Respect for the Planet. Simply stated, this is Toyota's commitment to the environment.

We challenge ourselves to minimize environmental impacts at all stages of the vehicle life cycle: in research and development, manufacturing, logistics and sales. We look at our own operations as well as those of key business partners—suppliers and dealerships. And, we partner with our communities to support environmental programs and initiatives.

Our success comes only by engaging the talent and passion of our employees, who believe there is always a better way. This conviction is rooted in the two pillars of the Toyota Way: Continuous Improvement: kaizen (change for the better) with standardized work, an evolutionary process that eliminates inefficiencies; and Respect for People: valuing and empowering the individual and the team, essential to making kaizen possible.

Toyota has built these pillars into its corporate culture; the result is a learning organization that believes in jidoka, or stopping to get things right. The Japanese word REFLECTION
The Japanese word hansei, translated loosely as reflection, is what happens when one of our employees stops to examine a completed project. Hansei is both an intellectual and emotional introspection. The employee must recognize the gap between the current situation and the ideal, take responsibility for finding solutions, and commit to a course of action. When a project finishes at Toyota, we use hansei to evaluate what went well and what did not. We then methodically try to preserve what went well and create countermeasures for what did not. These lessons are incorporated into the standard process so that when we repeat it, we improve over the last time. Finally, we share these insights with our colleagues so that they can learn as well, in a process we call yokoten.
hansei
, translated loosely as reflection, is what happens when one of our employees stops to examine a completed project. When a project finishes at Toyota, we use hansei to evaluate what went well and what did not. We then methodically try to preserve what went well and create countermeasures for what did not. These lessons are incorporated into the standard process so that when we repeat it, we improve over the last time. Finally, we share these insights with our colleagues so that they can learn as well, in a process we call yokoten.

In environmental terms, the improvements we seek are those that help us better manage issues such as waste, air emissions, energy consumption, water use, vehicle fuel efficiency and tailpipe emissions. Hansei is both an intellectual and emotional introspection. The individual must recognize the gap between the current situation and the ideal, take responsibility for finding solutions, and commit to a course of action. The examination involves a review of successes and failures, to determine what works and what needs to be improved. Hansei leads to ideas for kaizen and yokoten, the sharing of best practices from one location to another.

Even more so than in recent years, 2012 was a time of hansei in North America. We looked closely at how we operate and made some significant changes to streamline regional management, speed up decision-making and respond faster to customer needs. We reevaluated our environmental strategy and are working towards a more coordinated approach to measuring and tracking performance across the North American region.

Throughout this report, we describe instances where hansei is helping us identify ways to improve our environmental performance. We seek to design and produce more efficient and cleaner-emitting cars, to structure our operations so as to tread more lightly on the earth, and to enrich the lives of people in our communities. Our aspirations are part of a long-term view of sustainable growth that shows respect for the planet at every turn.

Dear Readers,

We are pleased to present Toyota's 2012 North American Environmental Report. Here you will find information about our environmental activities in the United States, Canada and Mexico, with a focus on progress during fiscal year 2012. Highlights of our performance are provided in 2012 At A Glance and at the beginning of each chapter.

Last year, we reported on the completion of our second five-year environmental action plan and committed to publishing new goals and targets through 2016. Over the course of this past year, we reflected on our environmental performance and reexamined our ultimate goals. This process of reflection, known as hansei, helped us recognize the value and importance of coordinated environmental management across Toyota's North American companies. So we began working on a new environmental action plan that reflects better coordination among the various functions and divisions in the region. This plan will provide the foundation for a stronger and more focused environmental strategy in North America. We look forward to sharing it with you next year.

In the meantime, we continue to address a number of environmental challenges. Climate change remains the most prominent of these challenges. We report on our approach in terms of the vehicle—fuel economy and advanced powertrain technologies such as plug-in hybrids, and in terms of operations—reducing energy consumption and corresponding greenhouse gas emissions and supporting renewable energy. Our record speaks for itself. We have the most fuel-efficient fleet of any full-line auto manufacturer, and Toyota's first hybrid—the Prius—accounts for half of all hybrids on the road in North America. In 2012, we introduced the Prius c and Prius Plug-in Hybrid as the latest additions to the Prius Family. And for the eighth consecutive year, Toyota's North American manufacturing division received an ENERGY STAR® Sustained Excellence award for exhibiting exceptional leadership year after year in the ENERGY STAR program.

We believe water is our next big challenge. Water issues are beginning to rival climate change in the international spotlight, and we have begun to look more closely at how we manage water in the production of our vehicles and in maintaining our facilities. Thanks to the ingenuity and persistence of team members at our Cambridge, Ontario, plant, we have found a way to reduce annual water consumption by more than 13.2 million gallons (50,000 cubic meters). Imagine the savings once this is transferred to other locations. And imagine the impact of teaching students and local communities about water conservation—our plant in Princeton, Indiana, was honored as one of only two North American recipients of the Water Champion award.

We have over 37,000 employees working in office space, distribution centers and manufacturing plants across North America. We use green building principles to help us design, build, renovate and manage our facilities in a more sustainable manner. We also work with our network of dealerships to implement these same practices. We are leading the industry with 37 facilities certified to LEED®, including 11 of our own Toyota and Lexus sites and 26 Toyota and Lexus dealerships.

These accounts and many more can be found in this year's report. We describe how we support our commitment to respecting the planet, including several spotlight articles that describe in greater detail the strategy and approach we take to environmental performance. We are also pleased to recognize several individuals for their contributions to making our company more eco-efficient.

We hope you enjoy our story.

Shigeki Terashi Dian Ogilvie
President and Chief Operating Officer
Toyota Motor North America, Inc.
Managing Officer
Toyota Motor Corporation
Senior Vice President & Secretary
Toyota Motor North America, Inc.

Environmental Strategy

Environmental issues are a priority for Toyota around the globe. Our commitment to the environment is stated in Toyota's Global Vision, announced in 2011 and founded on a commitment to quality, constant innovation and respect for the planet. Our Global Vision articulates the kind of company we strive to be—a company that shows consideration to the environment and investigates and promotes sustainable systems and solutions. We continually seek new ways to build better cars and enrich the lives of others, and we aim to be an admired and trusted company wherever we conduct business.

This approach stems from the values embedded in our Guiding Principles and Earth Charter. These values guide Toyota's operations worldwide.

The Guiding Principles challenge the company to "be a good corporate citizen," "dedicate ourselves to providing clean and safe products," and "pursue growth in harmony with the global community." Environmental responsibility is key to each of these.

Toyota's Earth Charter was developed in 1992 (and revised in 2000) to exemplify our comprehensive approach to managing environmental issues. The Earth Charter instructs us to strive for "growth in harmony with nature," "zero emissions," and "building close and cooperative relationships." The charter's four Basic Policies and Action Guidelines are listed in Figure 1.

Toyota's Vision and Principles

To translate Toyota's vision of Respect for the Planet into concrete action, Toyota relies on its environmental action plan process. The process for developing an EAP begins with the parent company in Japan, Toyota Motor Corporation (TMC). Every five years, TMC develops a global five-year environmental action plan (EAP).

The process of developing an environmental action plan relies on fundamentals of the Toyota Way, a means for employees around the world of thinking about and acting on environmental challenges. The two pillars of the Toyota Way—"Continuous Improvement" and "Respect for People"—are core values that help us constantly look for ways to reduce environmental impacts, and encourage us to respect and empower the individual and the team to take responsibility and maximize results.

The environmental action plan is a critical tool used to help us manage our environmental impacts across all aspects of our business. It provides clear direction to all business functions and creates a way for us to prioritize resources, measure progress and reassess performance in light of changing conditions.

Toyota companies around the globe use TMC's plan to structure their own environmental action plans. By developing regional EAPs, Toyota ensures that local conditions and priorities are taken into account, while still providing a consistent framework for worldwide planning.

This past year, in the spirit of hansei, we have been examining our recently completed five-year action plan for North America to find ways to better coordinate environmental activities across the various business functions. In the past, our manufacturing plants, logistics sites and offices each approached environmental management separately, developing their own metrics and key performance indicators (KPIs). We are now working to align KPIs across all functions. Increased coordination among the North American companies will bring greater efficiency and improved performance. We look forward to sharing our new environmental action plan in next year's report.

In this report, we describe environmental initiatives and performance in North America across our various business functions—research and development, manufacturing, logistics and sales. Information is organized by issue to allow for better readability and ease of navigation. In this report, we also describe progress against the one-year targets set by our operations in the following key performance areas:

  • Compliance
  • Air emissions
  • Energy consumption
  • Greenhouse gas emissions
  • Waste minimization
  • Water use

Click here for Compliance Click here for Air Emissions Click here for Energy Click here for Greenhouse Gas Emissions Click here for Waste Minimization Click here for Water

Environmental Governance

In 2012, we created an Environmental Strategy Working Group composed of environmental experts and representatives from four of Toyota's North American companies:

  • Toyota Motor North America, Inc. (TMA)
  • Toyota Motor Engineering & Manufacturing North America, Inc. (TEMA)
  • Toyota Motor Sales, U.S.A., Inc. (TMS)
  • Toyota Canada Inc. (TCI)

This report contains information from these four companies.

The Working Group operates under the authority of a charter signed by each company's Chief Environmental Officer. The Working Group sets strategic direction and priority for environmental efforts across North America and reports to the North American Executive Committee. The Chief Environmental Officers are committed to champion the work of this group in an effort to promote their ability to effectively engage with stakeholders at all levels of the organization in understanding the operational, business, investment and public relations impacts of managing Toyota's environmental footprint.

Environmental Governance for Toyota in North America

Environmental
Management & Compliance

Environmental management systems are an essential part of Toyota's overall effort to minimize risks and achieve leading levels of environmental performance. Each location's environmental management system (EMS) identifies significant environmental aspects and impacts and has corresponding controls, goals and targets to manage and gradually reduce these impacts over time.

An EMS is part of a redundancy of systems put in place to protect the environment. We have used and enhanced these systems in North America for 25 years. Our expertise has been recognized by suppliers who come to us to learn how we make an EMS successful. Employees from various functions frequently speak at events to share our knowledge with others. For example, Kevin Butt, General Manager/Chief Environmental and Safety Officer for Toyota Motor Engineering & Manufacturing North America, was a speaker in the Keynote Program for the Air and Waste Management Association's annual conference in San Antonio on June 19, 2012. His address was titled "Toyota's Approach to Sustainable Manufacturing."

In North America, 41 of our locations are certified to the International Organization for Standardization (ISO) 14001 standard. ISO 14001 is one of ISO's most successful management system standards. It has been adopted by well over 250,000 certified users in 155 countries. Recently, experts gathered in Berlin to discuss revisions to this standard. Sheena Donald, Specialist at Toyota's North American manufacturing headquarters in Erlanger, Kentucky, is one of these experts; she represents Toyota on Technical Committee 207. We are honored that Sheena is one of the 40 global experts working on the next generation of the ISO 14001 standard.

In 2000, Toyota's manufacturing headquarters in North America released a set of Green Supplier Guidelines to encourage suppliers to support Toyota's environmental goals. These guidelines were updated in 2007 and extended to sales and logistics suppliers. The guidelines encourage suppliers to pursue third-party certification of their environmental management system. Over 600 suppliers to our North American plants are certified to ISO 14001.

PERFORMANCE

All of Toyota's North American manufacturing plants and logistics sites and several office complexes have an environmental management system certified to the ISO 14001 standard. These 41 locations are listed in Figure 4. Our plant in Delta, British Columbia, was the first in North America to achieve this certification and has maintained it for 15 consecutive years.

ISO 14001 Certifications of Toyota’s North American Facilities

Compliance

Our activities are subject to local, state, provincial and federal laws that regulate air emissions, water discharges, stormwater management, greenhouse gas emissions, waste treatment and disposal, and chemical management. These regulations vary by facility based on the type of equipment we operate and local requirements.

Toyota is one of a number of companies named as a potentially responsible party (PRP) at the Portland Harbor Superfund Site in Portland, Oregon, and at a waste management site in Calvert City, Kentucky. We continue to work on groundwater remediation at our Newark vehicle distribution center with the New Jersey Department of Environmental Protection and the New York/New Jersey Port Authority. At the Long Beach vehicle distribution center, we are working with the Port of Long Beach and the Regional Water Quality Control Board to monitor groundwater quality.

TARGET AND PERFORMANCE

Target: Zero violations, zero complaints (missed)

Our North American manufacturing plants had zero violations and zero complaints in fiscal year 2012. Our Canadian logistics sites achieved their 14th year with no dangerous goods violations.

Our U.S. sales and logistics company received a violation and paid a $10,000 civil penalty for an undeclared shipment of aerosol insect repellent (a hazardous material) from a regional sales office. The violation did not result in harm to people or the environment. Short-term countermeasures have been instituted at the regional and area offices to help prevent a recurrence, and we are in the process of implementing long-term shipping and handling process enhancements.

Complaints and Non-Compliance