Toyota Motor CorporationAustralia LimitedACN 009 686 097

Environmental Report 2003

Reading the signs... and taking action

Sustainable Future

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Contents

Toyota Motor Corporation AustraliaToyota Motor Corporation (TMC) is the thirdlargest automotive manufacturer in the world.Toyota Australia (TMCA) manufactures Toyotavehicles at Altona, and sells and distributesvehicles under the Toyota, Lexus and Daihatsubrands. Toyota is Australia’s largest carexporter, selling to more than 20 countries.

Across Australia, Toyota is successfullymeeting the challenge of continuouslyreducing the environmental impacts of its activities.

Our manufacturing plant in Altona hasmaintained ISO 14001 EnvironmentalManagement Systems certification since 1998.This system ensures Toyota manages itsenvironmental impacts in accordance with aninternationally recognised framework.

We are working with our suppliers and dealernetwork to encourage their development ofEnvironmental Management Systems andstronger environmental performance.

This report shows how, during 2002, we revised our strategies, action plans and initiatives to reflect the higher level of environmental responsibility required of a leading and respected company with a number one mindset.

Key facts 2002Sales Revenue $5.96BTotal Assets $1.87BEmployees 4,465Vehicle production 86,558*Engine production 63,876*Vehicle sales, domestic

Toyota 157,864Lexus 3,111Daihatsu 6,010Industrial equipment 1846

Vehicles exported 49,300*Export countries 24Export revenue $1.1BLocal component suppliers 102Local purchase value $1.46BDealers

Toyota 222Lexus 16Daihatsu 87

* A major model change occurred during 2002

Toyota Australia Environmental Report 2003ScopeThis is Toyota Australia’s second environmentalreport, covering our operations during the2002 calendar year. For consistency withToyota Motor Corporation convention, it is referred to as the 2003 report.

The manufacturing data presented in thereport refers to our Altona Plant, whichaccounts for approximately 88% of our localenergy use, and 92% of water use. Data forour Port Melbourne plant (which manufacturessome vehicle components like fuel tanks,bumper bars, and seats) can be found on our website.

This report is not intended to be asustainability report. A more comprehensiveaccount of our environmental and communityactivities can be found at our environmenthomepage: www.environment.toyota.com.au

Why report on environment?Toyota Australia recognises the need to provide clear and concise information about our environmental performance to our stakeholders and the public. Reporting is fundamental to demonstratingthat we recognise our accountability and are committed to improving our environmental performance.

How to read this reportPerformance against targets set in 2001 is shown in tables at the top right hand side of each division page. Key focus areas are shown under the highlighted bar at the bottom right hand side of each division page.

Important notice please readToyota Motor Corporation Australia Ltd (Toyota Australia) has used every reasonableendeavour to ensure that this report is correctat the time of publication. However as vehiclespecifications and business processes mayvary from time to time, the details in this reportmay change over time. To the extent allowedby law, Toyota Australia will not be liable for anyreliance which may be placed on this report.

How this report was developedThe production of this report by EnvironmentalAffairs has been made possible thanks to the enormous contributions of manyemployees within Toyota Australia. We wish to thank them for their strong support andenvironmental involvement.

To help us understand and meet the expectations of our stakeholderswe established an external advisorycommittee, which includedrepresentatives from:

• Deloitte Touche Tohmatsu, who gave guidanceon the development of the report by applyingtheir reporting scorecard which incorporatesGlobal Reporting Initiative (GRI) principles

• URS Corporate Sustainable Solutions, whoconducted an independent audit of the data,data collection process, statements andcommitments made in this report. Theirfindings are summarised in the verificationstatement on the back cover

This report is printed with vegetable inks on paper stock made from 100% pre and post-consumer recycled paper. No oxygen or chlorine gas was used to bleach it. The printer, Finsbury, is ISO 14001 certified.

ContentsSetting the Scene 01Vision & Policy 02Vehicle Lifecycle 03Environmental Affairs 04Product Design 05Suppliers 06Manufacturing 07Dealerships & Community 09Verification Statement 10

This report presents a concise summary of our environmentalcommitment, performance and our level of ambition for the future. More detailed information can be found at:www.environment.toyota.com.au

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Setting the scene

President’s statementThe way we manage environmental issues willdetermine the very future of all manufacturingindustry, not just the automotive industry, and not just in Australia.

In our industry, we are faced with thechallenge of how society will balance theserious environmental issues raised by theautomobile against the demand for efficient, cost effective and enjoyable mobility.

I personally believe that the only companieswith a long-term future are those that includesustainability as a core driver.

Toyota Motor Corporation has made such ashift, with the 2010 Global Vision adopted lastApril. Toyota Australia has embraced thatglobal environmental vision.

I have traditionally adopted a top downapproach to environmental management. In response to the Toyota Earth Charter in2000, I established the key project ofenvironmental affairs, and during 2002 I established a Sustainability Committee to co-ordinate a step change in our approach.The Committee includes senior representativesfrom each division, which has given us a new focus on driving sustainable practices.

But change must also be driven from the bottom up.

I know our employees have been active inmany environmental matters, both here atToyota and at home in local communities. I now urge all employees to continue to help us drive change.

For with all of us reading the signs – andtaking action – we will build a sustainablefuture, not just for Toyota but for the world.

Ken AsanoPresident and Chief Executive Officer, Toyota Australia

Key Focus Areas for 2003• Continue to integrate sustainability into all

aspects of our operations • Achieve manufacturing five year Environmental

Performance Improvement targets• Turn employee awareness into action

with passion and dedication• Broaden stakeholder engagement activities

Environmental management is a core element of Toyota Australia’s mid to long term growth strategy. Ken Asano, President, Toyota Australia

01

Key Environmental Highlights

Global (TMC)• TMC Recycle-oriented society vision established P 02• Toyota supports Japanese government ratification on

climate change and Kyoto P 04 • Hydrogen Fuel cell vehicle released in December 2002 P 05• 100,000 hybrid vehicles sold (target is 300,000 per annum by 2005) P 05

Toyota Australia • Company wide review of environmental initiatives P 02• Natural Step Training conducted for manufacturing employees P 04• Community Liaison Committee established P 04• Environmental considerations incorporated in the new

Australian made Camry (Variable Valve Timing: VVTi) P 05• $350 million investment in new model Camry incorporates

environmental considerations in design P 05/07• Supplier environmental award – winner Siemens VDO P 06• Cumulative water savings in excess of 150 million litres

per year since 1998 P 07• World’s best practice introduced in Paint Shop– new cartridge

based painting process that reduced paint use by 52% and solvent use by 75% P 07

• Cost savings from specific environmental projects total $200,000 P 07• 153 dealers participated in National Tree Day P 09• Partnership with Conservation Volunteers Australia established P 09• Verification of 2003 Environmental Report P 10

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Vision & Policy

Toyota’s 2010 Global Vision

In April 2002 TMC adopted the 2010Global Vision, an ambitious vision forToyota’s journey towards meeting themobility needs of our society in a waythat respects our earth and all people.It comprises a set of long-termmanagement policies centred on thebasic theme of ‘innovation into thefuture’ (see right). The concepts of2010 Global Vision complement theToyota Earth Charter.

Toyota Earth CharterThe Toyota Earth Charter provides acomprehensive approach to globalenvironmental improvement through the fulllifecycle of Toyota’s operations. The Charterdescribes four principles to guide thedevelopment of Toyota Australia’senvironmental policies:

• Contribute toward a prosperous 21st centurysociety

• Pursue environmental technologies• Take action voluntarily• Work in co-operation with society

The Earth Charter underpins our Environmental Action Guidelines, 5-year Environmental Action Plan and annual company targets for environmentalimprovement. For further information go to: www.environment.toyota.com.au

Sustainability CommitteeToyota Australia established a cross functional Sustainability Committee to developstrategy and facilitate the implementation ofdivisional environmental action plans. The committee meets monthly to discussprogress and share information across theorganisation. It has representation from thepresident, executive vice presidents, directorsand senior management.

Company-wide environmentalassessmentIn 2002 Toyota Australia conducted a review of the activities and environmentalperformance of each business division inaccordance with the 5-year EnvironmentalAction Plan. In addition, we benchmarked ourenvironmental performance and managementinitiatives against recognised best practice. As a result of this process environmentalaction plans and targets for each division were updated and specific environmentalmeasures were incorporated in divisional key performance indicators.

Balanced Scorecard: integratingenvironmental Key PerformanceIndicators into daily decision makingToyota manages strategic direction throughthe Balanced Scorecard, which designatesaccountabilities against Key PerformanceIndicators for each organisational unit andmanager. In 2002 following the company wide environmental assessment,responsibilities were explicitly included, such that each of the Divisions represented on the Sustainability Committee now hasspecific environmental measures.Scorecard performance indicators aresupported by specific action plans with clearaccountabilities and timings. Performance ismeasured quarterly and forms a part of overalldivisional assessments. Online scorecardperformance reporting promotes strategyawareness, focus and integration into day-to-day work practices.

Creating automobiles with low environmental impact is no longer‘just one option’ for an automaker – it has become a crucialcorporate task. It could be said that without environmentalinitiatives, the automobile has no future. – Fujio Cho, President,Toyota Motor Corporation

Board

Sustainability Committee

Product Suppliers

Dealerships

Sales and Marketing

Manufacturing

Chaired by Environmental AffairsSupported by Public Affairs

and Government Affairs

02

Toyota’s 2010 Global Vision

Innovation into the Future working with passion and dedication to create a prosperous society

Kind to the Earth

Toward a recycle-orientated society Toward the age of Intelligent Transport Systems and ubiquitous networks

Toward development of motorisation on a global scale

Excitement for the World

Comfort of Life

Respect for all people

Toward a mature society

New Corporate image for Toyota

to pursue

Sustainability reporting structure

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03

Vehicle Lifecycle

Toyota is committed to reducing the environmental impacts of itsproducts throughout their full lifecycle.

Why is the environment important to Toyota?Automobiles contribute to globalenvironmental issues such as global warming,resource depletion, accumulation of wastesand atmospheric pollution. Demand for vehicleownership in densely populated developingcountries is growing rapidly; it is estimated thatthe number of cars on roads around the worldwill increase from approximately 750 milliontoday to over 1 billion in 2010.

With these increasing pressures, companieswill need to manage their operations for thebenefit of all communities, not just thosewhere cars are manufactured or driven. Formanufacturers to earn trust, voluntarycontinuous improvement beyond legislativestandards is essential.

Toyota is a world leader in developingenvironmental technologies. Toyota Australiamanages its environmental impact throughoutthe entire lifecycle of the vehicle, fromconception and design of products, includingrecyclability, through the supply chain andmanufacturing operations to our relationshipswith dealers and communities.

The benefits of improved environmentalperformance include:

• Market leading technologies, enhancingrevenue growth, eg Prius

• Production efficiency, reducing costs, eg cartridge-based paint technology

• Reduced reliance on natural resources,reducing business risk and costs, eg fuelefficiency given the limited global oil supply

• Employee satisfaction and motivation, eg Improvement Ideas scheme and rewards

• Stakeholder goodwill, increasing growth, eg Toyota Community Spirit

How does Toyota manage its environmental impact?Toyota applies both a top-down and bottom-up approach to managing itsenvironmental impact.

The top-down aspect provides a robustcorporate governance framework, andincludes:

• Leadership and commitment from the President and Board via the cross functional Sustainability Committee

• Divisional environmental action plans outlining environmental targets

• Management accountability for environmental performance included in Balanced Scorecard objectives

The bottom-up approach encourages our employees to integrate environmentalawareness into daily activities and to driveinnovation for environmental improvement.Examples include:

• Company-wide environmental awarenesstraining programs such as The Natural Step

• Extensive environmental management andreporting systems through the ISO 14001Environmental Management System

• Employee environmental work groups and networks

• Improvement Ideas scheme• Shop floor level initiatives like spill kit training,

environmental housekeeping policies andenvironmental risk assessments

• Employee and workgroup environmentalawards

The Environmental Affairs project teamsupports the development of divisionalenvironmental strategies and policies,conducts regular meetings to discusscompany-wide environmental opportunitiesand initiatives and oversees company-wideenvironmental training.

Key Focus Area for 2003• Continue to reduce environmental impacts

throughout the vehicle lifecycle

Product Design

Impacts:– Exhaust emissions and

photochemical smog– Accumulation of waste– Vehicle CO2 emissions– Vehicle recyclability

Dealerships

Impacts:– Accumulation of oil

and other waste– Vehicle recyclability– Vehicle emissions

Suppliers

Impacts:– CO2 emissions– Packaging waste– Hazardous substances

Manufacturing

Impacts:– CO2 emissions – VOC emissions– Waste, Resource use– Energy use, Water use– Hazardous substances

What are the main environmental impacts of Toyota Australia’s operations?

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04

EnvironmentalAffairs

Environmental incidents and accidentsIn 2002 there was a reduction in significantenvironmental incidents, as rated by ourinternal risk assessment criteria.

Incident rating 2002 2001

High 1 1

Significant 11 17

No negative external impacts were observedas a result of these incidents. For definitions of types of incidents, go towww.environment.toyota.com.au

Environmental risk management is an integralpart of our Environmental ManagementSystem and ISO 14001. It is managed both proactively through risk identification,assessment and management, and reactivelyby effective corrective and preventative actions.

Toyota Australia observed one deviation fromcurrent EPA licence conditions. A change inincinerator temperatures, undertaken toreduce energy use and greenhouse gasemissions, had the side effect of increasingcarbon monoxide emissions.

However, atmospheric modeling has shownthat the ground level concentration of carbonmonoxide at the plant boundary is still belowthe requirements of the State EnvironmentProtection Policy – Air Quality Management.We will address this matter as part of ourEnvironmental Improvement Plan andapplication for accredited licence status in June 2003.

Toyota stakeholder engagementWe are increasing our involvement with ourdiverse range of stakeholders, includingemployees and their families, suppliers,dealers, customers, government departmentsand agencies, local councils, regulatorybodies, business organisations and nongovernment organisation.

Current activities include:• Formal engagement with the EPA

(legislative compliance and development of an Environmental Improvement Plan)

• Dialogue with the Altona community andregulatory bodies via the Community Liaison Committee

• Participation in various community/environment projects and programs throughthe Toyota Community Spirit program

We have also begun an independent review of our stakeholder engagement program to ensure it continues to be effective andrelevant. Further details are available on our website.

Community consultation The Community Liaison Committee provides a forum for community feedback on the environmental performance of Toyota’smanufacturing operations in Altona. In 2002the Committee included local residents andbusinesses, and representatives from EPA Victoria, City West Water and the City of Hobsons Bay. In 2003 the Committee willcontinue to work with Toyota to develop anEnvironmental Improvement Plan.

Climate changeToyota Motor Corporation supports the aimsof the Kyoto Protocol. Similarly, ToyotaAustralia supports the aims of the protocoland will support ratification if the AustralianGovernment determines it is in Australia’sbroader interest.

Actions we are taking to address climatechange include:

• Setting specific targets for the reduction ofenergy use and greenhouse gas emissionsrelated to our Australian manufacturingoperations

• Introducing best practice technologies such as the hybrid petrol/electric Prius

• Incorporating technologies such as VariableValve Timing in the design of mainstreamvehicles to improve vehicle fuel efficiency and reduce vehicle emissions

• Implementing energy reduction projects in our manufacturing operations

• Agreement to sign up to the GreenhouseChallenge

Employee environmental initiativesDuring 2002 The Natural Step conductedenvironmental training sessions formanufacturing employees. The training aimedto raise awareness of environmental issuesand some of the initiatives that are possibleboth at work and at home.

To support the training sessions, Toyota developed the Environmental System Pocketbook and distributed it to every manufacturing employee on World Environment Day.

Distribution of the Environmental System Pocketbook was accompanied by environmental training and awareness sessions for all manufacturing staff.

Employees also have the opportunity tosubmit their own environmental suggestionsthrough Toyota's Improvement Ideas scheme.2002 saw several innovative schemesrewarded through our inaugural EmployeeEnvironment Awards.

In 2002, Toyota’s environmentalperformance was recognised by:

• City West Water Community EnvironmentAward – Industrial/Commercial trade waste category

• SEDA Work Energy Smart Award• Australian Fleet Managers Association

– Energy Efficiency Best Practice – FleetIndustry Certificate

• Waste Management and Environmentmagazine cover story ‘Toyota’s road to sustainability’

• Fairfax Good Reputation Index environmentalcriteria rank: #6

Key Focus Areas for 2003• Coordinate and support company-wide

environmental activities and ensure divisionalenvironmental targets are met

• Increase company-wide environmentalawareness

• Broaden stakeholder engagement strategyand programs

• Sign a Greenhouse Challenge agreement

Key challenges are to increase environmental awarenessthroughout the organisation, maintain management buy-in to the process and recognise employee contribution. – Dan Atkins,General Manager, Environmental Affairs, Toyota Australia

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Product Design

New CamryWhilst hydrogen fuel cells and hybrid vehiclesrepresent a future direction of the automotiveindustry, in the short to medium term,environmental performance remains a keyconsideration for Toyota when designingmainstream vehicles.

The new ‘greener’ Camry incorporatesVariable Valve Timing technology (VVTi) and the new 4-cylinder engine is 14% lighterthan its predecessor making it one of thelightest 2.4-litre, 4-cylinder engines in theworld. A range of styling modifications (for example, embedding the radio aerial in therear window) has reduced aerodynamic dragand specially developed silica/carbon-basedtyres have reduced rolling resistance.

As a result of innovations like these, the new2.4-litre, 4-cylinder Camry is approximately 5%more fuel efficient than the previous 2.2-litre 4-cylinder Camry, achieving a city cycle fuelefficiency of 9.5 l/100km (as measuredaccording to ADR 81/00).

Fuel efficiency and CO2 emissionsThe fuel efficiency of Toyota’s mid-size andlarge passenger vehicles compare favourablywith other similar size locally made vehicles,although actual fuel efficiency also depends on driver habits.

Automatic City cycle Annual CO2

models Transmission emissions (l/100Km) (kg)**petrol LPG petrol LPG

Prius 4.6 – 2,130 –Camry 4 9.5 – 4,370 –Camry 6 10.5 14 4,830 4,200Avalon 6 11.5 13 5,290 3,900

Commodore (VX) 6 11* 16* 5,060 4,800Falcon (BA) 6 11.5+ 15+ 5,290 4,500

*Source: AGO Fuel Consumption Guide 2001-2002, +Source: Ford Australia website (Feb 2003)**Calculations based on: 20,000 km per year, ULP CO2 coefficient = 2.3kg/litre, LPG CO2 coefficient = 1.5kg/litre

Compared with a regular vehicle, on a city cycle the Priusachieves approximately twice the fuel efficiency, half the CO2 emissions and significantly reduces the emissions that cause photochemical smog.

The Prius features the Toyota Hybrid System,which electronically controls the petrol engineand electric motor for optimum efficiency.Following its launch in October 2001, the Priusbecame the established leader in the hybridpetrol/electric vehicle market. To the end of2002 there were 338 Prius vehicles sold inAustralia, including strong sales to governmentagencies, fleet buyers and local councils.

Average fuel consumptionToyota’s corporate average fuel consumptionfor 2001 was 8.02 l/100km, improving on the 2000 figure of 8.05 l/100km. It is expected that the release of the 2003 Camry will further reduce Toyota’s corporateaverage fuel consumption.

Average fuel consumption values are reportedto the Federal Chamber of AutomotiveIndustries in April each year; 2002 figures werenot available when this report went to print.

Vehicle recyclabilityToyota is reducing the amount of materialgoing to landfill by labelling parts for separationand using the readily recyclable Toyota SuperOlefin Plastic to manufacture mudguards,dashboards, door cover trims and other parts.

The Prius was specifically designed to improve ease of recycling and eliminateharmful substances like lead.

Toyota Motor Corporation is evaluating thefeasibility of making plastic from sugar cane,sweet potato and corn. Unlike conventionalpetroleum-based plastics, this bioplasticbreaks down naturally.

Fuel cell vehiclesIn December 2002 Toyota launched theworld’s first market-ready hydrogen fuel cell powered electric vehicle (Toyota FCHV) to be certified by Japan’s Ministry of Land,Infrastructure and Transport. This confirmedthat the necessary infrastructure such ashydrogen-supply facilities, an inspection andmaintenance system and a system to addresstraffic mishaps, is in place to support its use.

For further information see the Environmentpage at: www.toyota.co.jp

LPG During 2002, LPG compatible engines andapproved conversion kits were developed forHiLux and HiAce commercial vehicles and forthe V6 Camry and Avalon passenger vehicles.

EthanolAll engines in current model Toyota vehicleshave been tested for performance with fuelcontaining ethanol levels of 10%. At this levelno abnormal deterioration of engine conditionwas detected.

Vehicle exhaust emissionsCurrent model Toyota vehicles continue toexceed exhaust emissions standards. ThePrius leads the way with significantly lowerphotochemical smog-causing emissions than those of a conventional vehicle.

Reducing vehicle noiseToyota Australia is working with regulatoryauthorities to introduce new Australian DesignRule standards for external vehicle noise,proposed for introduction from 2004/2005.Current model Toyota vehicles exceed existing standards .

Key Focus Areas for 2003• Integrate environmental technologies into

design of mainstream vehicles• Promote clean energy products

Performance against 2002 targetsMeasure Target/initiative PerformanceFuel efficiency Support NAFC targets for new models 2001 average fuel consumption target

of 8.02l/100km achievedExhaust emissions Euro 2* by 2003 for new models Achieved for new CamryVehicle recyclability Develop policies Evaluating opportunities for developing and End of Life Vehicles parts made from biodegradable materialsClean energy products Promote Hybrid technology Strong Prius salesAlternative fuels Investigate opportunities LPG Camry and Avalon to be launched

for local products in early 2003. 10% Ethanol approved for all Toyota vehicles

Vehicle noise Exceed proposed new standards Currently exceeding standards* Euro 2 is a European vehicle emissions minimum standard to be introduced to Australia in 2004

7.986 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01

8.08.18.28.38.48.58.68.78.88.99.09.19.29.39.49.5

National Average Fuel ConsumptionTOYOTA Corporate Average Fuel consumption

05

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Suppliers

Supplier environmental management policyToyota Australia is working collaboratively with its suppliers to help them implement anEnvironmental Management System (EMS) in accordance with our supplier environmentalmanagement policy. The policy provides aframework to help suppliers continuallyimprove their environmental performance and achieve environmental leadership. ToyotaAustralia’s aim is to encourage suppliers to go beyond attaining ISO 14001 certification.

The Environmental ManagementSystem development frameworkcategorises suppliers according to their degree of environmentalimpact – low, medium or high – and specifies the timeframe forattaining each of the five levels of the EMS development process.

High and medium impact suppliers areexpected to use a recognised EMS (level 3) by 2003 and 2005 respectively. Low-levelsuppliers are expected to implement a systemto manage their significant environmentalimpacts (level 2) by 2004.

In 2002 Toyota Australia coordinated anEnvironmental Management System self-assessment by suppliers, requiring them toidentify their degree of impact and progressagainst the Environmental ManagementSystem development framework. By the endof December, 22% of suppliers of vehiclecomponents or raw materials used directly inthe manufacture of vehicles (OriginalEquipment suppliers) had participated.

Of these suppliers, 75% indicated that they were at level 3 or above. In 2003 Toyota Australia will conduct a comprehensivereview of supplier progress against theEnvironmental Management Systemdevelopment framework.

Hazardous substancesThe Environmental Management Systemdevelopment framework also addresses theelimination of environmentally hazardoussubstances from our supply chain and wehave reported our progress in theManufacturing section of this report.

Supplier logistics – CO2 emissionsand packaging wasteDuring 2002, Toyota conducted an analysis of the CO2 emissions and packaging wastegenerated by parts delivery to the Altonamanufacturing plant and vehicle shipping to Australia.

The results of this analysis will help usunderstand the environmental impact of our supply chain and set specific targets for improvement.

Recognition of supplier EMS development supportToyota supplier Empire Rubber was awardedthe Environmental Business of the Year awardat the 2002 Bendigo Business ExcellenceAwards. Toyota’s Environment Group workedwith Empire Rubber providing technicalsupport and assistance in development of their ISO 14001 certified EnvironmentalManagement System.

Supplier Environmental AwardsIn 2001, Toyota established a special awardfor suppliers to encourage environmentalawareness, responsibility and initiatives – the Toyota Supplier Environmental Award.The inaugural Award was presented inNovember 2002 to Siemens VDO inrecognition of the integration of environmentalawareness into workplace culture, operationsand product design and the effectiveness of its Environmental Management System.Other finalists were BASF Azko Nobel andPBR Brakes.

Toyota representatives present Siemens VDO with the inaugural Supplier Environmental Award

Accepting the inaugural Supplier Environmental Award onbehalf of Siemens VDO is Vice President Manufacturing,Zoran Angelkovski. Pictured from Toyota Australia are:(L-R) Ken Asano, President; Dave Buttner, Director Salesand Marketing, (formerly Director Purchasing); Dan Atkins,General Manager Environmental Affairs; and Mike Rausa,General Manager Product Development (formerly GeneralManager Purchasing).

Key Focus Areas for 2003• Work collaboratively with suppliers to

exchange environmental best practice• Increase dialogue amongst suppliers

and review Environmental ManagementSystem status

Level 5

Resourcing research and developmentfor environmental improvement

Level 4

Independently audited, mature Environmental Management System

Level 3

Recognised Environmental Management System (eg: ISO 14001)

Level 2

Structured management system

Level 1

Written environment policyendorsed by management

Lega

l com

plia

nce

Lead

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ip

Performance against 2002 targetsMeasure Target/initiative PerformanceSupplier environmental Supplier self assessment 22% of component suppliers awareness completed self assessmentSupplier Environmental Component and raw material Supplier EMS development framework Management Systems suppliers use a recognised established and survey commenced

EMS by 2005Hazardous substances Chemical Substances Plan developed and 11 of 17 targeted substancesphase out Management Plan by 2001 phased out prior to 2005 deadlineSupplier logistics CO2 at 1999 levels and Logistics analysis commenced

reduce packaging by 10%

06

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2002 Manufacturing PerformanceThe manufacturing highlight for 2002 was theupgrade of the Altona plant to produce thenew Camry. The model change introduced anumber of new processes to themanufacturing operation and increased thelocal content of the vehicles assembled inAustralia. However the installation and testingof this new equipment disruptedmanufacturing operations, which loweredproduction volumes, and temporarily increased demand for various resources,including energy.

Toyota Australia’s key environmentalperformance indicators are closely linked to production volumes and the targets set in 2002 were not adjusted to reflect thesechanging business conditions. Consequently,lower production volumes, the installation of new equipment and the incorporation ofadditional processes at the Altona plantaffected Toyota’s overall environmentalperformance.

Toyota Australia’s financial reporting andinternal environmental reporting period is from 1 April to 31 March. Targets for 2003/04performance were not available at the time of printing this report and will be madeavailable on the website once they have been determined.

Reducing energy consumptionOverall energy consumption per vehicleincreased in 2002 to 10.53 GJ/vehicle, largely attributable to:

• The inclusion of several new processes on the site including increased aluminium castingand the installation of the new A0 Pressline (the largest single action automotive press in Australia)

• The energy use associated with the installationwork and extensive testing of new equipmentprior to production start of the new Camry

• The loss of ‘volume advantage’, which allowsfor fixed energy use, such as factory lightingand amenities, which is independent ofproduction volume, to be amortised over thenumber of vehicles produced

Nonetheless we have successfullyimplemented a number of energy reductionprojects. One of the most significant is a moreefficient casting process, involving the deliveryof molten aluminium to the Casting Shop.

Previously, aluminium for engine casting was delivered in ingot form and melted on site in barrel furnaces. With the installation of a new tower furnace and high pressurecasting machine, molten aluminium can now be delivered straight from the smelter, eliminating the energy use normally required to remelt the ingots.

2000 2001 2002 2002 Actual Actual Actual Target

GJ/veh 9.13 8.63 10.53 8.63Total GJ 845,885 816,156 911,476

Reducing Volatile Organic Compound emissionsIn 2002 there was a significant reduction in Volatile Organic Compound (VOC)emissions per square metre of surface area. This was due mainly to the installation and commissioning of a new world class ‘cartridge’ based painting system.

This new top coat system involves betterarticulated robots that can get closer to thecars, thus significantly reducing over sprayingand associated paint use. As a result, therehas been a 52% reduction in paint used,saving approximately 230,000 litres a year.

The new robotic painting line also featuresindividual pre-measured colour cartridges that reduce the need to flush painting lines,resulting in a 75% reduction in solvent used in the flushing process, saving approximately90,000 litres a year.

2000 2001 2002 2002 Actual Actual Actual Target

VOC g/m2 64.12 63.94 57.1 54.1Total VOC kg 597,063 607,441 509,055

Reducing waste to landfillDuring the year we reduced overall waste to landfill to 17.19 kg/vehicle. In 2002 a major effort was undertaken by our ProductionControl Division to reduce the amount ofpackaging associated with parts received from suppliers.

Toyota Australia utilises returnable stillages and packages for most of our local suppliers,eliminating the need for cardboard boxes and other wrapping materials in manyapplications. There have also been manypositive initiatives to reduce waste to landfilldriven from the shopfloor.

An aluminium recycling scheme for charity was launched by the Engine Shop staff while members in the Body Shop introduced a general waste segregation scheme.

2000 2001 2002 2002 Actual Actual Actual Target

Kg /veh 18.074 17.41 17.19 17.41Total kg 1,674,538 1,646,498 1,487,966

Reducing water consumptionWater consumption increased slightly withrespect to 2001 performance. The maincontributing factor to the increase was, again,the low production volume and the workassociated with the change over to the newmodel Camry.

Despite the overall increase in consumptionper vehicle, various projects over the last fouryears have contributed to cumulative ongoingwater savings in excess of 150 million litres per annum (150,000m3).

Toyota also won the 2002 City West WaterCommunity Environment Award in thecategory of Industry / Commercial TradeWaste based on our long term goodperformance in trade waste quality andquantity improvement.

2000 2001 2002 2002 Actual Actual Actual Target

m3/vehicle 5.21 4.50 5.13 4.50Total m3 482,701 425,574 444,052

Accounting for the environmentDuring 2002 our environmental workgroupsworked on numerous projects as part of thecontinuous improvement in our manufacturingoperations. These projects, which arerecorded in ‘Manufacturing and EnvironmentalCost Reduction Proposals’, led to dedicatedsavings of approximately $200,000 for theyear. This includes such projects as theinstallation of energy efficient lights at theEngine Shop inspection area and therecirculation of rinse water in the Paint Shop.

In addition to these dedicated savings, major engineering modifications to the planthave also had a positive financial impact. For example, it is expected that the Topcoat B Cartridge Painting system will save inexcess of $2.5 million in paint and solvent cost alone over the next year as well as theassociated environmental benefits.

Manufacturing Performance against 2002 targetsMeasure Target/initiative Performance

Reduce energy consumption 8.63 GJ/vehicle 10.53 GJ/vehicle

Reduce Volatile Organic 54.1 gram/m2 57.1gram/m2

Compound emissions

Reduce waste to landfill 17.41 kg/vehicle 17.19 kg/vehicle

Water consumption 4.5 m3/vehicle 5.13 m3/vehicle

Managing chemical substances Assess chemicals prior to introduction Achieved

Hazardous substances 17 remaining products 11 products no longer removed by end 2005 purchased in 2002

ISO 14001certification Maintain ISO 14001 certification Achieved

*GJ: Gigajoule

07

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Managing chemical substancesChemical substances introduced to ourmanufacturing plants are assessed throughthe Prior Assessment System to ensure that their use does not pose any potentialenvironmental problems.

During 2002 utilisation and knowledge of the Prior Assessment System was reinforcedthrough plant wide communications, employeeand contractor inductions and training.

Eliminating environmentallyhazardous substancesToyota Australia uses more than 1200 different products in the manufacturingoperations. As part of our program to eliminate environmentally hazardoussubstances, a survey identified 17 productscontaining controlled substances in excess of the concentration limit of 0.1%. In 2002, 11 of those products were targeted and areno longer purchased by Toyota Australia.The remaining six products are scheduled forremoval or replacement by the end of 2005.

ISO 14001 re-certificationThe Toyota Environmental ManagementSystem covering the Altona and PortMelbourne plants is subject to regular internaland external audits. During 2002, externalaudits were performed by Quality AssuranceServices Pty Ltd (now SAI Global). No non-conformances were reported and both sitesmaintained their certification.

The latest audit report for the Altona plantcontinues to reflect the growing maturity of our Environmental Management System:

Improvements from the shop floorShop floor action is a key component forachieving our manufacturing environmentaltargets. Through the use of environmentalworkgroups and quality circles, as well as theImprovement Ideas scheme, we endeavour tofind and develop projects and ideas. The goodefforts of our Shop floor are typified by thework of George Kypros and Bing Lok, andtheir teams from Body Shop and ProductionEngineering respectively.

In 2002 George and the Body Shop teamestablished a recycling scheme for segregatingpaper, bottles, cans and general waste aroundthe Body Shop. They also established a newenvironmental noticeboard to raise awarenessabout what is important, linking statistics tothe environment.

In one part of the plant the Body Shop team is currently considering implementing a new oil spills-absorbent material that, while moreexpensive, requires only one tenth the materialto soak up the same oil volume, thus reducingoil-contaminated prescribed waste volumes.The team also introduced a vacuum spill kit onwheels in the plant to assist in the quickcleaning up of small spills.

Bing Lok has pursued viable recyclingopportunities and kept extensive recyclingdata on separating cardboard, timber, paperand plastic packaging, paint, casting sand,aluminium (cast, solids, dross and turnings),cast iron and steel (mild and press). Webelieve that Bing’s work shows leadership, as this information is invaluable in allowingToyota to focus our waste minimisation efforts.

Toyota Australia seeks to foster these kinds ofaction and in 2002 the Body Shop team andBing were rewarded as part of the annualEnvironmental Workgroup Awards. Another standout, and winner of the mosteffective workgroup, was the team fromEngine and Casting Shop. They were closely

involved in the installation of new furnaces inthe Casting Shop, which brought two majorenvironmental benefits: the delivery of moltenaluminium (see ‘reducing energyconsumption’) and the ability to accept‘aluminium dross’. This ‘dross’, which waspreviously disposed of as waste to recycling,can now be reused directly in the area.

2002 Environmental Workgroup AwardsMost Effective WorkgroupUnit Assembly 1 (Engine and Casting Shop)

Most Improved WorkgroupMech Techs (Port Melbourne Maintenance)

Best Integration of EMS into the Shop42 Shop (Port Melbourne Fuel Tanks and Doors)

Best Individual Effort by a Work Group MemberBing Lok (Production Engineering)

Award for Special EffortBody Shop (Recycling Initiative)Production Control Division (Reduction ofPackaging Materials)

Key Focus Areas for 2003• Achieve 2003 performance targets• Continue removal of identified

hazardous substances• Turn employee environmental awareness

into action• Develop Environment Improvement Plan

as part of accredited licence application

Manufacturing

08

“The administration of theEnvironmental ManagementSystem provided by theEnvironment Group is aconsiderable contributingfactor to the success of the management system in protecting Toyota fromenvironmental liability whileproviding Toyota with theopportunity to improve itsenvironmental performance.

Another contributing factoris the commitment andenthusiasm evident in themanagers and staff in theShops and facilities of theAltona site.”

Environmental performance is a key component of ourmanufacturing performance and needs to be integrated at everylevel from the shop floor to top management. – Mike Harvie,Director of Manufacturing, Engineering and Purchasing.

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Dealerships & Community

Dealer environmental managementToyota Australia recognises the importance of dealerships in the lifecycle approach toenvironmental management and in late 2001released the Environmental Guidelines forDealers. The guidelines provided advice fordealerships developing an EnvironmentalManagement System during 2002.In 2003 we will survey the dealer network toidentify areas where we can provide technicaladvice and support.

Prius - towards a clean energy vehicle

Toyota Australia showcased thePrius at numerous environmentalevents and seminars. Prius demonstrates a practicaltechnology that significantly reduces vehicle emissions without compromising the drivingexperience. Many companies,government agencies and localgovernments use Prius to symbolisetheir environmental leadership.

End of Life VehiclesAppropriate disposal of vehicles is a significantissue for the automotive industry globally andis as much a design issue as a disposal one.Refer to the Product Design section on page 5for further information on vehicle recyclability.

National Tree DayOn July 28, 2002 Toyota coordinated NationalTree Day in collaboration with Planet Ark,Conservation Volunteers Australia, and variousregional conservation groups. The number ofregistered volunteers and trees plantedcontinues to increase from the inauguralNational Tree Day in 2000.Representatives from 153 of ToyotaAustralia’s 222 dealerships participated in National Tree Day 2002.

Toyota Community SpiritToyota’s Community Spirit program supportsvarious practical environmental projects andcommunity partnership activities.

For example, the Coastal Ambassadorsprogram – a collaboration between Toyota,Phillip Island Nature Park and the VictorianDepartment of Education Science-in-Schoolsstrategy – provides an opportunity for highschool students to learn about ocean life andconservation principles and encourages themto apply experience gained through theprogram in their local community.

In late 2002, Toyota developed a partnershipwith Conservation Volunteers Australia andpiloted a series of projects focussing onpenguin habitat conservation. A broaderprogram of projects that encouragescommunities to address local environmentalpriorities will be launched in 2003.

2002 Community InitiativesThroughout 2002 Toyota worked with the hostcouncils of its Port Melbourne and Altona sitesto provide support for a range of communityactivities.

• In cooperation with the City of Hobson’s Bay,Toyota delivered a series of CommunityTraining Workshops addressing the trainingpriorities of local community groups

• Toyota’s relationship with Altona’s BaysideFestival was recognised as a finalist in theAustralia Business Arts Foundation’sPartnership Awards

• Toyota supported a revegetation project in Truganina Explosives Reserve, on the Altona foreshore

• The Community Tree Planting Trailer, donatedto the Hobsons Bay community by ToyotaCommunity Spirit in 2001, continues to beused regularly by local environmental groups

• Toyota was a member of the City of PortPhillip - Healthy and Safe Cities Alliance, whichprovides a forum to raise local health andsafety issues

• Projects to be implemented in the City of PortPhillip in 2003 include Community TrainingWorkshops for local groups and a series ofpractical community environmental projectsinvolving Toyota employees and local residents

Toyota ForestsThe Toyota Plant Research Nursery based at Port Melbourne continues to supplyseedlings of Tasmanian Bluegum trees forplanting in Collie, Western Australia and in the ‘Green Triangle’ region near the SouthAustralian-Victorian border. Many of the treesare planted in regions affected by salinity. In total, approximately 1.3 million trees have been planted.

Penguin projects• In cooperation with the Port Phillip EcoCentre

and the St Kilda Earthcare group, Toyota iscontributing to the management of a penguincolony living on the St Kilda breakwater

• Toyota Community Spirit and ConservationVolunteers Australia piloted a series of penguin habitat conservation projects such as the construction of nesting boxes at PhillipIsland, Victoria

Key Focus Areas in 2003• Involve dealerships in local community projects• Conduct a dealer network environmental

support survey

Performance against 2002 targets

Measure Target/initiative Performance

Clean energy products Introduce Hybrid Technology by 2003 Prius introduced (Oct 2001)

Support community National Tree Day participation 153 dealers participated in National Tree Dayenvironmental activities

Dealer environmental standards Intranet guidelines by 2001 Guidelines established. Dealer network environmental support survey planned for 2003

End of Life Vehicles Develop appropriate policies Policy development ongoing

Parts packaging Minimise packaging Logistics analysis commenced

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Verification Statement

Your opinion is important to Toyota Australia. We welcome suggestions for improvement to this Report. These should be directed to:

General Manager Environmental AffairsToyota Australia, GPO Box 2006Melbourne Victoria 3001You can also download this report in pdf format at www.environment.toyota.com.auemail: environment@toyota.com.au

This report is printed with vegetable inks on paper stockmade from 100% pre and post-consumer recycled paper.

A sign of things to come

SUSTAINABLE FUTURE

Tel 61 3 9279 2888Fax 61 3 9279 2870

658 Church StreetRichmond, Victoria 3121 Australia

URS Asia-PacificURS House

Aim of the VerificationThe aim of the verification was to ensure the completeness, transparency, credibility and quality of the ToyotaAustralia Environmental Report 2002.

ScopeURS Corporate Sustainable Solutions, a strategic environmental consultancy, independently verified the Report inJanuary/February 2003 via the following approach:

• Data accuracy review – this involved following data trails, in many cases back to the original monitoring records,for more than sixty pieces of environmental data and information.

• Review of the integrity of data collation systems – members of the Environmental Affairs Team were interviewed,as were operational personnel at the Altona Plant, to assess the systems used to collate data and information forinclusion in the Report.

• Site visit – at the Altona Plant, this involved interviews, a site walkover for observation of performance and thereview of documentation and records.

• Interviews with senior executives – senior executives were interviewed regarding the integration of environmentalvalues into mainstream business, ie “ walking the talk”.

• GRI overview – a review of performance indicators in the Report was undertaken against Part C of the GlobalReporting Initiative (GRI) Sustainability Reporting Guidelines (August 2002).

Pushing the BoundariesThe following two attributes positively distinguish this as a leading verification process:

• Interview with the President – in order to ascertain his buy–in towards becoming a leading company with respect to the environment, the President of Toyota Australia was interviewed.

• External advisory group – to guide the report development process, an advisory group made up of external partieswas established. It included environmental and public affairs personnel from Toyota Australia, the Reportdesigners, the Internet site designer, a stakeholder engagement consultant and URS. This allowed us an in–depthinsight into all aspects of the Report development process.

Findings and ConclusionsThe preparation and verification of a public report such as this, is voluntary and not required by legislation, henceit represents a significant commitment from Toyota Australia. We congratulate them for a Report that presents atrue reflection of their environmental performance. It represents a transparent, credible and high quality descriptionof the organisation’s environmental challenges, initiatives and plans for the future. More specifically:

• Data accuracy – we found the data in the Report to be accurate.• Data completeness – we note that the data for Port Melbourne can be found on the website.• Report development process – the Report was developed to meet a challenging deadline using a process that was

both dynamic and sound.• Turning benchmarking into strategy – through the benchmarking of their performance against other organisations,

Toyota Australia has identified key improvement areas and used these to formulate its strategy.• Integration of environmental values – it was apparent from Mr. Ken Asano, President of Toyota Australia, that

environmental values are truly integrated into their way of operating. He had a number of key messages to convey,not least that “top down is not enough”, in fact he attributes the recent focus on environmental leadership to whathe calls a “grass roots wake–up call”. He stressed the obligation of car manufacturers to try to influencedealerships and the community, allowing “growth in harmony with the environment.”

Challenges AheadToyota Australia are aiming for a leadership position with respect to environmental performance. They “get it” and “get on with it”, but as with any powerful goal, a number of challenges lie ahead:

• Social indicators – we commend Toyota Australia for their coverage of environmental indicators and partialcoverage of economic indicators in the Report, on their website and through numerous programs. Whilst thisEnvironmental Report was not intended to incorporate social indicators, we encourage Toyota Australia to includethese in the next Report.

• Stakeholder feedback – you will see on the back cover of this Report, the message “A sign of things to come”.Toyota Australia sees its path towards leadership as a journey and encourages feedback from stakeholders at all stages.

• Challenge for employees – a challenge is also set for employees to turn the President’s “grass roots wake–up call”into real action.

Jo CainPrincipal Environmental Strategist

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