TDK : Issues Its First Sustainability-Linked Bonds

News Center | Press Release

TDK Issues Its First Sustainability-Linked Bonds

October 20, 2021

TDK Corporation (TSE: 6762) is pleased to announce its plan to issue bonds with a total issue amount of up to 100 billion yen in as early as November 2021. Some of the bonds to be issued will be sustainability-linked bonds named TDK Sustainability-Linked Bonds, whose tenor is seven years and issue amount is to be determined (hereinafter, the "Issuance"). The company has today submitted a revised corporate bond shelf registration statement to the Director-General of the Kanto Local Finance Bureau for the Issuance.

1. Purpose and Background

Positioning "Develop and Prosper in Harmony with the Global Environment" as one of the important management challenges for achieving the sustainable growth of society, the TDK Group achieved the goals set out in the TDK Environmental Activities 2020 in 2014, ahead of the schedule. As the next environmental vision, we established the TDK Environmental Vision 2035, setting a new goal of "halving CO₂ emissions intensity by fiscal 2035 in comparison with fiscal 2014 under the theme of reducing environmental footprints from a life-cycle perspective." We will make further contribution for achieving this goal with the awareness that minimizing environmental footprints in our business activities, nurturing the natural environment, and offering products that contribute to customers and society are the responsibilities we shoulder as companies.
With this awareness, we have decided to issue TDK Sustainability-Linked Bonds, which are linked to Sustainability Performance Targets ("SPTs") and reflect our efforts to achieve the TDK Environmental Vision 2035.
In fiscal 2020, while preparing the new Medium-Term Plan, we specified our materiality as the important challenges in which we should invest its management resources and which we should address with the highest priority in order to achieve the Medium-Term Plan and to balance society's sustainability with sustainable corporate growth. Under Value Creation 2023, our new Medium-Term Plan, we continue our approach of contributing to society while creating Commercial Value (execute growth strategy), Asset Value (improve asset efficiency), and Social Value (enhance enterprise value), which form our corporate value, thereby making our businesses grow. Of these, we consider Social Value, which represents our goal of building a sustainable society and company, is the starting point of a cycle for creating other Values.

2. Selection of SPTs

In the TDK Environmental Vision 2035, the TDK Group sets out a goal of "halving CO₂ emissions intensity by fiscal 2035 in comparison with fiscal 2014 under the theme of reducing environmental footprints from a life-cycle perspective." As the means for achieving this goal, we have selected three Key Performance Indicators (KPIs). Adopting these multiple, mutually related indices will enable us to assess the Group's efforts from a more multi-faceted perspective.

＜SPTs＞

1) Reduce CO₂ emissions intensity per sales (t-CO₂ per 100 million yen sales) by 30% in fiscal 2025 compared to fiscal 2014. CO₂ emissions intensity per sales is calculated by dividing the sum of Scope 1 emissions (directly produced emissions) and Scope 2 emissions (indirect emissions from purchased energy) by net sales stated on the consolidated statements of income.

KPI-1	FY2014	FY2018	FY2019*	FY2020*	SPT-1 FY2025
CO2 emissions intensity indexed to FY2014 as 100	100	91.9	86.9	90.9	70.0

^*The figures for FY2019 onward are verified by a third party.

2) Maintain "A" or "A-" for the CDP Climate Change score in the calendar year 2025. CDP Climate Change scores evaluate climate change initiatives of corporations and cities. CDP evaluates the participants' response to its questionnaire and gives a score from the nine levels (A/A-/B/B-/C/C-/D/D-/F) based on quantitative and qualitative assessment criteria.

KPI-2	2018	2019	2020	SPT-2 2025
CDP Climate Change score	D	A	A	A or A-

3) Achieve to raise the ratio of renewal energy sources to 50% of electricity consumption in fiscal 2025. The ratio is calculated by dividing the total of electricity purchased from renewable sources with an Energy Attribute Certificate and electricity generated in-house by total electricity consumption.

KPI-3	2018	2019	2020	SPT-3 2025
Ratio of electricity from renewable energy sources (%)	20.3	18.2	23.9	50.0

We will determine whether we have attained these goals based on the performance in fiscal 2025 for 1) and 3) and in the calendar year 2025 for 2). If we fail to achieve two or more of the above three SPTs, we will give donations to public interest incorporated associations, public interest incorporated foundations, international organizations, non-profit organizations certified by local governments, local governments, and organizations similar to the foregoing, whose purpose is environmental conservation activities, in the total cumulative amount equivalent to 0.3% of the bond issue amount before the redemption of the bonds. In addition to our own ESG initiatives, we will create an additional positive impact by supporting their activities through donations.

Overview of the Issuance

Tenor	7 years (scheduled)
Issue amount	To be determined
Issue date	As early as November 2021 (scheduled)
Lead managers	SMBC Nikko Securities Inc., Nomura Securities Co., Ltd., Daiwa Securities Co., Ltd., Mizuho Securities Co., Ltd.
Sustainability-Linked Bond Structuring Agent	SMBC Nikko Securities Inc.

As a third-party evaluation, Rating and Investment Information, Inc. (R&I) has provided a second opinion stating that the sustainability-linked bond framework created for the Issuance conforms to the Sustainability-Linked Bond Principles 2020 established by the International Capital Market Association (ICMA). In addition, R&I will verify the contents of the disclosures made by the company on the progress and achievement of SPTs established for the bonds and to release a report on the results of their verification.
The Sustainability-Linked Bond Structuring Agent supports the issuance of sustainability-linked bonds by, for instance, establishing a sustainability-linked bond framework and giving advice on the acquisition of second-party opinions.

About TDK Corporation

TDK Corporation is a world leader in electronic solutions for the smart society based in Tokyo, Japan. Built on a foundation of material sciences mastery, TDK welcomes societal transformation by resolutely remaining at the forefront of technological evolution and deliberately "Attracting Tomorrow." It was established in 1935 to commercialize ferrite, a key material in electronic and magnetic products. TDK's comprehensive, innovation-driven portfolio features passive components such as ceramic, aluminum electrolytic and film capacitors, as well as magnetics, high-frequency, and piezo and protection devices. The product spectrum also includes sensors and sensor systems such as temperature and pressure, magnetic, and MEMS sensors. In addition, TDK provides power supplies and energy devices, magnetic heads and more. These products are marketed under the product brands TDK, EPCOS, InvenSense, Micronas, Tronics and TDK-Lambda. TDK focuses on demanding markets in automotive, industrial and consumer electronics, and information and communication technology. The company has a network of design and manufacturing locations and sales offices in Asia, Europe, and in North and South America. In fiscal 2021, TDK posted total sales of USD 13.3 billion and employed about 129,000 people worldwide.

Contacts for media

Contact	Phone	Email Address
Yoichi OSUGA	TDK Corporation Tokyo, Japan	[phone]	[e-mail]