Toyota Australia - Environment and Community Report 2006

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Environment and Community Report 2006 Toyota Motor Corporation Australia Limited ACN 009 686 097 Environment and Community Report 2006 2 1 Toyota Australia Message from the President Throughout 2005 and now into 2006, the environmental activities of Toyota across the globe have been unified with the phrase 8Think and Act 9. It is a phrase that is consistent with the pillar of the Toyota Way that encourages continuous improvement in everything we do. One great strength of this approach is that it recognises the ability of individuals to act and generate change.

The actions of one person can create a ripple effect that ultimately can touch on people at our workplace, in our homes or in our community. Toyota Australia knows that a decision to change a process in the manufacturing plant in a bid to reduce energy use, or steps to engage with specific stakeholder groups can have a ripple effect on people in other parts of the business or community. Our efforts must be focused on managing these effects and channelling them in a way that promotes benefits for everyone concerned.

During the past year, Toyota Australia has developed a five year environment plan and revised its governance structure in ... more. less.

an effort to streamline information flows and consultation regarding environmental and community engagement issues. We have adopted global projects which will have a positive affect on our Australian operations and we are regularly seeking opportunities to engage with our communities. The environmental and community engagement programs operate across the company, and I am proud of the efforts Toyota Australia people have made to adopt the 8Think and Act 9 approach in everything they do. I am also pleased with the relationships we have developed across the country and we look forward to future opportunities to engage and to learn. As an automotive company, we are well aware of the great responsibility we have to work with the environment to create a better place to live and work. We look forward to continuing our journey in 2006. Ted Okada, President and CEO, Toyota Australia 01 Contents Page 01 Introduction Environment and Community Highlights 3 02 Principles, values and people Guiding Principles 5 Health and Safety 6 Compliance 7 Stakeholder Engagement 8 03 Environment Environment Plan 9 Environmental Awareness Survey 11 Vehicle Life-Cycle 12 Product 13 Supply Chain and Purchasing 15 Manufacturing 17 Export and Distribution 21 Sales and Marketing 23 04 Community involvement Toyota Community Spirit 25 Support of Major Community Events 30 i n t r o d u c t i o n Key Facts 2003 2004 2005 Sales revenue $7.13b $7.30b $7.62b Total assets $1.83b $1.74b $2.05b Employees 4,700 4,463 4,512 Vehicle production 113,614 109,862 109,222 Engine production 86,673 85,037 85,769 Local component suppliers 97 89 84 Purchase value $1.6b $1.03b $1.01b Vehicle sales, domestic Toyota 186,370 201,737 202,817 Lexus 4,490 5,009 6,005 Daihatsu 4,845 5,016 3,007 Exports Vehicles exported 66,200 65,400 68,989 Export countries 24 24 23 Export revenue (incl. parts) $1.4b $1.2b $1.3b Dealers Toyota 218 217 218 Lexus 17 18 18 Daihatsu 83 79 Dealer employees 11,400 * All figures relate to calendar years Toyota Australia - Historical Facts 1958 First 13 Landcruisers imported for use on Snowy Mountains Scheme 1962 Toyota passenger vehicle franchise acquired by Australian Motor Industries(AMI) Thiess (Sales) appointed to distribute Toyota commercial vehicles 1963 Tiara assembly begins at AMI Port Melbourne plant 1964 Corona assembly begins at Port Melbourne 1967 Crown assembly begins at Port Melbourne 1968 Corolla assembly begins at Port Melbourne Toyota acquires 51% of AMI, and 40% of Thiess sales and changes name to Thiess Toyota 1978 First engines built at Altona 1980 Toyota acquires 100% of Thiess Toyota 1985 First Corona wagons exported to New Zealand 1987 Camry replaces Corona at Port Melbourne Toyota acquires 100% of AMI and York Motors 1988 Toyota Motor Corporation Australia formed 1990 Lexus LS400 launched in Australia 1991 Toyota Australia becomes Australian overall market leader 1992 One millionth locally built Toyota produced 1995 Altona assembly plant officially opened. Camry enters production at Altona 1998 Altona plant achieves ISO14001 Environmental Management System certification 2000 National Sales and Marketing headquarters opened in Woolooware Bay, Sydney 2001 Launch of Prius hybrid petrol/electric vehicle onto the Australian market 2003 ToyotaAustraliaoverallAustralian market leader with industryrecord sales of 186,370 vehicles 2004 ToyotaAustraliaoverallAustralian market leader with industryrecord sales of 201,737 vehicles 2005 ToyotaAustraliaoverallAustralian market leader with industryrecord sales of 202,817 vehicles Scope of the 2006 Report The 2005 Environment and Community Report used a calendar year for reporting purposes. In this transition year, manufacturing data is used from the Japanese fiscal year (April 1 to March 31), the key facts table uses calendar year data, and all other information covers the period from 1 January 2005 to 31 March 2006. All manufacturing data refers to the Altona manufacturing site, which accounts for 92% of local energy use and 91% of local water use. Additional operations in Port Melbourne included the manufacture of fuel tanks, metal stamping and bumper bar painting. Relocation of the bumper bar painting operations was completed in March 2006 with the commissioning of a new facility at Altona. From June 2006 all manufacturing operations will be located at Altona. Important notice Toyota Australia has made every reasonable effort to ensure that this report is correct at the time of publication. However, as vehicle specifications and business processes may vary, the details in this report may change over time. To the extent allowed by law, Toyota Australia will not be liable for any reliance which may be placed on this report. Toyota in Australia Toyota Australia (Toyota Motor Corporation Australia Limited) is one of Toyota 9s (Toyota Motor Corporation) global manufacturing centres. The corporate headquarters, manufacturing and engineering activities are in Melbourne, and sales and marketing operations are located in Woolooware Bay, Sydney. There are also regional offices and parts distribution centres in Victoria, New South Wales, Queensland, and the Northern Territory. Toyota Australia has a long-term commitment to both its domestic and export markets. Apart from the locally built Camry, Toyota Australia imports a wide range of passenger, 4WD and commercial vehicles. These include the Yaris, Corolla, Avensis, Tarago, RAV4, LandCruiser, Prado, HiLux and HiAce, as well as the hybrid-model, Prius. In addition the luxury Lexus range of vehicles is also sold and distributed. Sales of Daihatsu vehicles within Australia ended on 31 March 2006. Toyota Australia is the largest Australian vehicle exporter. In 2005, 68,989 cars were exported to 23 export destinations, supplying Camry vehicles to the Middle East, South Africa and several South Pacific countries. Front cover: Andy Dudok has worked in the Body Shop in Altona manufacturing and then in Rectifications since 1997. He decided to use scrap metal from a Toyota Camry to create this accurate replica of a southern rock lobster. This sculpture was displayed as part of the Toyota Community Spirit gallery exhibition, 8Natural Selection 9, from December 2005 to February 2006. i n t r o d u c t i o n 3 Toyota Australia e n v i r o n m e n t & c o m m u n i t y h i g h l i g h t s Environment and Community Report 2006 4 01 Key focus areas for 2005 1. Finalise long-term industry and corporate fuel consumption targets for all new light passenger and commercial vehicles 2. Complete the development of local and imported vehicles to comply with Euro 3 and Euro 4 emissions standards 3. Launch new model incorporating direct injection LPG system 4. Continue initiatives to raise awareness of environmental issues among product development staff 1. Continue to support cross divisional environmental projects with an increased emphasis on in-plant substances of concern procurement 2. Develop Supplier Environmental Management System policy beyond 2005 3. Support information sharing between manufacturing and the supply chain 1. Maintain ISO 14001 certification and achieve 2005 performance targets 2. Home focus training & awareness program 3. Assist with new project targets (water 70%, and electricity 10% - reductions) 4. Establish Work Group Leaders for Action Learning Teams 5. Release TEMS guide (for use by work group members) 6. Support environment graduate rotation into manufacturing shops 7. Increase parts & accessories monthly review of environment activity 8. Establish training-gap analysis system 9. Support & identify training requirements 10. Utilise the introduction of a new waste contract to focus on waste minimisation 11. Determine the most appropriate replacement for afterburners in the paint shop 1. Review environmental compliance in the dealership network 2. Waste audits and colour-coded waste segregation will be extended across all parts distribution centres in 2005 3. Start the use of returnable packaging modules from Japan in February 2005 4. Provide environmental practice coaching and support, coordinated with the Environmental Policy Department, to field representatives and district sales operations managers, as well as dealers who complete the self assessment and register with Toyota Australia 9s national database 1. Increase dealer participation in Toyota Community Spirit activities 2. Increase employee participation in Toyota Community Spirit 3. Foster links between the Toyota Community Spirit partnerships and partners Toyota Australia Environment & Community highlights Performance 2005 1. Industry agreed to a target of 222g CO 2 /km at 2010 for all light vehicles 2. All vehicles certified to Euro 3 (ADR 79/01) from January 2006. A number of models certified to Euro 4 or beyond 3. New model HiAce incorporating sequential vapour injection LPG system available as an option with the petrol engine model 4. Product development awareness initiatives not progressed due to changes in organisational responsibilities 1. Established a program to remove four substances of concern from the supply chain 2. Environment Policy updated and distributed to suppliers 3. Toyota Australia supplier conference held 4. Toyota Australia signed up as founding member of ECO-Buy 1. Recertified EMS to ISO14001 with no non-conformances. 8Per vehicle 9 reductions achieved in overall energy use, water consumption and waste disposal 2. Increased participation in home focus and awareness activities with over 200 staff attending the Phillip Island Nature Park 3. Manufacturing Environment Group assisted TEMS work groups to implement 16 documented environmental improvement projects, saving approximately $775,000 per year 4. Launch of TEMS work group leader Action Learning Team 5. Design and launch of the 8Green Guide 9 to assist in TEMS development and implementation 6. Successful graduate rotation undertaken in Powertrain plant 7. Parts & accessories review not undertaken 8. Training gap analysis system not implemented 9. Environmental awareness training expanded to non manufacturing areas including Brisbane Parts Distribution Centre 10. Additional recycling opportunities identified through new waste contract, such as windscreen glass recycling 11. Major energy saving project implemented in Paint Shop with the decommissioning of the Topcoat A afterburner 12. Commissioning of new bumper resin plant featuring water borne painting technology 1. 61.6% of dealers completed TSM environmental management self-assessment 2. Colour-coded waste segregation implemented in Sydney and extended across other parts distribution centres 3. Confirmed strategy and schedule for the implementation of returnable modules from Japan 4. Environmental practice coaching deferred 5. Export and Distribution Division completed review of CO 2 emissions for vehicle distribution 6. Waste reporting system to be implemented as part of 5 year environment plan 7. Staged reductions in cardboard packaging resulting in significant reductions in cardboard packaging waste throughout supply chain 8. Brisbane Parts Distribution Centre installed plastic baler 9. Environmental Management System (EMS) Co-ordinator appointed to implement EMS into the five parts distribution centres 1. Dealer participation statistics developed for each state 2. Full roll-out of Toyota Community Spirit to each state and regional offices. Employee participation in Project Penguin Homes 3. Toyota Community Spirit still investigating ways to foster links between partners Products Supply chain and purchasing Manufacturing Sales and after sales, marketing and parts distribution Community and stakeholder engagement Environment and Community Report 2006 6 5 Toyota Australia Guiding Principles Toyota 9s seven Guiding Principles serve as the fundamental management policy for all operations. The principles reflect Toyota 9s commitment to providing clean, safe and innovative products, while respecting the environment and culture of the local communities. The Guiding Principles form a foundation for Toyota 9s Earth Charter, adopted in April 2000. Contribution to sustainable development As Toyota 9s business operations have become global, society 9s expectation of the company 9s contribution towards sustainable development has increased and the scope of these expectations has expanded. Toyota has prepared an explanation paper called 8Contribution to Sustainable Development 9 which interprets the 8Guiding Principles 9 from the perspective of how Toyota can work toward sustainable development in interactions with stakeholders. The full text version of this paper is available at: Toyota Way Toyota has stated its corporate values and methods in The Toyota Way 2001. These are shared throughout the Toyota group as an aid to realising the Guiding Principles. The Toyota Way defines how employees should perform and behave in supporting the Guiding Principles. The Toyota Way is supported by two main pillars: continuous improvement, and respect for people. Toyota Way training in Australia The Toyota Way Foundations is a one day training course, based on The Toyota Way 2001. It is an education and development starting point, designed to give employees a firm grasp of the terminology and concepts of the Toyota Way, as well as the basic history and heritage of Toyota. By 30 March 2006, 1,891 employees in Australia had received Toyota Way Foundations training. Human resources development Toyota Australia is committed to improving the performance of the entire organisation through improving the abilities of each employee and maintaining and improving the morale of employees by providing them with the opportunity for growth through work. Workplace agreement (WPA) The Toyota Australia 2005 WPA was certified in the Australian Industrial Relations Commission in July 2005. This agreement is binding for a period of three years, with a commitment for a fourth year. The overall purpose of the WPA is to express the commitment of the parties towards Toyota Australia achieving sustainable success in a global company. This agreement also assists Toyota Australia in business planning, maintaining competitiveness on a local and global scale, and in ensuring consistency and fairness of work conditions. Workplace diversity Toyota Australia is proud that there is a dynamic mix of cultures, ages, religions and beliefs represented amongst 4,512 employees. There are approximately 60 nationalities, with ages ranging from 18 to 80. The workforce is 13% female and 87% male, the average length of service is 10.3 years, and the longest length of service is 51 years. Health and Safety The Health and Safety system within Toyota Australia is structured around the Plan-Do-Check-Act continuous improvement process. Toyota Australia 8Plans 9 using risk assessments, undertakes the 8Do and Check 9 by performing regular workplace safety checks and 8Acts 9 by addressing hazards immediately when they become apparent. SafetyMAP The Safety Management Achievement Program (SafetyMAP) is an audit tool, managed by the Victorian Workcover Authority. Use of SafetyMAP makes an independent audit and review of an organisation's health and safety management systems possible. SafetyMAP helps to establish safer working environments consistent with the requirements of health and safety legislation, and protects people by eliminating, or better managing, any health and safety hazards. The SafetyMAP audit criteria allow an organisation to: " measure the performance of its health and safety program " implement a cycle of continuous improvement " compare health and safety performance systems to a recognised benchmark " gain recognition for the standards achieved by management of health and safety. There are two levels of SafetyMAP certification, an initial and an advanced level, with Toyota Australia at present holding the initial level certification. Toyota Australia first achieved SafetyMAP certification in August 2003. Since then auditors from Lloyds have audited various departments every six months to make sure safety systems are operating effectively. In 2006 all Victorian sites will be audited for recertification (certification is valid for three years). President 9s Safety Shield The Toyota Australia President 9s Safety Shield was introduced to manufacturing operations in Victoria in 2001. Since then it has evolved into a national program that has increased awareness of health and safety and encouraged enhancements to safety systems. The objectives of the President 9s Safety Shield are: 1. To reward and recognise outstanding health and safety management; and 2. To implement regular monthly auditing of safety management systems to ensure compliance with corporate policy and procedures. To be eligible to receive the award a department must: " Report, investigate and effectively countermeasure every accident/incident occurring for that month, including near- miss incidents " Support and facilitate successful rehabilitation of any injured team member as a result of an accident in that month " Share accident report details with other departments to prevent a repeat of the accident " Update and maintain accurate visual control boards (these display inspection results, managers audit results, hazard identification and countermeasure) " Display near-miss reports on visual control boards. Recipients of the award are presented with a trophy each month, with a major prize being awarded annually to a department for the achievement of outstanding health and safety performance. 02 p r i n c i p l e s , v a l u e s a n d p e o p l e Brisbane Customer Services Division won the 2005 President 9s Safety Shield. The award was presented to Philippe Faydherbe, Corporate Manager Operations (right), by Executive Vice-President of Manufacturing, Shoji Baba. Continuous Improvement Respect for People Challenge Form a long term vision, meeting challenges with courage and creativity to realise our dreams. Kaizen We improve our business operations continuously, always driving for innovation and evolution. Genchi Genbutsu Practice Genchi Genbutsu& go to the source to find the facts to make correct decisions, build consensus and achieve goals at our best speed. Respect Respect others, make every effort to understand each other, take responsibility and do our best to build mutual trust. Teamwork Stimulate personal and professional growth, share opportunities of development and maximise individual and team performance. 1. Honour the language and spirit of the law of every nation and undertake open and fair corporate activities to be a good corporate citizen of the world. 2. Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in the communities. 3. Dedicate ourselves to providing clean and safe products and to enhancing the quality of life everywhere through all our activities. 4. Create and develop advanced technologies and provide outstanding products and services that fulfil the needs of customers worldwide. 5. Foster a corporate culture that enhances individual creativity and teamwork value, while honouring mutual trust and respect between labour and management. 6. Pursue growth in harmony with the global community through innovative management. 7. Work with business partners in research and creation to achieve stable, long-term growth and mutual benefits, while keeping ourselves open to new partnerships. Two pillars. Five Principles. http://www.toyota.co.jp/en/sustainability/index.html Environment and Community Report 2006 8 7 Toyota Australia Compliance Toyota Australia has established a Corporate Compliance Committee to provide a strong and consistent commitment to the highest standards of corporate governance and to maintain a culture of compliance at all levels. The Corporate Compliance Committee meets every two months and addresses Toyota Australia 9s key compliance areas: " Trade Practices Act " National Privacy Principles " Occupational Health & Safety " Environment " Australian Design Rules. Compliance is a fundamental requirement for fulfiling Toyota 9s Guiding Principles and business objectives. It is also included in the annual Balanced Scorecard for each division. Toyota Australia Board members have responsibility for different corporate issues. This is confirmed by membership of different committees, such as the Environment Committee, Human Resources Committee and Corporate Compliance Committee. Code of ethics Toyota Australia 9s Code of Ethics is distributed to all employees. Employees, contractors and agents of Toyota Australia are expected to: " obey the law " be honest in word and deed " respect community values " be responsible " perform their duties consistent with the Code of Ethics. " use good judgement in avoiding any action that could create a conflict between personal, company and community interests. Balanced scorecard Toyota Australia 9s company-wide strategy management system is based on the Kaplan & Norton Balanced Scorecard. This system translates long term corporate goals into specific annual commitments that then cascade to all divisions, and departments. Performance monitoring is assisted by the intranet- based Balanced Scorecard reporting system, using the Plan-Do-Check-Act cycle. 02 p r i n c i p l e s , v a l u e s a n d p e o p l e 02 p r i n c i p l e s , v a l u e s a n d p e o p l e Stakeholder engagement Toyota Australia engages with a range of stakeholders. The following is a list of environment-specific interactions. Toyota Australia is a member of: " The PACIA Automotive Plastics Steering Committee " The Australian Industry Group Environment Working Group " The ECO-Buy Business Advisory Group " The Commonwealth Games Environment Stakeholder Forum. In addition to the above Toyota Australia has also participated in the: " Victorian EPA Greenhouse Gas Emissions Reporting and Disclosure Pilot " Federal Government Energy Efficiencies Opportunities Pilot " Australian Research Institute in Education for Sustainability (ARIES), Industry Sustainability Project " Victorian Planning and Environmental Lawyers Association Conference " Australian Greenhouse Office Greenhouse Challenge Plus Conference " 6th Asia Pacific Roundtable on Sustainable Consumption and Production " 5th National Environment and Energy Conference. Corporate Responsibility Index (CRI) The Australian CRI is based on a United Kingdom reputation tool and administered by the St James Ethics Centre in consultation with Australian business. Participating companies use this tool to better understand how corporate social responsibility applies to their business. The CRI provides a benchmark for companies to compare their management practice across the four areas of community, environment, marketplace and workplace, as well as their performance across a range of environmental and social impact areas. Ernst and Young verifies and audits all survey responses. Results are published in 8The Age 9 and 8The Sydney Morning Herald 9. In 2005 Toyota Australia moved from fourth to second position with a score of 95.7%. Toyota Australia 9s ratings for 2004 were: Corporate Strategy: Gold Integration: Silver Management practice: Gold Performance and impact: Gold Assurance and disclosure: Gold Toyota Australia 9s ratings for 2005 were: Corporate Strategy: Gold Integration: Gold Management practice: Gold Performance and impact: Gold Assurance and disclosure: Gold Toyota 9s survey response and feedback report are published on: Reputation Quotient Toyota Australia participates in the RQ survey conducted by Harris Interactive Australia. The RQ study is based on national research and specifically measures a respondent 9s perceptions in relation to six measures: Emotional Appeal, Products and Services, Social Responsibility, Workplace Environment, Financial Performance, and Vision and Leadership Toyota Australia has been ranked as number 1 in the 2005 RQ study released in August 2005. It is the first time that an automotive company has achieved the top ranking in the survey. In 2005, Toyota Australia achieved top ranking in the Products & Services and Workplace Environment categories, and number two in all other categories. The tables below provide 2005 rankings and Toyota Australia 9s results since 2000. Toyota Australia 9s Manager Environmental Policy, James Holgate(left), is congratulated by Origin Energy 9s Executive General Manager of Development Projects, Andrew Stock, on winning the 2005 Banksia Award for Business Environmental Responsibility and Leadership. Toyota Australia wins 2005 Banksia Award This Award recognised Toyota Australia 9s continuous improvement in its environmental performance. Judges commended Toyota Australia for broadening its environmental strategies beyond manufacturing to back office functions, suppliers and dealers, and to other parts of the distribution chain. The Banksia Awards have earned a reputation for being the most prestigious in recognition of environmental excellence and innovation in Australia for individuals, community groups, businesses and government organisations. Toyota Australia was also a finalist in the Banksia Award for Environmental Leadership in Media Communications. This recognised Conservation Connect, a key element of the Toyota Community Spirit partnership with Conservation Volunteers Australia. 2005 Results 1. Toyota Australia 2. Microsoft 3. Sony 4. Virgin Blue 5. Woolworths 6. Holden 7. Harvey Norman 8. David Jones 9. NRMA 10. Coles Myer Toyota Results 2000-05 Rank 2005 1 2004 3 2003 3 2002 4/5 2001 3/4 2000 9 Toyota Australia is committed to ensuring all employees are provided with opportunities to build positive relationships both within and outside the workplace. In this photo are some of the 18 Melbourne-based employees who participated in the 2006 Melbourne Corporate BRW Triathlon. http://www.toyota.com.au 9 Toyota Australia e n v i r o n m e n t e n v i r o n m e n t 03 Guiding principles for contribution to sustainable development The 4th Toyota Environmental Action Plan is a statement of the activities that Toyota must undertake in order to realise the corporate objective it is striving to achieve: 3 to become a leader and driving force in global regeneration by implementing the most advanced environmental technologies and processes. This is in response to Toyota 9s Guiding Principle No 6: To pursue growth in harmony with the global community through innovative management. The plan contributes to sustainable development by reducing environmental impact throughout all areas of business activities. This enables environmental and economic sustainability and helps build close and co-operative relationships with a wide spectrum of individuals and organisations involved in environmental preservation. Toyota Australia Environmental Policy: " Pollution prevention " Waste minimisation " Compliance with legislation " Continuous improvement These four key aspects of Toyota Australia 9s Environmental Policy guide every stage of Toyota Australia 9s activities in achieving the objectives of the Environment Plan. Management and coordination of Toyota Australia 9s Environment Plan The Environmental Policy Department plays akeyrolein thedevelopment of strategyand initiatives which are deployed to divisions. The Manufacturing Environment Group is responsible for environmental management at the Altona manufacturing site. An Environmental Management Systems Coordinator oversees the environmental management in the network of Toyota Australia 9s five parts distribution centres. These activities are supported by management environment committees in the Manufacturing and Sales and Marketing operating arms and workplace teams across manufacturing and non- manufacturing functions. The management environment committees report to the Toyota Australia Environment Committee which is chaired by Toyota Australia President and CEO, Ted Okada. *4th Action Plan items 9, 10, 12, 14, 18, 19, and 22 relate to issues that are not relevant to Australian operations. Action items 1. Reduce CO 2 emissions 2. Promote the development of technologies to achieve the fuel efficiency performance in each country and region 3. Promote the development of clean energy vehicles, encourage their effective introduction and ensure wider market acceptance 4. Develop technologies to respond to the diversification of energy and fuel sources 5. Promote initiatives to improve traffic flows using a variety of networking technologies 6. Reduce CO 2 emissions in production and logistics activities 7. Promote effective use of resources to contribute to the realisation of a recycling-based society 8. Reduce water consumption 11. Promote management and further reductions in the use of substances of concern (SOC). Eliminate use of four SOCs (lead, mercury, cadmium and hexavalent chromium) globally 13. Reduce emissions to improve air quality in urban areas in all countries and regions 15. Strengthen consolidated environmental management 16. Further promotion of environmental management at business partners 17. Enhance environmental education 20. Contribute to the development of a recycling-based society 21. Improve disclosures of environmental information and two-way communications 2006 Targets " Five year CO 2 reduction targets will be set for office sites " A complete review of environmental product and environmental brand strategies will be undertaken " Manufacturing will achieve a 10% reduction in CO 2 emissions using 2001 baseline data " A complete inventory of logistics CO 2 data will be undertaken and action plans for CO 2 reduction will be developed " Manufacturing will achieve an 8% reduction in waste generated per unit from 2005/06 baseline data " Two returnable parts delivery modules will be introduced at the parts distribution centres " Five year waste reduction targets will be set for offices and parts distribution centres " Manufacturing will achieve a 12% reduction in water consumption per unit from 2005/06 baseline data " Five year water consumption reduction targets will be set for offices and parts distribution centres " The installation of rainwater collection tanks at Sydney Parts Distribution Centre and Corporate Headquarters Company Fleet will be completed " Processes and plans will be developed to eliminate four substances of concern from vehicles, service parts and accessories " Manufacturing will achieve a 1% reduction per unit in volatile organic compound manufacturing emissions based on 2005/06 baseline data " Manufacturing will maintain ISO14001 certification with zero non-compliance and zero complaints " Plans for expansion of Environmental Management Systems to all Toyota Australia sites will be developed " Sydney Parts Distribution Centre will be certified to ISO 14001 " 80% of major dealers will be compliant with the Dealer Environment Risk Audit Program " Implement an ECO-Buy action plan to increase the purchase of more environmentally sensitive supplies " Continue initiatives to achieve quantifiable improvements in staff awareness of, and involvement in, environmental activities " Develop jointly with the Community Liaison Committee, a new Environmental Improvement Plan for the manufacturing plant " Toyota Community Spirit partnerships and employee volunteering activities will be maintained " Produce the Toyota Australia Sustainability Report 1. Energy/Global Warming 2. Recycling of Resources 3. Substances of Concern 4. Atmospheric Quality 5. Environmental Management 2010 Targets " Manufacturing will achieve a 13% CO 2 reduction per unit of production compared with 2001 data " Logistics operations, parts distribution centres and offices, will achieve reduction targets to be established following further analysis of current usage " Manufacturing will achieve a 25% reduction in waste per unit of production compared with 2005/06 data " Parts distribution centres will achieve reduction targets to be established following further analysis of current processes. " Offices will achieve zero waste to landfill " Manufacturing will achieve a 25% reduction in water consumption per unit of production based on 2005/06 data " Reduction targets will be established for parts distribution centres and offices following further analysis of current usage " Toyota Australia will eliminate the four SOC (lead, mercury, cadmium and hexavalent chromium) from all vehicles, parts and accessories supplied to Australian and overseas markets " Manufacturing will achieve a 5% volatile organic compound (VOC) reduction per unit of production compared with 2005/06 data Toyota Australia will strive to further reduce VOC emissions to 30g/m 2 " Altona manufacturing site will maintain the Environmental Management System and achieve a target of zero complaints and zero non-compliances " Complete a rollout of EMS across the remainder of the Company, including ISO 14001 certification where required " All suppliers are asked to comply with Toyota Australia 9s Supplier Environmental Policy " Implement an ECO-Buy action plan to increase the purchase of more environmentally sensitive supplies " Assist all dealers to comply with Dealer Environmental Risk Audit requirements and introduce coordinated reporting of environmental performance indicators across the network " Continue initiatives to achieve quantifiable improvements in staff awareness of, and involvement in, environmental activities " Develop jointly with the Community Liaison Committee, a new Environmental Improvement Plan for the manufacturing plant " Toyota Community Spirit partnerships and employee volunteering activities will be maintained " Improve disclosures of environmental information through regular reporting Environment and Community Report 2006 10 Toyota 9s 4 th global environmental action plan* Toyota Australia 5 year environment plan Global warming (CO 2 ) Waste (packaging materials, etc) Substances of concern Parts and materials suppliers Toyota dealerships Recycling Disposal Toyota development and design Toyota production Toyota logistics Logistics Procurement Customer use Global warming (CO 2 HFC) released into the atmosphere (HC, CO, NOx, etc.) Re-use. Waste (shredder residue, used parts including batteries) Extraction of resources Raw materials Fuel Energy Water Global warming (CO 2 ) Substances released into the atmosphere and discharged to waterways, noise, odour, waste etc. Waste (waste oil, used parts, etc. resulting from maintenance) Environment and Community Report 2006 12 Vehicle life-cycle Environmental awareness survey e n v i r o n m e n t 03 11 Toyota Australia In December 2005 a Toyota Australia Employee Environmental Awareness Survey was conducted. Approximately 810 employees responded to the survey. The survey was developed to measure environmental awareness and, over time, to determine success in improving performance. From the results of the initial survey, priority is being given to achieving improvements in staff awareness. Toyota Australia hopes to achieve 85% of staff reporting significant increases in awareness over the next year. Q1 How would you rate your awareness of environmental issues facing the world today? Q2 I have a good understanding of how my activity at Toyota can impact the environment. Q3 Management are committed to implementing responsible environmental practices. Q4 I'm aware of my role in ensuring Toyota's environmental obligations are met. 20% 40% 60% 80% 100% Toyota Australia total Target Q5 Do you think paper waste is minimal in your area? Q6 Everyone in the office copies and prints double sided and re-uses single sided paper. Q7 Has your environmental awareness at work changed over the last 12 months? Percentage of respondents rating a positive score of 4 or 5 on a 5 point scale. 03 e n v i r o n m e n t Environment and Community Report 2006 14 13 Toyota Australia Corporate average carbon dioxide emissions Previous reported average fuel consumption figures have been discontinued due to changes in mandated test procedures. The Australian motor industry is now reporting carbon dioxide vehicle emissions in accordance with Australian Design Rule (ADR) 81/01. The graph below shows sales weighted average of carbon dioxide emissions of all Toyota, Lexus and Daihatsu vehicles sold in each calendar year. Industry averages have not yet been compiled. During 2005 the Australian motor industry agreed with the Federal Government to a target of 222gCO 2 /km by 2010 for all light vehicles. Ethanol During 2005, Toyota Australia, in concert with other industry members, undertook further work to help improve consumer confidence in the use of appropriate ethanol blended petrol. In addition to the vehicles previously publicised as suitable for use with fuel with up to 10% ethanol, additional vehicles able to operate at up to 5% ethanol were identified. Also, agreement was reached among manufacturers and the Federal Government to provide vehicle labelling on locally manufactured models to declare their suitability with fuel containing up to 10% ethanol. Vehicle emissions With the introduction of ADR 79/01, all models have been certified to the more stringent emissions standards, equivalent to international Euro 3 requirements. In addition, Toyota Prius, Corolla, RAV4, Tarago and Avensis models and Lexus LS430, SC430, IS250 and RX350 were all certified to Euro 4 or above. Green Vehicle Guide Toyota Australia continues to provide information to the Federal Government Department of Transport and Regional Services for the Green Vehicle Guide. For more information on the Green Vehicle Guide please visit: Participation in industry forums As part of the Federal Chamber of Automotive Industry, Toyota Australia is involved with all relevant committees, including the Fuels Committee, and the Transport Emissions Liaison Group. Toyota Australia also participates in the Government Policy Advisory Committee, handling such issues as tyre stewardship and the recycling of refrigerants. Vehicle recyclability and reduction of harmful materials Toyota continues to use material identification marking to enable parts separation for recycling and uses the 100% recyclable Toyota Olefin polymer for various parts including bumpers, dashboards and door trims. Vehicle painting and coating processes potentially release harmful chemicals such as trichloroethylene. Toyota continues to control and reduce these by setting strict VOC emission reduction targets for all global manufacturing plants. As the following information shows, the new model Yaris and recently upgraded RAV4 are examples of expanding use of technologies to reduce the impact of vehicle manufacture. Yaris In 2005 the new Yaris hatchback replaced the Echo. It features an efficient, easy-to- dismantle structure which greatly improves the recyclability of this vehicle. This has been achieved by: " Easy to dismantle marks are stamped to indicate where dismantling can best be commenced " The front and rear door trim, deck side trim, back door trim, and the front bumper are also stamped with dismantling marks " Screw fastening points have been reduced, and replaced with clip fastenings " The structure has been engineered so that no separating or sorting is required " Recycled materials have been used in the dash insulator, floor silencer and deck box " The main parts of the instrument panel are constructed with polypropylene materials such as Toyota Super Olefin Polymer (TSOP) " An alignment mark for the fuel removal device is provided on the bottom of the fuel tank. This ensures all fuel is safely removed during dismantling. The use of VOCs in the vehicle painting and coating processes has been controlled and reduced by using water- based paint for the top coat of the outer body panel base paint. The undercoat consists of an acrylic material that is applied to the back surface of the underbody floor, while the use of polyvinyl chloride has been eliminated. RAV4 TSOP and Toyota Plastic Olefin materials are used throughout the interior and exterior of the new RAV4. The manufacture of RAV4 also uses water- based paints. Polyvinyl chloride-free materials are used for the roof mouldings, the surfaces of the tonneau cover, and the floor tunnel silencer. The clutch lining has been manufactured without the use of organic solvents. The use of halogen-free insulation for the cabin wire harnesses and for all protective materials also reduces environmental impact Prius The Australian Government has revised its environmental rating of the Prius. Prius currently has top ranking in the Green Vehicle Guide and is the only car to gain a five-star environmental rating using regular unleaded petrol (ULP), as opposed to more expensive premium unleaded (PULP). Sales of the Prius continue to increase despite extremely short supply due to high global demand. Sales in 2005 were 1,423 vehicles, compared to 201 vehicles in 2002. Overall cumulative worldwide sales of Toyota (including Lexus) hybrid vehicles passed the 600,000 mark at the end of March 2006. Camry The Camry four cylinder achieves a certified fuel efficiency of 9.9 litres/100km (auto) and 8.9 litres/100km (manual). Some of the environmental features of the Camry are: Variable valve Timing (VVT-i) Technology By adjusting the overlap time between the exhaust valve closing and intake valve opening, the engine characteristics can be changed to provide instant engine torque across the entire rev range. This gives both powerful acceleration and superior fuel economy. In addition, more complete fuel burn at a higher combustion temperature leads to fewer emissions. Styling modifications By embedding the radio aerial in the glass of the rear window and modifying styling to optimise airflow over the bonnet, front bumper, headlamps, roof and A-pillars, the Camry 9s aerodynamic drag coefficient was improved from 0.30 to 0.29. Reduced rolling resistance The Camry is supplied with silica/carbon- based tyres initially developed by Toyota and Dunlop to improve fuel efficiency and durability, while maintaining safe levels of grip in wet and dry conditions. 250 200 150 100 50 0 CO 2 g/km 2004 2010 2005 03 Product e n v i r o n m e n t P r o d u c t 03 e n v i r o n m e n t P r o d u c t The new Camry, released in August 2006 is the only four cylinder car manufactured in Australia. http:// www.greenvehicleguide.gov.au Environment and Community Report 2006 16 15 Toyota Australia The 4th Toyota Environmental Action Plan includes a commitment to further promote environmental management to our business partners, through increased cooperation with suppliers. Key focus areas include: " Management of Substances of Concern (SOC) contained in parts, raw materials, production facilities and other items supplied to Toyota Australia " Voluntary initiatives by suppliers to improve environmental performance. Supplier Environment Policy The three key requirements of suppliers are: 1. Environmental Management Systems (EMS): Toyota Australia requests all first tier suppliers who provide components, direct raw materials (for use either on the vehicle or in accessories), indirect raw materials (supplied to Toyota Australia facilities, but not to become part of the vehicle), and services to develop an ISO14001 certified EMS. 2. Elimination of SOC: Toyota Australia expects all first tier suppliers providing components and/or direct raw materials to eliminate the substances of environmental concern contained in those components and materials. Toyota 9s goal for all vehicles is to be SOC-free by the end of 2007. 3. Supplier Reporting: Suppliers must maintain close communication with Toyota Australia Purchasing Division on status with respect to the Supplier Environment Policy. SOC The 4th Toyota Environmental Action Plan goal has been set to eliminate the use of the four SOC: lead, cadmium, mercury and hexavalent chromium. This decision was made in response to Directive 2000/53/EC of the European Parliament to prevent waste from end-of- life vehicles. This directive stipulates that vehicle manufacturers and material manufacturers in Europe must ensure that components of vehicles placed on the market after 1 July 2003 do not contain mercury, hexavalent chromium, cadmium or lead. Toyota Australia aims to eliminate these four substances from all vehicles, parts and accessories by the end of 2007. This voluntary objective exceeds all national and state regulatory requirements in Australia. e n v i r o n m e n t S u p p l y c h a i n & P u r c h a s i n g Supplier Applicability Key requirement: Supplier Category Applicability 1ST Tier O.E. Direct Indirect Service Raw Material Raw Material Suppliers 1. Implement EMS 3 3 3 3 2. Eliminate SOC 9S 3 3 Select Not Suppliers Only Applicable 3. Communicate with TMCA 3 3 3 3 Supply chain &Purchasing The ECO-Buy green purchasing program ECO-Buy is an initiative to increase purchasing of environmentally sensitive supplies. It is a joint initiative of the Municipal Association of Victoria and EcoRecycle Victoria (now known as Sustainability Victoria). ECO-Buy started as a local government program and is now being launched to business. As a member of ECO-Buy Toyota Australia will: " Manage risks in the supply chain that may arise from using potentially harmful or socially unacceptable products " Minimise impact on the environment by integrating environmental considerations into business operations " Publicise practical and measurable environmental initiatives " Become part of a network of councils and businesseswho willshareknowledge, experiences and achievements. 2005 Supplier Environmental Excellence Award The annual Supplier Environmental Excellence Achievement Award encourages environmental improvement and innovation in Toyota Australia 9s supply chain. The winner of the 2005 Achievement Award for Environmental Excellence was Autoliv Australia. This was announced at the Supplier Conference in April 2005. Toyota Australia waste management service provider Toyota Australia Purchasing Division finalised its tender process for waste management services in 2005 with Collex the successful tenderer. The services agreement covers all Victorian operations and includes the following key performance indicators: " Achieve ISO14001, ISO9001, SafetyMAP and Waste Wise accreditation for Toyota Australia sites within 12 months " Zero non-compliance with legal and statutory requirements " Zero non-compliance with all Toyota Australia site procedures " Zero general waste to landfill by 2010 " Zero prescribed waste to landfill by 2010 " Active participation in Toyota Australia waste management meetings, waste audits, Environment Improvement Plan, damaged material transfer, and development of objectives and findings and prioritising of improvement plans as scheduled " 2% annual reduction in volume of waste products arriving at Toyota Australia sites " Develop inventory of equipment producing CO 2 emissions. The services agreement requires weekly, monthly and quarterly waste reports that include recommendations for improvements. Also, annual waste reports are required that detail environmental impacts of services provided to Toyota Australia. SOC Heavy Limit Exemptions Metals Lead MAX " Car batteries 1000 ppm " Solder " Electronic circuit boards Mercury MAX " Discharge 1000 ppm lamps " Instrument panel displays Hexavalent MAX " NIL Chromium 1000 ppm Cadmium MAX " Nickel cadmium 100 ppm batteries 03 03 e n v i r o n m e n t S u p p l y c h a i n & P u r c h a s i n g Toyota Australia Senior Management with the 2005 Toyota Australia Supplier Award winners. Back row (left to right): Yoshiaki Numata, Ted Okada, Mitsuo Kinoshita (TMC Senior Managing Director), Shoji Baba, Mike Harvie, Rob Jakobi. Front row (left to right): Bob Franklin (Autoliv Australia), Ron Kirwan (Kirwan Group Services), Mark Dwyer (OzPress), Kan Ito (Australian Arrow), Brian Freeborn (Schefenacker Vision Systems), Manny Larre (Pilkington (Australia), Alan Stevens (PBR Automotive) On Wednesday 2 November 2005, Toyota Australia President and CEO Ted Okada (front) committed the company to the ECO-Buy program as the founding member of ECO-Buy Business. Also present were Deputy Premier of Victoria and Minister for Environment, Water and Victorian Communities, John Thwaites, and Commonwealth Games Environment Ambassador, Rob Gell (far right). http://www.ecobuy.org.au/ http:// www.greenhouse.gov.au/challenge/ Environment and Community Report 2006 18 17 Toyota Australia During 2005 new manufacturing targets were set based on directives from the 4th Environmental Action Plan. This has been done in conjunction with preparation for introduction of the new model Camry and Aurion at the Altona manufacturing plant. This project has required the investment of more than $400 million in new facilities and equipment. The subsequent construction and commissioning activities have resulted in additional resource use at Altona. The upgrade involved the relocation of several processes from the Port Melbourne site. Toyota Australia commissioned a new bumper bar painting and moulding facility, a new unit parts assembly operation, a new fuel tank assembly and painting operation, a new main jig line in the weld shop and a new logistics centre. As a result of this activity, the achievement of internal environmental targets for the Altona site represented a challenge for the manufacturing operations in 2005/06. Despite this, all additional processes have been introduced without any required increases to existing licence limits for the Altona site. e n v i r o n m e n t M a n u f a c t u r i n g e n v i r o n m e n t M a n u f a c t u r i n g 03 03 Manufacturing Environmental performance 2005-2006 Energy Overall energy use from stationary energy sources per vehicle was 8.54GJ in 05/06 versus 8.77GJ in 04/05. This represented a 2.6% reduction, but remained above the energy target of 8.34 GJ/veh. While natural gassuppliesthemajorityofenergy, electricity performance lagged against the target. Greenhouse gas emissions increased from 168,590 tonnes CO 2 equivalents in 04/05 to 179,990 tonnes CO 2 equivalents in 05/06 in - linewith a7% increasein overallproduction volume. Details of Toyota Australia 9s greenhouse gas emissions can be found as part of Toyota Australia 9s submission to the Australian Greenhouse Challenge: In terms of gas reduction activities, it has been possible to turn off one of the gas fired afterburners in the Paint Shop. This project has saved 52,000 GJ per annum and was made possible through continued improvement in paint technology and efficiencies in line sequencing. In terms of electricity usage, Toyota Australia has introduced several initiatives in 05/06 which will reduce consumption. The new unit parts and bumper resin plants have been equipped with 8Goldway Enersave 9 units. These units manage to balance out peaks in electricity demand and are expected to return an 8% improvement in electricity consumption in these plants. Waste An emphasis on identifying recycling opportunities has resulted in a reduction of general waste from 9.43 kg/veh to 9.06 kg/veh. For example, it is now possible for Toyota Australia to recycle its laminated glass waste from the assembly process, diverting 11,000 kg of waste per annum from landfill. There has been an increase in the yearly result for prescribed waste from 3.13 kg/veh to 3.45 kg /veh. The majority of this increase is due to prescribed waste at the Paint Shop. Improvements in waste separation have led to an increase in the number of chemical drums and liners being disposed. Installation of robots into the primer spraybooth have however saved 23,000 kg of sludge disposal per year. Overall, waste performance has improved from 12.56 kg/veh to 12.51 kg/veh. Toyota Australia continues to pursue recycling and reuse opportunities for all waste streams. During 2005/06, Toyota Australia managed to recycle or reuse 96% of all waste material flows and only 4% of waste had to be disposed to landfill. The majority of recycled material is the steel off cuts which occur during the pressing of the complex shapes that make up a vehicle body. Last year 24,000 tonnes of steel was recycled by Simsmetal. Other waste streams to benefit from recycling were: " Aluminium dross and turnings - 1,800 tonnes " Casting sand - 1,500 tonnes " Windscreen glass - 11 tonnes " Cardboard - 797 tonnes " Timber - 770 tonnes " Paper - 18 tonnes " Plastic - 83 tonnes. Water Water use at Toyota Australia has declined marginally from 3.88 m 3 /veh to 3.87m 3 /veh. There was extensive use of water as part of the commissioning process for the new unit parts and bumper resin facilities. During the construction and commissioning of these plants, up to 700m 3 per month was used by these sites to test the integrity of the processes and to run initial production trials. Volatile Organic Compounds (VOC) VOC emissions from Paint Shop increased slightly from 37.2 g/m 2 to 37.6 g/m 2 . While reducing the amount of solvent used is a positive outcome and reduces emissions of VOCs, a side effect of this reduction has been that the used solvent contains a higher concentration of paint solids than before. This higher concentration has reduced solvent recovery. Maintenance improvements during the Christmas shutdown resulted in an increase in solvent recovery and a consequent drop in VOC emissions. Overall, recovered solvent dropped from 126,000 litres in 04/05 to 105,000 litres in 05/06. The recycled solvent prevented approximately 80 tonnes of VOCs from being emitted into the atmosphere. The installation of new articulated robots in the Paint Shop primer area has contributed to a reduction of VOC emissions, from 6.38 g/m 2 to 5.48 g/m 2 , and also reduced paint consumption by 17,700 litres. 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 7.5 7.0 6.5 6.0 5.5 5.0 Gas per vehicle Actual Target GJ/veh 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 1000 900 800 Electricity per vehicle Actual Target kWh/veh 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 20 15 10 5 General waste per vehicle Actual Target kg/veh 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 4 3 2 Prescribed waste per vehicle Actual Target kg/veh 2000/01 200 1/02 2002/03 2003/04 2004/05 2005/06 6 5 4 3 Water per vehicle Actual Target m3 /veh 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 70 60 50 40 30 VOC g/m² per vehicle Actual Target g/m² Environment and Community Report 2006 20 19 Toyota Australia Environmental incidents The Toyota Australia Environmental Management risk matrix rates environmental incidents as high, significant, moderate, or low. Toyota Australia has a system for identifying solutions and countermeasures for incidents which have an environmental impact called Environmental Action Requests (EAR).The total EARs for 2005/06 were as follows: High = 6 Significant = 3 Moderate = 14 Low = 3 There has been an increase in High and Significant incidents since 04/05. The High and Significant EARs in 05/06 can be split into two categories: 1. Spills to stormwater (3 High, 2 Significant) 2. High trade waste discharge (3 High, 1 Significant) Toyota Australia experienced a number of spills during the delivery of bulk chemicals. These events have led to an increased focus on contractor education to ensure that all delivery drivers are familiar with Toyota Australia 9s equipment, procedures and emergency response. The incidents associated with high trade waste discharge were linked to increased metal levels, and high pH levels in the trade waste. These were identified by the ongoing monitoring regime and addressed as required through: " Improvements to the engine trade waste treatment plant to allow mechanical isolation " Improved maintenance of polymer dosing lines in the Port Melbourne unit parts area " A redesign of the phosphate press bund and transfer system to provide an earlier alarm and system shut down. A small number of spills were also attributed to the malfunction of new equipment during commissioning of new facilities. Accredited licence To be an accredited licensee, the overriding requirement is to demonstrate a high level of environmental performance and an ongoing capacity to maintain and improve this performance. This is demonstrated through the following cornerstones: " An Environmental Management System " An Environmental Audit Program " An Environment Improvement Plan. Toyota Australia continues to operate under its accredited licence. The accredited licence was fundamental in the approval of recent plant improvements such as the unit parts and bumper resin operations. Both of these developments offer a net benefit to the environment as they replace older and less efficient facilities at the Port Melbourne site. They were approved by EPA Victoria under the conditions of the accredited licence without the need for a Works Approval. Community Liaison Committee (CLC) Toyota 9s CLC meets every two months to review progress on Toyota 9s Environment Improvement Plan. It comprises representatives from local government, the EPA, City West Water and the local community. During the next year, Toyota Australia and the CLC will revise the Environment Improvement Plan in line with the requirements of the accredited licence. For more information on the Toyota Australia Environment Improvement Plan visit: Global ISO 14001 TEMS annual surveillance audit This audit was conducted by SAI Global and held from 7 April to 14 April 2005 in selected shops/departments at the Altona site. The findings highlighted minor improvement opportunities. Toyota Australia met or exceeded all required standards. Toyota Environmental Management System (TEMS) Green Guide This Green Guide is a practical manual on managing the TEMS system for new workgroup members and/or experienced Work Group leaders. The Guide is an aid to understanding environmental policy, aspects and impacts, controlling operations, and learning how Toyota Australia manages its environmental activities. It is also a reference guide for developing TEMS skills, auditing and operational knowledge. Toyota Australia and other environmental reporting initiatives. In addition to the Environment and Community Report, Toyota Australia reports publicly on its environmental performance through a variety of methods. These include reports to: " The National Pollutant Inventory " TheAustralianGreenhouseChallengePlus " The State Environment Protection Policy on Air quality Management. Manufacturing Environment Group and TEMS work groups The Manufacturing Environment Group coordinates the TEMS and the environmental programs and initiatives in the manufacturing operations. The group supports the seven shop floor environmental teams (TEMS work groups); Weld, Assembly, Paint, Press, Powertrain, Production Control, and Port Melbourne. With the consolidation of manufacturing operations from Port Melbourne to Altona, a new Bumper/Resin workgroup will be set up in the second half of 2006 together with a Unit Parts workgroup. There are regular cross-functional workshops where these groups address environmental issues such as: " Internal and external audits findings " New environmental improvement projects " Training and awareness. During 2005 the TEMS work groups implemented 16 documented environmental improvement projects, saving approximately $775,000 for the year. Environmental shop floor training and awareness In 2005 Toyota Australia continued to present an environmental unit as part of the curriculum of the Success in Automotive Manufacturing (SAM) course it conducts for team member development. Over 90 employees from Altona manufacturing and the Brisbane Parts Distribution Centre attended a practical training session aimed at improving awareness and understanding of environmental issues. A range of activities were also organised at Altona to celebrate World Environment Day, and National Tree Day. 2005 TEMS awards Awards are given each year to both groups and individuals in recognition of their hard work and efforts to: " Reduce costs through resource saving projects " TEMS maintenance and commitment. The winners this year were: Most Effective Work Group 3 Powertrain Best Individual Effort 3 Phat Huynh (Body Shop) Most Supportive Work Group Member - Manjit Sidhu and David Mifsud (Powertrain), Peter Holt (Assembly Shop), Phil Vella (Paint Shop) Most Supportive Manager - Malcolm Tucker (Paint Shop) Best Project for Water - Paul Maranelli (Paint Shop) 3 Sludge pool optimisation saving 19,000 m 3 and $28,000 per year. Best Project for Waste - Clint Harrison (Production Engineering) 3 Primer robots introduction saving 17,700 litres of paint, 23,000 kg of sludge and $390,000 per year. Best Project for Energy - Matthew Allan & Malcolm Tucker (Paint Shop) 3 Decommissioning of afterburners, saving 52,000GJ and $195,000 per year. Bumper bar production The new bumper bar, unit parts and fuel tank operations replace existing operations at the Port Melbourne site and have enabled Toyota Australia to embark on air quality improvement initiatives. For example: " The solvent-borne, hand painted bumper bar process was replaced by a new waterborne robotic process that is expected to reduce the amount of solvent and VOCs emitted from 205 tonnes per annum (tpa) to 155 tpa. " The new fuel tank painting showercoat process is a closed loop system, with a transfer efficiency of almost 100%, virtually eliminating the overspray waste of the previous spray painting process. This process is expected to halve VOC emissions from 14.35 tpa to 7.72 tpa. 03 03 e n v i r o n m e n t M a n u f a c t u r i n g e n v i r o n m e n t M a n u f a c t u r i n g TEMS work group members at the 2005 Awards Ceremony http:// www.npi.gov.au http://www.greenhouse.gov.au/challenge/ http:// www.epa.vic.gov.au http:// www.environment.toyota.com.au/ TWP/Upload/Media/299.pdf Environment and Community Report 2006 22 21 Toyota Australia Environmental impact and activities As a result of Toyota Australia 9s continuous improvement philosophy (Kaizen), this report contains a new section on the impact of export and distribution activities. The Export and Distribution Division consists of three key areas: export, logistics and order systems. Departmental activities primarily cover vehicle distribution (via suppliers), and ordering. Key suppliers are Patrick Autocare (processing and transport), Prixcar (processing), Toll (transport), TNT (transport), NYK (shipping), and K-Line (shipping). Currently, environmental data is only being collected from one key logistics supplier, Patrick Autocare. The following table summarises the main environmental impacts from Export and Distribution activities. e n v i r o n m e n t E x p o r t a n d D i s t r i b u t i o n e n v i r o n m e n t E x p o r t a n d D i s t r i b u t i o n 03 03 Export and Distribution Area Activity Environmental aspects Impact Export Transit yard operations Emissions - vehicle handling, yard/ferry vehicle, truck loading Altona Energy consumption - tunnel lighting, office operation Medium Paper - Vehicle Survey Report (VSR), case marking, protective floor covers, key number Transport of export vehicles Emissions - truck, vehicle unloading, vehicle handling to wharf Paper 3 VSR paperwork High Export wharf operations Emissions - truck unloading, vehicle handling Energy consumption - site lighting, office operation Low Shipping of export vehicles Emissions - vessel loading, vessel sailing Energy consumption - site lighting, office operation Hi

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