2022, the global economy showed an overall recovery trend, if varied from region to region, mainly due to progress in vaccination against COVID-19. At the same time, the outlook remains uncertain due to the resurgence of infections from mutated strains of the virus, disruption of logistics from the resumption of economic activities, the deteriorating situation between Russia and Ukraine, and other factors. Furthermore, shortages of procured parts, particularly semiconductors, continue to have a significant impact on the automotive industry. In order to allow the SUBARU Group to respond flexibly to rapid changes in society and industry and to provide stakeholders with the value of “Enjoyment and Peace of Mind,” in FYE March 2022 we continued to take preventive action against COVID-19 and the spread of the virus. Meanwhile, we focused on improvement initiatives in procurement, working to achieve flexible operational planning and execution and high efficiency in sales operations in the course of doing business.
In the market environment of late, we have received many back orders due to strong demand for SUBARU vehicles, especially in our most key market of North America. To meet these customers’ expectations, we will be steadfast in advancing reforms to achieve SUBARU’s growth, produce and sell as many vehicles as possible, and communicate these results to our stakeholders.

Contributing to a sustainable society through the promotion of CSR

With regard to the three priority items of the mid-term management vision “STEP”—corporate culture reforms, quality enhancement, and evolution of SUBARU-ness—we are working as a unified Group under the slogan of “change mindset, change behavior, change the company.” Furthermore, in order to fulfill corporate social responsibilities by contributing to diversifying social needs, which is one element of our Vision for 2025 in ”STEP,” we at the SUBARU Group have established the Six Priority Areas for CSR and have been focusing on initiatives leveraging our business strengths to find solutions to social problems. In each of these initiatives, we are steadfastly marching forward in a way that embodies SUBARU-ness, with our first priority being to pursue SUBARU-ness that is unwavering amid changing times and changing external environments. Alongside our stakeholders, we will continue to work toward the achievement of an enjoyable and sustainable society and the sustainable growth of the SUBARU Group. We will do this by creating and providing SUBARU’s unique value based on the three priority items in “STEP” and the Six Priority Areas for CSR.

Strengthening CSR promotion and management on a global and Group-wide basis

In order to contribute to solutions to social issues through our business activities, it is important to promote and instill CSR initiatives on a global and Group-wide basis. To this end, in April 2020 we established the SUBARU Global Sustainability Policy as a guideline to be shared by all Group employees and which clearly indicates the direction of our initiatives. In addition, in October 2021 we renamed the CSR Committee the Sustainability Committee to function as a forum for more proactive discussions on sustainability and CSR initiatives.
Furthermore, we decided to reflect the results of employee satisfaction evaluations, a product of our engagement with employees, in a portion of the compensation for directors^*1 of the Board and vice presidents starting in FYE March 2023. This restates the SUBARU Group’s commitment to contribute to the achievement of an enjoyable and sustainable society by strengthening CSR initiatives and management on a Group-wide and global basis, while establishing a clearer integrated position with management than before.

*1

Excludes outside directors.

Strengthening initiatives for human rights

A number of human rights-related issues have been cropping up around the world. 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 FYE March 2021. 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 and implement measures to address them. If a company commits an act where human rights issues arise, it not only results in loss of trust from customers but also damages brand image, significantly affecting the business foundation. Therefore, SUBARU recognizes respecting human rights as a risk related to its industry and business operations. Going forward, the SUBARU Group will focus on mitigating human rights risks by steadily implementing measures to address risks in both of the aforementioned domains within each relevant department and by encouraging business partners and stakeholders, including those in the supply chain, to do the same based on our Human Rights Policy.

Progress in the Six Priority Areas for CSR

Among the Six Priority Areas for CSR is Peace of Mind; we are continuing to implement quality enhancement here, one of the most important topics of the mid-term management vision “STEP.” This is because high quality is at the root of the SUBARU brand, and is a source of added value. In this phase where we can continue to show results from our quality enhancement initiatives, including adapting to new technologies, we are continuing to sustain these initiatives. Our specific activities in this area include taking steps to ensure thorough implementation of a “Quality-First” mindset and reinforcement of organizational efforts and structure. Activities also include “Execution Quality” enhancement, with the goal of preventing defects reaching the general public in domains after the production preparation stage, and “Innate Quality” enhancement, seeking to reform the process from initial exploratory stages to development and design. As part of our work in manufacturing quality reform, in January 2021 we established the “FAST^*2” quality improvement team in the key market of North America to quickly resolve any defects that may have occurred there.
In FYE March 2023, we started operation of a new final vehicle inspection wing, physically separated from the production lines at our plants in Japan. While this series of measures has produced clear results, our reforms are still at the halfway stage, and we will work to achieve steady results so that our customers and dealers can feel the positive effects of reforms.
We have also declared the goal of achieving zero fatal traffic accidents^*3 by 2030. In April 2022, we announced that a wide-angle monocular camera for enhancing EyeSight’s recognition capability will be newly adopted in the Outback for the North American market. We are currently considering expanding this system’s application to more models and markets, and in the future we will integrate advanced sensing technology and artificial intelligence (AI) to further increase the intelligence of cars and improve safety in all situations.

*2

Fast Action & Solution Team

*3

Reducing to zero the number of fatal accidents occurring while a driver or passenger in a SUBARU vehicle and the number of fatalities among pedestrians, cyclists, and the like arising from collisions with a SUBARU vehicle.

At the SUBARU Group, we see Diversity, one of the Six Priority Areas for CSR, as a characteristic both of people and products, and we believe that respecting diversity in our employees also leads to diversity in our products. Within employee diversity, SUBARU’s human resources need to be able to exert their unique talents informed by their own personal values and characteristics. This is why SUBARU values the differences in gender, nationality, culture, and lifestyle among its employees, and we as the SUBARU Group are proceeding with efforts to create workplace environments where everyone can make a meaningful contribution.
In FYE March 2022, we introduced a new personnel system and open-call job rotation. While establishing a mechanism letting employees take on challenges to realize their own career visions, we aim to generate human resources who will act independently and lead reforms, thereby encouraging the growth of the individual. Within diversity of products, in May 2022 SUBARU launched its first global BEV,^*4 the SOLTERRA, in order to respond to the trend toward electrification. In parallel with electrification, we also see the utilization of internal-combustion engines as an option to contribute to a decarbonized society. To demonstrate this, in March 2022 we competed in Super Taikyu Series 2022 with a racing vehicle that uses carbon-neutral fuel. While responding to changes in society, we will reflect SUBARU’s unique technologies in our products and maintain our competitiveness into the future.

*4

BEV: Battery electric vehicle

For the Environment, one of the Six Priority Areas for CSR, we consider protecting SUBARU’s fields of business—the global environment comprising the earth, the sky and nature—as an important topic for ensuring the sustainability of both the SUBARU Group and society as a whole. In FYE March 2022, we formulated the medium-term Environment Action Plan 2030. This plan provides a roadmap for CO₂ reduction toward achieving carbon neutrality by 2050, and within this plan we are currently promoting initiatives such as increasing the sales ratio of BEVs, introducing zero CO₂ emission electricity at plants, and resource recycling. Although it is not easy to determine the timing of the transition to BEVs, we will strategically reorganize our domestic production system to ensure that we can respond to this change. We are targeting around 2025 for the commencement of BEV production, and we will add a specialized BEV production line after 2027 to put in place a highly efficient and flexible production mechanism and improve business feasibility.

Aiming to be a company “delivering happiness to all” alongside our customers and society

In our Vision for 2025 within “STEP,” we declare that we will “Become a brand that is ‘different’ from others by enhancing distinctiveness.” In line with this vision, we will further evolve this deep relationship between SUBARU and our customers that makes us different from other brands. We do this because we see this relationship as the greatest asset for the SUBARU Group and the SUBARU brand.
It is my firm belief that we at SUBARU will strive to put smiles on our customers’ faces by polishing this SUBARU-ness they sense even further, and to bring those smiles to all our stakeholders, to society, and to the Earth itself. And so, we will continue to maintain dialogue with our stakeholders, aim to be a company “delivering happiness to all” alongside our customers and society, and strive to always make SUBARU a company you can love.

Representative Director of the Board, President and CEO