Seeking to work with our customers to create product value for them, while working on business models that improve our customers' trust in us 6

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1 Environmenal & Social Repor 29

2 Conens Top Message 2 Yanmar Group Business 4 HIGHLIGHT Business models ha enhance Life Cycle Value Seeking o work wih our cusomers o creae produc value for hem, while working on business models ha improve our cusomers' rus in us 6 HIGHLIGHT 2 Creaing more saisfacion for cusomers hroughou he world A global cusomer service sysem ha suppors he Yanmar brand 2 Social Responsibiliy Repor Adminisraive Organizaion 8 Relaionship wih Our Cusomers 2 Relaionship wih Our Disribuors and Dealers 23 Relaionship wih Our Suppliers 24 Relaionship wih Our Employees 25 Relaionship wih Sociey 28 Environmenal Repor Environmenal Managemen 32 Effors in Produc Developmen 34 Effors o Preven Global Warming 38 Effecive Use of Resources 4 Appropriae Managemen of Chemical Subsances 4 Environmenal Managemen Srucure 42 Environmenal Communicaion 45 Reference Daa Environmenal Performance Daa 46 Sie Repor 5 Hisory of Yanmar Group Environmenal Aciviies 53 Ediorial Noes We issue his Repor every year o inform Yanmar Group sakeholders of he philosophies, policies, and acions he Group has aken wih respec o he environmen and sociey as well as he records of our aciviies in fiscal year 28 so as o improve our aciviies hrough muual communicaion. This issue Repors some of our ypical aciviies in he opening pages of Highlighs o help readers undersand how he Group is rying o achieve is missions and responsibiliies as a good corporae ciizen. The pages on our social responsibiliies provide an ouline of our managemen sysem and feaure some of our acual aciviies for each sakeholder. The pages on our environmen aciviies Repor our aciviies conduced according o he secondary medium-erm plan. Reference Guidelines. "Environmenal Repor Guidelines (27)" of he Japanese Minisry of Environmen 2. "Susainabiliy Reporing Guidelines (3)" of he Global Reporing Iniiaive Period Covered The aciviies and daa disclosed in his Repor are for he period of fiscal year 28 (March 2, 28, o March 2, 29). However, he Repor also includes some iems occurring in fiscal 29. Sies Covered In general, he informaion in his Repor applies o he Yanmar Group as a whole. Informaion specific o Yanmar Co., Ld. or any paricular area or relaed company is indicaed as such in he ex. The erm "Shiga Zone" used in his Repor refers o our plans locaed in Shiga Prefecure: Biwa, Yamamoo, Kinomoo, Oomori, Nagahara, and he Nagahama Sie. The erm "Amagasaki Zone" refers o he Amagasaki and he Tsukaguchi plans. Dae of Issue Published in Sepember 29 (he nex issue is scheduled for Sepember 2).

3 Corporae Profile Trade name Yanmar Co., Ld. Head office -32 Chayamachi, Kia-ku, Osaka Tokyo office 2-- Yaesu, Chuo-ku, Tokyo Founded March 92 Capial 6.3 billion Chairman & Execuive Direcor Tadao Yamaoka Presiden Takehio Yamaoka TurnoverFY billion (consolidaed base) 22.6 billion (company base) Employees (as of March 2, 29 5,45 (consolidaed base) 3,282 (company base) Major Changes in 28 The second plan of Yanmar America, Alana was compleed (March 28). The YLS Kobe Cener sared full operaions as a global service base (April 28). The Technical Cener of Yanmar Engine (Shanghai) Co., Ld. was opened (June 28). Companies selling agriculural equipmen o he domesic marke were inegraed ino our company, Yanmar Agriculural Equipmen Sales Co., Ld. was esablished (December 28). The Technical Cener of Yanmar Europe B.V. was opened (December 28). Yanmar Agriculural equipmen Co., Ld. was merged ino Yanmar Co., Ld. o realize srucural reform of our agriculural equipmen business (February 29). Major Indicaors Consolidaed Sales and Ordinary Profi ( million) ( million) 6, 5, 4, 3, 2,, Raio of Consolidaed Sales by Segmen in 28 Oher businesses.6% Raio of Consolidaed Sales by Region in 28 The Americas.% Asia.% 5,26 5, FY SalesOrdinary Profi Indusrial machinery business 53.3% 65 5, , , Inernal combusion engines and relaed equipmen business 45.% Europe 6.% Japan 72.9% Employees (Consolidaed) (Person) 6, 4, 2,, Raio of Employees by Region as of March 2, 29 The Americas 3.7% Asia 3.% 5,2 5,58 5,365 5,6 5, FY Europe 2.% Japan 8.3% Yanmar Co.,Ld Manufacuring Power Sysem Operaions Division Manufacuring Managemen Dep. Biwa PlanYamamoo Plan Kinomoo Plan Precision Equipmen Division Omori PlanNagahara Plan Large Power Producs Operaions Division Amagasaki Pan Marine Operaions Dep. Producion Dep. Tsukaguchi Plan Domesic Group Companies Yanmar Agriculural Equipmen Sales Co.,Ld. Yanmar Agriculural Machinery Manufacuring Co.,Ld. Seirei Indusry Co.,Ld. Kanzaki Kokyukoki Mfg. Co.,Ld. Yanmar Energy Sysem Co.,Ld. Yanmar Energy Sysem Mfg. Co.,Ld. Yanmar Consrucion Equipmen Co.,Ld. Yanmar Consrucion Equipmen Sales Co.,Ld. Yanmar Marine Sysem Co.,Ld. Yanmar Shipbuilding & Engineering Co.,Ld. Yanmar Casing Technology Co.,Ld. New Dela Indusrial Co.,Ld. Kyorisu Meal Indusrial Co.,Ld. Yanmar Logisics Service Co.,Ld. Overseas Group Companies Asia Sales / Services YANMAR ASIA (SINGAPORE) CORPORATION PTE. LTD. YANMAR ENGINE (SHANGHAI) CO.,LTD. YANMAR AGRICULTURAL MACHINERY (THAILAND) CO.,LTD. YANMAR AGRICULTURAL MACHINERY (KOREA) CO.,LTD. YANMAR INDIA REPRESENTATIVE OFFICE Research & Developmen YANMAR KOTA KINABALU R&D CENTER Manufacuring / Sales P.T. YANMAR DIESEL INDONESIA P.T. YANMAR AGRICULTURAL MACHINERY MANUFACTURING INDONESIA P.T.YKT GEAR INDONESIA YANMAR S.P. CO.,LTD. YANMAR AGRICULTURAL EQUIPMENT (CHINA) CO.,LTD. YANMAR ENGINE (SHANDONG) CO.,LTD. Norh & Souh America Manufacuring / Sales / Services YANMAR AMERICA CORP. Sales / Services C.U.T. SUPPLY COMPANY LLC. YANMAR SOUTH AMERICA INDUSTRIA DE MAQUINAS LTDA. Manufacuring / Sales TUFF TORQ CORPORATION TRANSAXLE MANUFACTURING OF AMERICA CORP. Europe Sales / Services YANMAR EUROPE B.V. Manufacuring / Sales YANMAR MARINE INTERNATIONAL B.V. YANMAR ITALY S.p.A. AMMANN-YANMAR S.A.S. MOSCOW REPRESENTATIVE OFFICE OF YANMAR.,LTD.

4 Top Message Conribuing o our cusomers and o sociey hrough "Comprehensive Power" and "Soluioneering" We are developing businesses in he major fields of urban, he land and he sea, in ligh of he Yanmar Group Mission of We, he YANMAR Group, will srive o creae new and meaningful value ogeher in parnership wih our worldwide cusomers. We will be innovaors and leaders in harnessing energy, while conribuing o an environmenally susainable sociey, hrough he delivery of unrivalled producs and services. To go wih his mission, we inroduced in he spring of 29 a new brand concep "Soluioneering* Your Everlasing Smile." So far, o fulfill our corporae mission, our underakings have focused on he developmen of fuel-efficien, performan and durable echnologies and producs, and he provision of world-class services. Ye a he same ime, he environmen ha surrounds us coninues o experience major shifs. Prioriy is being pu on he global environmen in erms of "creaing susainable socieies," and rapid advances are aking place wih globalizaion and informaion. I believe ha we mus also respond quicy o hese changes. Meanwhile, he needs of our cusomers are shifing wihin his environmen. Such changes include an ever increasing number of iems ha ranscend previously prescribed business fields. To deal wih hese developmens, I hink we need o concenrae all of he managemen resources in our possession. I also believe ha he supply of soluions using our comprehensive power will become imperaive in fuure business and ha fulfilling his role should be one of our missions for our cusomers. We collec and employ our engineering echnologies in a wide variey of fields and hen srive o solve he problems ha bese our cusomers. The process brings smiles o he faces of our cusomers and a sense of involvemen and joy o our employees. Tha's he kind of brand we aim for a Yanmar. Specifically, we are adaping GHP (gas hea pump) air-condiioning echnology for agriculural faciliies, developing a nex-generaion powergeneraion sysem ha makes effecive use of digesive gases emied when he wase of livesock is reaed a farms, and are involved in bio-fuel and engine research for he realizaion of carbon-neural moors. Furhermore, in he agriculural and fishing indusries, we no only provide producs and afersale service, bu we also leverage our cryogenic echnologies and group-company neworks o connec producion areas (farming and fishing villages) wih consumpion areas (ciies). Our involvemen in he creaion of his new business model is one example of Soluioneering. Nohing makes us happier han when we can conribue o he vializaion of regions ha fosered Yanmar in he pas. I believe ha his is one of our social responsibiliies ha we mus achieve. To develop his form of Soluioneering, i is imperaive we work harder o examine business from he perspecive of our cusomers. Our VOC ("Voice of Cusomer") projec was launched in January 28. We have since been coninuously lisening o he voices of our cusomers and moving ahead in he new direcion of a cusomeroriened business model. As you will learn in his repor, Yanmar is engaged in various effors, including he research and developmen of environmenal echnologies, environmenal conservaion, and conribuions o sociey. In he fuure, will closely abide by our corporae mission and he concep of Soluioneering and do our umos o mee rapidly changing marke needs, srive owards he realizaion of an environmenally-susainable sociey, and carry ou business aciviies ha conribue o sociey. "Soluioneering" is a erm we coined ha combines he words "soluion" wih "engineering.""engineering" indicaes manufacuring wih engines a is core and "Soluion" indicaes finding soluions o problems ha affec our cusomers. Takehio Yamaoka Presiden 2

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6 Yanmar Group Business Providing susainable producs and high qualiy service in he fields of urban, he land and he sea o mee cusomer needs Living-environmen businesses ha harmonize he ciy mechanism wih a comforable lifesyle GHP (gas hea pump air condiioners)* and cogeneraion sysems* 2, which are used in response o energy and environmenal problems, as well as regular and emergency power-generaion equipmen, help mainain comfor and safey in various aspecs of living. In addiion, we are working for he effecive use of energy in our sysems o conver o biomass-generaion sysems, which use carbon-neural biomass as fuel ha has no effec on he increase of CO2 when burn, and o hermal energy, which uses warm waer, seam and oher resources. Also, small consrucion machinery and general-purpose machinery, mouned wih highly efficien and low-fuel consuming diesel engines, have been shown o be effecive in high efficiency, labor-saving operaions. Such environmenal measures are being employed in he building of our srees and owns. Air-condiioning sysems ha produce low amouns of CO2 emissions and are * equipped wih gas engines raher han elecric moors o drive he compressors, which circulae he refrigeran. 2 Sysems ha generae elecriciy by burning gas as fuel and hen effecively use he * hea o supply ho waer or for air condiioning. Urban Oudoor uni of a gas hea pump air condiioner GHPs, which creae comforable environmens hroughou enire commercial faciliies, a he Rinku Oule Mall A mini-excavaor, frequenly used for infrasrucure developmen in urban areas Verical waer-cooled disel engines

7 Cool conainers for rail use, which enable disribuion while he cargo is refrigeraed a he proper emperaure. DAG faciliies, which regulae he naural dryness of sored grains so ha he naural flavors are no alered Toal suppor, from manufacuring o disribuion, as we pursue safe and abundan "food." The land We conribue o he developmen of agriculure in all he relevan fields, from mechanizaion of individual asks (by racors, rice ransplaners, combine harvesers, ec.) o uniform sysemizaion (NAPURA sysems) and faciliizaion. In addiion, we have shown posiive resuls in food disribuion, whereby he food remains very fresh and operaions are carried ou a low cos. This is achieved hrough "ranspor cool conainers," which enable fresh food producs o be disribued a he righ emperaures. The NAPURA sysem, which has inegraed all of he operaions of dry-field farming, from seeding o harvesing Seeking o achieve he ideal co-exisence beween humans and he sea in he fields of marine leisure, fisheries, and he developmen of large-scale marine engines The sea We have been enhancing our lineup of marine engines and pleasure boas o give people he opporuniy o discover he wonders of he sea. Also, hrough efficien and high-oupu marine engines and he developmen of fishing boas as well as various machinery and faciliies, we are conribuing o he vializaion of he fishing indusry, which provides us wih our food. Furhermore, we are working on he pursui of safe and comforable sea journeys ha ake he Earh and he environmen ino consideraion, hrough our improvemens in he performance of diesel engines for large-scale ships and research and developmen of an elecric propulsion sysem.* 3 3 A propulsion sysem ha powers ships using propellers, whereby * he propellers are conneced direcly o a moor ha runs on elecriciy generaed by a diesel engine A marine propulsion diesel engine A powerboa engine, widely used in he USA, Europe and oher world markes. The engine has high oupu and is environmenally friendly. YANMAR Enviromenal & Social Repor 29

8 HIGHLIGHT Business models ha enhance LifeCycle Value Seeking o work wih our cusomers o creae produc value for hem, while working on business models ha improve our cusomers' rus in us Yanmar's Large Power Producs Operaions Division produces large marine engines and powergeneraion engines. These producs have a long lifespan, normally being used for 2 o 25 years. During his period, i is crucial for he engines o mainain heir performance in erms of produc safey, economy, and environmenal friendliness, and for us o coninue our bond of rus wih our cusomers. Accordingly, in 25 he Large Power Producs Operaions Division embarked upon a new business model ha enhances "Life Cycle Value." We need o develop producs in cooperaion wih our cusomers and hen pursue value for our cusomers for periods long afer he producs' delivery, while carrying ou services ha include providing soluions and educaion. So we have sough approaches ha have an eye on "offering producs and services wih cusomer focus." Amagasaki Plan The Amagasaki Plan was founded in 936 as a facory for he producion of he world s firs pracical diesel engine, developed by Yanmar back in 933. Nowadays, he plan operaes as a producion facory for large diesel engines. Being an urban-ype facory, he faciliy is engaged in environmenal-conservaion effors. During fiscal 28, he plan opened is doors o,688 people for visis by cusomers o observe he facory's operaions, field rips, and educaion of sudens a he Technical Training School, ec. The Large Power Producs Operaions Division suppors he global marine ranspor business The Large Power Producs Operaions Division has a long hisory, even among Yanmar's diverse business aciviies. The headquarers has made grea srides in is business endeavors, in parallel o he growh of he global marine-ranspor business. The base of hese operaions is our Amagasaki Plan. As a facory for he producion of large diesel engines, i mass-produces boapropulsion engines (large marine propulsion engines) and power generaion engines (auxiliary marine engines), in addiion o diesel and gas engines for land and general use. 93% of all hese engines are for marine use, and fied ono large ocean-going vessels, like for example, bulk carriers ha carry coal from Ausralia or ankers bringing crude oil from he Middle Eas. Each vessel is fied wih hree or four power-generaion engines (each wih an oupu ranging from 8 o 3,3 kw). The Amagasaki Plan is a large facory, wih 389 people working in he Producion Deparmen as of May 29 and nearly 8 workers in oal when he developmen, saff and oher deparmens are included. LCV (Life Cycle Value) aiming o creae value ogeher wih our cusomers The mission advocaed by he Large Power Producs Operaions Division is "o provide marke leading producs and services." In pursui of his mission, sales, developmen, Hiroshi Ihara Senior Execuive Officer a Yanmar Co., Ld and General Manager of he Large Power Producs Operaions Division. He joined he company, hen called Yanmar Diesel Co., Ld., in 977. Afer spending seven years from 985 posed o Singapore, he was appoined Execuive Officer a he Engine Deparmen and Large Produc Markeing Deparmen in 22. In 24 he was appoined an Execuive Officer and Manger of he Large Power Producs Operaions Division and Manager of he Large Producs Markeing Deparmen as well as concurrenly holding he posiion of Presiden of Yanmar Engineering Co., Ld. He became an Execuive Officer a Yanmar Co., Ld., and General Manager of he Large Power Producs Operaions Division in 28. He has held his presen poss since March 29.

9 and producion operaions were amalgamaed while resrucuring go under way. A new business model ha aimed o achieve "LCV Enhancemen" was launched in 25. The lifespan of large ocean-going ships, which sail he grea oceans of he world, is 2 o 25 years. We sared hinking wih he idea ha his lifecycle is exremely long compared o oher producs. The curren Senior Execuive Officer and General Manager of he Large Power Producs Operaions Division, Hiroshi Ihara, who spearheaded he reform as he General Manager of he sales deparmen a he ime, offers a definiion of LCV: "We sar our sales effors hree years before engines are delivered. We gain he rus of our cusomers, deliver he engines, and hen he ships' consrucion is compleed. However, he objecive of ship owners, who are he cusomers, is o use he ship and earn profis from i for a long period aferward, of 2 o 25 years. The real job sars afer he produc's delivery. The hinking behind LCV is o ry o work wih cusomers in pursui of value for hem. I's very imporan o sick ogeher during he various evens ha ake place during hose 25 years." I is no easy o build he rus of our cusomers during a period of 25 years. Various facors are involved in mainaining a relaionship of rus, such as human ies, environmenal facors, speed, credibiliy, informaion, and services. Improving LCV requires keeping all hese facors in mind a he same ime. When he ime comes 25 years laer for our cliens o replace heir ships, our aim is ha hey will choose us and say, "Righ, le's make i Yanmar." Tha is a The 6EY8 Model Large Marine Diesel Engine for Power Generaion This produc improves LCV, no o menion enhancing "harmony wih he environmen." I is he firs Japanese-made marine engine o acquire cerificaion as an engine complian wih he IMO Tire 2 NOx regulaions, scheduled o come ino effec from 2. YANMAR Enviromenal & Social Repor 29 7

10 HIGHLIGHT Improving developmen processes ha enable "preesablishmen of qualiy" The number of unis produced and ordinary income a he Large Power Producs Operaions Division rockeed from when we sared o resrucure under he LCV banner ---- unil 28. So wha changes occurred during he resrucuring? One was improvemens in he developmen processes. Before, he developmen deparmens were cenral when producs were made, and sales saff hen proposed hese producs o our cusomers. The sales and afer-sales service deparmens were mainly he poins of conac wih cusomers. The people in charge of developmen would never direcly mee wih he cusomers. Developmen ha akes place in a siuaion where he Assembly process inside a clean room needs of he cusomer aren' correcly undersood can ge bogged down during esing. Many modificaions are made as producs are sen back due o problems ha crop up afer delivery. As a resul, he cusomer's rus is los. "Developmen process improvemen was a prerequisie o LCV enhancemen, says Kasunori Izumi, Manager of Design Group, Developmen Deparmen, Developmen Deparmen a he Large Power Producs Operaions Division. "From he planning sage, we had cusomers involved in he planning and we heard a lo of discussion abou he various demands he cusomers had, demands ha were refleced in he design of he producs. In addiion, before building he prooype, we asked our cusomers o be able o carry ou preliminary and verificaion esing wih he acual ways he engines would be used (for insance, operaions running on heavy fuel) while on board. This process enabled us o esablish qualiy during preliminary developmen, and so pos-delivery modificaions decreased," he says. The reliabiliy of producs wih a long lifespan canno be fully undersood merely by conducing ground ess in facories. So we carry ou esing on cusomers' ships during he early sage of produc developmen. There migh be doubs wheher our cusomers are happy o comply wih his. However, Mr. Ihara responds by saying: "Boh he engineers a he ship-making companies and he engineers a his facory are cooperaive. Companies ha own a large number of ships generally use engines from various manufacurers, ye he areas ha wear are generally he same. The owners ofen say Reforming he process by which producs are made Repor The 6EY8 Model was born in our new developmen process Cusomer Kasunori Izumi Manager of Design Group, Developmen Deparmen, Developmen Deparmen a he Large Power Producs Operaions Division. Cusomers' presence a facory reviews Developmen Conac poin Manufacuring Qualiy assurance, services Field ess on ships during preliminary developmen Sales The 6EY8 model is a new produc (on sale from June 27) ha was born from he new developmen process ha aims for LCV improvemens. Previous engine developmen focused on rying o ge "performance" ---- eiher high oupu or fuel economy. Bu wha our cusomers hope for is "performance plus reliabiliy." In oher words, we mus ensure operaion wihou problems cropping up suddenly. Running engines on heavy fuel will diry he combusion chambers, sain he urbochargers, creae blow-by for he inake and exhaus valves, and cause abrasion o he pison rings and cylinder liners. In addiion, diry lubricaing oil causes abrasion o he various sliding pars and he promp clogging of he lubricaing oil srainer. These problems were in our mind during he developmen of his engine, and so we incorporaed new echnologies o suppress conaminans. We also managed o boos he engine's overall reliabiliy and endurance by equipping i wih an applicaion o deal wih moderae amouns of conaminans wihou any loss of performance, which we hough was conneced o LCV improvemen. Fuure engine developmen will involve no only he developmen deparmens bu will also bring ogeher sales, manufacuring, procuremen and service deparmens as we work on projecs. We hink i will be imporan o be able o complee appealing producs hrough boh communicaion and preliminary esing wih our cusomers during he developmen sage. 8

11 Large diesel engine assembly process hings like, "Well, ry mouning a Yanmar engine on one of our ships once." Since we deal wih he same worries, hey work wih us in effors o creae hings. I also hink i's indispensible o LCV improvemen o build ies of co-exisence and co-prosperiy wih our cusomers." This join work becomes an opporuniy o consruc muual ies wih he cusomer. I's also conneced o he idea of making producs ha have received he consen of he cusomer and making producs ha are loved by he cusomer. Supporing our cusomers and widening human exchanges hrough "TQP Subcommiee Aciviies" and "TT School" The TQP Subcommiee Aciviies are anoher policy for LCV improvemens. This is based on he idea of he necessiy o heighen cusomers' LCV hrough services in order o win heir rus, and i is an aciviy ha complees cusomer services afer a produc's delivery. As Mr. Ihara explains: "We idenified asks ha emerge crosswise hroughou he deparmens and hen esablished he subcommiees. By srenghening associaions in order o solve problems wihin a subcommiee or among he subcommiees, we increased he speed of TQP (Tokki Qualiy Plan: Tokki being he abbreviaed Japanese name of he Large Power Producs Operaions Division) realizaion. Due o his, he number of complains has fallen, and we are seeing conribuions o higher profi raios." Mr. Ihara adds, "When a ship owner designaes Yanmar, hen ha's also imporan for he educaion of he engineers. The T.T. (Technical Training) School is joined wih he Amagasaki Plan, along wih a gueshouse for accommodaion. The school carries ou raining on engine echnology and mainenance, no only for company employees, bu also for ship owners and engineers from shipbuilding faciliies in Japan and overseas. Wihin he company, meanwhile, he handing down of engineering skills o he younger generaion has become an urgen issue, due o he large number of skilled engineers who will be approaching reiremen age in he near fuure. The T.T. School esablished a skills ransmission commiee made up of former employees and our main engineering corps in 28. The body conducs follow-up raining sessions, divided by levels, while also resrucuring he sysem whereby echnical skills are passed on. Through he swich o a developmen process in which cusomers ake par, he inernal TQP Subcommiee Aciviies, and uilizaion of he T.T School, we have seen he emergence of posiive effecs ha were originally unimagined. The wheel of human exchange inside and ouside he company is expanding. We are seeing lively communicaion ---- which never ook place before ---- among co-workers who used o keep o hemselves even hough working a he same Amagasaki Plan, as well as among developers inside and ouside he company and service providers. A raining session for company employees YANMAR Enviromenal & Social Repor 29 9

12 HIGHLIGHT Aiming for high-qualiy service engineering and he expansion of neworks One of he policies a he Large Power Producs Operaions Division is o use our environmenal echnology and engineering srenghs o ake on he challenges of marine ranspor. Wih he keywords "environmenal susainabiliy," "laborsaving echnologies," and "safey responses," we are making effors in echnology o deal wih NOx (nirogen oxide) regulaions of he IMO (Inernaional Mariime Organizaion) and in he developmen of elecric propulsion ships.* In he following passage, Mr. Ihara gives us his houghs on he fuure of he Large Power Producs Operaions Division. "If we imagine our cusomers as being he audience in a heaer, hen our 'performance' would no merely be he engines, bu raher he enirey of our services and he achievemen of LCV. Producs wih a long lifespan bounce around all over he place. No. 8 Shoei Maru, an ocean-going longline una fishing boa equipped wih an elecric propulsion sysem. They're used on second-hand ships ha sail all over he world, and we have no idea where hey will be in he world when service is required. Since we can' simply replace he engines, as wih a car, we mus ge aboard he ships during heir voyages o do he repairs. Mainaining service bases hroughou he world is very difficul. Bu his in iself provides a business opporuniy, as we can pu our effors ino expanding our high-qualiy service engineering and global neworks. Mr. Ihara's dream is he creaion of a conrol cener capable of knowing in real ime he curren locaion of ships equipped wih Yanmar engines, by using a global map. If a problem occurs, hen a sysem o rush o he scene could be quicy esablished. Yanmar engines move across he world's oceans and ie ogeher he world's ciies. Through developmen ha involves our cusomers and services ha seek value for our cusomers, ha sense of rus is expeced o rise seadily. These are ships equipped wih a sysem o run moors * and drive propellers using elecrical power from a generaor. From he propulsion of ships o supplying power o shipboard equipmen, he sysem can handle all of a ship's needed elecrical energy. A he same ime, i can achieve lifecycle-cos reducions, a greaer degree of freedom in a ship's layou, and a redundancy of sysems ha lead o improved safey. Furhermore, he sysem is low-vibraion and low-noise and cus a ship's emission of CO2, NOx and SOx, enabling sea journeys ha are friendly o humans and he environmen. The sysems are seeing wider use in recen years, from various ypes of commercial vessels, o survey ships and fishing boas. Repor Aiming for "an open facory" o he communiy and o sociey, while he facory is being reformed Yasuhiro Kanai Manager of he Producion Engineering Group a he Large Power Producs Operaions Division. Workers replace he facory's souh wall. The Amagasaki Plan is sriving o improve he local scenery and reduce noise, as he facory is locaed in an area wih many houses. Work o replace he facory's souh wall, which is adjacen o some deached houses, was carried ou in January 29. Trees were planed ouside he wall and sree lighs insalled, o he saisfacion of he residens. For he sake of a cluser of condominium buildings o he eas of he facory, he direcion of exhaus pipes of six facories was alered and mufflers insalled, reducing noise. In oher measures carried ou in he ineres of environmenal conservaion, low energy lighing and a sewage reamen sysem ha separaes oil and waer will be inroduced. We are currenly working on reforming our facory so ha i "gives emoion o our cusomers." Our facory upholds he idea of hings, people and managemen as a necessary elemen for making hings. However, as our base, we should have a culure ha gives hanks o he cusomers we have here. I believe ha i will be imporan o carry ou our work afer everyone joins ogeher o carry ou he 3S's, which are he foundaion of hings; urning employees ino muliskilled workers, he foundaion of people; and he visualizaion, he foundaion of managemen.

13 Oher aciviies Yanmar's Cogeneraion Sysem ha is employed a an Anarcic base Yanmar has been involved in he developmen and producion of gas engines from early on. Is congeneraion sysem, which uses clean naural gas and delivers "elecriciy and hea," is used in various indusrial fields and also a he Showa observaion base in he Anarcic. Keiji Amasaki Oufiing Group, Amagasaki Plan, Large Power Producs Operaions Division Yanmar has been dispaching saff o he Japanese Anarcic Research Expediion since he 25h expediion in 983 o manage he power-generaion equipmen a he Showa Base. By he ime of he 5s expediion in 29, a oal of 3 Yanmar employees had aken par in his projec. I myself ook par on he 49h Japanese Anarcic Research Expediion in 27 as he person responsible for he power-generaion equipmen hroughou he winer. A he Showa Base, wo S65 Models, used as power generaors, are swiched every 5 hours (approximaely 2 days). Ye during he 49h expediion, I did an overhaul of generaor No.. Apar from 5-hour inspecions when he base's power source was swiched, I was also responsible for consrucion work on base equipmen, roadwork, observaion suppor, snow removal, mainenance of generaors in observaion cabins, supporing an inland observaion our, and so on. I was also involved in "Anarcic Classroom" (held abou 4 imes a year), which links he Showa Base wih schools in Japan via an Inerne TV-conferencing sysem for lecures. Pars used for engine mainenance mus be compaible wih he iems a he base, unil he ime he nex expediion arrives. In addiion, of all he saff, I was he only one whose job involved he engines. So I had o resolve problems using my own judgmen. While single-handedly aking care of he lifelines of elecriciy, air-condiioning and ho-waer supply, I fel he pressure daily of being he only one responsible and of he necessiy ha observaion aciviies no be inerruped. The momen I fel he real value of his work was when he engines performed wihou inciden and he saff could do heir aciviies wihou having o worry. This is definiely a job ha isn' noiceable on he surface. Ye he operaion endencies of he engines had been passed down from each of our predecessors in he form of daa files. I was uplifed by hinking ha, "There is no way ha hese Yanmar engines ha have been mainained by hose before me will break down." Tha le me carry ou my duies. If I had he chance, I would ake par again. The winer saff Overhauling a generaor Adelie penguins YANMAR Enviromenal & Social Repor 29

14 HIGHLIGHT 2 Creaing more saisfacion for cusomers hroughou he world A global cusomer service sysem ha suppors he Yanmar brand From early in is hisory, Yanmar has managed o expand is business fields o markes overseas, and o dae our producs are loved by cusomers in 3 counries. We are aiming owards a % repea business and sriving o esablish a service sysem ha would be fully consisen hroughou he world. As par of his plan, we have developed a uniform-managemen sysem of pars ha is in use globally. We compleed Kobe Cener, Yanmar Logisics Service Co., Ld., in April 28 as a warehousing hub cener for Yanmar hroughou he world. Thanks o his, we are now able o deliver Yanmar pars quicy and precisely o every corner of he world. The creaion of a global sysem ha responds o he needs of our overseas cusomers has been he focus of our effors. 2

15 Tying ogeher he srings of "service" ha cover Yanmar's vas business erriories Yanmar is developing business hrough a four-pole sysem comprising Europe, America, Souheas Asia and China, while aiming o carry ou appropriae suppor for all cusomers involved wih Yanmar producs. Ye surmouning language and culural barriers and saisfying he demands of he world are no easy asks. So in March 26, wih he objecive of offering consisen cusomer service hroughou he world, we launched he Global Cusomer Service (GCS) Deparmen a he head office in Osaka. Three service deparmens ---- pars, echnology and logisics ---- which had previously operaed separaely in Japan and overseas ---- were all amalgamaed o become a uni wih a oal workforce of abou people. As GCS Chief Manager Masafumi Yoshino explains: "I's imporan o offer he hree services of pars, echnology and logisics as a single solid block. Even if you have he iem, i's useless if i can' be delivered o he cusomer. If you've only go he pars, hen you can' do he repairs. And if you can' share all of your informaion concerning your producs, hen here's no poin. Tha's he premise behind our way of hinking. Our job is o ie ogeher he srings of service ha cover all of Yanmar's vas erriories. From he poin ha our area is on a global scale and ha our arge is all of Yanmar's producs, hen our work covers a diverse range. As a basic policy of GCS, "The GCS Way" is displayed in he diagram on he righ. This is arranged as a yardsick of he global communiy consising of everybody involved in services for Yanmar producs, no jus Yanmar's employees around he world bu also exclusive agens and reail sores, 3 Services among ohers. The basic value is "No downime service." GCS holds a "Global Meeing" wice a year ha gahers ogeher people responsible for cusomer-service deparmens in each counry. We are aemping such projecs as well as he sharing of informaion. The opening of he Kobe Cener, a hub for he global supply of pars This faciliy, which embodies "The GCS Way," was launched in April 28 on Kobe's Por Island. Is official name is Kobe Cener, Yanmar Logisics Service Co., Ld., (simply called Kobe Cener in following references). Prior o he launch, GCS spen wo years and.3 billion yen for he developmen of a uniform-managemen sysem of global pars. Kobe Cener is a hub supporing he uniformmanagemen sysem from he hardware side, while a he same ime fulfilling he role of coordinaor of Yanmar's global warehouse. Mr. Yoshino, who was he force behind he planning and developmen of he uniformmanagemen sysem, explains he role of Kobe Cener: "For example, he service siuaion a a branch in France can be ascerained a he head office in Osaka, or if an acciden occurs ouside of service hours in he Unied Saes, hen pars ceners in oher counries can respond. This is enabled by he uniformmanagemen sysem. GCS collecs informaion from local subsidiaries overseas and bases hroughou Japan and analyzes o deermine he mos efficien invenory siuaion a each of hem." Based on he oucome, pars are sen and delivered o depos in Japan or overseas by Kobe Cener. We've realized a sysem here fulfills cusomer focus on 'offering uniform and globally common services so ha our cusomers will no be hindered.' The GCS Way Mission Enhance he Yanmar brand image hrough improved cusomer services Vision Providing complee cusomer saisfacion o achieve a % repea rae Values ÔNo down-ime serviceõ worldwide/muual reliabiliy Guiding Principles Work from he cusomersõ perspecive/on-sie prioriy/global perspecive /Teamwork/Face o Face Pars services Masafumi Yoshino Technology Repair services Informaion services Cusomers Logisics services Execuive Officer, Chief Manager of he Global Cusomer Service Deparmen Joined Yanmar Diesel Co., Ld., in 98 Manager of Corporae Planning Group and Senior Manager of Corporae Sraegy Deparmen, Senior Manager of Sales Planning Deparmen in Sales Corporae Deparmen of Yanmar Co., Ld. in 24, hen held consecuive poss in sales planning, including Senior Manager of he Planning Deparmen in 25. He has held his curren pos since 26. 9

16 HIGHLIGHT 2 Faciliies and equipmen ha op for a semiauomaic approach and environmen friendliness Kobe Cener is locaed in a hree-sory building wih oal floor space of 5,83 m 2. Medium-capaciy rack locaions number 8,336, while heavy-duy palle racks number 3,382. The cener boass capaciy roughly 5% bigger han he Osaka Pars Cener, which served as he nucleus of he company's pars-supply operaion for over 4 years. The cener's leading feaure is is receiving and shipping lines. Using semiauomaic carrier machines, one line is for domesic shipmens and five for overseas shipmens, and accepance inspecion and packing can be carried ou smoohly. "For he new cener, we sudied wheher o go wih hi-ech from he sar, and hen made he bold decision o use semiauomaic mehods," Mr. Yoshino explains. "If we had gone ahead wih a fully auomaed compuerconrol sysem, i could have ended up causing problems for our cusomers by failing o pick up pars in he even of power ouages or equipmen fauls. Our philosophy is No down-ime service, and in he end we seled on a concep ha enables people o ake proper backup procedures." A special feaure of Kobe Cener is is various environmen-friendly aspecs. Gas hea pumps, which use less energy and emi lower levels of CO2 han elecriciy, are used in he air-condiioning sysem. In consideraion of he neighboring communiy and scenery, he buildings' heighs were kep o no higher han hree-sories, while % of he facory sie is greened. Also, o deal wih he characerisics of he land on Por Island, which is prone o subsidence, he land and buildings are made o sink simulaneously, while a foundaion is used ha exers no influence of he subsidence on he equipmen. The lighing sysem inside he warehouses is sensiive o human percepion and highly energy efficien. Even during an eigh-hour working shif, he lighs are acually on for 4.7 hours, aaining a 4% cu. Regarding he working environmen, barrier-free faciliies have been inroduced in such places as he parking areas, washrooms, and second-floor offices. Kobe Cener Ouline Name: Yanmar Logisics Service Co., Ld, Kobe Cener Locaion: Minaojima, Chuo-ku, Kobe Ciy, Japan Sie area: 2,58m 2 Building area: 8,45m 2 Toal floor space: 5,83m 2 Aggregae invesmen: 3.67 billion Main business Sorage and shipmen of pars areas: for overseas Assembly and manufacuring of engine pars 4

17 Yanmar's cusomer services employ he wo wheels of "IT" and "he human connecion" There are generally wo ypes of cusomer services, according o he GCS view. One is he exper use of IT. The oher is he "human connecion" ha lisens o he voices of our cusomers, face o face. In he pas, when he unified-managemen sysem was creaed, GCS's IT nework was almos in place. Now, from his year, GCS is launching Yanmar's own independen "GOYOKIKI" sysem. "Goyokiki" is a Japanese word ha refers o a cusom from he Edo Period of radesmen going door o door o visi heir cusomers. In oday's world, however, cusomers' faces are ofen never seen, due o such modern IT-based facors as communicaion by . So now i is common for service represenaives no o know wha o do in order o go ou o mee heir cusomers. Conversely, cusomers ofen complain ha service people pay uninvied visis. Ye he curren GOYOKIKI sysem employs IT plus he human connecion. While displaying daa on a personal compuer, he service represenaive can explain how suppor echnology was conduced in he pas and ha now we seem o be approaching an era when such problems no longer occur. "In he fuure, as he pracical applicaion of IT and GOYOKIKI make global inroads, a he same ime we wan o do more of our hinking from he aspec of cusomer focus," Mr. Yoshino says enhusiasically. "The arge of our services is he exclusive agens who are direcly conneced o he cusomer, and he people a sales locaions. How are he cusomers' voices, which are being heard by hose people, being aken in? We've managed o have a nework beween local subsidiaries and sales locaions. However, we wan o have a speedier ransmission of informaion reaching he head office o know wha's really aking place or wha kind of demands our cusomers have and wha should be done. This means 'making informaion seamless.' Yanmar producs reach our end cusomers afer being subjeced o many differen processes. Bu we consider only he informaion being seamless." Yanmar's producs cover a wide range, and is cusomers are a diverse group of people. However, here is one hing hey have all in common he "Yanmar brand." GCS is sriving every day o deliver greaer saisfacion o is cusomers around he world as par of is mission o "improving cusomer services o enhance he Yanmar brand." Repor Supplying pars quicker and more precisely o ensure no down-ime service Kiyomi Tomizawa Manager of Kobe Cener, Yanmar Logisics Service Co., Ld In fiscal 28, he firs year he Cener opened, i was able o conribue o meeing he GCS sales arge of 2.5 billion yen (an achievemen rae of 3%, and 64% compared o he previous fiscal year). This includes growh of 5% for he handling of airmailed packages sen in response o emergencies, while he demands have grown and become more sophisicaed han before. In order o respond o hese demands a bi quicker, we swiched o a same-day shipping sysem whereby Kobe Cener ships iems on he same day for orders received by a.m. and for orders received by 2 p.m. in he case of iems sen in response of accidens. The Osaka Pars Cener, by comparison, used o ship iems from orders received he previous day. If logisics sysems are se up a regional airpors in he fuure, hen we would aim o use his one-day sysem for orders received by 3 p.m. on he same day for boh domesic and overseas shipmens. Along wih making effors o esablish a shipping sysem ha mees he delivery expecaions of our cusomers, bolsering he emergency-pars shipping sysem, and addiionally improving he qualiy of ranspor packing maerials, we aim o provide suppor as much as possible based on he GCS policy. YANMAR Enviromenal & Social Repor 29 5

18 6 Wih he aim of gaining he rus of all our sakeholders, Yanmar is engaged in he creaion of an environmenally susainable sociey.

19 Adminisraive Organizaion We are pressing ahead wih our CSR managemen while bolsering our corporae-governance sysem o ensure our fuure growh as a rused and reliable corporaion.2& Relaionship wih Our Cusomers Placing grea imporance on he bonds of rus we have esablished wih our cusomers around he world, we aim o creae value ha is meaningful o boh our company and our cusomers as we srive o achieve original qualiy assurance and universal design. 2 Relaionship wih Our Disribuors and Dealers We aim for he sharing of informaion concerning our producs and business aiude wih disribuors and dealers in overseas and domesic markes. Wih his in mind, we are consrucing an elaborae nework wih he goal of making us he world's No. in cusomer saisfacion.2! Relaionship wih Our Suppliers By creaing parnerships wih business associaes who are moivaed abou environmenal preservaion in counries around he world, we are able o promoe "Green Procuremen", an environmenally conscious sysem of procuremen.2 " Relaionship wih Our Employees Placing imporance on he individualiy and originaliy of each individual, we srive o foser personnel capable of working on he global sage, while also providing suppor in a variey of ways ha respec diversiy.2 # Relaionship wih Sociey Aiming o move forward ogeher wih he regions and socieies we serve, we work o make conribuions o socieies and regions in Japan and abroad. These effors include he revializaion of agriculure, suppor for educaion and spors, and chariable conribuions.2 & Relaionship wih he Environmen Taking "Symbiosis wih Naure" as our corporae heme, we are placing greaer effor in he developmen of environmen-oriened producs, environmenal preservaion in our manufacuring processes, and "environmenal communicaion" aciviies.2! Social Responsibiliy Environmenal Conservaion Aciviies YANMAR Enviromenal & Social Repor 29 7

20 Social Responsibiliy Repor Adminisraive Organizaion Yanmar promoes CSR managemen in order o remain a corporaion rused by sociey. Corporae Governance Sysem Yanmar has pu in place a corporae governance sysem ha realizes quick decision-making and clearly defined responsibiliies, wih he aim of improving sable corporae value over he long erm. As our adminisraive organizaion, in 2 we inroduced an execuive officer sysem o promoe separaion beween adminisraive supervision and he execuion of duies. Since hen, he Board of Direcors has specialized in he deerminaion of duy execuion and supervision of execuion. Yanmar has 6 direcors as of March 2, 29, and he Aricle of Incorporaion sipulaes ha here should be no more han 2 direcors. Under he Board of Direcors are hree managemen commiees: he Managemen Sraegy Commiee (in charge of acual decision-making for he enire Yanmar Group), he Business Execuion Commiee (in charge of PDCA managemen for business execuion), and he Monhly Business Review Commiee (in charge of he monhly progress managemen of business execuion), which serve o enhance he execuive power of adminisraion. Yanmar urns o wo exernal audiors ou of four members, whose job is o monior managerial operaions, o reinforce he check-and-balance capabiliy and deerren capabiliy wih respec o duies, hereby enhancing he ransparency of our corporae conduc. Each audior conducs audiing in line wih he policies and audi programs deermined by he Board of Audiors. Corporae Governance Organizaion Char Appoinmen / Dismissal Accounan Audior General Shareholders' Meeing Repor / Supervision Board of Audiors Consen for appoinmen Consen for compensaion, ec. Managemen Sraegy Commiee Business Execuion Commiee Repor Monhly Business Review Commiee (As of March 2, 29) Appoinmen / Dismissal Appoinmen / Dismissal Audi Board of Direcors Supervision/ Repor Inernal Conrol Yanmar resolves he fundamenal policy on he esablishmen of a sysem a he Board of Direcors and is esablishing an appropriae inernal conrol sysem in order o ensure he appropriae execuion of businesses in compliance wih he Corporae Ac. To be specific, Yanmar has deermined basic policies concerning he formaion of an inernal conrol sysem a he Board of Direcors as follows: Basic Policies for Formaion of he Inernal Conrol Sysem (ouline) Promoing developmen and implemenaion of inernal compliance sysems based on he compliance regulaions Esablishing a sysem o exensively and comprehensively manage risks for he enire Group Esablishing a managemen sysem for appropriae implemenaion of businesses by he enire Group When a criical decision is o be made, a serious managemen condiion occurs, or maerial damage or loss of rus is likely, Direcors or employees should immediaely noify he audiors if hey find any violaion of law or maerial ac of or. Corporae Audiors may reques ha a repor be made a any ime. In addiion o he above, he Basic Policies also deal wih appropriae sorage and managemen of informaion, esablishmen and improvemen of managemen sysem, and independency of assisans o audiors. Compliance Promoion Sysem Group Compliance Commiee The Yanmar Group se up he Group Compliance Commiee (wih he Execuive Vice Presiden as he head and represenaives of each business company and operaion division as members plus exernal members <lawyers>). The purpose of he Commiee is o have he op managemen as well as all Group employees fully undersand he corporae ehics and he imporance of legal compliance, and o esablish and mainain a sysem ha prevens any conduc in violaion of social ehics and laws and regulaions. The Commiee has in place he Yanmar Code of Conducs and formulaes compliance policies for he enire Group based on he Code. Each Group company sipulaes is own compliance promoion plan based on he Group-wide policies and carries ou compliance programs. Promoion Aciviies ❶ Full check of compliance risks A Group-wide full check of compliance risks was conduced from July o November 28. 8

21 ❷ Acquisiion of Pledges of Compliance Pledges of Compliance were acquired from Group employees and execuives excep for overseas companies. As of he end of March 29, 98% of saff members have submied pledges. ❸ Esablishmen of a sysem for overseas In November 28, inernal compliance officers of overseas companies were invied o Japan o hold an Overseas Subcommiee. The condiion and saus of heir promoion aciviies were confirmed by he Subcommiee. ❹ Inernal educaion aciviies The Rinri ("ehics" in English) News is issued on he inrane bimonhly. In Ocober 28, posers were creaed in order o improve employees' recogniion of heir inernal reporing sysem. Inernal Reporing Sysem "Complain Box for Ehics" Yanmar has in place a "Complain Box for Ehics," which allows employees o noify or consul when hey have learned of or have doubs abou any inappropriae, unlawful, illegal or unehical conduc a workplaces or during business aciviies. The Secrearia receives hese noificaions by phone, fax, or in personal consulaions, and he Compliance Commiee addresses problems in order o develop soluions. In 28, he number of noificaions o he Complain Box for Ehics increased from 7 in he previous year o 22 as a resul of wider recogniion hrough poser adverising of he inernal reporing sysem. Group Companies Esablishing heir Compliance Commiees Business companies and operaion divisions also esablish heir own Compliance Commiees as subordinae organizaions of he Group Compliance Commiee and formulae heir own compliance policies. The purpose is o expose dorman, hidden bu presen compliance problems and ake measures o avoid heir recurrences as prevenive acions. Risk Managemen Promoion The Yanmar Group se up a secion dedicaed o risk managemen in Augus 26 and esablished he Group Risk Managemen Commiee (wih he Execuive Vice Presiden as he head and represenaives of each business company and operaion division as members) in April 27. The Commiee, designed o ensure accurae managemen and pracice agains varying risks affecing our business, has been assigned he asks of reviewing Group-wide policies and direcions, addressing issues and responses relaed o risk managemen promoion, and confirming he decisions made. Major Aciviies ❶ Uilizaion of he Risk Even Repor Daabase We promoed uilizaion of he Risk Even Repor Daabase ha sared in June 27. Whenever any progress in handling each risk even ha occurred in he Yanmar Group is made, risk managemen officers pu i on record in he Daabase for sharing wih he op managemen. There were 5 evens enered in he Daabase in 28. ❷ Risk assessmen for he Yanmar Group's major plans Exernal specialiss visi our major plans o check heir capabiliies o resis accidens and disasers so as o improve curren risk counermeasures. In 28, nine plans underwen such field surveys. ❸ Emergency communicaion nework and communicaion es Yanmar inroduced a safey confirmaion sysem in January 26 and conducs general drills for he enire Group in January and Sepember every year. In 28, we esablished an emergency communicaion nework ha enables swif ransmission of danger informaion from each faciliy in he Group on no-work days, and conduced a communicaion es every wo monhs. Promoion of CSR Aciviies In March 28, we se up he Corporae Social Responsibiliy Dep. as an organizaion dedicaed o he furher promoion of CSR aciviies in he Yanmar Group. Composed of he Inellecual Propery Dep., Legal & Business Ehics Group, Environmenal Managemen Dep., and Planning Group, he Corporae Social Responsibiliy Dep. is acively implemening crosssecoral measures in order o incorporae he varying requess of sakeholders ino business operaions. Organizaional char for CSR promoion Corporae Social Responsibiliy(CSR) Dep. Inellecual Propery Dep. Legal & Business Ehics Group Environmenal Managemen Dep. Planning Group [Roles and Aciviies] Managemen and sraegic uilizaion of he Group's inellecual properies Promoion of he Group's compliance and consulaions on relaed legal affairs (response o lawsuis) Supervision of environmenal aciviies including responses o exhaus gas regulaions Implemenaion of CSR promoional aciviies and esablishmen of he Group's risk managemen sysem YANMAR Enviromenal & Social Repor 29 9

22 Social Responsibiliy Repor Relaionship wih Our Cusomers Qualiy is he "bond of rus wih cusomers." True o his moo, we srive o reinforce our parnership wih cusomers. Effors o Improve Qualiy The Yanmar Group regards "qualiy" as a bond of rus wih cusomers. Each employee coninuously srives o earn he rus of cusomers by providing producs wih he indusry's op levels of qualiy and performance, and by offering promp, suiable services. In 968, we were he engine indusry's firs winner of he Deming Applicaion Prize, he greaes honor besowed for he pursui of qualiy conrol, and since ha ime, all of our employees have been sriving o achieve qualiy improvemens and produc safey hrough he ongoing promoion of TQM 2 and QC circle aciviies. This award is given o organizaions ha have achieved disincive performance improvemen hrough he applicaion of TQM in a designaed year. The Deming Prize Commiee is esablished in he Union of Japanese Scieniss and Engineers. 2 A sysemaic aciviy ha conducs effecive and efficien operaion of all of he organizaions of a company, and conribues o he achievemen of he company s arge so ha saisfying commodiies and services can be provided a he righ ime and a he righ price. Also referred o as a "general qualiy commimen." Our Qualiy Assurance Sysem Yanmar is engaged in qualiy assurance aciviies in all sages of business aciviies, ranging from he planning and developmen of producs o producion, sales and service, wih he qualiy assurance deparmen of each business uni 3 serving as he general conac. Every business uni has a Produc Safey Commiee in place o ensure produc safey. The enire group is being moniored for qualiy assurance by he group-wide Qualiy Assurance Commiee. We have also obained ISO 9 cerificaion a 28 unis, including some overseas. 3 The collecive name for operaions divisions (including he Power Sysem Operaions Division, Large Power Producs Operaions Division, Marine Operaions Dep., and Tracor Division) and business companies (including Yanmar Consrucion Equipmen Co., Ld., Yanmar Energy Sysem Co., Ld., and Kanzaki Kokyukoki Mfg. Co., Ld.). Yanmar's Qualiy Assurance Sysem Qualiy Assurance and Produc Safey Aciviies We are conducing sysemaic aciviies o ensure produc qualiy and safey a every sage of our business aciviies, including he planning, developmen, producion, sales and service of our producs. A he developmen and design sage, we incorporae marke needs and cusomer requiremens ino design qualiy hrough QFD (qualiy funcion developmen) and predic and idenify poenial problems in he life cycle of each produc hrough FMEA (failure mode effec analysis). Produc safey is paricularly imporan. In addiion o compliance wih all applicable sandards and regulaions boh domesically and inernaionally, we have a sricer se of in-house sandards in place. We also conduc coninuous design reviews as well as risk assessmens, and hold evaluaion meeings a each sep of new produc developmen. Wih his sysem, new producs mus undergo assessmen from he viewpoins of boh qualiy and safey before being pu ino mass producion. A he producion sage, qualiy and safey are indispensable facors in each process. Our qualiy managemen sysem is consanly being improved hrough QC circle and ISO 9 aciviies. QC meeing a a workplace Managemen Commiee Srucure Qualiy Assurance Commiee Business Unis and Qualiy Assurance Deparmen Business Unis, Qualiy Commiee/Produc Safey Commiee Produc planning Basic plan Prooype design Mass producion design Producion preparaion Producion planning Procuremen of pars Accepance inspecion Processing and assembly Shipmen inspecion Sales Complains Invesigaion and analysis Prevenion of recurrence and invesigaion of cause Confirmaion of effeciveness Produc developmen Producion Cusomer saisfacion survey Sale and service Risk assessmen, DR, FMEA, FTA, QFD, Reliabiliy Engineering, Safey Sandards, and Technical Sandards QA Shee, QC Schedule, Operaion Sandards, TPM Aciviies, QC Circle Aciviies, and Iniial Sabiliy Managemen Aciviies Before-Sales and Afer-Sales Service, Failure Analysis and Qualiy Informaion Sysem ISO 9 Qualiy Managemen Sysem in Each Business Uni 2

23 Incorporaing he Concep of Universal Design ino our Producs is Our Soluion o Refinemen of "Sanding in he User's Shoes" Universal Design Agriculural machinery is characerized by he following uniquenesses in use, which are no seen in auomobiles or consrucion machinery, because of where and how hey are used: ) Since users carry ou farming while moving, hey are required o carry ou wo kinds of operaions, i.e. "moving" and "farming," a he same ime. 2) Agriculural machines are used in severe working environmens such as seeply sloped semimounainous areas or muddy paddy fields. 3) Farmers carry ou differen kinds of work, i.e. illing, puddling, rice planing, and yielding, according o he season and over shor ime periods, and use differen kinds of machines. By he ime a farmer feels he has become used o using one machine, he work for which he machine is used is over, and he farmer won' use i again unil he following year. This makes i more difficul for farmers o learn how o operae each machine more efficienly. 4) Farmers, who are users of agriculural machinery, are aging every year, which is causing a widening gap in physical capabiliy among users. Fully aware of he need o develop agriculural machinery ha is user-friendly for boh aged and beginner users, Yanmar acively uses he concep of universal design (UD) for each agriculural machine. We have esablished a guideline in he form of he "Ten Rules," composed of he convenional "Seven Rules of Universal Design," including ease of undersanding, simpliciy, safey and securiy, plus hree addiional rules from he viewpoin of machines for agriculure, namely "economic efficiency," "aesheic beauy" and "environmenal friendliness." We hen conduc use ess involving users including he aged and women o conduc numeral evaluaions in erms of operabiliy or comfor during use. The resuls of rial use ess are hen analyzed by age or he level of experience o idenify and eliminae problems and make improvemens, wih he resul ha new findings are consanly incorporaed ino new produc developmen. The AJ28 Series Combine harveser is one of he fruis born form hese effors. We inend o coninue o pracice UD and creae and improve producs while "sanding in he user's shoes." In addiion o agriculural machinery, we promoe he concep of UD in all our business aciviies including consrucion machinery and energy sysems. Topics Yanmar's Exhibi in he "Japan UD Experience Pavilion" a he Taiwan Design Exposiion 28 Yanmar displayed he Combine harveser AJ28 in he Japan Universal Design Experience Pavilion, which inroduced advanced cases of universal design in Japan, a he Taiwan Design Exposiion 28 held in Tainan from Ocober 4 o 9 in 28. A large number of people showed an ineres in he AJ28, which feaures various universal-design elemens, including a wing lever ha mees he wo demands of viewabiliy and ease of use, and an operaion panel designed o be easy o look a. Many visiors acually rode on he combine harveser o ouch and feel he UD feaures of he machine. Abou 38, people visied he Exposiion during he period, many of whom visied he Japan UD Experience Pavilion and saw Yanmar's producs. A presenaion, Yanmar's Universal Design Promoion, was held as one of Japan's advanced case Combine harveser AJ28 examples of UD in he Taiwan UD Seminar held during he Exposiion period. The Expo and seminar provided a good opporuniy for Yanmar o connec wih visiors, and Yanmar came o firmly believe ha UD, which embodies he concep of sanding in he user's shoes, is undersood by people around he world despie linguisic barriers and regardless of he ype of produc. YANMAR Enviromenal & Social Repor 29 2

24 Social Responsibiliy Repor Relaionship wih Our Cusomers We pu a lo of imporance in communicaion wih our cusomers, so ha you can use our producs wih a sense of securiy. Response o and Suppor of Cusomers Communicaion wih our cusomers is very imporan for Yanmar as we srive o help our cusomers use our producs safely and appropriaely. We quicy and accuraely respond o cusomer complains, opinions and requess in order o improve cusomer saisfacion. Responses o Cusomer Inquiries In Japan, we have esablished a Cusomer Consulaion Office ha responds o elephone inquiries from cusomers. Cusomers can also send heir opinions and requess by from our websie. inquiries (FY28) Breakdown by business Large marine engines: 349 (5%) GHP and generaor: 529 (7%) Land engines: 74 (%) General-use consrucion equipmen: 968 (3%) Ohers: 963 (3%) Response o cusomer requess Special agens overseas Special agens in Japan OEM and shipbuilding yard Cusomer Toal: 7,366 inquiries Small marine engines:,895 (26%) Farm machinery:,948 (26%) Breakdown by region Middle Eas: 29 (3%) Middle and Souh America: 386 (5%) Conens of inquiries Sales nework: Inquiries abou 6% producs:% Produc informaion: 26% Pars informaion: 6% Yanmar Group Sales companies (sale and service) Corporae secion (service, qualiy assurance, cusomer consulaion conac) Oceania: 92 (3%) Africa: 75 (2%) Europe: 938 (3%) Toal: 7,366 inquiries Asia:,43 (4%) Service informaion:% Ohers: 26% Pars inquiries: 4% Japan: 2,276 (3%) Norh America: 2,47 (29%) Business unis (developmen, producion, qualiy assurance) Afer-sales Service Annual naionwide cusomer quesionnaire surveys are used o obain informaion abou our sores, sales aciviies, services and producs from cusomers seleced from random sampling. For agriculural machinery, cusomer saisfacion surveys are implemened wih regard o producs launched each year, and he 28 survey was conduced for one machine. Guaranees ha include checkshees for free inspecions are issued for some producs as par of our afer-sales service improvemen policy. The Swif and Accurae Provision of Produc Safey Informaion Regulaions for produc safey have recenly been reinforced as a resul of, for example, revision of he Consumer Produc Safey Ac. In response, Yanmar has improved various inernal sysems for compliance wih produc safey regulaions, including enhancemen of he Yanmar Technical Informaion Sysem (YTIS, e-claim ) ha gahers echnical informaion by means of he web and he inrane, and esablished he Cusomer Consulaion Office. In addiion, we acively provide he relevan auhoriies 2 wih informaion on accidens. YTIS: Yanmar Technical Informaion Sysem (in Japan) e-claim: overseas warrany handling sysem 2 Minisry of Land, Infrasrucure, Transpor and Tourism, Minisry of Economy, Trade and Indusry, Minisry of Agriculure, Foresry and Fisheries, ec. Enhanced Response o Recall In case an unexpeced problem arises affecing producs purchased by cusomers and acion is judged necessary, Yanmar will swifly implemen appropriae acions, including he recovery, repair, inspecion or replacemen of producs wih cusomer safey and damage prevenion as op prioriies. In case of a recall, we shall noify he relevan organizaions 3 and disclose his informaion in recall noices in newspapers and on our websie o ensure our compliance wih he recall rules. 3 Minisry of Land, Infrasrucure, Transpor, and Tourism, Minisry of Economy, Trade and Indusry, Minisry of Agriculure, Foresry and Fisheries, he Japan Boaing Indusry Associaion, CPSC, EPA, ec. Imporan News on Qualiy hp:// Number of recalls Number of recalls MLIT Recall and Improvemen Measures, produc recalls based on he Consumer Produc Safey Ac, and he number of recalls noified o he CPSC (fiscal year) 22

25 Social Responsibiliy Repor Relaionship wih Our Disribuors and Dealers We have esablished a firm relaionship of rus wih suppliers and dealers around he world. Holding of he Yanmar Convenion The Yanmar Group holds he Yanmar Convenion every year o encourage effors o share ideas, direcions and produc informaion wih dealers hroughou he counry and reinforce relaionships of rus wih hem. The Yanmar Consrucion Equipmen Convenion was held a Marine Messe Fukuoka, Fukuoka ciy, on July 9, 28, and 45 paricipans, mainly renal conracors, aended he convenion from 9 counries. The Yanmar Agriculural Equipmen Naional Convenion was held a Kobe Poropia Hoel, Kobe ciy, on January 9, 29. The firs par was a presenaion of he new company Yanmar Agriculural Equipmen Sale Co., Ld, esablished by merging sales companies in December 28, and in he second par, wih he upcoming merger wih Yanmar (Feb. 2), he paricipans vowed o achieve furher "evoluion" under he slogan "Le's combine all he forces of he Group and advance even furher wih Yanmar always being he cusomer's choice". Repor Yanmar Marine Naional Convenion --- a Grea Opporuniy o Renew Our Commimens owards Our Dealers Akihiro Kaayama Planning Group, Domesic Sales Managemen Dep. Yanmar Marine Sysem Co., Ld. The Yanmar Marine Naional Convenion 28 was held a Hoel New Oani Osaka on Ocober, 28. Under he slogan of "Esablishmen of a cusomeroriened business model," specific examples of "proposal-ype business models" employed by Yanmar Marine Sysem's sales offices and dealers were presened. All paricipans in he Convenion renewed heir commimen. During he Convenion, he new 6CXB engine model was also inroduced. Oher new boa models including he Hun24 were shown a he Yanmar New Boa Presenaion held a he New Nishinomiya Yach Harbor on he 2nd and 3rd of Ocober. Yanmar Marine Sysem is deermined o coninue providing our cusomers wih producs and services ha saisfy hem. Communicaion wih Overseas Agens Yanmar Group holds produc exhibiions in various pars of he world every year o allow as many people as possible o ge o know our producs and boos ies wih dealers. Disribuor and Dealer Convenions are also held o promoe he inroducion of new producs and he exchange of noes among paricipans in order o vialize communicaion among dealers. Repor The 2h China Inernaional Agriculural Machinery Exhibiion wih Over, Visiors Every Day Hua Min Manager, Sales Dep. Yanmar Agriculural Equipmen (China) Co., Ld. The 2h China Inernaional Agriculural Machinery Exhibiion was held on Ocober 26 and 27, 28.,86 companies in and ouside China paricipaed in he Exhibiion, and over, people visied he venue daily, which reaffirmed he curren and fuure poenial for growh of he Chinese marke of agriculural machinery. Tracors, diesel engines, power generaors, rice and whea harvesers, paddy rice ransplaners, and vegeable harvesers were on display hroughou an impressive area of 35,m 2. Among hese, he Ee6 combine for wo-lane harvesing and designed paricularly for use in mounainous areas drew much aenion. Some 8 unis have been sold in China since is launch in 26. During he Exhibiion, Yanmar received he suppor of 4 dealers from he Henan Province. Their professional sales saff provided excellen high-qualiy services o visiors, helping us successfully conduc he exhibiion. Yanmar Marine Naional Convenion China Inernaional Agriculural Machinery Exhibiion YANMAR Enviromenal & Social Repor 29 23

26 Social Responsibiliy Repor Relaionship wih Our Suppliers Yanmar Communicaes wih Suppliers in and ouside Japan in Various Ways o Deepen Muual Undersanding. Fundamenal Purchase Policy The Yanmar Group ensures horough compliance wih "value, qualiy and delivery ime," he basic funcions of procuremen service, on a global level and wih sraegic group-wide purchasing. We also collaborae wih suppliers in environmenal conservaion effors and oher aciviies in order o mee social needs from a long-erm sandpoin. Reinforcemen of Parnership From a long-erm perspecive, we promoe he deepening of muual undersanding and rus wih suppliers. Sable Supply We audi suppliers in erms of equipmen capabiliy, personnel reinforcemen, produciviy improvemen and supply from overseas bases, provide he necessary insrucions concerning hose maers, and promoe parnerships wih suppliers o ensure he sable acquisiion and imely delivery of maerials and pars from hose suppliers. Qualiy Assurance We aim o ensure he appropriae qualiy of pars delivered by suppliers by aking various acions, including qualiy audis and guidance o suppliers, a qualiy commiee, he iniial sable managemen of new producs, and implemenaion of he Qualiy Prioriy Managemen Sysem and Qualiy Conrol Excellen Plan Cerificaion Sysem. Qualiy Prioriy Managemen Sysem: Sysem o provide special qualiy insrucions every year o suppliers wih lowraed qualiy evaluaions. Cos Reducion We se up cos arges and arge cos reducion wih his in mind. Legal Compliance We comply wih social norms, laws, regulaions, and heir spiri and ensure horough compliance wih securiy proecion. Purchase Policy Briefing One of hese ways is a Purchase Policy Briefing session held every year for our major suppliers a he beginning of he year a seven locaions in Japan o explain he policies for he enire year and for he mid-erm. In February 29, based on he predicion ha he presen severe marke condiions would las a leas for wo more years, wo-year cos reducion arges were deermined. In order for he enire Group o fulfill hese arges, suppliers are encouraged o propose various ideas for cos reducions and help us ogeher make a difference in erms of improvemens of produc funcions, sharing of pars, and enhancemens of produciviy. Supporing Suppliers' Effor for Improvemen The Procuremen Dep. of he Yanmar Group selecs cerain of our domesic and overseas suppliers from he viewpoins of value, qualiy and delivery ime every year and provides insrucions for improvemen. Since 27, we have been promoing YWKS aciviies o enhance he consiuional improvemen of suppliers and reinforce parnerships wih hem. In 28, 9 suppliers were invied o paricipae in hese aciviies o make effors for "qualiy improvemen," "produciviy enhancemen," and "invenory reducions." YWKS sands for Yanmar Way by Kaizen wih Suppliers, which is an exended version of YWK aciviies o include suppliers. YWK (Yanmar Way by Kaizen) aciviies are ongoing improvemen aciviies conduced by he Yanmar Group and specifically include effors o reduce defec raios and achieve lead ime and producion cos reducion a 6 divisions and 7 plans in Japan. Green Procuremen Reinforcing he Green Procuremen Sysem Since he esablishmen of he Yanmar Green Procuremen Guideline in April 23 (revised in December 26), we have been promoing he procuremen of safe pars and componens designed and produced in an environmenally-friendly way while collaboraing wih our suppliers a various pars of he world. In November 26, we formulaed he Regulaions on Resricions of Use for Environmenal Hazardous Subsances o idenify subsances which we should volunarily refrain from using. In selecing suppliers, we prioriize ransacions wih suppliers enhusiasic abou environmenal conservaion aciviies wih an esablished environmenal managemen sysem in addiion o such evaluaion iems as value, price and delivery ime. Wih he Procuremen Dep. of he head office as he main player, we hold briefing sessions o he managemen of all suppliers o reques heir cooperaion wih a green procuremen survey and green procuremen. Survey for Pars and Maerials We check maerials and pars provided by suppliers for subsances banned by our guidelines. In 28, we sared puing chemical subsance conen informaion from suppliers ino a daabase o esablish he Produc Conen Chemical Subsance Managemen Sysem for he inegraed managemen of hese subsances. We promoe he inernal disclosure of informaion on chemical subsances conained in Yanmar producs. Green Procuremen Guideline : hp:// 24

27 Social Responsibiliy Repor Relaionship wih Our Employees Yanmar devoes is energy o nururing personnel capable of working on a global scale while sanding in he cusomer s shoes. Human Resources Vision In order for Yanmar o survive amid compeiion on a global scale, we need o "srenghen" no only our producs bu also our organizaion and individual employees. Based on his undersanding, we formulaed visions from he viewpoin of organizaion and personnel and apply hese o acual managemen. The Vision for Personnel (Acquisiion and Fosering of Human Resources) () We have professional human resources capable of working on a global scale; regardless of naionaliy, gender or age. (2) We operae a career developmen program ha can swifly foser human resources for fuure managemen posiions. (3) We promoe personnel exchange in he Yanmar Group, including overseas, in order o make effecive use of he group personnel. (4) We have in place a sysem ha allows us o respec he plans, desires and inenions of each individual employee in erms of personnel developmen and assignmens. The Vision for Mechanism (Personnel and Treamen Sysem) () We fairly evaluae he achievemens of individuals and he company and convincingly allocae he resuls. (2) We have a sysem in place ha allows high-achieving employees o enjoy above level compensaion in he indusry. (3) Long-erm employmen is he basic paern of employmen in principle, and measures are available ha help each employee lead a career life ha maches his/her respecive lifesyle. The Vision for Organizaion and Funcions (Organizaional Sysem and Business Operaions) () We have an organizaional sysem based on mission managemen, o ensure full awareness of he arge direcion of each business by all employees, and have clearly defined he duies and roles for all employees based on each mission. (2) We have a simple and efficien chain of command in place, conduc appropriae delegaion of auhoriy, and can engage in swif decision-making. (3) We have clearly defined core operaions in each division in order o ensure he implemenaion of business operaions wih a small organizaion and a small group. Non-core operaions are acively ousourced. Global Talen Developmen When a company faces ongoing challenges in erms of operaion and managemen, he lack of concenraion on human resources developmen direcly resuls in he loss of power for evoluion. Now, when he enire Group is seen from a global viewpoin, we realize he increasing demand for personnel. To mee such demand, we inend o provide fair learning opporuniies and appropriae educaional environmens in all business fields including overseas companies, and impar he capabiliies of an innovaive mindse o each employee. We suppor he Group-wide srucure for capabiliy developmen in order o foser personnel who are eager o ake on all challenges and play imporan roles in global businesses. We provide educaion and raining o our employees o help hem become beer persons wih wide frames of reference, by providing raining on fundamenal skills and imparing business knowledge and know-how so as o ulimaely srenghen manufacuring capabiliies. Developmen of Human Resources Capable of Sanding on Their Own wih Cusomers' Viewpoins Always in Mind We are engaged in he developmen of human resources who can moivae hemselves o enhance heir capabiliies as well as help heir cusomers solve problems in order o achieve successful resuls. We provide various opporuniies for capabiliy developmen such as "engineer (basic) educaion," "selecive workshops ('Challenge Seminars') and "correspondence educaion," paricularly o hose employees who "are deermined o learn by hemselves" and "wan o enhance heir capabiliies and performance for greaer conribuions o cusomers." Nururing of Human Resources Acive in Global Businesses To promoe he 'globalizaion' of our personnel, we emphasize specialized raining, such as ha designed o improve pracical English capabiliies cenering on conversaion skills and inernaional business skill raining ("English business wriing classes" or "raining for presenaions and negoiaions in English"). We also coninue o reinforce our raining programs for employees assigned o overseas sies (such as problem-solving or overseas risk managemen raining), and suppor our employees saioned in foreign counries o help hem swifly adap o working and living in foreign counries. We are coninuously commied o srenghening our educaion and raining for global players. Developmen of Human Resources for Fuure Managerial Posiions We provide learning opporuniies for improvemen of managemen capabiliies such as he Yanmar Managemen School o help our employees who are desined o play pivoal roles in managemen posiions in he fuure. To furher help hem serve as global leaders, we suppor capabiliy developmen such as communicaion wih and leadership for foreign employees. We will increase learning opporuniies o help employees acquire in-deph knowledge on managemen from a global viewpoin. YANMAR Enviromenal & Social Repor 29 25

28 Social Responsibiliy Repor Relaionship wih Our Employees Flexible Sysems Available for Respec for Employee Diversiy. Lisening o he Employees' Voices We conduc an employee awareness survey as a means of lisening o heir voice. The way in which employees' awareness varies over he years is moniored and analyzed in our survey concerning employees and heir feelings of happiness or burden agains "work," "workplace," "superiors" and he "company"; issued once every hree o four years via he inrane in a quesionnaire forma. Analysis of he resuls is used o develop measures o revialize he organizaion and workplaces. Employmen of Personnel Yanmar employs capable people in various ways based on he objecive of "acquiring professional personnel who can work globally, regardless of naionaliy, gender or age." Two ypes of employmen paerns are used, namely graduae recruimen and mid-career recruimen. In recen years, he emphasis on diversiy managemen ha respecs individual diversiy has encouraged us o hire more foreigners and more women for main career racks. As of May 2, 29, Yanmar alone, on a nonconsolidaed basis, had 3,398 employees, wih a malefemale employmen raio of 88.3% (3,) versus.7% (398). Man-woman employmen raio (as of May 2, 29) (Yanmar Co., Ld.) Women.7% Men 88.3% Man-woman graduae recruimen raio for 28 (Yanmar Co., Ld.) Women 5.7% Toal of employed graduaes Men 84.3% Women 2.% Employees for adminisraive and engineering careers (Main career and operaions) Men 79.% Women 2.9% Engineering employees Men 97.% Diversiy and Opporuniy Supporing a Balanced Life beween Work and Family Yanmar develops and improves employmen environmens o help sabilize he careers and family lives of employees who raise children or ake care of aged parens by providing a recenly revised child nururing and nursing care sysem, a female employee reemploymen sysem inended for former woman employees who qui due o marriage or childbirh, and more. Sysems inroduced and users (Yanmar Co., Ld.) (Unis: persons) Sysem Child-care leave Family-care leave Number of users Promoion of Employmen of he Physically Challenged As of March 29, he physically-challenged employmen raio is.62% (Yanmar Co., Ld.), 7 persons shor of he sauory level of.8%. Therefore, we are making a group-wide effor o aain he sauory physicallychallenged employmen raio. Recruimen aciviies are implemened a employmen bureaus as well as in conjuncion wih graduae recruimen aciviies; including visis o schools or paricipaion in briefing sessions. Afer employmen, physically challenged employees have he opporuniy for consulaions in he hird year in he case of graduae recruimen, and he second or hird year in he case of mid-career employmen, as well as consulaions wih he newly employed o help hem say wih he company. Reemploymen of Older People An over-6 re-employmen scheme for hiring people 6 and older, has also been pu in place o promoe he propagaion of echnical experise and help workers achieve pos-reiremen sabiliy. Respec for Human Righs Yanmar holds workshops wih inernal and exernal lecures for new employees as well as younger and midcareer employees, sends hese young employees o exernal workshops, and makes educaional exs available via inernal publicaions o creae brigh working environmens where human righs are respeced. In addiion, we uilize morning meeings and in-house bullein boards o impar he imporance of human righ o employees. In he Shiga Zone, Yanmar is a member of he Shiga Corporaions Coordinaion Meeing on Anidiscriminaion and, as a managing member, is acively engaged in educaional aciviies o promoe anidiscriminaion in oher member companies

29 We are aking various acions o ensure he healh and safey of our employees. Promoion of Healh Improvemen Healh Managemen and Promoion Commiee The Healh Managemen and Promoion Commiee is formed by he members of he labor union engaged in he healh insurance union, personnel and labor affairs secions, General Affairs Dep. of he Power Sysem Operaions Division, and General Affairs Dep. of he Large Power Producs Operaions Division. The Commiee consuls on and promoes various healhrelaed maers such as periodic medical checks and measures o miigae "meabolic syndrome." Healh Conrol Yanmar conducs a periodic medical check for all employees every year. We also provide a medical check for adul disease prevenion for employees aged 3, 35 and over 4 as well as opional checks when requesed. As a resul of hese checks, hose diagnosed as having meabolic syndrome are qualified o ake specific healhcare guidance a heir reques or by appoinmen of he company since 28. In addiion, we focus on he healhcare of overworked employees. For example, hard-working employees whose overime exceeds hours a monh or whose average overime in hree monhs exceeds 8 hours are qualified o see indusrial medical advisors, and are recommended o undergo adul disease checkups as required. Menal Healhcare Menal healhcare raining is conduced as par of managerial worker raining and rank-specific raining curriculums (such as newly appoined key job raining or upper supervisory job raining). We also hos a lecure by an indusrial medical advisor a he head office once a year. In addiion, we provide a variey of informaion on menal healh, including he placemen of menal healh informaion on group bullein boards and references o menal healh consulaion services, in order o preven he occurrence of menal diseases. Occupaional Healh and Safey The Yanmar Group has an occupaional healh and safey commiee a every producion plan o fully ensure he healh and safey of workers. Each plan mainains and reinforces heir occupaional healh and safey managemen by conducing healh and safey parols and oher aciviies under he direcion of he Occupaional Healh and Safey Commiee. The saus of safey managemen of each plan is repored o he head office in monhly occupaional hazard repors. These repors are used o improve employee awareness and o preven he recurrence of accidens hrough measures such as he in-house disclosure of repor informaion and he incorporaion of he lessons learned ino educaion and raining programs. Since he working environmen differs from plan o plan, each plan uilizes is own managemen sysem. Occupaional Hazard Saisics All indusries Average for he manufacuring indusry Frequency Yanmar Yanmar Group 2.5 2, FY Frequency: Faaliies or injuries per one million working hours Subjec period: From January, 28, o December 3, 28 Two companies were added in FY 27, namely Yanmar Casing Technology Co., Ld. (casing) and New Dela Indusrial Co., Ld. (fabricaion and assembly). Because of he impac of he disasers ha occurred (number of injured) a hese wo companies, he acciden occurrence raio of he enire group was evenually pushed up. Labor-Managemen Relaionship Yanmar mainains a sable relaionship wih he Yanmar Labor Union and engages in periodic negoiaions and discussions on employee working condiions. We also have he opporuniies o explain and discuss he financial condiions of he company by holding meeings o explain he corporae condiion and oher labormanagemen meeings. Inspecion in Yanmar's Biwa Plan YANMAR Enviromenal & Social Repor 29 27

30 Social Responsibiliy Repor Relaionship wih Sociey Yanmar engages iself in various aciviies o make conribuions o our sociey for he Earh, local communiies and children. Social Conribuion Aciviies The Revializaion of Agriculure Yanmar Suden Essay Cones Since 99, Yanmar has been annually holding he Suden Essay Cones o creae a forum of hinking and discussion wih young people concerning he fuure of agriculure and rural areas. There are many universiies ha radiionally ake on our essay cones as par of seminar aciviies or many agriculural colleges ha incorporae he essay cones as par of heir curriculums. We receive many proposals and recommendaions from hose young sudens. For he 9h Suden Essay Cones based on he heme of "Agriculure Changes and Agriculure Responds. Now Lay he Groundwork for he Fuure. 'Food' ha Nurures Life, 'Agriculure' ha Produces Foods, and 'Farming, Mounain and Fishing Villages' ha Proec he Environmen," we had 485 enries, including 5 heses and 37 essays from 8 universiies and schools in Japan. The grand-prize winner in he hesis caegory was Keia Sawaguchi, Graduae School of Kyushu Universiy, who wroe a hesis on "Is he Pen Sronger Than he Spade?" The grand-prize winning essay was "Change of Mind" wrien by Nanae Yoshimisu, Agriculural Deparmen, Oia Prefecural College of Agriculure. 9h award ceremony Children's Picure Exhibiion Yanmar provides suppor for a children s picure exhibiion eniled Counryside Paddies and Sreams sponsored by he Naional Federaion of Land Improvemen Associaions (Naional Midori Ne). The 9h exhibiion held in 28 received 2,4 enries, and as a resul of a five-day screening process, 22 prize winners, enries and 6 group prize winners were seleced. The Yanmar Prize wen o a picure drawn by Ayumu Kurokawa, a 6h grader from an elemenary school in Chiba prefecure, iled "Threshing in Terraced Paddy Fields." Awardwinning and seleced pieces were on display a he venue of he Midori Experience Even 28 held in he underground mall of he Shiodome Shiosie, Tokyo, from Ocober 29 o November 3, 28. "Threshing in Terraced Paddy Fields" by Ayumu Kurokawa, Chiba Prefecure Suppor for Spors Supporing he aciviies of Cerezo Osaka ( J league) Yanmar suppors he aciviies of he Cerezo Osaka J League professional soccer eam as an operaing organizaion for he eam ogeher wih Osaka's local adminisraions and leading companies as par of our effor o help promoe spors culure in he local communiy. Cerezo eam members conribue o he growh of ahleic aciviies by holding soccer lessons a local elemenary schools, and by paricipaing in evens and oher ypes of OSAKA C F.C. communiy ineracion. Cerezo Foundaion Aciviies Educaion Suppor Yanmar's firs presiden Magokichi Yamaoka esablished he Yamaoka Educaion Foundaion in 95 o develop human resources capable of conribuing o world peace and prosperiy and culural improvemen. Magokichi s commimen o his projec has been passed down hrough successive generaions, and even afer 59 years since is esablishmen, he Foundaion sill makes scholarship grans and loans available o high school, college and universiy graduae sudens as well as foreign exchange sudens. So far over 5, people have received hese scholarships and moved on o perform acive roles in various fields. In 28, scholarships were graned o a oal of 5 sudens including 44 graduae sudens (including 2 foreign exchange sudens), 44 college sudens, and 27 high school sudens. Scholarships Graned in 28 (Uni: Persons/ million) Classificaion No. of Sudens 44 Graduae sudens (Japanese sudens) 32 (Foreign sudens) 2 College sudens 44 High school sudens 27 Toal 5 Amoun

31 Topics Yanmar suppors he Biodiesel Challenge Projec, an aemp o drive around he world using biodiesel. Yanmar provides diesel power generaors o he Biodiesel Challenge Projec iniiaed by phoo journalis Shusei Yamada. In 28, Mr. Yamada drove hrough Norh Africa, Europe, Cenral Asia, and Russia and safely reurned o Japan on December, 28. The oal raveling disance covered during he Projec was 47,853 km. He was provided wih used vegeable oil in various pars of he world, produced fuel in his car over 5 imes, and successfully covered he enire disance using only biodiesel fuel. Mr. Yamada visied he head office of Yanmar on January 3, 29, and alked abou he hardships he experienced in gahering and refining used vegeable oil on his way, he warm friendship and communicaion wih people going beyond racial barriers, and he high levels of reliabiliy and durabiliy of Yanmar's generaors ha made a good showing in emergency siuaions. Shusei Yamada reas fuel wih he biodiesel refining uni. Topics Yanmar donaed consrucion machinery for he consrucion of a park ha helps conserve he environmen and conribues o he beermen of local communiies. Consrucion of he Izumisano Hills Green Park is ongoing under he slogan "Creaing Green Areas Joinly wih Osaka Ciizens" in he souhern par of Osaka Prefecure. This projec is being pursued as he concered effor of prefecural ciizens and corporaions o creae a park ha promoes Execuive Vice Presiden Haayama receives a cerificae of appreciaion from Governor T. Hashimoo. environmenal improvemen and environmenally friendly living for local people. Supporing he projec as one of he corporae groups rooed in he Kansai disric, Yanmar donaed a compac Vio2-3 hydraulic excavaor, a C2R crawler carrier, and a G24-6LE power generaor for consrucion of he park on January 3, 29. In response, Osaka Governor, T. Hashimoo, issued a cerificae of Vio2-3 mini hydraulic excavaor appreciaion o Yanmar on March 27. The park is going o be a place of naural ameniy and pleasure for prefecural ciizens where a variey of naural habias coexis including woods, bamboo foress, erraced paddy fields, and flower nurseries as he work coninues. YANMAR Enviromenal & Social Repor 29 29

32 Social Responsibiliy Repor Relaionship wih Sociey Each of he Group companies is engaged in social conribuion aciviies deeply rooed in each localiy. Volunary Aciviies Yanmar helps local communiies enhance heir socieies by paricipaing in volunary aciviies ha include cleaning projecs. Such aciviies help increase he awareness of environmenal imporance. Paricipaing in he All-ou Lake Biwa Cleaning (Power Sysem Operaions Division) We paricipae in he all-ou cleaning of Lake Biwa held annually on he Day of Lake Biwa (July ), designaed by Shiga Prefecure, and gaher refuse and lier scaered on he lakeside. Paricipaing in he, People My Homeown Cleaning Movemen (Large Power Producs Operaions Division) We paricipae in he, People My Homeown Cleaning Movemen, held annually all around he ciy of Amagasaki, and gaher refuse, empy cans, fallen leaves and oher lier from around he plan. Clean Movemen All-ou Lake Biwa Cleaning Holding he Cherry Blossom Fesival in he Company's Garden (Kanzaki Kokyu Manufacuring Co., Ld.) Kanzaki Kokyu Manufacuring annually opens is garden o he public during he cherry blossom season, and invies local residens hrough heir respecive residens' associaions as well as he residens of local homes for he aged o deepen communicaion wih local people. Cherry Blossom Fesival 3

33 Yanmar acively provides suppor o disaser-sricken areas and conducs environmenal conservaion aciviies ouside Japan. Social Conribuion Aciviies in Foreign Counries Suppor for he damage by he largescale earhquake in Sichuan, China The major earhquake ha occurred in Sichuan, China, on June 4, 28, was a devasaing naural disaser ha ook almos 7, lives. Aware of he agony ha survivors and local residens are experiencing as hey suffer shorages of elecric power and coninuing afershocks, Yanmar Engine (Shanghai) Co., Ld., a local Yanmar corporaion in China, donaed porable power generaor ses o China's Red Cross. The donaed generaors were sen o he affliced area by he Red Cross o help local people in heir resoraion effors. Suppor for he Cyclone Damage in Myanmar On May 2, 28, a powerful cyclone occurred in he souhern par of Myanmar and wreaked grea havoc. Yanmar immediaely informed he Office of he Unied Naions High Commissioner for Refugees (UNHCR) of is inenion o donae power generaors, learned ha here was grea demand in he damage-sricken area in Myanmar for power generaors, and swifly arranged he donaion of 62 power generaor ses o he affliced area via he UNHCR. As a resul, rescue aciviies were considerably improved, and he UNHCR presened a leer of appreciaion o Yanmar on Augus 26, 28. A presen, Yanmar's power generaors are being used in local resoraion aciviies a 3 sies in Myanmar. An appreciaion leer from he Shanghai Red Cross Environmenal Conservaion Aciviies of Yanmar Agriculural Equipmen (China) Co., Ld. Yanmar Agriculural Equipmen (China) Co., Ld. sared cleaning ErMaoshan mounain-climbing Road (an approximaely 2 hour reurn journey on foo) adjacen o Wuxi Municipal Xihui Park, in May 28. In 28, some employees and heir families including he presiden paricipaed in his aciviy inended o conribue o he beermen of he local communiy and enhance employees' awareness of he environmen. Leer of appreciaion presened o Yanmar by he UNHCR (op) Power generaor ses sen o he cyclone-devasaed area (lower lef and righ) Cleaning aciviy on he mounain rail YANMAR Enviromenal & Social Repor 29 3

34 Environmenal Repor Environmenal Managemen The Yanmar Group is pursuing he 22 Environmenal Vision as a milesone of he cenenary of our foundaion o ensure horough Group-wide implemenaion of environmenal managemen. Policies for Environmenal Aciviies Our sociey is sill facing a variey of serious problems, including global warming, he depleion of resources, he desrucion of naure, and environmenal polluion. True o is founding spiri of a Graeful o serve for a beer world Yanmar has been engaged in environmenal conservaion aciviies ever since he company was esablished. In 995, we esablished he Yanmar Global Environmenal Charer, and all of Yanmar's producion faciliies obained cerificaion for he ISO 4 Environmenal Managemen Sysem sandard in 998. In hese ways, Yanmar is making seady and coninuous progress in is effors o reduce environmenal load. In 22, Yanmar updaed is Yanmar Global Environmenal Charer, creaing he Yanmar Group Global Environmenal Charer o furher promoe environmenal awareness in he managemen philosophy of he Group as a whole. Yanmar Group Global Environmenal Charer Environmenal Philosophy The Yanmar Group aims o conribue o he susainable developmen of sociey by consrucing a harmonious relaionship beween group developmen and he needs of he global environmen. Acion Guidelines. We posiion environmenal conservaion as one of he mos imporan managemen objecives of he Yanmar Group for he purpose of Group-wide environmen managemen. 2. We sricly observe he laws of all counries and he ordinances and regulaions of all disrics where we conduc producion aciviies, and when necessary, esablish volunary environmenal regulaions in order o achieve superior levels of environmenal conservaion. 3. The Yanmar Group Global Environmen Commiee esablishes environmenal promoion guidelines and disseminaes hem hroughou he Group o achieve an overall promoion of environmenal conservaion by he Group. 4. We acively disseminae environmenal conservaion informaion inernally and exernally o promoe he undersanding of Group companies and parners abou he need for cooperaion in he efficien promoion of environmenal conservaion aciviies. 5. We promoe effecive measures sysemaically and on a coninuous basis in he following four environmenal fields: The esablishmen of echnologies ha conribue o environmenal conservaion, and providing producs and services ha reduce environmenal load. The reducion of environmenal load in each sage of business aciviies. The joining of forces and cooperaion wih exernal paries o conribue o local communiies and disseminae environmenal informaion. The raising of environmenal awareness among Yanmar employees, and he promoion of inernal environmenal educaion, lifesyle innovaion, ec. (Revised March 22) Environmenal Vision Yanmar esablished he 22 Environmenal Vision o define goals o be achieve by 22, he h anniversary of our founding. We never sop moving ahead wih his vision as he common goal for he enire Group, working owards he realizaion of a susainable sociey. 22 Environmenal Vision The Yanmar Group, in full recogniion ha i does handle producs ha can impose environmenal load, underakes o:. Conribue o he growh of a susainable, resource-recycling sociey [A sociey ha promoes he prevenion of global warming, zeroemission, re-use, and recycling] 2. Provide number-one, only-one, as called, producs ha are compaible wih boh environmenal and economic needs [Producs ha emi cleaner exhaus gas, have higher energy efficiency, and reduce harmful subsances] 3. Fulfill social responsibiliies in cooperaion wih sociey [Promoe legal compliance, volunary regulaions, informaion disclosure, and communicaion wih he communiies] To achieve hese objecives, he Group shall: () Consruc exensive common environmenal preservaion sysems for all consolidaed companies in Japan and abroad (2) Wih implemening environmenal preservaion aciviies sep-by-sep, providing environmenfriendly producs, increase he brand image and reliabiliy of he Yanmar Group as a whole (3) Provide business resource o he prevenion of global warming and reducion of harmful subsance in order o say one sep ahead of he requiremens (4) Expand environmenal educaion for associaed companies and dealers 32

35 Second Environmenal Mid-erm Plan Yanmar developed he Second Environmenal Mid-erm Plan (26-2) o achieve is 22 Environmenal Vision and has se 24 achievemen goals in five domains of "Srucure," "Environmenal Managemen," "Business Operaion," "Produc Measures" and "Sociey." In he field of "Produc Measures," we revised he produc assessmen regulaion ha incorporaes environmenally conscious design ino produc developmen. Yanmar will furher srive o promoe and reinforce he life cycle assessmen (LCA) in order o achieve hese goals. Evaluaed as group resuls excep some iems in 28. Targes of he 2nd Environmenal Mid-erm Plan (26-2) and he Saus of Achievemen Caegory Iem Mid-erm arges 28 Group Goals 28 Group Resuls Transformaion o a CSR Sar of publicaion of CSR Repor in 28 Srucure Srucure Publicaion of CSR repor Publicaion of Environmenal & Social Repor Expansion of he Global Paricipaion of overseas affiliaed companies, Promoion of aciviies of each sie's Implemenaion of Environmenal Conservaion Environmen Commiee and expansion of Global Environmen Meeing Environmenal Conservaion Commiee Commiee aciviies a each sie Environmenal Audis Sar of he use of consolidaed accouning in 28 by domesic companies Environmenal compliance audi Audiing a 5 sies Environmenal Performance Managemen Environmenal accouning, risk managemen, preparaion of inernal environmen repor Esablishmen of he Environmenal Informaion Sysem Targe achieved Parly achieved (more han 7%) No achieved (less han 7%) Review of inroducion Evaluaion Environmenal Managemen Acquiring ISO 4 Environmenal Cerificaion Execuion of Environmenal Educaion (Domesic and overseas) Producion companies: % Non-producion companies: 5% or more Esablishmen and implemenaion of environmenal educaion sysem based on hierarchy Koga Division of Yanmar Casing Technology Co., Ld. and Yanmar Marine Sysem Co., Ld. o acquire cerificaion Koga Division of Yanmar Casing Technology Co., Ld. and Yanmar Marine Sysem Co., Ld. acquired cerificaion Business Operaion Reducion of Gases Causing Global Warming Reducion of Energy Consumpion Resource Savings Eliminaion of Maerials Tha Produce Environmenal Load PCB Treamen Wase Reducion CO2 emissions: Reducion of 5% or more (compared wih 25) Reducion of 5% (compared wih 25) Waer consumpion: Reducion of 2% (compared wih 25) Banning of he use of sauorily conrolled subsances Reducions in he use of volunarily conrolled subsances (See p. 34) PRTR subsances: 3% reducion (compared wih 2) Disposal of PCB: disposal by 26 Emissions reducion of % (compared wih 25) CO2 emissions: Reducion of 3% or more (compared wih 25) Reducion of 3% or more (compared wih 25) Reducion of 5% or more (compared wih 2) Survey o verify he conen of environmenally burdensome maerials PRTR subsances: Reducion of 5% or more (compared wih 2) Developmen of a PCB disposal plan and applicaion Emissions: Reducion of % or more (compared wih 25) CO2 emissions: Reducion of 23.3% (compared wih 25) 23.5% drop (compared wih 25) 29.3% drop (compared wih 2) Implemenaion of conen survey, and operaion of managemen sysem for environmenally burdensome maerials PRTR subsances: 8% drop (compared wih 2) Disposal plan developed and applicaion filed Emissions: 37.% drop (compared wih 25) Paper Resource Savings Paper recycling raio: 7% or more Paper recycling raio: 6% or more Paper recycling raio: 66.8% Produc Measures Promoion of Green Purchasing Improvemen of he Environmenal Performance of Producs Improvemen of Energy Efficiency Environmen Coordinaion Design Eliminaion of Maerials Tha Produce Environmenal Load Provision of Environmen- Relaed Informaion Developmen of Ecologically Friendly Producs Reducion of Environmen Burden a Time of Produc Disposal Volunary Aciviies Social Conribuion Communicaion wih Local Residens Promoion of Tree and Flower Planing Eco office goods purchasing raio: 7% or more Advance achievemen of clean emission regulaion Operaing efficiency: 2% or more (engine hermal efficiency: 5% or more) (compared wih 25) Implemenaion of LCA for all new producs Banning of he use of sauorily conrolled subsances Reducions in he use of volunarily conrolled subsances (See p. 34) Inclusion of informaion on he environmen, recycling, and wase disposal in insrucion manuals Developmen of producs wih Environmenal Label III Research and improvemen of produc disposal processes Local volunary aciviies: 5 or more Holding of social gaherings: or more Promoion of ree-planing Eco office goods purchasing raio: 6% or more Advance achievemen of clean emission regulaions Tes rials by Developmen Dep. Survey o verify he conens of environmenally burdensome maerials Local volunary aciviies: consisenly 5 or more Social gaherings wih local residens: or more Increase in rees planed Eco office produc purchasing raio: 56.9% (Yanmar Co., Ld.) Advance compliance wih clean emission regulaions Selecion of models by Developmen Dep. Green procuremen survey conduced Cleaning of plan viciniy, My Homeown Cleaning Movemen, Cherry Blossom Fesival garden opening, summer fesival, All-ou Lake Biwa Cleaning," ec. Paricipaed in local evens Conduced ree planing aciviies YANMAR Enviromenal & Social Repor 29 33

36 Environmenal Repor Effors in Produc Developmen Yanmar is engaged in he advancemen of environmenally friendly echniques in all produc fields. R&D wih Foresigh The Yanmar Group has been consisenly involved in he advancemen of he environmenal friendliness of all of our producs, namely, he developmen of engines wih cleaner emission and lower noise and vibraion levels. We conribue o he developmen of a recycling sociey by pursuing and providing producs ha help reduce environmenal load. R&D (Absrac) Field Iem Descripion Engine echnology Sysem echnology Agriculural echnology Applied Technologies Low emission Improvemen of sysem efficiency Gas engine for GHP Reducion in engine fuel consumpion Low vibraion and noise Uilizaion of new forms of energy Ecology and economy Easy operaion Planing and harvesing echnology Improvemen of engine combusion Elecronic conrol echnologies Emission gas pos-processing equipmen Coolan cycle echnology Conrol echnologies Combusion, emission pos-processing and engine conrol echnologies Improvemen of combusion, loss of air inake and discharge, ec. Advanced vibraion and noise conrol echnology, srucural opimizaion echnology Biodiesel fuel uilizaion echnology Power generaion using wood biomass I-HMT (Inegraed Hydraulic Mechanical Transmission) Planing and harvesing acceleraion echnology Consrucion equipmen, disribuion equipmen, ransmissions, marine producs and environmenal fields Inroducion of LCA The Yanmar Group is inroducing LCA (Life Cycle Assessmen) ha quaniaively ascerains he effecs on he environmen of a produc hroughou is enire lifecycle, as well as from he sandpoin of he procuremen of raw maerials, producion, ranspor, disribuion, use and disposal of he produc. The creaion of numeric daa reflecing he effecs on he environmen requires he accumulaion and analysis of he necessary daa for assessmen from all relaed processes, namely from he design o producion sages. We applied LCA o he racors in FY27. In he fuure, we will apply LCA o our major represenaive producs such as backhoes, GHPs, rice ransplaners, combines and boas. Developmen of Environmenal Technology Yanmar akes on he challenge of furher refining environmenally friendly echnologies for our producs o help creae a recycling sociey. Specifically, our effors in he area of cleaner engine emissions focus on he developmen of elemenal echnologies for emissions o cope wih he emission regulaions of a variey of counries around he world ha are becoming sricer every year, resuling in compliance wih he hird and inermediae fourh EPA regulaions. For marine engines, Yanmar became he firs domesic manufacurer o acquire exper evidence for he second emission regulaions of he IMO Agreemen in May 29. For removal of environmenal load subsances, he original arge of "oal disposal by 28" was revised based on he acual resuls of he effor. For subsances banned for use (conrolled subsances), we ban heir use in producs. For volunarily conrolled subsances, we esablish in-house applicaion sandards and promoe he sysemaic eliminaion of hese subsances. Legally and volunarily conrolled subsances Subsances banned for use Subsances volunarily conrolled by Yanmar Asbesos, specified chlorofluorocarbons, riehanolamine, polychlorinaed biphenyls (PCB), polybrominaed biphenyls (PBB), polybrominaed diphenyleher (PBDE) Lead and is compounds, mercury and is compounds, cadmium and is compounds, and hexachromium and is compounds Labels Indicaing Produc Environmenal Informaion The Environmenal Label is inended o inform he marke of he environmenal aspecs of a produc or service, and serves as a judgmen crierion for cusomers when selecing a produc. ISO 42 ses he sandard for hree Environmenal Labeling schemes: Type labels are awarded o producs by a hird pary based on heir predeermined sandards. An example is Japan s Eco Mark. Type II labels are based on a manufacurer s self-declared claim abou a produc s environmenal performance and are herefore called selfdeclared labels. Type III labels provide environmenal daa quanified based on he LCA mehod, and i is up o he purchaser o decide how o judge he informaion. The Yanmar Group plans o develop producs for Type III labeling. Reducion of Environmenal Load from Produc Disposal Environmenal consideraion is incorporaed ino our producs from heir design sage so ha he producs can be easily disassembled, and he disassembled pars easily recycled. In he design and developmen sage, facors relaed o he dismanling and recycling performance of a produc are quanified as numeric values, and arges are se based on hese values. Those arges allow us o minimize he environmenal load of producs as well as he pars or maerials ha consiue he producs when hey are disposed of. We will promoe he furher invesigaion of how producs are disposed of in order o achieve greaer improvemens in his area. 34

37 Yanmar s Environmenally Oriened Producs Indusrial Engines Complying wih he Emission Regulaions of Various Counries around he World including EPA-Tier 4 of Norh America MINIMAX Series (Verical Waer-cooled Diesel Engines) This is a compac diesel engine designed using he conceps of "ulra compac and high performance," "low noise and vibraion," and "environmenal friendliness." This engine covers a power oupu range from 6 o 7 kw, and is inended for he compac power generaor and lawn mower marke. Due o he use of a ladder-frame srucure, inroduced o Yanmar producs for he firs ime, his series feaures a reducion in noise of approximaely 2 db (A). In addiion, compacness (power densiy ) has been increased by approximaely % in comparison wih exising models. Power densiy = maximum oupu / packaging volume The Field of Energy Power Generaion Efficiency of 34%, he World's Highes Level in his Class, Achieved CP35VC (35 kw Micro Cogeneraion Sysem) In November 28, Yanmar launched he 35 kw Micro Cogeneraion Sysem. This produc is fied wih echnology of our own developmen, he high-efficiency lean-burn mirror cycle engine 4GPF 6 Type ha opimizes igniion iming and maching in he combusion chamber. I feaures he world's highes level of power generaion efficiency in his class, or 34%, hereby achieving improvemens boh in energy saving and economic efficiency. As i allows for muliple operaion of up o 6 unis (power generaion capaciy ranging from 35 kw o 56 kw), his produc realizes exremely high-efficiency operaion for largescale users such as hospials, welfare faciliies, business hoels and facories by ensuring opimal uni number operaion conrol wih regard o changes in power demands a such large faciliies. Topics Compac Horizonal Waer-cooled Diesel Engine Type HB and Ohers Cerified as Heriages of Indusrial Modernizaion The Heriage of Indusrial Modernizaion is a scheme, iniiaed by he Japanese Minisry of Economy, Trade and Indusry in 27, which cerifies buildings and machines ha have suppored he modernizaion of Japanese indusry as heriages useful for local vializaion. In 28, he second year of he scheme, over 5 faciliies and iems were seleced. Among hese are engines conserved by Yanmar ha were lauded as hose among he "Addiional 33 Heriages of Indusrial Modernizaion in 28" for heir conribuions o he growh of seam engines and inernal combusion engines ha suppored a wide variey of indusries including heavy indusry, agriculure, foresry and fisheries. Compac horizonal waer-cooled diesel engine Type HB R&D Gasified Power Generaion Sysem Capable of Acceping a Wide Range of Biomass Wases Yanmar possesses a biomass-based power generaion sysem ha is fueled wih sawdus which is hen gasified o produce elecric power. We are now developing a new sysem based on his exising sysem. The new sysem under developmen is capable of using various kinds of wase biomasses including wase wood chips and bark generaed during he producion of lumber, wigs and branches rimmed from sree rees, rice husk ash, and agriculural residuals, producing hermally decomposed gas, and supplying elecric power and hea. 3 kw biomass gasificaion cogeneraion sysem YANMAR Enviromenal & Social Repor 29 35

38 Environmenal Repor Effors in Produc Developmen Yanmar s Environmenally Oriened Producs The Field of Agriculure Sandard Combine ha Realizes High Efficiency and Performance wih a Builin Threshing Uni Home-use Mini Culivaor Feauring boh Ease of Use and Environmenal Friendliness Soybean Combine GS38 Soybean Combine GS38, pu on he marke in 28, is equipped wih a new TNV engine (maximum oupu of 38 ps / 2,8 rpm) ha complies wih he second emission regulaions. In addiion, a newly developed "rolling ype pipe concave" reduces he raio of diry beans by approximaely 6% in comparison wih our own exising machines, hereby realizing increases in yields of highqualiy beans. Furhermore, he use of a new axial flow long roor and weigh-savings in he machine help he GS38 realize.2 imes greaer operaional efficiency and.5 imes greaer processing capabiliy, and ye reduces fuel consumpion by % in comparison wih is former models. QTe This mini culivaor is he bes choice for home gardens ha are growing in number hese days, saisfying "ease of use" and "environmenal friendliness." As i uses a baery and a moor designed o be recharged wih a home-use V power source, i eliminaes roublesome engine mainenance, sar-up operaion, and fuel procuremen, and herefore is ready for use by mechanically challenged users. Use of a baery means ha he culivaor has "zero emissions." In addiion, a unique "roor in moor" mechanism (moor and deceleraor insalled in he fork shaf) realizes an opimal weigh balance by providing high operaional efficiency and downsizing he moor oupu. Oher environmenally friendly feaures include low noise (engine raio - 2 db) and zero wase fuel. Consrucion Machinery Complying wih he Laes Emission Regulaions in Japan, US and Europe Crawler Backhoe SV- The SV- is equipped wih a direc fuel-injecion engine ha complies wih Japanese non-road special moor vehicle emission regulaions, US EPA Tier-3 emission regulaions, and Euro 3A regulaions. Improved efficiency of he hydraulic sysem also realizes improved fuel consumpion approximaely 2% beer han convenional machines. The SV- is an environmenally friendly machine wih lower CO2 emissions, one of he causes of global warming. I also boass excellen recyclabiliy as seel is used for he bonne and cover for ease of repair and reuse. 36

39 The Field of Marine Producs Family-oriened Boa wih Excellen Environmenal and Safey Performance Highes Class Oupu Engine wih Environmenal Friendliness Hun24 (Model: EF24AZ) A complee diversion away from he convenional focus on fishing, he Hun24 was developed as a produc for family use. Environmenally, he Hun24 has beer fuel consumpion, or approximaely wo hirds ha of gasoline ouboards due o a newly insalled four-sroke diesel engine. Use of a new echnique ha produces cabins and haches using LRTM (ligh resin ransfer molding) remarkably reduces discharges of VOCs (volaile organic compounds) ino he air. Passages have been insalled on boh sides of he cabin for easy movemen o he fron deck. Safey performance has also been enhanced by insalling handrails on he bow and he sides of he cabin. 6CXB-GT This new engine is capable of providing he highes oupu in is class (363 kw: below 4. ons in onnage caegory) while reducing fuel consumpion by approximaely % a he raed oupu, and remarkably lowering he smoke raio (in comparison wih exising engines). This business use engine also complies wih he IMO II emission regulaions (NOx emissions) o be applied in 2. To realize enhanced oupu, he major componens of he engine, or crankshaf, cylinder block, and cluch, feaure opimized srengh and rigidiy levels. In addiion, he fuel injecing iming has been opimized wih he use of a imer mechanism for low emissions, and he geomery of he air supply and exhaus passages have also been opimized for reducions in fuel consumpion. Wih hese innovaions, he arges of high oupu, high reliabiliy and low emissions have simulaneously been saisfied by his earhfriendly 6CXB-GT engine. Topics Energy-saving Live Fish Tank (FS6NA) Won he Chairman's Award of he Japan Machinery Federaion Yanmar's horizonal convecion filering live fish ank won he 28 Japan Machinery Federaion Chairman's Award. Live fish anks are waer anks o keep fish and shellfish alive, and are used a local wholesale markes, fishery cooperaives and supermarkes in Japan. Since live fish anks have o operae circulaion pumps on a 24 hours basis due o heir srucure, energy saving had posed a problem. The FS6NA has incorporaed various energy-saving echniques including he insallaion of an energy-saving circulaion pump developed by us, and he use of an FRP insulaed srucure for he waer ank and he waer channel, hereby realizing power savings of more han 7% in comparison wih he previous producs. Saniary performance has also been enhanced by insalling an ulraviole serilizing uni. Yanmar is helping o reduce CO2 emissions by acively encouraging he replacemen of currenly operaing live fish anks wih energy-saving ones. Energy-saving live fish ank FS6NA YANMAR Enviromenal & Social Repor 29 37

40 Environmenal Repor Effors o Preven Global Warming Yanmar is sriving o reduce CO2 emissions a our producion sies for he prevenion of global warming. Promoion of Energy Savings The Yanmar Group is reducing all kinds of energy used in producion aciviies, including elecriciy and fuel, in order o ace he challenge of conribuing o he prevenion of global warming. The Yanmar Group has se a arge of a 5% reducion in energy consumpion and a 5% reducion in CO2 emissions in uni requiremens by 2 in comparison wih 25. In 28, he Group underook he challenge of reducing energy consumpion in producion processes and inroducing high-efficiency equipmen. Through his challenge, he Group was able o reduce energy consumpion and CO2 emissions in uni requiremens by Energy consumpion and energy consumpion uni requiremens (Yanmar C., Ld.) (, ) (/ million) ,886 42,82 42,373 39,52 39,5 4 4 Inroducion of he Power Regeneraor In h. Zone, we inroduced 7 power regeneraing sysems ha recover power generaed from durabiliy ess of engines as elecric energy, which can regenerae a maximum of 9 MWh of elecriciy per year and reduce CO2 emissions by 346 ons. In 28, hree power regeneraing sysems were inroduced o he Amagasaki Plan o regenerae elecriciy produced in es operaions, apply i as power for he operaion of equipmen, and he cooling fans of he load equipmen formerly driven by commercial power were shifed o regeneraed elecriciy. The load equipmen was also changed from convenional waer anks o a heaer-equipped dry ype, which resuled in is a % decrease in waer Power regeneraor (Amagasaki Plan) consumpion Energy Saving Aciviies of he Group Companies Energy consumpion (in crude oil) Energy consumpion uni requiremen Toal CO2 emission and CO2 emission uni requiremen (Yanmar Co., Ld.) (, CO2) (-CO2/ million) 77,35 76,39 8, ,44 72, CO2 emission CO2 emission uni requiremen Consumpion of energy by ype Kerosene.8% Diesel oil 2.9% Town gas 3.7% LNG 5.9% Bunker A 2.7% LPG.3% Toal consumpion (crude oil) 39,5 Buane gas.% Ohers.2% FY FY Purchased power 65.4% Being a member of he Team Minus 6%, a group organized for promoing he prevenion of global warming, he Yanmar Group is engaged in varying energy-saving aciviies: Replacing lighing equipmen wih energy-saving ypes Promoing lighs-ou during lunchimes and afer hours Implemening "Cool Biz" Replacing cooling waer pumps wih inverer ypes (for adjusing waer volumes hrough conrol of roaional speeds) (CO2 reducion of 23 ons per year) [Amagasaki Plan] Inroducion of recycling equipmen for waer-soluble cuing fluids [Amagasaki Plan] Replacing air-condiioners wih energy-saving GHPs [Marine Operaions Dep., Amagasaki Plan, Research & Developmen Cener, Biwa Plan, Yanmar Agriculural Machinery Manufacuring, Yanmar Consrucion Equipmen Sales] Replacing subsaion ransformers wih op-runner ypes o reduce ransformaion losses [Marine Operaions Dep.] Recycling solvens used in coaing processes hrough he inroducion of auomaic solven recycling equipmen (recovery and reuse of 78% of wase hinner) [Marine Operaions Dep.] Energy saving by insalling pneumaic piping dedicaed o hermal processing [Kanzaki Kokyukoki] Energy saving by urning off subsaion breakers (VCBs) on days-off [Kanzaki Kokyukoki] Convering wase maerials such as wooden palles or packing wood boxes ino bioehanol [Kanzaki Kokyukoki] Tanabaa lighs-ou campaign (oal lighs-ou in sies) Eco safey driving campaign

41 Environmenal Conservaion in Disribuion Improvemen of Shipping Efficiency The Yanmar Group works wih Yanmar Logisics Service Co., Ld., which is in charge of produc shipping for our Group, o promoe he raionalizaion of disribuion so as o realize Group-wide reducions in environmenal loads. The revision of he Energy Saving Ac in April 26 requires every merchan o pu effor ino saving energy. The Yanmar Group assigns Energy Saving Officers a Yanmar sies and ranspor companies o quaniaively check and monior he disribuion loads of he Group aciviies, including consigned disribuion, and develops and promoes energy saving programs. Promoion of Modal Shif The Yanmar Group expedies "modal shif" ha swiches means of ranspor from rucking o freigh rains and ships o reduce CO2 emission from shipping aciviies. Inroducion of Low-emission Vehicles The Yanmar Group is sysemaically shifing o lowemission vehicles such as low-emission gas or hybrid cars for company cars and sales personnel cars. The raio of low-emission vehicles in FY28 was 63.6%, and Yanmar coninues o inroduce more low-emission vehicles ino is flee. Inroducion of low-emission cars (Yanmar Co., Ld.) (car) (%) FY Low-fuel consumpion or low-emission car Hybrid car Raio of low-emission cars o he oal number of cars used In 28, he number increased due o a business merger wih Yanmar Agriculural Equipmen Co., Ld Topics Yanmar won he highes environmenal ranking consecuively for four years in he environmenal raing of he Developmen Bank of Japan In November 28, he Developmen Bank of Japan (Presiden Minoru Murofushi, DBJ) provided Yanmar Co., Ld. (Presiden Takehio Yamaoka) wih financing employing environmenal raings in cooperaion wih Shiga Bank Ld. [Conens of Evaluaion] True o is founding spiri of "Graeful o serve for a beer world", Yanmar is deermined o fulfill is social responsibiliy by geing involved in aciviies ha aim a creaing harmony beween he sociey and he environmen, hus enhancing he value of enerprise. Yanmar is helping users reduce environmenal loads by providing environmenally conscious producs ha comply wih he sric emission regulaions of a variey of counries around he world. Yanmar is engaged in advanced underakings oward he realizaion of clean alernaive fuels including biofuels. Yanmar boass high environmenal performance as evidenced by a 7.7% reducion in CO2 in uni requiremens relaive o he previous year. The DBJ Environmenal Raing is he world's firs financing scheme o inroduce he special echnique of "environmenal raing," which raes a company's level of environmenal managemen using a screening sysem developed by DBJ, selecs excellen companies and provides preferenial ineres raes in hree sages of financing according o he raing. In November 28 he company received a Developmen Bank of Japan loan based on is being raed a he highes grade in DBJ s fourgrade environmenal raing schedule: companies wih paricularly impressive environmenal programs." YANMAR Enviromenal & Social Repor 29 39

42 Environmenal Repor Effecive Use of Resources Yanmar is engaged in he formaion of a cyclic sociey by promoing reducions and recycling of wases, and he conversion of wases ino valuable resources. 4 Wase Reducion The Yanmar Group is aking aggressive acions o curb he generaion of wase from producion processes and decrease he oal amoun of wase disposal by promoing he recycling of wase by ype, convering he wase ino maerial wih value. To ensure horough separaion of wase by ype, employees are frequenly informed of he imporance of wase separaion by a lis of wase separaion rules posed a necessary locaions, including wase sorage sies in plans, worksies and offices. Employee educaion programs are used o promoe undersanding. Effors are also made o promoe furher recycling including he inroducion of reurnable palles. Wase oil produced from plans is also convered ino a valuable resource by using improved producion processes ha preven foreign maerials from mixing wih he oil. Oher acions aken o reduce coss include he reuse of cardboard maerials as valuable ypes and he recycling of shredded paper wase. By 2, we aim o achieve a % reducion relaive o he 25 level. In FY28, we reduced wase generaion by 37.% in uni requiremen. Wase producion and uni requiremen of wase producion (Yanmar Co., Ld.) 5, 4, 3, 2,, 4, , Wase producionuni requiremen of wase producion Recycling rae (Yanmar Co., Ld.) (%) ,672 Recycling of Abandoned FRP Boas (/ million) 5 I is difficul o dispose of FRP boas because of heir high srengh, which is one of he reasons why he number of illegally abandoned FRP boas is increasing. The FRP boa recycling sysem was sared by he Japan Boaing Indusry Associaion upon acquisiion of , FY FY wide-area auhorizaion by he Environmen Miniser in 25. A oal of 2,39 FRP boas during he four years from 25 o 28 were recycled.,52 of hese, or 49.7%, were sunken or disabled boas including illegally dumped boas, he recycling of which is requesed by local governmens wih grans from he Japan Foundaion. 87 boas were general decommissioned boas recycled by heir owners a heir own cos. Acively paricipaing in his sysem, he Yanmar Group readily fulfills is role as an FRP boa manufacurer in erms of EPR 2 by promoing he appropriae disposal of FRP boas as par of our effors o form a recycling sociey and preven illegal dumping. FRP boa: FRP (fiber reinforced plasics) grealy srenghens he body of a boa and generally ensures a durabiliy of over 3 years. The fibers used are glass fibers or carbon fibers. FRP boas are made by molding FRP. 2 EPR: exended produc responsibiliy Changes in he number of disabled FRP boas recycled (boas) Ordinary disabled boas Disabled boas handled by local governmens (wihou grans) Disabled boas handled by local governmens (wih grans) Reducion in Waer Resource Consumpion Our acive promoion of he recycling of waer for plans has allowed us o reduce waer resource consumpion by 29.3% relaive o he sandard level of 25 in uni requiremens, wih approximaely 23,266 ons of waer consumed during FY 28. Waer consumpion and uni requiremen for waer consumpion (Yanmar Co., Ld.) (, ons) (/ million), , Clean waer and indusrial waer consumpion Groundwaer consumpion Uni requiremen for clean waer and indusrial waer consumpion Uni requiremen for waer resources consumpion FY FY

43 Environmenal Repor Appropriae Managemen of Chemical Subsances Yanmar pursues he appropriae managemen and reducion of chemical subsances o reduce environmenal risks Legal Compliance and Prevenion of Polluion The Yanmar Group aggressively pursues he appropriae managemen and reducion of chemical subsances according o applicable laws and regulaions, including he PRTR Ac, in order o avoid environmenal risks associaed wih producion aciviies. We annually submi repors on he amouns of PRTR-conrolled subsances emied or moved wih respec o our business aciviies. All plans of Yanmar sricly pracice he appropriae sorage, managemen and noificaion of PCB-conaining equipmen, including capaciors, in accordance wih he PCB Special Measures Ac and he Wase Disposal Ac. PRTR Ac = Ac concerning he reporing, ec., of he release ino he environmen of specific chemical subsances, and he promoion of improvemen o he managemen of he subsances Reducion in Chemical Subsance Emission The Yanmar Group is reducing he consumpion and emissions of PRTR-conrolled subsances and volunarily banned some subsances as par of is effor o develop environmenally-friendly producs and reduce environmenal risks. The amoun of PRTR-conrolled subsances used in FY28 was reduced by 69 ons relaive o 27. This consumpion was an 8% reducion in uni producion volume relaive o he sandard level of 2. We coninue o pursue and use alernaive maerials insead of subsances ha have been conrolled volunarily, or hrough regulaions. No. of PCB equipmen iems a Yanmar Co., Ld. plans ,47 No. of PCB equipmen iems a Yanmar Group companies Yanmar s Consumpion of Chemicals Covered under he PRTR Ac Div. PCB equipmen iems Company name PCB equipmen iems Reg. no. Shiga Zone Yanmar Agriculural Machinery Manufacuring Amagasaki Plan Seirei Indusry Names of Chemicals Tsukaguchi Plan Kanzaki Kokyukoki Mfg Waer soluble zinc compounds 2-aminoehanol Animony and is compounds Bisphenol A epoxy resins Ehyl benzene Ehylene glycol Xylene Chrome and rivalen chromium compound Hexavalen chromium compound Cobal and is compounds Ehylene glycol monoehyl eher aceae (aceae 2-eoxyehyl) Vinyl aceae,4-dioxane Dichloromehane (ehylene dichloride) Organic in compound Syrene,3, 5-rimehylbenzene Toluene Lead and is compounds Nickel Nickel compound Barium and is waer-soluble compound Hydrazine Phenol Di-normal-buyl phhalae Phhalic acid bis (2-ehylhexyl) Benzene Boron and is compounds Polyoxyehylene=alkylphenyleher Polyoxyehylene=nonylphenyleher Formaldehyde Manganese and is compounds Molybdenum and is compounds Toal R&D Cener Yanmar Energy Sysem 274 5, , , ,37 62, ,88 Head Office Yanmar Consrucion Equipmen Yanmar Co., Ld. 42 4,84 74,438 9, ,336 38, ,95 Toal Masue Div. of Yanmar Casing Technology Yanmar Agriculural Machinery Manufacuring Koga Div. of Yanmar Casing Technology Seirei Indusry 2, ,849 6,27 4, ,339 28, ,239 New Dela Indusrial Kanzaki Kokyukoki Mfg 35, , ,993 Toal Yanmar Energy Sysem Mfg 82, 82, Yanmar Consrucion Equipmen 84 2,54 27, ,846 2, ,334 77,474 Use of PRTR subsances Ehyl benzene 7.4% Manganese and is compounds.8% YMR Shipbuilding 95,993 95,993 Toluene.9% Syrene 7.% Ehylene glycol 2.% Masue Div. of Yanmar Casing Technology, ,42 27, ,32 8 2, , ,936 Toal,357,44 kg Koga Div. of Yanmar Casing Technology 2,665 5, ,8 3,465 32,68 Ohers 3.6% New Dela Indusrial 5,43 6,886 2,436 4,752 Chromium and richromium compounds 23.7% Xylene 22.4% (Uni: kg) Toal 3,984 5,558 4,229 52,282 63,54 33,67 32, ,993 8,969 6, , ,27 3,65,357,44 YANMAR Enviromenal & Social Repor 29 4

44 Environmenal Repor Environmenal Managemen Srucure Yanmar has se up a fine-uned implemenaion srucure o achieve appropriae environmenal managemen. Implemenaion Srucures The Yanmar Group Global Environmenal Commiee, consising of op execuives from each Group company, was esablished in 22 o promoe high-level environmenal managemen for he Group as a whole. Each Group company has is own Global Environmenal Commiee ha akes he iniiaive in promoing environmenal conservaion aciviies under he leadership of he op managemen of he company. The Yanmar Group Coordinaion Meeing is also formed by he secrearias of hose company-level commiees as a subordinae organizaion of he Yanmar Group Global Environmenal Commiee, and engages in he communicaion of aciviy policies and discussion of aciviy saus. In addiion, he Produc Subcommiee, consising of he developmen managers of Group companies, was esablished under he Coordinaion Meeing and underakes various aciviies o improve he environmenal performance of our producs. Acquisiion of ISO 4 Cerificaion The Yanmar Group promoes group-wide effors o achieve ISO 4 cerificaion, an inernaional sandard for environmenal managemen sysems, as par of our effors o coninuously promoe environmenal conservaion aciviies (See he able of ISO 4 Cerificaion by Sie on page 49). We also help group companies planning o acquire ISO 4 cerificaion esablish heir own environmenal managemen sysems so as o ensure smooh and efficien aciviies oward acquisiion. We endeavor o encourage boh domesic and inernaional non-producing faciliies o acquire cerificaion. Repor Effors o Acquire ISO 4 Srenghen he Bond of Solidariy ISO Promoion Group (Secrearia), Yanmar Marine Sysem Co., Ld Yanmar Group Global Environmenal Commiee Organizaion Char of he Yanmar Group Global Environmenal Commiee Yanmar Group Global Environmenal Commiee Secrearia: Corporae Social Responsibiliy Dep. Environmenal Managemen Dep. Environmenal Conservaion Commiee, Shiga Zone Environmenal Conservaion Commiee, Large Power Producs Operaions Division Environmenal Conservaion Commiee, Marine Operaions Dep. Environmenal Conservaion Commiee, Research & Developmen Cener Environmenal Conservaion Commiee, Tracor Division Environmenal Conservaion Commiee, Agriculural Machinery & Equipmen Division Environmenal Conservaion Commiee, Agriculural Implemen & Equipmen Division Global Environmenal Commiee, Agriculural Equipmen Sraegic Markeing Division Global Environmenal Commiee, Farm Plan Operaions Division Global Environmenal Commiee, Kanzaki Kokyukoki Manufacuring Global Environmenal Commiee, Yanmar Energy Sysem Global Environmenal Commiee, Yanmar Consrucion Equipmen Yanmar Group Environmenal Coordinaion Meeing Produc Sub-commiee Secrearia Secrearia Secrearia Secrearia Secrearia Secrearia Secrearia Secrearia Secrearia Secrearia Secrearia Secrearia Secrearia: Environmenal Managemen Dep. Yanmar Marine Sysem is a sales company ha specializes in sales and servicing of ship and boa engines. Being always aware ha wha we do affecs he environmen is aken as one of our social obligaions. Based on his idea, we sared working harder owards he acquisiion of ISO 4 in Augus 27, wih he aggressive underaking of environmenal conservaion aciviies as our objecive. To begin wih, we se up he ISO Promoion Group, seleced environmen promoion commiee members from he secions in he sie, sared holding Environmenal Promoion meeings wice a monh, examined all he jobs we do, idenified all environmenally relaed aspecs, deermined arges, and discussed presen problems and fuure asks o be aced. In he beginning, we were confused as we were no sure of erminologies and specific procedures o follow. Bu as we repeaed discussion, we fel our energy was gradually direced o srenghening of he bond of solidariy oward he se arges. Finally, we successfully obained ISO 4 cerificaion in Augus 28. We have in place a mechanism ha allows for company-wide analysis of summaions of energy consumpion, and we coninue o hold Environmenal Promoion Commiee sessions approximaely once a monh even hough we have acquired cerificaion so ha our coninued effors remain effecive. Las bu no leas, he mos imporan poin is ha each one of us should improve awareness owards environmenal issues. 42

45 Environmen Audis ISO 4 cerified faciliies are commied o coninuously improving heir environmenal managemen sysems. Specifically, heir environmenal policies are disclosed and heir environmenal performance periodically audied o ensure ISO compliance. Inernal audis are conduced annually, likewise hird-pary examinaions by an exernal cerificaion organizaion. Implemenaion of he Environmenal Compliance Audi Environmenal compliance audis were carried ou for he five sies of he Yanmar Group, i.e. he Yamamoo Plan, Kinomoo Plan, Koga Division of Yanmar Casing Technology, Yanmar Logisics Service, and Yanmar Energy Sysem Manufacuring in 28. The audis revealed cerain discrepancies requiring improvemen, including no submission of necessary noificaions, inadequae monioring of managemen condiions, and unclear indicaions of sorage locaions on signboards. Accordingly, hese sies were insruced o make necessary correcions including clarificaion of he scope of legal conrol and he subjecs of conrol and noificaion of necessary repors and renewal. In addiion, we insruced hem o "visualize" managemen condiions and indicae informaion again on signboards. Legal Compliance Yanmar vows o comply wih environmenally relaed laws and ensure sric conrol of relevan operaions, including he reenion and reporing of measuremen records. There were no group-wide violaions of applicable laws in 28, bu an acciden involving a diesel oil spillage occurred. Alhough his was immediaely aken care of and no serious afereffecs occurred, we conduced a complee inspecion of equipmen a all sies as a prevenive measure. Prevenion of Air Polluion Yanmar endeavors o preven air polluion during operaions, including recovery of exhaus gas emied from engine durabiliy ess and pre-shipmen produc es runs wih exhaus gas recovery equipmen. Prevenion of Soil and Waer Polluion Polluion checks are conduced on parcels of land scheduled for sale or alernaive use and any polluion emerging is subjec o remedial measures wih he guidance and aendance of he adminisraion. The qualiy conrol for waer discharged from our plans is sricly regulaed by seing our own volunary sandard more sringen han applicable legal requiremens. A once monhly parol in he plans and drill are also conduced assuming a spill acciden once a year o ensure coninual alerness whenever an acciden may occur. Measures agains Noise and Malodor All complains from local residens concerning noise or malodors are recorded. In response, we hold briefing meeings o explain he siuaion and immediaely ake acions for correcion or improvemen. We also ake measures o preven, miigae and avoid noise and odors derimenal o neighbors by insalling acive silencing sysems (sysem producs manufacured by our company) and equipmen designed o remove black smoke. Environmenal Audis Coninuous Improvemens Under ISO4 Reducion of Environmenal Risk Acion Execuive Review Plan Environmenal Policy Planning Coninuous Improvemen Check Do Implemenaion & Managemen Regular proacive drills and updaing of risks are conduced for foreseeable risks o preven he occurrence of risks such as environmenal polluion. The Yanmar Group idenifies environmenal risks, in line wih ISO 4, and updaes hem as required by aking necessary acions, conducing drills or making inernal audis. Idenified environmenal risks are repored o he Risk Managemen Commiee as hose affecing he enire Group for recording and annual updaing. Inspecion & Correcion YANMAR Enviromenal & Social Repor 29 43

46 Environmenal Repor Environmenal Managemen Srucure Yanmar emphasizes environmenal educaion o enhance he environmenal awareness of each and every employee. Environmenal Educaion Yanmar provides coninuous environmenal educaion o help each employee improve his or her awareness of he environmen. Our environmenal educaion consiss of general courses inended for new recruis and general employees, and special courses for employees engaged in special work and for inernal environmen audiors. Thus Yanmar employees can paricipae in educaional programs ha are well suied o heir specific job requiremens. Environmenal Educaion for New Recruis New recrui educaion is provided o new employees o promoe environmenally appropriae acions a he jobsies o which hey are assigned. They acquire a basic undersanding of environmenal issues and deepen heir undersanding of he environmenal aciviies of he Yanmar Group. Environmenal Awareness hrough Inernal Publicaions The laes informaion is provided o our employees hrough "ECHO," an inernal publicaion produced by he Yanmar Group. Every issue includes informaion ha helps employees keep abreas of he laes environmenally relaed informaion. Since he spring issue of 28, ECHO has feaured informaion on CSR for greaer awareness of corporae social responsibiliy. 28 Spring Issue 28 Summer Issue 28 Auumn Issue 29 Winer Issue [CSR Series] Reducions in environmenal loads of producs [CSR Series] Wha is CSR? [CSR Series] Wha is he Environmenal & Social Repor? [CSR Series] Compliance Repor Environmenal educaion for new recruis Environmenal Educaion a Producion Sies Educaion on mehodologies and echnologies relaed o environmenal proecion is provided o all employees, based on heir jobs, a every plan once a year. Faciliies ha have acquired ISO 4 cerificaion provide environmenal educaion and raining o employees in line wih his ISO sandard. Employees working a worksies ha can have a major impac on he environmen are provided wih special raining ha eaches he employees abou he operaing procedures of relevan equipmen and sysems. Employees hus learn o ensure environmenal proecion a heir jobsies. Exernal educaional insiues are also used o help our employees obain qualificaions relaed o he environmen. Educaion a Yanmar Co., Ld. Saff Caegory Saff in special fields Inernal environmenal audiors General saff New recruis General Educaion Environmenal arges and implemenaion by business division Inroducion o environmenal issues Special Educaion Work pracices for boilers, liquid wase processing faciliies, ec. ISO Audiing mehods. ISO environmenal regulaions and Yanmar sandards 2. Legal sipulaions 3. Processes for reaching environmenal arges / Audiing echniques I obained he license of "energy manager," and a he same ime I gained a sense of achievemen and confidence. Shuuji Miamura Faciliies & Environmen Group, General Affairs Dep. Large Power Producs Operaions Division Since I came o be involved in environmenally relaed services, I have sared learning abou he environmen by, for example, paricipaing in relaed seminars. I decided o maerialize my effors by becoming a license holder as qualified personnel are required a jobsies. I aended a workshop for "energy managers" wo years ago; ook a six-day lecure and sa he es on he 7h day. The workshop sared a 9 am and ended a 5 pm every day. In addiion o laws and regulaions, I learned abou pas changes in condiions, fuure projecions and oher maers relaed o energy managemen, he principles of hea and elecriciy, he principles of equipmen based on hese, and many oher fields. On he las day, I ook ess for four subjecs which ook 8 o minues. I was kep very busy during he workshop, aking lecures all day long and doing revision and preparaion afer lecures everyday. Bu i was a good change of amosphere as I was able o ge away from daily work. I fel a srong sense of achievemen when I received my cerificae. I also gained a can-do sense of self-confidence. I highly recommend aking on his challenge if you find ha i ineress you. 44

47 Environmenal Repor Environmenal Communicaion Yanmar promoes communicaion wih he public on various environmenally relaed hemes o allow he public o gain an undersanding of our environmenal conservaion effors. Environmenal Exhibiions Exhibis a he Lake Biwa Environmenal Business Messe 28 Yanmar exhibied producs a he Lake Biwa Environmenal Business Messe environmenal indusrial fair held a he Nagahama Dome in Shiga Prefecure from November 5 o 7, 28. This is one of Japan's larges environmenal indusrial fairs, which is held annually in Shiga, he railblazing prefecure in he field of he environmen. We have paricipaed in his exhibiion every year since is sar, and focused on he comprehensive capabiliies of he Yanmar Group under he heme of he "Environmen" in his h even. We exhibied environmenal producs and he effors of each division and deparmen in our booh. In addiion, we inroduced our environmenal managemen. Among hese, he highperformance compac diesel engine MINIMAX, which feaures a small "size" bu high "power," drew a paricularly large amoun of aenion. h Lake Biwa Environmenal Business Messe 28 Donaion of Engine for Trial Use wih Biodiesel Fuel Yanmar is engaged in a variey of aciviies oward he formaion of a resource recycling sociey. As one of hese effors, we invied applicaions for donaions of Yanmar engines for rial use using biodiesel fuel on our websie, screened he applicans, and decided o donae one o he Tokai Universiy Challenge Cener Trans-Japan Caravan Team (Souh Roue) on March 3, 29. The caravan eam is driving a bus fueled by biodiesel from Kyushu o Kano while promoing he need for "prevenion of global warming" a local elemenary and junior and high schools in locaions hey visi. Repor "Yanmar Loved by he People" will no be buil in a day Misao Kaji Adverising Promoion Group, Brand Managemen Dep. (Presenly Sales Planning Dep., Large Produc Markeing, Large Power Producs Operaions Division) Prior o celebraing he h anniversary of our foundaion in 22, we waned o go back o he basics, go back o where Yanmar was born and o he spiri of foundaion, and, based on ha hinking, se up our booh "colored oally in Yanmar Red" and exhibied environmenally conscious producs from our nine business divisions in he Lake Biwa Environmenal Business Messe. Among many visiors were a farmer couple whose agriculural machines are all Yanmar made and an elderly person whose faher used o work for Yanmar. This was a real evidence o show ha Yanmar has a hisory of almos years and ha Yanmar producs have been loved by so many people. Informaion and personal conacs wihin and ouside he Group and which exceed deparmenal barriers are essenial elemens in he creaion of a cusomer-oriened business model and conribue o he realizaion of an environmenally susainable sociey. Tokai Universiy Challenge Cener Trans-Japan Caravan Team Supporing he Koonarie Summer Fesa Yanmar suppored an eco even for reducions in environmenal loads, he Koonarie Summer Fesa 28, held a Hibari Park, Higashi-omi Ciy, Shiga Prefecure, from Augus 9 o 6, 28. Following on from he previous year, Yanmar provided a power generaor se (AG25SS) for rial use wih biodiesel in he 5h even in 28. The venue was decoraed wih lighs for each heme, and par of he elecriciy for some 25, lighs was provided by he Yanmar power generaor. The fuel ha was used consised of vegeable oil gahered from local residens, which was hen refined ino biofuel. The Fesa aracs over, visiors every year and is esablishing iself as one of he local summer aracions. Trial-use power generaor se (AG25SS) YANMAR Enviromenal & Social Repor 29 45