Management Policies of the Toshiba Group Moving Forward (Issues to be Addressed)

Note: The following is the translation of “Management Policies of the Toshiba Group Moving Forward (Issues to be Addressed)” section of the Business Report, From April 1, 2021 to March 31, 2022. This English translation was prepared for reference purpose only.

◎ Enhancement of Shareholder Value

We recognize that it is the utmost responsibility for the Board of Directors to act in the best interests of the Company and our shareholders.

In April 2022, the Board of Directors resolved to establish Special Committee, in order to engage with potential investors and sponsors and review strategic alternatives. All members of the Special Committee are composed by the independent outside directors of the Company. Discussions with potential investors and sponsors are led by the management team and have started. The Special Committee along with management, will engage in the negotiation process by confirming the potential structures in advance, receiving timely reports on the negotiation status, providing opinions at important junctures. The Special Committee shall also conduct an analysis on a thorough process to compare offers and structures, identify the privatization or other alternative offer that is best for our diverse stakeholders including shareholders, and provide the current relevant information prior to the AGM, based upon the status at that point in time.

◎ Our Vision

Based on Basic commitment of the Toshiba Group, committed to people, committed to the future, the Group intends to continue contributing to the development of society by combining the knowledge and capabilities accumulated over years of experience in a wide range business, ranging from infrastructure to electronic devices, with its strength in information processing, digital and AI technologies, and providing services and solutions that can help to solve issues facing the world today..

The Company plans to formulate various measures to maximize the corporate value of the Group and announce a medium-term management plan in 2022.

◎ Advice from the Governance Enhancement Committee

At the Company, an investigation was conducted by the investigators appointed at the Extraordinary General Meeting of Shareholders held on March 18, 2021 to look into whether the 181st Ordinary General Meeting of Shareholders held on July 31, 2020 was conducted in a fair manner (including whether or not resolutions were handled appropriately and fairly), and the investigation report on the results of said investigation was disclosed in June 2021. The investigators indicate in the investigation report that, based on the provisions of the Corporate Governance Code, the 181st Ordinary General Meeting of Shareholders held on July 31, 2020 cannot be said to have been conducted in a fair manner. The Company takes such indication seriously, and with regard to the so-called Pressure Issue, it was determined that an objective, transparent, and exhaustive inquiry, in which external third parties would also participate, should be conducted into the real causes and facts of the matter to clarify the locus of responsibility and to put together measures to prevent a recurrence. To this end, the Governance Enhancement Committee was set up and commissioned to analyze the root causes, clarify responsibility, and provide advice in relation to the measures to prevent a recurrence. The report compiled by this Committee was received on November 12, 2021. Based on the advice given in the Committee report, the Company had the Board of Directors and Executive Officers hold discussions and formulate measures to prevent a recurrence,focused on building healthy relationships of trust with shareholders, improving an organizational structure that is excessively reliant on government ministries and agencies, rebuilding of corporate governance, and practicing the “correct tone at the top.” While working to formulate and implement measures to prevent a recurrence of this incident, the Company will continue efforts to quickly recover the trust of all stakeholders, particularly with shareholders who were disadvantaged by this incident, by continuing to demonstrate an unchanging commitment to practicing the “correct tone at the top” into the future among its management, including first and foremost the Directors and Executive Officers.

◎ Climate Change

The Group sees impacts from climate change as material risks and, following the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), we are analyzing impacts on our business. We predict physical risks from natural disasters and transition risks from the rising cost of responding to regulations, loss of sales opportunities due to delays in responding technologically, and impaired reputation from delays in initiatives. As such, we are striving to strengthen our frameworks and activities for addressing these risks. At the same time, identifying opportunities from increased demand for decarbonized energy technologies, energy-saving products and services, and the like, we are proceeding to develop our renewable energies business and other businesses with carbon neutrality as one of our business strategies. We have established a framework under which important issues related to climate change that could affect our business are discussed at the Sustainability Strategy Committee, which is chaired by the President, and then reported to the Board of Directors.

As a response to climate change and as stated in our Environmental Future Vision 2050, the Group seeks to achieve carbon neutrality throughout the value chain by FY2050 and, as a new target, reduce GHG emissions by 70% by FY2030 compared to the FY2019 level. For our FY2030 reduction targets, in FY2020, we acquired the approval of the Science Based Targets (SBT) initiative, which is consistent with the Paris Agreement.

At present, we are pursuing the detailed Seventh Environmental Action Plan, which takes us to FY2023, and are proceeding to reduce GHG emissions in our business activities, as well as in our products and services. We aim to hold total GHG emissions in our business activities in FY2023 to 1.04 million t-CO2 and to achieve a 1% year-on-year improvement every year in our total energy-derived CO2 emissions intensity. Furthermore, in our products and services, we aim to continue developing and delivering renewable energies as well as products and services that have robust energy-saving features. We aim to reduce GHG emissions (Note 1) during energy supply by 13.6% in FY2023 (versus FY2019), while aiming for a 43 million t- CO2 contribution to GHG reduction (cumulative from FY2021) through the adoption of renewable energies and an 84 million t-CO2 contribution to GHG reduction (cumulative from FY2021) during product use (Note 2).

(Note 1) The items subject to the target are products and services associated with power supply, such as thermal power generation

(Note 2) The items subject to the target are products and services associated with power consumption, such as social infrastructure products

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