Sustainability | Sustainability Management Fund Procurement through ESG FinanceFund Procurement through Sustainability-Linked Finance

Fund Procurement through Sustainability-Linked Finance

TDK procured funds through the ninth series of unsecured straight TDK Sustainability-Linked Bonds in December 2021 and the TDK Sustainability-Linked Loan in August 2023.

Overview of TDK Corporation the ninth series of unsecured straight bonds (with special inter-bond pari passu clause) (TDK Sustainability-Linked Bonds)

Total amount of bond issuance	40 billion yen
Payment date/maturity	December 2, 2021 Payment date/Seven years
Rating	Rating & Investment Information, Inc., (R&I): A+
SPTs	Reduce CO₂ emissions intensity per sales (t-CO₂ per 100 million yen sales) by 30% in fiscal 2026 compared to fiscal 2015. Maintain “A” or “A-” for the CDP Climate Change score in the calendar year 2025. Achieve to raise the ratio of renewal energy sources to 50% of electricity consumption in fiscal 2026.
Attributes of bonds	The achievement status of SPTs (1) and (3) will be assessed based on performance in FY 2026, and the achievement status of SPT (2) will be assessed based on performance in calendar year 2025. If we fail to achieve two or more of the above three SPTs, we will make donations to public interest incorporated associations, public interest incorporated foundations, international organizations, NPO certified by local governments, local governments, and other similar organizations that engage in 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 TDK’s own ESG initiatives, we will generate additional positive impact by supporting activities through donations.
Structuring agent of sustainable finance	SMBC Nikko Securities Inc.
Third-party evaluation	R&I second opinion

TDK Corporation: Overview of the TDK Sustainability-Linked Loans

・July 31, 2023: TDK Issues Its First Green Bonds and Raises Funds through Sustainability-Linked Loans

Loan amount	80 billion yen by Syndicated Loan
Loan term	Six years
Loan agreement date	August 7, 2023
Loan arranger	Resona Bank, Limited., MUFG Bank, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, Mizuho Bank, Ltd.
SPTs*	Maintain “A” or “A-” for the CDP Climate Change score in the calendar year 2025. Achieve to raise the ratio of renewal energy sources to 50% of electricity consumption in fiscal 2026.
Structuring agent of sustainable finance	Mizuho Securities Co., Ltd.
Framework	Sustainable Finance Framework
Third-party evaluation	R&I second opinion

*With respect to “Reduce CO₂ emissions intensity per sales (t-CO₂ per 100 million yen sales) by 30% in fiscal 2026 compared to fiscal 2015,” we achieved a 32% improvement in fiscal 2022, achieving the target ahead of schedule.

Status of Progress of SPTs and KPIs for TDK Sustainability-Linked Finance

TDK reports on the Key Performance Indicators (KPIs) and Sustainability Performance Targets (SPTs) that it set and the status of progress toward achieving them.
In the TDK Environmental Vision 2035, TDK made the reduction of environmental load from a life-cycle perspective a key topic and set a target of halving CO₂ emissions intensity by fiscal 2036 with fiscal 2015 as the base year. TDK set multiple SPTs that reflect the actions taken to achieve this target. By incorporating multiple inter-related measures, TDK believes that it is possible to gauge the Group’s actions from a more multi-faceted perspective.

SPT-1:Reduce CO₂ emissions intensity per sales (t-CO₂ per 100 million yen sales) by 30% in fiscal 2026* compared to fiscal 2015
SPT-2: Maintain “A” or “A-” for the CDP Climate Change score in the calendar year 2025.
SPT-3: Achieve to raise the ratio of renewable energy sources to 50% of electricity consumption in fiscal 2026*

*Targets until fiscal 2026 (ending March 31, 2026)

SPT-1: Reduce CO₂ emissions intensity per sales (t-CO₂ per 100 million yen sales) by 30% in fiscal 2026 compared to fiscal 2015.

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	Fiscal 2015	Fiscal 2019	Fiscal 2020*	Fiscal 2021*	Fiscal 2022*	Fiscal 2023*	Fiscal 2024*	SPT-1 Fiscal 2026
CO₂ emissions intensity indexed to fiscal 2015 as 100	100	91.9	86.9	90.9	68.0	48.2	29.9	70.0

*The figures for fiscal 2020 onward are verified by a third party.

SPT-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	2021	2022	2023	SPT-2 2025
CDP Climate Change score	D	A-	A-	A-	A-	A-	AorA-

SPT-3: Achieve to raise the ratio of renewable energy sources to 50% of electricity consumption in fiscal 2026.

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	Fiscal 2019	Fiscal 2020	Fiscal 2021	Fiscal 2022	Fiscal 2023	Fiscal 2024	SPT-3 Fiscal 2026
Ratio of electricity from renewable energy sources (%)	20.3	18.2	23.9	30.0	39.9	55.2	50.0