Aiming to be a trustworthy company in harmony with...

Aiming to be a trustworthy company in harmony with society

DENSO CSR REPORT 20071

2 0 07D E N S O C S R R E P O R T

More detailed data http://www.denso.co.jp/en/csr/report/2007/index.htmlURL

URL

URL

Aiming to be a trustworthy company in harmony with society

Beginning with our 1999 “Environmental Report,” DENSO has published yearly report in Japanese and

English, to further the interactive communication with the maximum number of its stakeholders, for the

purpose of building a sustainable society.

This 2007 report is the second edition of what is now entitled the “CSR Report.” In this report, the idea of

corporate social responsibility (CSR) is positioned at the core of its management and the results of global

group efforts are introduced.

Environment, one of the three DENSO-unique priority areas, is highlighted here in the feature part titled

“DENSO CSR Challenge.”

In order to reduce the number of pages of the report, DENSO has placed a portion of detailed data on its

website. Please access the website to view them, as well as other related information.

Period and scope of this reportPeriod covered:

Fiscal year 2006 (from April 2006 to March 2007) Some of data describe the activities in fiscal year 2007, in order to help understand the contents of this report.

Companies and business locations covered: DENSO and its consolidated group companies

Scope of this report: As a general rule, DENSO and its all consolidated group companies For some items, the scope is stated separately.

Guidelines used in the preparation of this report•GRI (Global Reporting Initiative)“Sustainability Reporting Guidelines (G2)”•Japanese Ministry of the Environment “Environmental Reporting Guidelines 2003”•Japanese Ministry of the Environment “Environmental Accounting Guidelines 2005”

Comparative tables for this report and the GRI Guidelines, outline of business, details of financial information, and others are available on our website:

http://www.globaldenso.com/

About the coverThe cover is an expression of the desire of the entire DENSO group to bring consideration and fulfillment to the people of the world through the creation of an “advanced automotive society.” That is, a world free of traffic accidents and congestion in harmony with the environment.

Website symbolRelated and more detailed information is available at the guided website.

Issued by: Koichi Fukaya, President and CEO

Editor: Sadahiro Usui, Managing Officer

Issue date: December 2007

The scheduled issue of the next report: November 2008

2DENSO CSR REPORT 2007

President’s Message

DENSO Corporate Information

CSR of DENSO

Feature: DENSO CSR Challenge

ManagementCorporate Governance and Compliance

Risk Management and Information Security

Report on Social Responsibility

For Our Customers

With Our Associates

With Our Shareholders and Investors

With Our Suppliers

With the Global and Local Communities

Communications for CSR

Environmental Report

Environmental Management (Eco management)

Development and Designing (Eco products)

Production and Logistics (Eco factory)

Coordination with Society (Eco friendly)

Opinions from Stakeholders and Responses of DENSO

A Third-party Comment

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05

07

11

19

21

23

25

28

34

35

37

41

43

45

53

59

65

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Contents

President’s Message


DENSO Philosophy

Aiming to become a good partner in building a sustainable society

In 1949, when DENSO was spun off from an automobile manufacturer’s component division, we had only a handful of clients. Today, we have grown into a global corporation that supplies key components and systems to the world’s top automakers and employs more than 110,000 people in 32 countries around the globe.

We appreciate that our customers and our stakeholders have supported us in the midst of a constantly changing era with their understanding of our sincere efforts to contribute to both the automotive industry and local communities, under our corporate philosophy of “contributing to a better world by creating value together with a vision for the future.”

In recent years, together with the efforts to build a sustainable society, the expectations for corporations have increased and the stakeholders have diversified. Also, there is a demand for corporations to comply with legal and ethical standards and to contribute to local communities. Thus, we are required to use a management style that explores ways towards solving a wide variety of social and environmental issues in partnership with our many stakeholders. In other words, a corporation earns its reputation as a social member welcomed by people in the process of achieving social responsibilities, while increasing economic value.

In 2006, DENSO took its first step towards becoming a corporation that is trusted and supported by society.Now, I would like to introduce three propositions based on the activities detailed in this report.

Contributing to an “advanced automotive society” as a “truly global corporation” trusted and supported by society

President and CEO, DENSO CorporationKoichi Fukaya

MissionContributing to a better world by creating valuetogether with a vision for the future

Management Principles1. Customer satisfaction through high-quality products

and services2. Global growth through anticipation of change3. Environmental preservation and harmony with society4. Corporate vitality and respect for individuality

Individual Spirit1. To be creative in thought and steady in action2. To be cooperative and pioneering3. To be trustworthy by improving ourselves


Driving the DENSO Spirit to promote CSR management

In April 2006, we formulated the “DENSO Group Declaration of Corporate Behavior” as a new policy. We have shared this as a proposition to practice the corporate social responsibilities (CSR) throughout our group companies. This Declaration is our promise to proactively contribute to a sustainable society through all of our business activities and promote our management, setting CSR as the core of our action. Also, the Declaration raises the awareness of the relationships among different stakeholders, including customers, stockholders, suppliers, local communities, and our associates, thereby mapping out what DENSO can, and should, do for each stakeholder.

Our individual associates are the central players in practicing CSR. In other words, the awareness and behavior of our more than 110,000 associates working in the countries and communities around the globe are especially important. As such, I have personally assumed the chair of the CSR Promotion Committee, which was established anew to properly diffuse and embed CSR within the Company. I am proceeding respective activities, incorporating a cycle of “Plan (proposal, procedure) – Do (implementation) – Check (assessment, examination) – Action (review, improvement) into their management.

Fortunately, the DENSO Spirit (Foresight, Credibility, Collaboration), a handed down faith and values since the foundation of the Company, has deeply diffused into our corporate culture. This spirit will drive a continuous improvement of our efforts for CSR.

Contributing to build an advancedautomotive society

Participating in the creation of a sustainable society through “monozukuri” (manufacturing) is a vast proposition for DENSO, an automotive component maker. However, this proposition is a roadmap for presenting our significance through creative technologies. We have set “DENSO Vision 2015” as a guideline to realize this proposition and we are spreading out the activities of development and manufacturing that “contribute to building an advanced automotive society.” In this society, cars are in harmony with people, as well as the environment, without having a negative impact on them and people can truly feel content.

Among other things, we especially emphasize “environment” and “safety.” In fiscal 2006, we contributed to fuel efficiency and purification of exhaust gas from gasoline, hybrid, and diesel vehicles, with our automotive components and systems resulting from

sophisticated technologies of control and manufacturing. In the area of safety, DENSO’s unique sensors and electronic control technologies helped bore a new safety system for detecting pedestrians.Furthermore, in order to make group-wide efforts against global warming, the DENSO group strengthened energy-saving activities at the manufacturing sites across the world. On top of that, in March 2007, an energy reduction technology stemming from our manufacturing part was approved by the Japanese government as a “Clean Development Mechanism*” in Malaysia, whereby we plan to contribute to the prevention of global warming. These results are described in the “DENSO CSR Challenge” and “Environmental Reporting” sections of this report.* A system enacted as a part of the Kyoto Protocol for furthering the prevention of global warming. Under the system, an industrialized country supports a developing country in reducing CO2 emissions, and then the reduced amount can be added to that of the industrialized country.

Evolving into a truly global corporationThe third proposition is the evolution into a truly global corporation by establishing community-rooted business bases, thereby becoming responsive to the expectations and the trust of customers worldwide. In order to realize this, our basic policies and sense of value must be shared throughout the group, above all. Then, our entities in each location must autonomously promote their management in accordance with local market needs, restrictions, and cultures. Thus, our uniqueness must be exercised in our all business activities encompassing manufacturing, employment, human resource development, environmental conservation, and corporate citizenship.

We believe that “hitozukuri” (human resource development) is the driving source of the evolution. The hitozukuri, which is based on a long-term employment and is designed to draw out the maximum potential from our associates of each personality, is one of DENSO’s strengths and assets. There is an urgent need to furnish the background to develop future local leaders in our foreign sites. In fiscal 2006, we poured our efforts into building a base for this background. From now on, we intend to strengthen more and improve hitozukuri.

Recently, we at DENSO have been recognized by a variety of organizations for our steadily continuous environmental activities and social efforts. Inspired by this recognition, we plan to deepen communications with more people and explore new ways for coordination and cooperation. This report and our website are important means to initiate these plans. After you have read this report, please feel free to share your candid thoughts and opinions with us.

DENSO Corporate Information


Company name

Address of headquarters

Established

Representative

DENSO CORPORATION

1-1 Showa-cho,

Kariya, Aichi 448-8661 Japan

December 16, 1949

Koichi Fukaya, President and CEO

(Current as of March 31, 2007)

Automotive Parts

Air conditioning systems Radiators

Thermal Systems

Monolithic substrate Spark plugs EGR valves Common rail systems

[Air conditioning] [Cooling systems and components] [Engine control components] [System control components] [Fuel injection]

Powertrain Control Systems

Non-Automotive Products

Barcode handy scanners

[Automatic ID data capture devices]

Industrial robots

[Factory automation products]

Consumer-Products (Thermal Systems)

Kerosene heat pumps

[Cooling and air conditioning systems]

CO2 heat pump hot water supply system

Engine electric control units Monolithic ICs Sensors

Electronic Systems Electric Systems

Alternators

DC-DC converters

Electric power steering electric control units

Electric power steering motors

[Electronics products] [Electronics devices] [Relays][Engine electrical systems]

[EHV]

[EPS]

[Motors]

Instrument clusters ETC on-board equipment Millimeter-wave radars Windshield wiper systems

[Body electronics components] [ITS (Intelligent Transportation System)] [Driving assist and safety]

Car navigation systems

Corporate OverviewCapital stock

Employees

Consolidated subsidiaries

Affiliates under equity method

Net sales

Ordinary income

Capital expenditures

Research and development expenditures

Cost of sales

Corporate tax paid

Internal reserves*

Overseas sales ratio

187.4 billion yen

Consolidated 112,262

188 Companies

32 Companies (Japan 14, The Americas 6,

Europe 2, Asia and Oceania 8, Other areas 2)

3,609.7 billion yen (Consolidated, +13.2% y/y)

322.1 billion yen (Consolidated, +13.8% y/y)

312.5 billion yen (+8.2% y/y)

279.9 billion yen (+9% y/y)

2,990.4 billion yen (+14% y/y)

124.3 billion yen

171.4 billion yen

48.5%

* The Electronic VCT Business including small motors was merged into the Electric Systems Business Group in January 2007, following the revision of the Business Groups system.

http://www.denso.co.jp/ja/investors/URL

For more detailed financial information, please visit our website.

Industrial Systems

Information and Safety Systems

* Net income for the current year, excluding dividends

Main Products

Economic Reporting


'02

23,328

1,599

'03

25,624

1,887

'04

27,999

2,139

'05 '06

31,883

2,666

36,097

3,031

(FY)

Sales Operating income

100 million yen

40,000

20,000

0

•Sales / Operating income shift

'02

1,7111,467

'03

1,9651,512

'04

2,353

1,610

'05 '06

2,887

1,851

3,125

2,199

(FY)

Capital expenditures Depreciation

100 million yen

3,000

2,000

1,000

0

•Capital expenditures / depreciation shift

'02

8.94

'03

9.55

'04

10.42

'05 '06

10.57 11.23

(FY)

10 thousand

10

5

0

•Employees

'02

1,885

'03

2,149

'04

2,382

'05 '06

2,563 2,799

(FY)

100 million yen (%)

4,000

3,000

2,000

1,000

0

10

8

6

4

2

0

•Research and development expenditures

EuropeNumber of companies: 35Employees: 14,687Sales: 507.5 billion yenPercentage of sales: 14.1%

JapanNumber of companies: 82Employees: 56,589Sales: 1,859.0 billion yenPercentage of sales: 51.5%

Asia, Oceania, and othersNumber of companies: 59Employees: 23,928Sales: 474.7 billion yenPercentage of sales: 13.1%

The AmericasNumber of companies: 44Employees: 17,058Sales: 768.5billion yenPercentage of sales: 21.3%

* Number of companies: Sum of consolidated subsidiaries and affiliates under equity method

'02

7.9

'03

7.6

'04

8.4

'05 '06

9.4 9.9

(FY)

(%)

10

5

0

•Return on equity (ROE) •Sales by Business segment

FY2006

6.9%

1.3%1.8%

1.5%

9.2%

8.6%

31.5%

23.0%16.2%

Thermal systemsPowertrain control systemsInformation and safety systemsElectric systemsElectronic systemsSmall motorsOther automotiveIndustrial systems/consumer productsOther non-automotive

OthersManufacturing companies

Research and development expenditures

Percentage on net sales

8.1 8.4 8.5 8.0 7.8

Business Development by Region (Employment / Scale of operation)

CSR OF DENSO


Aiming to be a trustworthy company inharmony with society

In corporate philosophy, DENSO presents our mission of “contributing to a better world by creating value together with a vision for the future.” In order to realize this, we formulated a long-term management vision named “DENSO Vision 2015” in 2004.The coordination and cooperation by sharing a sense of value with our many stakeholders are indispensable to accomplish this vision. The “Corporate behavior that earns trust and support of society” is the base of the accomplishment.In order that every one of more than 110,000 associates worldwide practices this behavior, we announced the “DENSO Group Declaration of Corporate Behavior” in April 2006 to declare our aim of the management for CSR (Corporate Social Responsibility).

Driven by the DENSO spirit

“DENSO spirit” has been a driving source to exercise the activities of CSR. Our three principles of “Foresight, Credibility, and Collaboration,” which guide our corporate culture, are fundamental values or faith cultivated ever since our foundation in 1949.

DENSO believes that, as the Company exercises the “Collaboration” with the communication and teamwork among associates, the highest performance is achieved. As such, the activities of CSR will take a root in all of our group companies and the activities will mature to the socially responsible behavior on an individual level.

•CSR framework

DENSO Group Declaration of Corporate Behavior

•Environmental conservation •Corporate citizenship •Respecting associates*Key areas to emphasize as priority

CSR Promotion Committee, CSR Promotion Center, Installed CSR Leaders

•Compliance •Customer relations •Free, fair and transparent transactions

•Information disclosure, IR •Occupational safety •Mental health

Areas to promote as basis

Promotion structure

Policy

Economic aspects(business results)

Environmental and social aspects

Contents ofactivities

*Including respect for human rights

In order to grow continuously while achieving our mission, the “corporate behavior that earns

the trust and support of society” is indispensable.

As such, DENSO aims the management for CSR that emphasizes the relationships with our stakeholders.

The Company will contribute to a sustainable society, as every associate exercises the DENSO Spirit.

Social Responsibility of DENSO

Summary of fiscal 2006


With ourshareholders

DENSO has around 69,000 shareholders (as of the end of March 2007). While aiming to increase our corporate value through a stable and long-term growth, we practice a proper profit return to our shareholders. Also, we disclose business and financial data in a speedy manner through robust investor relations activities and our website, for example, to increase the transparency of our management.

With oursuppliers

We have roughly 1,400 first-tier suppliers (as of the end of March 2007). Based on our “Open Door Policy,” our doors of business opportunity are open worldwide, as we penetrate fairness in all business transactions follwing our disclosed procurement policies, as well as our impartial and fair evaluation system. We respect our suppliers as equal business partners and aim for mutual progress and growth.

Withthe globaland local

communities

We are working on the activities of environmental conservation throughout our corporate behavior, aiming to be a corporation that operates in harmony with society, thereby proving the trust of global society and local communities. Also, as local members of local communities, our associates spread out proactive contributions to the countries or communities in which they work, confronting a variety of social issues.

With ourassociates

In order that each of our more than 110,000 associates in 32 countries (as of the end of March 2007) can work vigorously, we will respect human rights and we will offer a fair working conditions free of discrimination and equitable opportunities for individual growth. Also, we will establish the values of “mutual trust and mutual responsibility” with associates through sincere dialog and discussion to promote the building of a safe and comfortable working environment.

For our customers

We rest on our four pillars of “quality, technology, service, and customer support,” which are founded on our “customer first” mind. We will develop safe and high quality products and services, whereby we will strive to create a new value. Also, we will penetrate the safeguard of the personal information of our customers.

DENSO’s relationships with stakeholders

We will actively contribute towards the development of a sustainable society•We will comply with the law and promote ethical behavior.

•We will honor the culture and history of each country and strive to operate with respect for people.

•We will strive for an open and fair information disclosure and dialog.

•We will anticipate changes and challenge in order to create new values.

•We will work to ensure the best quality by focusing upon on-site verification and implementing “Kaizen” (continuous improvement).

•We will work to encourage communication and teamwork.


Major activities for fiscal 2006DENSO has established the “CSR Promotion Committee,” chaired by the President and CEO, as the highest decision-making authority with regard to the activities of CSR. Attended by DENSO’s entire board of directors, the committee is in charge of orienting the whole group, overseeing the state of progress, and spreading out CSR. In fiscal 2006, the committee implemented the following measures, focusing on the issues on the understanding and embedment of the idea of CSR in every associate.

(1) Distributing “Code of Conduct for DENSO Group Associates”

What is emphasized to spread out the activities of CSR is a proactive manner for aiming a corporation operating in trust and in harmony with society. It must not be considered a reactive duty. Also, DENSO emphatically builds a climate in which all associates fully understand the significance of CSR and practice it as a matter of course in their daily activities.In order to achieve this goal, the Company has formulated the “Code of Conduct for DENSO Group Associates” and from April 2006 the Company has started distributing it to all associates in the group. It clarifies the fundamental idea and ethical behavior for the each of its stakeholders, in keeping with the ideals of the “Declaration of Corporate Behavior.”

(2) Appointing and Installing CSR leadersA promoter at each workplace is necessary to embed specific activities of CSR in the course of daily work, while sharing the idea described in the “DENSO Group Declaration of Corporate Behavior” and the “Code of Conduct for DENSO Associates.” As such, in June 2006, CSR leaders were appointed and installed to every department in DENSO Japan and every DENSO group company. They have started their activities of CSR, setting action items and goals tailored to the characteristics of their workplace or business.

(3) Holding CSR Forums The CSR Forums have been held since April 2006 as the occasions of internal communication which allow to

understand the idea of CSR and its contents of activities for CSR at DENSO. There is a series of substantial CSR-related themes. In the forums, associates are lectured by experts and by those who at the companies which precede DENSO in CSR. Associates also discuss subsequently. The aim is that associates will reflect their raised awareness of problems and their proposals to specific measures. A total of five CSR Forums were held in fiscal 2006, attended by roughly 1,800 DENSO group associates. (see p. 42)

(4) Publishing CSR report for associatesIn March 2007, DENSO published a report entitled “Our Activities of CSR” to introduce specific activities of CSR which are undertaken by associates themselves or at their workplaces. This report gives associates the thought of CSR and the means of specific behavior. In the future, the Company plans to use this report at internal seminars or external meetings, to further the understanding on the activities of CSR at DENSO.

External recognition for environmentaland social activities of DENSO

DENSO’s efforts on environmental and social issues are recognized by many external organizations every year. In fiscal 2006, the Company was ranked sixth among the “The Global 100 Greenest Companies” reported by the Newsweek magazine. In addition, the Company received the following recognitions and ratings.

Titles Conducted by DENSO rankingThe Global 100 Greenest Companies

Global 500

Yomiuri Weekly Best 100Corporations

Environmental Management Ranking

Environmental Image Ranking

Overseas Environmental Ranking

Dow Jones SustainabilityIndex (DJSI)

ETHIBEL Sustainability Index (ESI)

Morningstar Social ResponsibilityInvestment Index (MS-SRI)

Newsweek

Nikkei Inc.

The Yomiuri Shimbun

Dow Jones & Company (the U.S.A.),SAM Group Holding AG (Switzerland)

Forum Ethibel (Belgium)

Center for Public Resources Development,Morningstar Japan K.K. (Japan)

6th of 100

84th of 500

27th of 4,110 (overall)

12th of 1,741 (manufacturing sector)

5th of 1,741 (manufacturing sector)

3rd of 100

Included in index for 7years in a row(one of global 318 companies)

Included in index for 3 years in a row(one of global 296 companies)

Included in index for the 4 years in a row(one of Japanese 150 companies)

Our Activities of CSR

Code of Conduct for DENSO Group Associates

CSR OF DENSO

•Major environmental and social recognitions by external institutions

4859

61


Here DENSO sorts its CSR into nine areas and, as such, the Company reports the results for fiscal 2006 and the plans for fiscal 2007, centering key action items.

Results from the activities in nine areas of CSR for fiscal 2006 and the plans for fiscal 2007

Areas Key action items (by 2010)

Reduction of CO2 emissions at all group manufacturing sites

Emissions basic unit: Less than 80, compared with that of 2000 scored 100

[DENSO Japan]Less than 117, compared with that of 1990 scored 100

Emissions basic unit: 73 compared with that of 2000 scored 100

Emissions: 120 compared with that of 1990 scored 100

In order to grow in harmony with the environment, promote global warming prevention, the primary issue that automotive industry faces

•Accomplish targets in the DENSO ECOVISION 2015

•In particular, promote an all-out effort to save energy globally to help reduce CO2 emissions

Major Results for fiscal 2006Goals Results

Major plans for fiscal 2007Page

Environ-mental

conserva-tion

75 percent for group company participation in the corporate citizenship furtherance campaign

10 percent for associate participation in a furtherance system for volunteer activities [DENSO Japan]

Participation: 66 percent

Associate participation: 14 percent

•Strengthen respective activities emphasizing a group coordination

•Promote continuous activities to increase participation rate of associates

[DENSO Japan]•Expansion of system to widen the

occasions for the success of women in the workplace

•Introduction of measures to support senior associates

•Promotion of employment for the physically challenged

28

32

In order for diverse human resources to work vigorously, promote respective activities

Promote edifying activities to promote diversity

Embedment of a climate of compliance

•Spread out “Code of Conduct for DENSO Group Associates”

•Installed compliance leaders

19

20

Comply with legislation, as well as its ideal, and practice ethical behavior

Penetrate more compliance and eradicate wrongdoing

Establishment of a customer service desk for prompt response to inquiries

Established customer service desk in the General Administration Dept. (May 2007)

Expand the function of the customer service desk to be trusted and satisfied by customers

Strengthen the function of the customer service desk (increase the response level of receptionists )

•Introduction of an evaluation system for suppliers at group manufacturing companies in Japan

•Recommendation on the promotion of the activities of CSR for suppliers

•Introduced a supplier evaluation system to group manufacturing companies in Japan

•Distributed “DENSO Group Declaration of Corporate Behavior” to 1,400 first-tier suppliers and shared respective efforts with them

35

36

•Practice free, fair, and transparent business transactions

•Practice “CSR Procurement,” encompassing supply chain

•Enhance the introduction of the supplier evaluation system

•Revise basic business contracts with first-tier suppliers

•Implement a self diagnosis at suppliers

•Building of a procedure for information disclosure

•Enhancement of the opportuni-ties of dialog with stakeholders

•Published a CSR report

•Held the Stakeholder Dialog in Japan and in Thailand

Practice transparent as well as honest information disclosure and dialog

•Enhance the contents of CSR report and website

•Enhance the opportunity of dialog with stakeholders

Zero serious accidents within the whole group companies

Zero serious accidentsMaintain and enhance a safe and comfortable work environment

Promote continuous activities to penetrate the awareness of safety

Building of foundation for every associate to work healthily in mind and body

Enhanced procedures such as resumption support system, hot line for counseling

33

Build procedure for associates to work healthily in mind and body

Corporate citizenship

Respecting associates

Compliance

Customer relations

Free, fair, and

transparent transactions

Information disclosure

Occupa-tional safety

Mental health

32

Promote the activities to raise the awareness of every associate about health

In order to co-exist with society, practice corporate citizenship in every community in which DENSO conducts business

•Introduced a system for maternity leave and shorter working hour; start preparing the establishment of infant daycare centers

•Enhanced a system for rehiring seniors

•Installed at group company in Japan the person responsible for hiring the physically challenged

37

40

25

26

41

4266


DENSOCSR ChallengeDENSO’s challenge of addressing global warmingDENSO’s vision for the future is the realization of a “society where automobiles are loved.”

However, our planet is faced with the urgent issue of climate change, otherwise known as global warming.

Neither “creation of an advanced automobile society” nor the activities of a sustainable company can be

realized without solving this issue for humanity as a whole.

In this feature, the Company will introduce its challenges of addressing global warming (reducing CO2

emissions) by such area as: “Eco Products,” “Eco Factories,” and “Eco Friendly.”

All these are being practiced founding on “Foresight,” “Credibility,” and “Collaboration”, the three pillars

of “DENSO Spirit” which DENSO has fostered over the years as a sense of value and belief.

Environmental conservation activities by DENSO

DENSO Spirit

Credibility CollaborationForesight

Providing surprises andimpressions in a way

that only DENSO can do.

Providing quality andreliability beyond

customer expectations.

Achieving the highestresults by working

as a team.

A company that is trusted and supported by society

Contributing to a better world

by creating value

together with a vision for the future

Mission


P13

P15

P17

ECO PRODUCTSInform of routes with the least environmental impact using car navigation systems

PRONAVIForeseeing the near future, DENSO challenges CO2 emission by means of “monozukuri” (manufacturing) with forefront technologies. Popularizing and permeating PRONAVI is another example of the surprising and impressive development for which DENSO is known.

01DENSOCSR Challenge

Foresight

ECO FACTORYReduce energy loss with the efforts of all associates in manufacturing

Perfect Energy Factory (PEF)DENSO challenges CO2 emission at monozukuri locale in every plant to minimize them. The Company is spreading out the PEF concept worldwide to meet society’s expectations and trust.


Credibility

ECO FRIENDLYEvery associate willingly does environmental activities

The DENSO Eco-Point System: DECOPONDENSO challenges CO2 emission to reduce it by what it can do on its job or in daily life of its associates. DENSO aims to diffuse what it does into all of its regional communities.


Collaboration

What is the DENSO CSR Challenge?DENSO is making its eager efforts for “environmental conservation,” “corporate citizenship,” and “respecting associates (hitozukuri),” the key three areas in which the Company exercises its uniqueness. The Company positions these efforts as “DENSO CSR Challenge.” Last year, DENSO focused on “respecting associates.” This year, the Company spotlights “environmental conservation,” with an emphasis on the theme of preventing global warming (CO2 reduction).



Inform of routes with the least environmental impact using car navigation systems

PRONAVIForesight ECO PRODUCTS

Addressing the social issue of congestion: evolving car navigation

systems to clear the way

The “Internet ITS,” a model of automotive society for the future, is a system for inter-connecting automobiles on the Internet to provide traffic information, pay tolls, and more. Without solving the social issue of congestion, which is directly caused by automobiles, the automotive society would not have the future. The research and development for the navigation system of next-generation “PRONAVI” sprang from the thought that the progress in navigation systems could help resolve the problem.Even if such information as traffic jams is going to be obtained from sensors in roadways, it is impossible to obtain the information about every roadway, due to the limits on furnishing its infrastructure. Hence, there must be the automobiles equipped with sensors that reciprocally transmit such data as speed and position based on their positions. In this way, the real time information can be obtained from automobiles on roadways. This information is called “probe information,” because it probes the traffic in a society on the level of individual automobile.

Deploying probe information: started a cooperative project among industry,

academia, and government

The advantage of probe information is that it allows obtaining plentiful information from congested roadways. Since 2001, an experiment involving 1,570 taxicabs equipped with probe information transmitters (“Probe Taxis”) has been conducted in Nagoya City, Aichi Prefecture, Japan. This experiment demonstrated the validity of probe information. The information gathered in this experiment is still being deployed today.In 2003, the“P-DRGS Consortium,” a cooperative project involving industry, academia, and the Japanese government, officially began with the aim of popularizing the navigation system “PRONAVI,” which deploys the probe information. It is a five-year project under the support of Strategic Information and Communications R&D Promotion Program by Japanese Ministry of Internal Affairs and Communications. DENSO is playing a major role in developing the PRONAVI technology.

Faster, more comfortable, and more environmentally-friendly: realizing an automobile

society that “considers” people and the Earth

Demonstrative prototypes were displayed at the ITS World Conference held in October 2004 and the ITS Expo held in July 2005 at the EXPO 2005 AICHI JAPAN. Such great surprise and excitement of many participants were heard that “I’ve always wanted a car navigation system like this” and that “Please popularize this as prompt as possible.” The system can predict CO2 emissions with high accuracy based on the forecasted vehicle speed for each area corresponding to traffic jam conditions. In short, it not only helps solve congestion, but also allows drivers to select routes with lower impact on the environment.Another characteristic of “PRONAVI” is that it allows to compare the CO2 emissions of given travels, not only by automobiles, but also by a combination of a vehicle and public transportation such as trains. In general, the CO2 emissions of trains is one-tenth of that of vehicles. But destinations reachable by trains are limited. Which of the routes is faster, more comfortable, and more considerate

As a driver for my personal pleasure, I dream a day when we help achieve “a society where automobiles are loved” by driving a car and thus supplying probe information. If DENSO rightly respond to both safety and environmental demands, I believe that the day we achieve the goal will not be very far off.

ITS Development Department

Takatoshi Matsushita

DENSO aims to challenge CO2 emission to reduce it by monozukuri deploying DENSO’s unique technologies. In this

thought, the Company created the navigation system of next-generation, “PRONAVI.” It accurately forecasts congestion

and the accompanying CO2 emissions to ease the burden on the environment and thus build a safe and comfortable

automotive society. DENSO has a specific proposal for the vision to draw: “a society where automobiles are loved.”

Voice of person in charge


PRONAVI http://www.p-drgs.com/URL

to the environment? PRONAVI gives individuals an overall picture, allowing them to decide on their route to realize an automobile society that “considers” people and the Earth.

Towards the grand goal of reducing CO2:DENSO’s mission to address

and solve issues

The year 2007 marks the end of the project, which began in 2003. However, a number of issues must be addressed before PRONAVI is popularized. The biggest challenge is how to gather the probe information. One of the means for addressing this challenge is to deploy GPS-equipped buses and trucks to transmit the probe information. In order to realize this, one of the coming themes is to build cooperative relationships among bus and trucking companies.

Currently, automakers are separatively undertaking the development of navigation systems that deploy probe information. How these separative efforts can be gathered into a whole social trend? In order to achieve the grand goal of reducing CO2, DENSO aims to promptly popularize the system not only by competition but also by cooperation. In this way, DENSO is challenging automotive society to realize its maturity.

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The interest of the world is moving to the next stage after the target period of the Kyoto Protocol (a post-Kyoto Protocol). PRONAVI will prove an indispensable tool when the time comes to head specific goals of reduction in CO2 emissions. I specialize in traffic planning and traffic engineering, and thus I am involved in both P-DRGS and the permeation of a Eco-Money (traffic ECOPON), which is intended to be an incentive for using public transportation. I have high expectations for DENSO as a corporation on the front lines of environmental issues, with the development of PRONAVI and the introduction of its own Eco-Money, DECOPON.

Ph. D. Professor, Nagoya UniversityGraduate School of Environmental Studies P-DRGS Consortium General Representative

Takayuki Morikawa

Expectations for DENSO

My expectations and recognition for DENSO as an leading corporation in environmental awareness

[PRONAVI]A navigation system of next generation which is under development by the P-DRGS Consortium. DENSO is leading the technological development of this cooperative project. PRONAVI is a forcastable navigation system that deploys real-time probe information from automobiles on the road, and offers route information, including public transportation such as trains. It calculates the predicted CO2 emissions for each route, allowing drivers to avoid traffic jams and to select the most environmentally-friendly route.

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An image of automobile society which is to be realized by PRONAVIDemonstrative trial at the ITS World CongressAn overhead view showing the area in which probe cars are gathering information (shown in red)Demonstrative trial at ITS Expo



From a voluntary plan to ECO VISION2005: doing everything possible to save energy at factories in Japan

DENSO has worked on energy saving (reducing CO2 emissions) at manufacturing sites. In 1993, DENSO set a voluntary target for the reduction of CO2 emissions basic unit and then the company started spreading out its energy saving activities. In the “ECOVISION 2005,” formulated in 2000, the amount of CO2 to be reduced was incorporated into the corporate management indices. The index presented a clear target of “reducing CO2 emissions by 10% compared with that of 1990 by 2010,” whereby it has constituted main pillar of environmental management plan. This target cannot be achieved only by the efforts of a specific department but by those of entire associates who are literally in monozukuri and required to “work hard and save energy wherever possible.”

Making energy loss and results of improvements “visible” and

continuously spiraling upward

“What everything possible is needed to do?” “How do we realize a total associate participation?” After much trial and error, DENSO has reached to the method of making energy saving activities “visible” by scoring. First, in this method, energy consumption at each site is disclosed within the company; next, a theme for improving energy saving is set company-wide; then, the progress of improvement by production process is

scored; and finally, the score is used to raise awareness of energy saving among associates. Specific items are of course revised every year to improve evaluation criteria and thus to continue the upward spiral of progress. Additionally, to diffuse the awareness of full participation among associates, the accomplishment of PEF was added to the requirements for the in-house award of “Energy Saving Excellence” for manufacturing sites. This has borne a good sense of competition among associates, thereby leading them to actively think “how to improve my own site.” Also, among the factories, reciprocal communications and exchanges of opinion have frequently been conducted to understand specific improvements made at other sites.

Beyond the frame of a corporation: unveiling energy saving technologies

society-wide, and worldwide

In the PEF activities, the technology of “blower utilization, instead of an air compressor” was developed by the Air Conditioning Manufacturing Department 3 in Toyohashi Plant, Aichi Prefecture, Japan. In fiscal 2004, this was honored with the “Excellent Energy Conservation,” a prize of the minister of Economy, Trade, and Industry in Japan. This is a revolutionary technology to achieve massive savings in energy consumption, in which a large compressor required to make compressed air is replaced with a blower (low-pressure fan) and the piping is modified. DENSO unveiled this technology at the Energy Conservation Center and, thereafter, the Company has accepted dozens of lectures and visits regarding this technology. Furthermore, in 2005, this technology was cited as an industrial standard in the amended Act Concerning the Rational Use of Energy in Japan. Thus, this technology makes remarkable contribution for permeating energy saving into the whole industry.

Spreading out PEF activities to factories worldwide: turning energy-saving technologies

into Clean Development Mechanism

In “ECOVISION 2015,” newly formulated in 2005, DENSO hammered out a global policy for speeding the reduction of CO2 emissions by spreading out the PEF activities

“Monozukuri” (manufacturing) with the lowest CO2 emissions is one of the crucial issues facing the building of a

sustainable society. In order to realize this, the efforts towards the “Perfect Energy Factory (PEF)” are promoting at

the DENSO factories in the world, in which the energy loss at all manufacturing stages is reduced to nearly zero,

while increasing production efficiency.

Reducing energy loss to the lowest level with the participation of all factory associates

Perfect Energy Factory (PEF)Credibility ECO FACTORY

Manufacturing sites anywhere in Asia aspire the incorporation of advanced environmental technologies. Here in Malaysia, we are making efforts to effectively reduce energy consumption by proactively introducing, as well as practically tailoring, the energy saving technologies which have proved effective at the mother factory in Japan.

DNMY (Malaysia) Facilities Group

Che Jamri

The voice of person in charge


The Perfect Energy Factory http://www.denso.co.jp/ja/csr/environment/factory/URL

fostered in Japan to manufacturing sites worldwide. It was an expression of a strong sense of urgency, that is, regardless of different situations by country or by community, the social responsibility of DENSO will not be achieved unless its more than 110,000 associates work together to confront global warming.In March 2007, PEF activities progressed anew. Pursuant to the Kyoto Protocol, a plan for spreading out the energy saving technology regarding compressed air to the factory in Malaysia (DNMY) was approved as a “Clean Development Mechanism (CDM) project”* by the Japanese government. In the future, after the authorization of regulatory bodies designated by the Malaysian government and the UN, this project will become the part of the international plan for reducing CO2.The energy-saving technology on which DENSO has earnestly made efforts is now playing a role in preventing global warming. It is a new step towards practicing the DENSO philosophy of “contributing to a better world by creating value together with a vision for the future.”* A system in which an industrialized country supports a developing country in reducing CO2 emissions, and then the reduced amount can be added to that of the industrialized country.

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For many corporations which aim at the promotion of energy saving, the barriers are the difficulties in determining actual energy usage and a lack of necessary knowledge. DENSO, however, has steadily accomplished the result. DENSO’s inimitable thoroughness in measuring the levels of production and energy consumption together in real-time is truly impressive. In addition, I deeply respect DENSO’s unhesitating stance of unveiling its know-how through press releases and lectures here at the Energy Conservation Center. I hope that the examples of energy saving set by DENSO, a leader in making energy issues “visible,” will be applied among various industries in the future.

Energy Conservation Center, Japan

Hisakazu Tsujimoto

My expectations for DENSO as a pioneer in makingenergy issues “visible”

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[The Perfect Energy Factory]A keyword for energy-saving activities in “ECOVISION 2005.” Through making energy consumption “visible,” it allows at all levels, from departments to factories, or from person in charge to all associates, to proceed the building of Perfect Energy Factory with exhaustive improvements. Currently, following the announcement of “ECOVISION 2015,” the scope is expanding to include overseas manufacturing sites.


An education introduced in a technological seminar on energy saving improvement with regard to compressed air used in production facilities. Efforts on making “visible,” a highly effective motive in promoting energy saving The associates at Toyohashi plant, Japan, were honored with the award from the minister of the Economy, Trade, and Industry in Japan for developing blower technology for compressed airAn education at DNMY in Malaysia , which is spreading out CDM



In December 2006, DENSO started operating an in-house Eco-Point system, DECOPON. Even if associates

notice the importance of environmental activities, it can be difficult to put the activities into actual practice.

Based on the concept of “for the environment = for our own fulfillment and delight,” the Company is

challenging this difficulty. The dream of DENSO is to expand an eco-friendly lifestyle from DENSO to

communities, as well as to the whole society.

Every associate willingly does environmental activities

DENSO Eco-Point System: DECOPONCollaboration ECO FRIENDLY

Wonderful example of EXPO Eco-Money: “Can we do the same system

within DENSO, too?”

The model for the DECOPON system was EXPO Eco-Money first introduced at EXPO 2005 AICHI JAPAN. The merit of this system is its simplicity. It fulfills users with “saving and using points,” thereby allowing everyone to participate in voluntary eco-friendly action without strain. In the long run, although the power of one individual activity is small, its accumulated effect will make a definite contribution to the global environment.“Can we do the same system within DENSO, too?” “This is the best way to expand environmental action among associaties.” These strong beliefs bore the DECOPON concept. Many “activists” in other industries, NPOs, and the government raised their voices of cooperation to support this concept. DENSO associates who volunteered at EXPO 2005 AICHI backed the creation of DECOPON as well. “I enjoyed the exchange with visitors.” “I could let children happy.” Such voices of the volunteers upheld the DECOPON concept.

A spirit of self-sacrifice is not enoughfor the long term: “A little at a time,

without strain” is the secret

As “environmental conservation” is presented for one of the key areas of CSR, DENSO has emphasized the

business activities in harmony with the environment. However, no matter how many technologies and products the Company creates with environmental considerations, these efforts are not enough to solve the environmental problems. DENSO has more than 110,000 associates, and the total of their family members amounts to several folds of the number. Not only as the Company, but also as an individual part of the Company, there are “something” to do in daily lives, and at last the accumulated effect of these small things will be large enough. However, simply focusing on self-sacrifice and duty is not enough to expand eco-friendly activities. Some of the strongest motives for people are “fulfillment” and “delight.” Also, to do “a little at a time, without strain” will continue for a long time. As an environmentally advanced corporation, DENSO will take over the philosophy of the EXPO Eco-Money and the Company will back the “voluntary action” among its associates. For these sakes, DENSO began to challenge the operation of the DECOPON system.

Be an Eco-Money of “fulfillment” and “delight,” as well as of “DENSO-way”

“How to harness the system to DENSO’s corporate activities or its role in society?” This was the theme on which the Company has wanted to reach a corporate-wide consensus. The Company has repeatedly challenged clarifying the meaning for the Company to introduce such a point system and thus making DECOPON “unique to DENSO.” In the process of taking action “for myself,” the participating associates eventually make a contribution to local communities, as well as the Earth’s environment. Expanding such “menu” of choices was another theme of the DECOPON system. One of the “menu” items for preventing global warming is “eco-commuting,” in which associates consider communities and the environment in the daily behavior of “commuting,” thereby rivising the means of commuting. This is not only invaluable for reducing congestion, and thus reducing CO2, but also for achieving CSR of DENSO. Also, as associates alternate the way to approach the essential action of “eating” or “buying,” the Company can change the structure of the whole society into that has less impact on the environment. In order to be the

My dream is the realization of a procedure in which the people of the world can delightedly participate in the eco-friendly action. In doing so, we will recover the Earth environment, and will create a world in which we can live comfortably and without conflict.

General Administration Dept.

Noritaka Kadoi

Voice of person in charge


DECOPON http://www.denso.co.jp/SOCIAL/decoponURL

means for such action, DENSO is meticulous about the “menu” of “eco-product purchasing,” in which the points are added corresponding to the purchase price.

DECOPON’s goal: aiming for a time when“the system is no longer needed”

There is the “thought” which DENSO has placed in the DECOPON system. The Company wants its associates to look at the “environment” in which they live and to think of it in terms of the relevance to their “happiness.” The Company wants even more associates to regard the issues facing their societies as those facing their lives. After the system had been introduced in December 2006, around 2,000 associates have participated in the system. The voluntary action is slowly but surely taking root among workplaces, as hearing “this is my first time to volunteer for environmental efforts” or “I want to propose a new “menu” item.” DECOPON is one of the means for DENSO’s associates to expand environmental efforts to their families, and for the families to expand the efforts to their local communities. The goal of DECOPON is to reach a time when “the system is no longer needed.” It is surely not a fantasy to realize a society in which environmentally- friendly action is normally taken without such procedure as DECOPON.

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I think that it’s difficult to expand environmentally- friendly action simply by calling the words like “Do something good for the environment.” The DECOPON system is a tool for DENSO associates to work excitedly, relate to communities, and like DENSO. When I spoke to DENSO associates, I was moved by the fact that they think the system will be successful when it will be expanded not only within the company but also among other companies. This exactly becomes a voluntary chain. Instead of being forced to act “on behalf of someone,” individuals start doing from something that is delightful for them. Then, its end result will be a positive influence on society and the environment. This is the kind of eco-friendly action I hope to see.

NPO, Eco-DesignCivil Society Forum Representative

Yoshiyuki Hagiwara

It begins with a feeling of “delight”

[DENSO Eco-Point System: DECOPON]In this system, DENSO gives Eco-Points to associates and their families for their eco-friendly action (e.g., environmental household accounting, environmental learning, eco-product purchasing, clean-up activity, environmental volunteer, eco-commuting). The points are compatible with the EXPO Eco-Money, introduced in 2005 at EXPO 2005 AICHI JAPAN and can be used for afforestation, donations to local environmental NGOs, for example.

A poster publicizing the system of DECOPON and eco-friendly actionExchanging Eco-Points at EXPO Eco-Money Center (Nagoya City, Aichi, Japan)“DECOPON Seminar,” learning about the environment delightedlyMany associates participate in volunteering by means of DECOPON.

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Corporate Governance and Compliance

Management

Corporate governance is the cornerstone of DENSO to grow continuously, while practicing CSR. The Company recognizes that compliance (adherence to laws and ethics) is the foundation of corporate governance, and therefore DENSO is striving to enhance and strengthen it.

Corporate governance(1) Basic policyGlobal marketplace is changing rapidly and, in this circumstance, DENSO must keep and increase the long-term business performance. In order to achieve this, the Company is making efforts to establish a corporate governance, recognizing its importance to strengthen group competitiveness.

(2) Promotion structureDENSO has adopted the corporate auditor system and, in addition to the statutory bodies such as General Meeting of Shareholders, Board of Directors, Board of Corporate Auditors, and Accounting Auditors, the Company has furnished various internal control procedures. At the same time, through ongoing provision of the information about business conditions to its shareholders and investors, the Company practices sound, efficient, and transparent management.To expedite the decision-making process and operation, DENSO has appointed directors (13 in total) that are responsible for each business division to connect management and locale. In addition, the Company has appointed managing officers (27 in total) dedicated to business execution in each responsible department. Furthermore, DENSO has set the term of office for its directors to one year in order to build a nimble

management structure capable of responding to a changing management environment and to clarify management responsibilities during each fiscal year. (3) Management oversight functionsTwo standing auditors and three external auditors are responsible for monitoring the execution of duties by directors, as well as the business operations and financial conditions of its subsidiaries worldwide. The external auditors comprise the executive from another company, academics, and lawyers. They attend Board of Directors and Board of Corporate Auditors, offering advice and exchanging opinions from a broad perspective. In addition to the auditors, dedicated internal audit departments have been established in its major group companies around the world.

(4) Furnishing internal controlsCorporate internal control systems have been strengthened following the new “Companies Act” enforced in May 2006 in Japan. Also, in order to ensure the credibility of financial reporting for fiscal 2008, the Company is obliged to file an Internal Control Report pursuant to the Financial Instruments and Exchange Law in Japan. To respond to these trends, DENSO is reviewing and reexamining its operational process and document control structure to strengthen the internal control.

Compliance(1) Basic policyThe “Code of Conduct for DENSO Group Associates,” revised in April 2006, stipulates the compliance with legislation and the respect for culture and custom of the countries or localities in which the Company does business. Also, it stipulates the behavior of every associate subject to the highest ethical standards. The Code is shared with all group companies in Japan, while its spirit and principle are shared with the group companies overseas. (2) Promotion structureAs a part of the internal control system, in 1997 DENSO established a “Business Ethics and Compliance Committee” (Secretariat: Legal Department) chaired by a director of DENSO in the highest tier. From 2003, an internal whistle-blowing system called the “Business Ethics Hotline,” which is dealt with by external lawyers and Legal Dept., has been available. As of May 2006, the Company has expanded the coverage of the system to include the 300 first-tier suppliers and the Company operates it pursuant to the Whistle-blower Protection Act

•DENSO’s Corporate Governance System

General Meeting of Shareholders

Top Management Meeting

Internal Audit Department

Top Management MeetingCSR Promotion CommitteeRisk Management MeetingBusiness Ethics andCompliance CommitteeExport Controls CommitteeCustomer SatisfactionImprovement CommitteeEnvironment CommitteeInternal Information CommitteeCentral Security CommitteeSocial Contribution CommitteeOthers

Board of CorporateAuditors

( )Majority ofexternal

corporateauditors

AccountingAuditor

Board of DirectorsChairman,President,

Executive Vice President

Senior ManagingDirectors

Business DivisionLeaders

Appoint, Supervise

Audit

Audit

AccountingAuditsExecution in

Frontline Operation

ManagingOfficers

( )

( )


•Entire procedure for the activities of business ethics

Business Ethics and Compliance Committee

Company

Check by audit (Thematic audit)

Consultation desk, e.g., hotline

Field survey(self-check, Surveyof Business Ethics)

Punitiveaction

Workplace

Superiors

Potential risk of wrongdoing

Potential risk of wrongdoing

<Workplace management>•Communication•Improve workplace climate

EducationInformationrelease

Subordinates

in Japan.In North America, DENSO has established in 1999 the “North American Compliance Committee” and then the Compliance Officer has been responsible for penetrating the respective guides and operating a local hotline. Besides, in fiscal 2006, the Company started anew the Compliance Audit. In Europe, the “EU Version of Code of Conduct for DENSO Group Associates” was formulated in fiscal 2006. From now on, DENSO will spread it out sequentially throughout the business sites in the EU, reflecting on the cultures and the legislation of respective countries. Also, the Company is discussing the introduction of a hotline subject to the guidelines unique to Europe.In China, the Company began discussions regarding the introduction of a compliance program in fiscal 2008.In addition, once every year, the Company holds the “Global Legal Conference” for leaders of legal affairs at headquarters in Japan and at the regional headquarters in the U.S.A., Europe, and China, allowing them to share relevant information and issues.

(3) Education and awareness-raisingTo diffuse and embed the awareness of compliance, since 2002 DENSO has implemented seminars by organizational class. In May 2006, the Company installed Compliance Leaders (who are also CSR Leaders) at DENSO Japan and at each group company in Japan to conduct education and awareness-raising by workplace. In addition, Legal Dept. at DENSO Japan has strived to raise awareness of associates by publishing the “Business Ethics Newsletter” (eight times yearly), by enhancing the content of the Internet website for business ethics, and by conducting visiting legal educations. In October 2006, “Business Ethics Forum” (see page 42) was held for chief executives and Compliance Leaders at group companies in japan.

(4) Check in activities of compliance Since 2003, every October has been set for “The Month of Corporate Ethics in DENSO Group,” during which a company-wide standardized self-check has been

conducted. Also, since fiscal 2004, the “Survey of Business Ethics” has been implemented with the aim of comprehending the diffusional degree of respective measures and the potential risks. The results have been reported to the Business Ethics and Compliance Committee. In fiscal 2006, the scope of the survey was expanded to include temporary associates. The results of the roughly 4,000 surveys returned confirm that there is a gap in awareness of compliance between superiors and subordinates, and that there is a misunderstanding on the internal whistle-blowing system. Based on these feedbacks, in fiscal 2007 DENSO will promote focused activities to raise awareness at the managerial level and to correct the understanding of internal whistle-blowing system.

V O I C E

Thinking of mindset through compliance lectureWhile someone says “we are capable of working without education,” many do not understand the potential impact of wrongdoing. We pay attention to the topics, materials, and the way of talking to instill the contents of lecture into the participants, keeping their interest. The embedment of compliance is considered to be a proof of our individual growth, and so the lecture should be continued afterward.

Akira MaseCompliance Leader

Guest speech at “Business Ethics Forum” Business Ethics Newsletter

•Results of activities in fiscal 2006Consultative reports to internal whistle-blowing system 141 reports

Education by organizational class 2,674 participants

Legal education for group companies in Japan 31 companies

Business Ethics Forum participants 400 (DENSO Japan and group companies in Japan)

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A risk management seminar

Risk Management and Information Security

Management

•Organization for countermeasure against crisesTask team

Group companies in JapanGroup companies overseas

•Risk Management Meeting secretariat

•Risk responsible departments in Functional Centers

•Contact desk within group companies

Chief of the task team: Directors who oversee Fuctional Centers which include Risk Responsible Departments (or if necessary, the Company President & CEO)

Secretariat •Corporate Communications Dept.•Corporate Planning Dept.•Intellectual Property Dept.•General Admin. Dept.•Legal Dept.•Secretarial Dept.

Europe ChinaThe Americas Asia/OceaniaRegional headquarters

•Risk management structure

Board of DirectorsBusiness Groups

Group companies in JapanResponsible

Functional Dept.’s(Regional headquarters)

Risk ManagementMeeting

Group companies Overseas

•Major risk items

Environmental pollution, Labor accidents, Expansion of customer complaints, Employee issues, Disputes over personnel issues, Confidential information leak, Product recalls, Bad debts, Traffic accidents, Production impediments, Information system failures, Violations of contract obligations, for example.

Accidents andmistakes due tointernal factors

Antitrust law violations, Foreign exchange Law violations, Tax evasion, Patent infringement, Crimes and scandals of directors and employees, for example.

Violations of law

Cornering of DENSO’s stock, Derivative action, Product liability lawsuits, Contingencies, Stagnant transportation, Cyber terrorism, for example.

Accidents orincidents due toexternal factors

Volatility in financial market, Natural disasters, Encountered incidents, Disaster at supplier, for example.

Natural disasters Act of God

In keeping with the global spread of its business, DENSO is making efforts to strengthen risk management and information security as a part of its internal control system so that the Company reduces risks to the lowest possible degree.

Risk management(1) Basic ideaThe matters with the potential to cause damage to management are classified into “Risk” (situations in which risks have not been realized) and “Crisis” (emergency situations in which risks have already been realized). For the former case, DENSO pours its efforts into the prevention by picking up the shoots of risk. For the latter case, the Company strives for a prompt and proper initial response and resumption. Among others, the key items are: “1) strengthening responsiveness during crises; 2) diffusing and raising awareness of risk management; and 3) strengthening the group risk management.”

(2) Promotion structureThe “Risk Management Meeting” is a cross-company organization in which the 58 risk items with the potential to impact life, credit, property, or business activities have been selected. These items have been individually allocated to responsible departments. The departments have been continuously reviewing and raising the level of measures for prevention and resumption. Likewise, Risk Managers have been appointed at group companies whereby DENSO seeks to furnish a promotion structure and share relevant information with group companies. Additionally, the Company conducts a self-check for each risk item following “Self Diagnosis Sheet,” thereby raising the level of risk management.

(3) Diffusion and awareness-raisingThe “Crisis Communication Manual” has been distributed to all directors, managers, and responsible persons by risk item. In addition, all associates are obligated to carry the “Risk Management Handbook” that urges precise response when fires, traffic accidents, or earthquakes occur. Furthermore, as a measure to strengthen risk management, seminars are implemented for managers. The scope of the seminars was expanded

to include responsible persons for risk management at group companies and, in fiscal 2006, 75 percent of persons in the list attended the seminars.

(4) Business continuity plan (BCP)Amid a recent multitude of large-scale disasters occurred both inside and outside Japan, to be strong enough to withstand calamity is required. DENSO continues formulating business continuity plan. The plan aims to ensure the safety of suffered associates, or their families, and achieve the responsibility of product supply following a prompt response. Assuming the Tokai and the Tonankai Earthquakes, the Company has formulated the operational follow-through to resume business operations within a set target period and the corresponding operational manual. As such, DENSO promotes building a model for the formulation of continuity plan at product divisions. In addition, concerning the safety confirmation, which is the basis of business continuity, in 2005 the Company introduced “Safety Confirmation System.” In Japan, the Company

Countermeasure team

Production Logistics Procurement Quality Control Environment Sales and Service

Accounting GeneralAdmin.

HumanResources

Emergency Rescue andFirst Aid

Computers andCommunications

Facilities


•Security control structureInformation Strategy Committee

Information Security Chief

Information Security Center

Supervisory directors

Responsible directors

Each Dept.

HumanResources Dept.

CorporateCommunications Dept.

IntellectualProperty Dept.

Propose/ Report Direct / Oversee

Report Direct / Oversee

Audit

Coordination

Direct / Oversee

Audit Dept.

Report

Direct / OverseeReport

Promoters forsecurity control

Responsible person for security control

has implemented a group drill of inputting into the system. (about 40,000 associates have participated every time)

Information security(1) Basic ideaDENSO recognizes that technology, information, and personal data of customers and associates are valuable assets. Under this recognition, in 2003 the Company formulated “DENSO Group’s Basic Principles of Information Security”, and the Company has been working on the strengthening of both data protection and information management. Furthermore, beginning in 2005, the Company established the “DENSO Group Information Security Standards,” which defines 142 management items referring to the globally popular ISMS.* This has been applied to group companies, of which 56 in Japan and 75 abroad.*Information Security Management System

(2) Promotion structureUnder the Information Strategy Committee, in 2002 DENSO established Information Security Center and Information Security Chief as special organizational units to build a management structure based on international information management system standards (such as ISO/IEC 27001). In addition to information security control, audit, and company-wide self-check, the Company has implemented a monitoring survey to comprehend the actual situation of information security at each group company. In this way, DENSO continuously seeks to raise the company-wide level of security management.

(3) Education, seminars and countermeasures for systemThe foundation of information security rests on a high

awareness of security management in every associate. As such, the Company has held seminars by organizational class or those for new associates. In fiscal 2006, the Company also did the seminars for security control promoters at each department (139 in total) and the section meetings for associates responsible for the management of personal computers. All these sought to penetrate the awareness of security control. Furthermore, the Company has conducted such countermeasures as encoded transmission on the Internet, restriction on memory media usage, restrictive use of outgoing emails, and audit on the vulnerability of servers. In this way, DENSO examines the operative situation of system and continuously strive to strengthen the information security.

(4)Diffusion and embedment within groupIn fiscal 2006, with the aim of ensuring diffusion and embedment of the “DENSO Group Information Security Standards,” DENSO held explanatory meetings, example presentations, and sessions for reporting survey result to all listed group companies in Japan. All these were about particularly important “102 Items Regarding Rules・Operation and Furnishing” of the standards. With regard to the 12 companies to which DENSO outsources designing, the responsible persons of DENSO visited these companies for themselves, investigated the current situation of countermeasures, and conducted advice and corrective recommendations. In addition, DENSO held a “Global IS Conference” in November 2006 for group companies overseas to exchange opinions and share information with regard to the spreading out of the standards. Then, for the regions with a low level of information security, the Company conducted follow-up activities to emphatically promote information security.

Seizing of secured information by an associate

A DENSO engineer was arrested by Aichi Prefectural Police, Japan on March 16, 2007, on suspicion of having plundered a personal computer containing the data of component drawing sheets. On April 23, the Nagoya Regional Public Prosecutors Office in Japan declined to prosecute the case in light of insufficient evidence. However, following the internal code, the Company imposed a punitive dismissal to the associate.DENSO shows the deepest apologies for this incident, which caused a great deal of trouble for clients and other individuals concerned. The Company is aiming to strengthen more its information management up to the highest possible levels to prevent a recurrence.

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Legal Dept.Eng. AdministrationDept.

IT PlanningCenter

GeneralAdministration Dept.


In order for DENSO to continue growing

as a truly global corporation, it is more

and more important for us to watch for

trends in society, to be aware of changes

in society, and to quickly and precisely

respond to the demands of society.

As such, in fiscal 2006 DENSO started the

management based on CSR in which the

relationship to society is emphasized. We

are working on this management together,

driven by the corporate culture of the

DENSO Spirit (Foresight, Credibility,

Collaboration).

As a member of automotive industry, DENSO must strive more to face

social issues including quality improvement, occupational safety, and

eradication of traffic accidents.

In order to solve these issues, every associate of the DENSO group

must understand the “ISR (Individual Social Responsibility)“ and put it

into his or her action.

DENSO is determined to make more efforts to aim at a “true CSR”

backed by the awareness and action of each of its associate.

Aiming for CSR rootedin every associate


Senior Managing Director,Member of the BoardResponsible for CSR

Noriaki Kato


Highlights of activities for fiscal 2006

For our customers

With our associates

With our shareholders and investors With our suppliers

With global and local communities

Reliability Center in full operationA research facility called the “Reliability Center” was established at DENSO headquarters to hand down its sophisticated assessments, analyses, and technologies for improving the quality of products.

Established DENSO Diag-StationUnder the coordination of eight regional sales companies in Japan, DENSO began to build a new service network for the fault diagnosis of technologically-advanced vehicles.

Progressed more in preventive safety and pre-crash safetyDENSO developed the main components of the object detection systems for such as pedestrians and the pre-crash seatbelt systems, both of which constitute the parts of the new PCS

(Pre-crash Safety) system installed in the TOYOTA Lexus LS460.

Started“DENSO-way Monozukuri Education” DENSO is strengthening DENSO’s unique “monozukuri” education with the aim of developing global human resources. The Company aims to speed the development of local leaders in overseas entities.

Jointly established a management company for infant daycare center As a part of the efforts to support the balancing of work and child rearing, DENSO jointly established a management company to operate infant daycare centers for associates. The

centers have been in operation as of October 2007.

Held “Women’s Forum” and promoted awareness-raising As a part of the activities to raise awareness of promoting the success of female associates, in December 2006 DENSO held the “Women’s Forum.”

Returned profits following increase in sales and income in all regionsDENSO achieved record financial results, due to the strong production of both Japanese and other automakers. Dividends were raised to 45 yen a year.

Spread out supplier assessment to group companies overseasDENSO has extensively spread out the “Supplier Assessment System (CAPS)” with impartial standards to group companies overseas, for the purpose of mutual

development and increased corporate performance.

Revised Green Procurement GuidelinesDENSO expanded the scope of suppliers covered and the Company requested to strengthen chemical substance management, report LCA of newly supplied components and materials, and consider the environment in

logistics.

Enhanced wheelchair production and basketball exchangesDENSO expanded wheelchair production, a supportive project for the NPO “WAFCA,” to China. Also, the Company held the first “DENSO/AIOI CUP WAFCA East Asian Wheelchair Basketball Friendship Game.”

Started operation of an Eco-Point system “DECOPON” DENSO started the “DECOPON,” a point system that supports associates’ activities of environmental conservation and of contribution for their local communities. 1,956 associates have been registered.

Extended the boundary of volunteer activitiesDENSO actively made efforts to promote the membership in the “DENSO ‘Heartful’ Club” and the participation in a group-wide activity of corporate citizenship named “DENSO‘Heartful’ Day” or “DENSO Group Community Service Day.”

P25

P29

P34 P35 P36

P26 P27

P32P30,P42

P39,P40P37 P17-18,P38

DENSO Diag-Station Stereo Image-Processing ECU

DENSO ‘Heartful’ Day

Women’s Forum

Museum of Past Troubles

DECOPON passbook

Assessment activities with CAPS for improvement

CAPS

Assessmentcriteria

Voluntaryimprovement Assessment

Feedback

DENSOSuppliers

General Meeting of Shareholders Homepage for procurement activity (in English)

DENSO/AIOI CUP WAFCA East Asian Wheelchair Basketball Friendship Game

DENSO-way Monozukuri Education An infant daycare center

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For Our Customers



Museum of Past TroublesIn-room rough road test

Honored with the Global Contribution Award from a customer

DENSO is striving to create a new value based on its “customer first” policy and the four pillars of “quality, technology, service, and customer support.”

The fundamental principle of quality-firstThe safety of customers is entrusted to the quality of automotive components. That is why ever since its foundation the Company has been working on the “quality in creation” in all stages of designing, manufacturing, and after-service. This effort is based on the policy of “quality management in all stages of the manufacturing process.”Specifically, the “CS (Customer Satisfaction) Improvement Committee” (Chairperson: President Fukaya) selects quality-related issues by examining the activities related to quality, thereby conducting quality improvement. In addition, following the history of recognition with the Deming Prize*2 (1961), the Company promotes TQM*3 activities to spread out group-wide activities of quality improvement.

(1) Quality assurance structureWith regard to the quality assurance of a new product, the Quality Assurance Meeting is held in every four stage from planning and designing to mass production, with the attendance of top executives. In particular, in the designing stage, quality is strictly confirmed by repeated tests. Some tests are conducted in the environmental testing room and others are conducted in the corporate proving grounds under such conditions as high-speed lapping, rough roads, low temperature, and icing. These tests are to assure the reliability and endurance of each product in a total vehicle system, as well as in stand-alone.

<Enhancement of sites and system for research and development >DENSO established the “Technical Centers” in Japan. Also, the Company established other centers with material assessment function in the U.S.A., Germany, and Singapore. In Aachen (Germany), the Company established the “Engineering Center” with the function of designing and assessment of the products for diesel vehicles. In fiscal 2006, following the expansion of the emerging market such as China and India, the new Technical Centers were established in Thailand and China. As such, DENSO continues promoting the product development tailored to regional characteristics.

< Full operation of Reliability Center >The “Reliability Center,” which gathers all of reliability facilities at headquarters, has begun its full operation as of April 2006. At the Center, the reliability assessments of various DENSO products on the environmental and operational endurance are conducted with more than 1,000 testing machines. Also, in order to assess each product in a vehicle system, as well as in stand-alone, the Company uses the vehicle testing facilities which are capable of in-room tests, simulating high speed or rough road and conditioning such environment as temperature and humidity. As such, DENSO pursuits the increase in reliability. In addition, the Center’s “Museum of Past Troubles” permanently exhibits products and documents related to the serious quality troubles in the past. In fiscal 2006, the Museum had more than 20,000 visitors in total. Now the Museum has become a precious occasion to raise awareness of product quality.

(2) Raising awareness of quality and activities of improvement

DENSO is spreading out continuous activities of improvement with high awareness of quality. Such activities consist of: the “QC-Circle Activities” with more than 1,800 circles; the “Qualitative Skill Competition” in which five senses are exploited to detect defects; the “Quality Improvement Exhibition” with all group companies; and the group-wide “CS Improvement Campaign” (once a year). Since 2002, the activities in small groups mainly in the manufacturing part have been enhanced to include administrative and technical parts as well. In fiscal 2006, a “QC-circle Tournament” was also held in China. On top of that, at the “All-Japan QC-circle Competition,” DENSO has been awarded the gold medal for five years in a row. In November 2006, two circles from DENSO were awarded the gold medal. It is by means of these activities that DENSO is so highly recognized by its customers of car manufacturing.

*1 A prize unique in Japan, which is awarded to individuals or corporations recognizing the contribution to quality management.

*2 Total Quality Management, an activity of quality improvement, evolved from QC (Quality Control) activities


•Major awards from customers in fiscal 2006

Recipient ReasonName Customers

Educations of Diag-Meister

•Inquiries and comments regarding DENSO products

Total9,307

Other 14%

Environmental systems 3%

Communication devices 2%

Ionic air purifiers 1%

Clean air filters 2%

ETC47%

Spark plugs19%

Car navigation systems 12%

Improving service level(1) After-sales service structureBased on the policy of DENSO such that “products and services are integral,” the following services are conducted: check and repair of automotive parts; sales of spare parts; and recovery of CFC refrigerant in car air conditioning systems. In Japan, the eight regional sales companies conduct the services in coordination with 691 service stations (designated service stations, dealerships). Also, 3,700 overseas service stations in 98 countries conduct the services. Furthermore, at the “Service Training Center” of headquarters and the training facilities around the world, the Company seeks to improve the technical skills of its staff. At the same time, the Company holds an annual “Global Service Conference” in which the responsible persons in each country share information and discuss the solutions for respective issues.

(2) DENSO Diag-StationsDue to the progress in the electronic control of automobiles, the service sites of DENSO are increasingly required to provide sophisticated technical responses. In order to promptly correspond to this trend, DENSO launched “Diag-Stations” in which

technicians and facilities are available to promptly diagnose the faults in advanced vehicles. At Diag-Stations, DENSO deploys its original analytical equipment, such as fault diagnosis testers and data recorders, and installs “DENSO Diag-Masters” who have certified by a Company-unique examination. By 2010, DENSO plans to open 50 or more Diag-Stations in Japan.

Strengthening customer service deskUnder a strict information security, the comments and suggestions of customers are informed to the concerning departments, thereby seeking to respond to them with necessary improvements. In May 2007, DENSO established a new “Customer Service Center” to respond to its customers more promptly and properly.

Response to malfunctioningIn the event of a serious malfunctioning in a product, DENSO promptly notifies the information to customers and relevant organizations through different media, while furnishing a structure for the recall and the repair of the product in question.In March 2007, a component used in three types of the product “Spot Heater,” manufactured between 1982 and 1990, were found to potentially cause a smoke or fire hazard. The problem were attributed to the cracks in the solder for a current-control component (type: 12F, 12FD), and the breakage due to the long use of oscillating function (type: 7FX). DENSO immediately posted the “Expression of apology, and the request of withdrawing and recalling” on its website and all national newspapers. The Company also established a toll-free number for the “DENSO Spot Heater Recall Reception Center.” As of July 2007, there have been no reported cases of fires or injuries caused by these products, but the Company is continuing to pour its full efforts to recall the products.

Apology and notification concerning the Spot Heaterhttp://www.denso.co.jp/ja/topics/070327-01.html

URL

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Contribution in 3 partsof world (fifth time)

Improvements in the cost ofLexus LS

LS460 components

Performance on costimprovement

Recognition of quality

Recognition of quality

Performance on VA/VE improvement

Overall recognition of quality,cost, and delivery

Toyota Motor Corporation(Japan)

Toyota Motor North America

Toyota Motor Europe

General Motors

DENSO

DIAU, AAA(Australia)

DMAT (U.S.A.)

DNBA (Spain)

DNEU (Regionalheadquarters in Europe)

Toyota MotorCorporation Australia

Proposal in componentintegration activities

Overall recognition of quality, service,technology, and cost of four products

Honda Motor Co., Ltd. (Japan)

DENSO

DENSO

DENSO

Suzuki MotorCorporation (Japan)

Global ContributionAward

Excellence in CostImprovement Award

Technical DevelopmentAward

Quality category:Gold

Quality category: Bronze

Cost ImprovementCategory: Gold

Excellent SupplierAward

Supplier of the Year

VA/VE Proposal Award

Parts Integration Award


Stereo Image Processing ECU (World first) Driving Assistance ECU (World first)

Instrument cluster with TFT LCD

The pursuit of safety, comfort, and convenience

To “create an advanced automotive society,” DENSO is making its efforts to develop innovative products mainly in the areas of “environment, safety, comfort, and convenience.” In fiscal 2006, the Company made the following progress in the areas of safety, comfort, and convenience. Such progress was applied to the Toyota “Lexus LS460” which has been on sale from September 2006. (see page 55, a subsection for products in the Environmental Reporting section)

The development of products for a new “Pre-Crash Safety (PCS)” systemThe PCS developed by the Toyota Motor Corporation is a safety system to reduce mutual injuries by actuating such as brakes and seatbelts on the brink of an unavoidable collision. Toyota’s “Lexus LS460” has mounted a new PCS system in which sensors detect not only cars or obstacles, but also pedestrians.DENSO developed the following for the new PCS system: 1) “Stereo Image-processing ECU,” which processes the data sent from the stereo camera for three-dimensional objects including pedestrians; 2) “Front Millimeter-wave Radar,” which detects the obstacles in front of a vehicle; 3) “Driving Assistance ECU,” which controls PCS system basing on the information from Stereo Image-processing ECU and Front Millimeter-wave Radar; and 4) “Pre-crash Seatbelt ECU.” With these products DENSO is contributing to improve safety performance.

New climate control systemBy the world’s first infrared sensor “Matrix IR Sensor,” which detects the surface temperature of rear passengers individually, the new climate control system automatically controls the air temperature and the air flow rate according to each rear passenger’s thermal condition. Also, the oxygen concentration conditioner, which prevents a decrease of oxygen concentration inside the vehicle cabin, and the new rear air conditioning unit, which realizes excellent low noise performance, are installed in the system to improve passenger’s comfort.

(1) The Development of remote security systemDENSO developed, together with Toyota Motor Corporation, the world’s first remote security system with a remote immobilizer function*. When a vehicle and its key with an immobilizer function are stolen, the support center sends orders to the vehicle to prohibit the engine’s restart. As such, this system has improved the vehicle’s anti-theft security.* Immobilizer is an anti-theft system for vehicles, which allows the vehicle’s engine to start

only when the authentication code of the key matches with the vehicle electronically.

(2) The development of cluster with TFT LCD displayFor the first time in the world, DENSO developed a superior backlight-unit for the TFT Liquid Crystal* Display (LCD) on instrument clusters using a high-luminance Light-Emitting Diode (LED). This information device gives highly readable information to drivers. The unit does not contain mercury, an environmentally hazardous substance, and reduces energy consumption by 20% compared with conventional cold-cathode tube type backlight-unit.* Liquid crystal using thin-film transistors

•Mechanism of detecting a pedestrian

Obstacle detection by amillimeter-wave radar

Near-infrared ray irradiation

Distance measurement andthree-dimensional recognitionby a stereo camera

•New climate conditioning system

Matrix IR sensor

Front HVAC unit

Oxygen concentrationconditioner

Rear air conditioning unit

Air diffusers


Safety

Convenience

Comfort

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DENSO Spirit

MissionTo realize the growth and prosperity of both DENSO and its associates by creating a culture where all associates can contribute to DENSO’s business aims to the maximum of their ability.

Human Resource Philosophy1. To create among associates a sense both of unity and

of individual motivation to actively participate in business activities.

2. To recruit, assign, retain and develop associates who are creative and have the willingness and ability to contribute to continuous business growth.

3. To establish and implement fair human resources management policies and systems, which are highly evaluated by both associates and society.

DENSO Human ResourceManagement Philosophy

When all associates work to their full potential and have an enjoyable personal life, the resulting effect is company growth. DENSO places this idea as the basis of our measures, presenting it in the DENSO Philosophy, the Human Resources Management Philosophy, and the DENSO Group Declaration of Corporate Behavior. As such, we strive to create an environment free of any discrimination in which our group associates around the world can succeed amidst various cultures and traditions.

Sharing the DENSO SpiritThe DENSO Spirit specifies the sense of values and beliefs that should be shared throughout the entire group so that we can grow and develop as a truly global corporation in which associates with unique personalities work together as one. This is the stipulation of the values tacit ever since our foundation comprised by: “Foresight (Vision, Creativity, Challenging),” “Credibility (Quality first, On-site verification, Kaizen),” and “Collaboration (Communication, Teamwork, and Human resources development)”. DENSO seeks to instill and diffuse these values at any such opportunity as training and dialog activity.

Employment policy and associate relationsWe at DENSO consider “hitozukuri” (human resources development) as the source of corporate growth. Hence, in our associate relations, we set the philosophy which encompasses 1) mutual trust between the Company and associates and 2) the improvement of labor conditions through Company growth. We have fostered this philosophy in resolving a labor turmoil in 1950 in Japan, shortly after the Company was founded.In DENSO Japan, such associate relations forum as at corporate level, at Groups or Centers level, and at the workplace level are regularly held. Of which, the forum at the workplace level (six times a year) plays an important role in increasing associate awareness of involvement in corporate management.

Associate Motivation SurveyIn DENSO Japan, we conducted the “Motivation Survey” to comprehend our associates’ level of motivation and satisfaction regarding the work, as well as the Company, and to reflect its outcomes into corporate management measures. The survey centers on the issues including “motivation to work”, “vigor at workplace”, and “behavior of superiors.” The latest survey was conducted for the listed 33,339 individuals (DENSO Japan), and achieved response rate of 96 percent. The results of the survey were reported to the directors at the highest tier. The results were also fed to the managers of each workplace to utilize the identified issues on workplace operations.

•Number of associates and breakdown (as of March 2007)

Total associates(consolidated)

DENSOJapan

112,262 associates (consolidated)

Average age

Average service years

Turnover rate

Number of associates

Male

35,516

41.4 years old

21.0 years

0.3%

3,775

32.8 years old

12,6 years

3.1%

Female

Associate relations forum (DENSO Japan)

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Education on DENSO Monozukuri

Human resources development and Career Support

Each of our associates has his or her own set of values. Thus, in DENSO Japan, in order that individual associates expand their potential feeling growth and achievement, we base our policy of “respect for independence balanced with collaboration and maximum utilization of human resources” to pour our efforts in developing the ability of associates and in building a fair and impartial system.

(1) Building an environment of challenge (DENSO Japan)In order to foster an awareness of independence balanced with collaboration among our associates, we have furnished the following: the education by organizational level with a variety of selective courses; an enrollment scheme at graduate schools to heighten professionalism; a supportive system to acquire a degree such as a MBA (Master of Business Administration); and a sophisticated program of professional education for the associates of engineering and skilled at “DENSO Engineering and Technical Skills Training Center.” As to the upward career move, associates are challenging their job or ability based on their own vision of “what I want to be in the future.” At the same time, through systems such as the “Developmental Rotation System,” associates are confirming the performance and assignment through a regular interview with their superiors. In addition, we have established such internal systems as job posting and free agency to support their motives to venture into their new possibilities.

(2) Global human resources developmentIn order to reach our ultimate goal of globalization, we promote the localization of management throughout the world by actively developing associates.

<The Global Leadership Program>We are expanding a program oriented to develop local managers who understand the DENSO-way and possess high management ability. Specifically, we are conducting intensive seminars for successor candidates

to Top Management positions and have implemented a performance management system following a globally common procedure.

<Education on DENSO-way Monozukuri >In 2005, with the aim of developing local managers and supervisors, we established the “Monozukuri DNA Promotion Center” in DENSO Japan. In fiscal year 2006, we began the “Education on DENSO-way Monozukuri.” It aims to hand down the essence of our quality-first policy through acquiring the following: the importance of a management approach based on “on-site verification,” which seeks to solve issues in locale rather than behind a desk; and the job procedures which draws the potential of associates.

<Education on Cross-Cultural Understanding> (DENSO Japan)The associates in overseas group companies are increasing. As a result, there are more opportunities for Japanese associates to travel abroad on business. As such, in order to further strengthen the global responsiveness of DENSO headquarters, in fiscal 2006 we began the class by organizational level on “Education on Cross-Cultural Understanding.” It aims an upgrade communication ability through learning in depth foreign culture, as well as foreign language . (3) Handing down our technical skills as a development

strategyThe lifeblood of DENSO comprises the technologies and technical skills, which develop and produce the products that are too high in precision and quality for other companies to imitate. Therefore, we particularly pour our efforts to hand the technologies and technical skills down, and on. To do so, at the DENSO Engineering and Technical Skills Training Center, a systematic education on technologies and skills are implemented. Meanwhile, training facilities have been established in our factories around the world, at which the masterful associates of facility maintenance or production engineering are handing their skills down to


•Number of applicants for major systems (DENSO Japan)Developmental Rotation System An annual average of 1,200 associates

(from fiscal 1998 to 2006)

Internal job posting system 15 associates per year (from fiscal 1998 to 2006)

Internal free agency system An annual average of 10 associates (from fiscal 1998 to 2006)


V O I C E

The activities to share the DENSO Spirit

Various activities to share the DENSO Spirit are conducted in India as well. Associates participate in workshops, in which they talk with each other about the compilation of a code of conduct based on the DENSO Spirit, as well as about their experiences. In addition, among four group companies in India, the persons in charge of promoting the DENSO Spirit meet regularly, and thereby they coordinately proceed with respective activities.

DNHA (India)

S. Chakraborti

the next generation. In addition, in Japan, at the DENSO Technical Junior College, which offers the curriculum of technical high school, technical college, and junior college, we have nurtured the youth who carries the next generation, and thereby we have produced many medallists at the “World Skills Competition,” in which the world’s highest skills are contested.

(4) Shifting from temporary workers to regular, full-time associates (DENSO Japan)

Among other measures seeking to move the carrier of our diverse associates upward, in fiscal 2005 we have established a system that allows temporary workers to shift to permanent employment. In fiscal 2006, 189 temporary workers (3.1 times more than in the previous year) have shifted to regular, full-time associates. In fiscal 2007, we plan to shift 450 temporary workers to those of regular, full-time.

Human rights, equal opportunity, and respect for diversity

In the “DENSO Group Declaration of Corporate Behavior” and “Code of Conduct for DENSO Group Associates,” DENSO has stipulated the prohibition of any discrimination and harassment based on race, gender, age, nationality, or physical disability.

(1) Seminars and edificationIn Japan, we incorporate the education on human rights into the education by organizational level (e.g., for new recruits and new managers). Also, the seminars and group studies are held. In particular, since 2000, we have emphasized inhibitive education on sexual harassment and power abuse. This is a part of our education on compliance. Furthermore, we have

confirmed the appropriate effect of the respective policies by group-standard self-check (Japan) and corporate check (overseas). Besides, we strive for the prevention by establishing whistle-blowing system (Japan). (see p. 20)

(2) Support for female associates to succeed (DENSO Japan)We believe that, in order to foster a corporate climate in which the “wisdom” is utilized across the associate attributes, in Japan the opportunities of success for female associates with high ability and motivation are indispensable. Following this belief, we are striving to furnish the suitable environment. Specifically, we have placed the following priority measures in DENSO Japan: 1) increase in the number of female managers and expansion of occasions for their success; 2) upgrade in motivation among female associates and the provision of edificatory opportunities; and 3) provision of occasions to rethink the awareness among superiors and in workplaces.In fiscal 2006, we held the “Women’s Forum” as a part of edifying our awareness. Top management declared that the corporate-wide efforts would be made to support the success of associates. Also, we discussed promotion measures through lectures of advanced companies, panel discussions between female associates and management, and surveys.Furthermore, in November 2006, we introduced anew the system to re-employ associates once have left the Company due to the transfer of their spouse. As such, we expanded the opportunities for women to succeed by their immediate contribution with the knowledge and experience fostered at DENSO.

(3) Support for finding jobs after retirement (DENSO Japan)Amid our aging associates, since April 2006 DENSO Japan has introduced a new re-employment system named the “Career Associate System,” which extensively encompasses all our associates. This system aims to support the motivation to work and live and thus to strengthen the corporate competitive edge. As of April 2007, 160 associates have re-employed. In addition, in order to respond to the diverse requests on job finding, since April 2006 we have also introduced and have operated the “Senior Challenge System.” This system provides work opportunities outside the Company.

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Global Human Resources Forum

(4) Furtherance of employing the disabled (DENSO Japan)For the employment of the disabled, ever since 1978 when DENSO Japan began the regular employment of the hearing impaired, we have proactively worked on expanding employment and occupational range, increasing education and seminars, and furnishing facilities. As of fiscal year 2006, we have 417 disabled associates (356 in manufacturing, 61 in administration), who comprise 1.94% of our total workforce, exceeding the statutory employment rate. In addition, our special subsidiary of DENSO Taiyo Co., Ltd. currently employs 60 disabled associates in its business of manufacturing instrument clusters for mini vehicles. In the future, DENSO Japan will work to expand the scope of qualification for the disabled. At Japanese group companies the Company will work on furthering the employment of the disabled.

Building a comfortable workplaceAmong others in Japan, we have been enriching the systems from the viewpoint of “work-life balance,” aiming for a compatible life of work and home. Abroad, we have been operating related systems respecting the culture and custom of local communities. We all with the will to work have been making efforts to build a comfortable workplace environment.

(1) Responding to HR Issues at sites abroadThe Associate Relations Review (ARR) has periodically been implemented to review the human resources and labor measures at sites abroad. Following this Review, representatives of human resources departments at DENSO headquarters and regional headquarters visit local sites. Then they review the operational status of the environment, safety, hygiene, compliance with labor regulations, treatment, and benefits. Furthermore, in fiscal year 2006, we began using the “HR Indicator” index, which analyzes changes in associate working status on a monthly basis, in order to better respond to issues at an early stage.

(2) Global collaboration of human resources functionAfter collecting ideas from people across the world, in fiscal year 2006 we introduced a new procedure to plan and promote human resources measures worldwide. Following this procedure, the team comprised of members from DENSO Japan and other places in the world review specific issues. Also, the representatives in charge of human resources from headquarters and regional headquarters cooperatively set the direction of

respective global measures. In addition, the persons who are responsible for human resources of their global region come together and hold the “Global Human Resources Forum,” in which they share the measures and discuss human resources issues. In this way, we are working on building a workplace in which associates can actively succeed.

(3) Enhancing associate support for childcare and nursing care (DENSO Japan)

As part of building an environment in which our associates who are balancing work and childcare can work comfortably, in November 2006 we started a new system combining maternity leave and shorter working hours.Furthermore, we have set up the “Half-Day Paid Leave System” and “Yasuragi Leave,” the latter allows associates to accumulate their unused yearly paid leave to use in cases of accidents or illnesses involving themselves, spouse, children, or parents.

V O I C E

Childcare Leave gifted me with precious joy(DENSO Japan)

This is an account from one of our associates. “The birth of our first child posed my wife more strain than imagined. So when our second son was born I took the Childcare Leave for two months. The Leave was a precious experience, as my son grew before my eyes and as the housekeeping, as well as childcare, literally weighed. This experience has changed my idea of work and home. I am very grateful to my workplace for its understanding and follow-through.”

IIC Engineering Dept. 2

Takanori Makino



•Control items and results

Control items

Safety Marks

Lost time injury frequency

Number of serious accidents

Number of serious accidents ofsubcontracted construction

Fires

Occupational illnesses

Group companiesoverseas

43.584×7360×6760

0.040.10×0.110.06×0.070.05

00

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[DENSO group] Target: 0.08 Result: 0.06

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Group companiesin Japan

Target Result

DENSO JapanAssess-

ment Target Result Assess-ment Target Result Assess-

ment

1.0

0.5

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•Work-related accident ratio (Absence frequency ratio)

‘01 ‘02 ‘03 ‘04 ‘05 ‘06 (Fiscal year)

0.37

0.07

0.50

1.02

Manufacture of electricalmachinery,equipment,and suppliesDENSO

All manufacturing sectorsManufacture of motor vehicles,parts, and accessories

Lost time injury frequency= ×1 millionLost time injury

Total working hours

100

50

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•Safety Points

‘01 ‘02 ‘03 ‘04 ‘05 ‘06 (Fiscal Year)

DENSO Japan

Group companies overseas

Group companies in Japan

77

59

47

81

56

4133

26 17

3954

44

25

64

43.5

73

30

67

(4) Cooperatively establishing infant daycare centers (DENSO Japan)

In Japan, in January 2007 DENSO and four other companies in TOYOTA Group jointly established Touchcare Corporation, a company that operates and manages infant daycare centers for our associates. The company is going to establish the infant daycare center named “Tacchicchi House” at five locations in Aichi Prefecture and Mie Prefecture, where our business sites are densely located. The centers are operated according to the work days and work hours of the companies, and thereby the companies will support the associates rearing children. The centers started operations in October 2007.

Safety and health (1) Safety philosophyBased on DENSO’s safety philosophy of “It will be the best way for human respect and high productivity to make safe and comfortable,” DENSO has established the “DENSO Safety and Health Standards” (internally known as “DAS,” first instituted in 1969). The Company manages respective goals by safety inspections, while assessing and following through by periodical safety diagnosis. Thus, DENSO is promoting the management of safety and health that covers the whole group.

(2) To strengthen safety constitutionDENSO and its group companies in Japan have identified and assessed the risks of serious accidents and have furnished the safety standard by company. The group companies overseas have held explanatory seminars on risks and have spread out relevant supportive activities in Asia, China, and the Americas.However, there have been such incidents as the trap in machinery at DENSO, the fire at a group company in Japan, and the false operation of forklifts and cranes at group companies overseas. In fiscal 2006, 36 associates injured on the job (DENSO group), of which 14 were absent from work. As a result, DENSO and its group companies in Japan did not reach the target level in terms

of the Safety Marks.*DENSO takes these outcomes as a serious crisis and from fiscal 2007 onward it make efforts to penetrate safety awareness with dialog, strengthen safety diagnosis (audit), and furnish a global safety standard.* A system in which marks are given based on the degree and the type of injury for each

accident.

T O P I C S

PAC (Philippines) was honored with award from Safety Organization of the Philippines

In November 2006, PAC, a group company in the Philippines was awarded at the “National Safety Convention,” hosted by the Safety Organization of the Philippines, with recognition of its excellence in occupational safety. PAC has operated with zero accidents since it had begun operating in 1996, and was recognized for operating 3 million hours consecutively without an accident.

The Tacchicchi House

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•Building fitness of associates (DENSO Japan)Medical check-up coverage 100%

Participants of mental health seminarsManagers around 960 (21 seminars)Non-managerial associates around 1,900 (65 seminars)

Participants of preventive education on life-style related diseases 990

Participants of the “Health Promotion Activity” 6,040

Visiting lecture on mental health at a workplace

Building up the health of associatesBuilding up the health of associates is the cornerstone for promoting vigorous corporate activities in teamwork. Based on this idea, DENSO is making efforts to build up the health of body and mind of its associates under a system of “prevention and awareness-raising,” “consultation and early detection,” and “cure and rehabilitation.” In the system, related departments and healthcare staff work together.Also, group companies of the Company are striving for the healthcare measures pursuant to legislation under the recognition that the health of associates is most important to realize “corporate vitality” in the DENSO Philosophy.

(1) Mental HealthAn open workplace is primarily important to increase the mental health. For this purpose, DENSO is striving to promote a variety of consultative services and activities for vitalizing its workplaces. At the same time, the Company is emphasizing the curb on long working hours and the seminars by organizational class for the sake of “illness prevention and awareness-raising.” Besides, specialized medical staffs are on hand at all times in the “Counseling Room” established in all of its plants in Japan.In fiscal 2006, in Japan, DENSO established a new exclusive hotline for counseling. Also, with the aim of finely personalized consultations, the Company sought to increase the number of psychiatrist, clinical psychotherapist, and specialized nurse. Besides, in order to smoothly rehabilitate the absent associates, the Company introduced the new “Rehabilitation Support Program.” This program is to support rehabilitating associates with attendance simulation, shorter working hour, and the plan for phasing in to the job. Additionally, in order to comprehend the level of mental fatigue among its associates, DENSO newly set respective items in the internal questionnaire called the “CSR Survey.” The Company will watch the development of the survey, comparing with the outcomes of the national survey published by the Japanese Ministry of Health, Labor, and Welfare.

(2) Activities to increase physical healthAs a preventive measure against the increase of life-style related diseases (including hyperlipemia, hypertension, and diabetes), DENSO is conducting both group education and personal instruction to improve the meals and the lifestyle of its associates. The Company was conducting the activity called “Building up Health and Fitness” mainly for the manufacturing part to restrain the obesity of visceral fat, resulting in such as the metabolic syndrome, and to maintain and increase health and fitness. From fiscal 2007 onward, the Company will expand the scope of this activity to include all job categories, thereby spreading out anew the “Health Promotion Activity.”

C O L U M N

Do it! The Promotion Committee of Healthful Life

In April 2007, to enhance the supportive activities of health building for associates and their families, the “Promotion Committee of Healthful life” was jointly launched by the Healthcare Administration Dept., the DENSO Health Insurance Union, and the DENSO Well Corporation. The committee is based on the idea that the efforts of associates together with the understanding and cooperation of their family are indispensable to prevent and ameliorate illness. As such, the committee is going to plan and offer a variety of programs for preventing obesity or illness and for building exercise habits, in which associates can participate together with their family.

A yoga class

•The Effect of activity for improving the issue of obesity and fitness

Fiscal 2004

Lack of fitness+ Obesity30%

Lack of fitness26%

Obesity44%

Fiscal 2006

Lack of fitness+ Obesity30%

Lack offitness16%

Good17%

Obesity37%

With Our Shareholdersand Investors


•DENSO’s bond rating

Moody’s Japan

Standard & Poor’s

Rating and Investment Information Center

Rating companies Long-term rating

Aa1

AA+

AAA

Short-term rating

P-1

A-1+

a-1+

*1 DJSI: Dow Jones Sustainability Indexes, an index selected by Dow Jones & Company, Inc. and SAM group, a Swiss research company. Of approximately 2,500 major companies in 34 countries, the top 300 companies are selected.

*2 ESI: Ethibel Sustainability Indexes, a Belgian non-profit organization Ethibel evaluates the efforts regarding social responsibility at about 1,500 major companies in the world, and selects about 200 companies.

•Content of IR activities

IR Activities in fiscal 2006Target

Institutional investors inJapan, Financial analysts

Individual investors and shareholders

Overall

Institutional investors abroad

•Information meeting and the “One-on-one meeting” abroad (Asia: in July; North America: in September; Europe: in November)

•Exhibition in IR fairs (Tokyo, Japan, in December, 700 booth visitors; Nagoya, Aichi, Japan, in December, 1,150 booth visitors)

General Meeting of Shareholders in fiscal 2006

Exhibition at General Meeting of Shareholders

DENSO is aiming to increase corporate value, in step with a stable long-term growth. The Company discloses both business and financial information timely and appropriately, while conducting dialogs. As such, the Company increases the transparency of its corporate management.

Business results of fiscal 2006 and profit returning

The business results of DENSO in fiscal 2006 showed an increase in revenue and profits in all regions, driven by strong production of Japanese automakers both inside and outside Japan, and by the Company’s proactive expansion of sales to foreign automakers. As a result, the consolidated net sales were 3,609.7billion yen (up 13.2% year on year) with ordinary income of 322.1billion yen (up 13.8%). The dividend applicable to the year was increased by 7 yen per share, to 45 yen. ROE (return on equity), an index indicating profitability (efficiency) for the investment of shareholders, rose to 9.9% (up 0.5%).

General Meeting of ShareholdersEvery year DENSO holds General Meeting of Shareholders at the end of June at headquarters in Kariya City, Aichi Prefecture, Japan. For those shareholders unable to attend, the Company is striving to disclose the information by posting a video of the proceedings on website. In addition, after the meeting, the Company implements a guided plant tour for

shareholders who are interest in it.

Information disclosure and investor relations

To enhance the opportunities of investment as an open corporation, DENSO complies with statutory disclose standards, as matter of course. Also, the Company releases information promptly, as well as fairly, deploying a variety of media. Specifically, for institutional investors, individual investors, and financial analysts, the Company proactively holds a variety of explanatory meetings and appears in IR fairs. In fiscal 2006, DENSO implemented the activities shown in the following table. Among others,

factory tours and the meeting with corporate executives were in high repute. Both of them targeted institutional investors in Japan.

Evaluation from external institutionsThere is an increasing interest in an investment tool called “Socially Responsible Investment (SRI),” in which not only financial performance but also the efforts for society, environment, and ethics, collectively the efforts for CSR, are assessed. DENSO has been selected seven years running in one of such indices called DJSI*2. Additionally, in Europe the Company has been selected in one of leading indices in Europe called ESI*3. As such, DENSO has been included in a number of SRI funds. Besides, with regard to the bond rating of the Company, the rating companies, two based in the U.S.A. and one in Japan, have evaluated the sound financial condition of DENSO as shown below.

Information for investors http://www.denso.co.jp/ja/investorsURL

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•Quarterly financial information meeting, the “One-on-one meeting”•Factory tour, Executive discussion forum (Zenmyo Plant, Aichi, Japan, in March)

•Factory tour (after General Meeting of Shareholders)•Publication of business report, distribution of IR news mail

•Release of information on the website of “Investors”

•Publication of annual report

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With Our Suppliers


DENSO Suppliers Convention

DENSO Group Global Procurement Conference

•Activities using CAPS to improve constitution of suppliers

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CAPSVoluntary

improvement Assessment

Feedback

DENSOSuppliers Expectationson suppliers

=Assessmentcriteria

Delivery Management

Socialresponsibility( )Environment/Safety

ComplianceCostQuality

DENSO opens its doors in and out of Japan, and the Company penetrates fairness in all of its transaction processes. DENSO respects its suppliers as equal partners and builds a trustworthy relation. Thus, the Company aims at mutual evolvement and growth.

Basic procurement policyThe “Open-Door Policy” is a corporate basic policy to practice free, fair, and transparent transactions. This policy is to offer equal opportunities to all suppliers regardless of nationality, company size, or previous transaction records. The steps to start a transaction and the inquiries to procurement part are disclosed on the website.

Assessment by CAPS To seek to a mutual growth amid a fierce global competition, continuous improvements in quality, cost, and delivery are necessary. Therefore, DENSO has established the CAPS supplier assessment system which comprises fair standards. In fiscal 2006, the Company expanded its application of the CAPS to the four major global regions (the Americas, Europe, Oceania and Asia, and China), whereby the Company

sought to diffuse and penetrate it, considering both national and local characteristics.Also, in order to promote respective measures, the “DENSO Group Global Procurement Conference” was held for the persons who are responsible for procurement at overseas group companies. At the Conference, relevant information was shared and the issues common to every region were discussed. In fiscal 2006, roughly 70 persons (including those at headquarters) from 24 foreign sites participated in the conference. *CAPS: Constitution Assessment Program for Suppliers

Sharing CSR policy with suppliersEvery year, DENSO holds the “DENSO Suppliers Convention” for all main suppliers to explain its procurement policies. At the convention, the Company graciously awards excellent suppliers of the year, thereby striving to strengthen mutual partnership. In fiscal 2006, in order to promote the activities of CSR throughout the supply chain, the Company distributed the “DENSO Group Declaration of Corporate Behavior” to about 1,400 first-tier suppliers and requested each supplier to appoint a person responsible for the activities of CSR. Also, the Company expanded the scope of the Business Ethics Hotline to cover its suppliers. In fiscal 2007, DENSO will incorporate “compliance, protection of human rights, environmental conservation, and observance of occupational safety” into the basic business contract with its suppliers. Additionally, with a check sheet which comprises 17 commitment items DENSO will request its suppliers a self-check.

1 Open-door policy

2 Mutual evolvement based on mutual trust

3 Promotion of green procurement which considers the environment

4 Promotion of local procurement aiming for a “good corporate citizen”

5 Penetration of the compliance with legislation and the confidentiality

[Basic ideas on procurement]

( )


•Global coordination with suppliers

Local entitiesof supplier

DENSO

Suppliers

•Strengthen corporate constitution•Develop human resources •Build procedures

Quality assurancemanualsCAPS( ) Quality assurance

manualsCAPS( )

Send supportive team

•Strengthen corporate constitution•Build procedures

•Nurture site instructors•Furnish quality assurance manuals

•Transfer technological know-how•Develop and install local human resources

Japan OverseasDENSO

sites

Promoting collaborationTo improve the quality of supplied components and the technology of suppliers, DENSO implements discrete support by supplier, technical exhibitions, and skill competitions. In fiscal 2006, DENSO hammered out a policy as a measure to proceed these activities. The policy is to select “prominent suppliers” which possess brilliant technology, as well as mindset, and to make efforts together with them to develop advanced products or production technologies. To the selected suppliers the Company presents an “expected value” on medium-term and long-term bases. Then, the Company spreads out supportive activities to cope with various issues. Thus, DENSO and suppliers aim to mutually strengthen the competitiveness.

Supporting and strengthening the management at suppliers

In an effort to strengthen the corporate performance of suppliers, the “DENSO HISHO-KAI” association, which comprises 79 of main suppliers, implements vigorous activities of study groups in many subjects such as quality control, “monozukuri” (manufacturing), and labor affairs. The association also holds various lectures. DENSO supports the activities by sending the persons in charge at respective specialized divisions to provide advises or lectures in the study groups. In fiscal 2006, as a part of the new “Risk Management Lecture,” the DENSO HISHO-KAI held the lecture for top executives regarding occupational safety, proper employment of external human resources (such as temporary staff), and work hour management. DENSO supported these lectures by providing related information of the Company, such as the policy and the methods for spreading out respective activities.

Revising Green Procurement GuidelinesThe “DENSO ECOVISION 2015” (see p. 45) is a corporate commitment to reduce more the environmentally hazardous substances throughout the business activities of DENSO. In order to promote the reduction, in fiscal 2006 the Company revised its procurement policy named the “DENSO Group Green Procurement Guidelines,” seeking to strengthen the following measures: expanding the scope of companies covered; penetrating the report of chemical substances contained; reporting CO2 emissions from procurement to mass production; and considering more the environment in logistics. In August 2006, DENSO held an explanatory meeting for about 1,400 suppliers and requested them to practice these measures. (see p. 46)

Penetrating business etiquette as a buyerTowards the trusted and supported procurement activity, DENSO has stipulated its ruling behavior in the “Code of Conduct for DENSO Group Associates.” Also, the Company has distributed “Business Etiquette for Buyers” to all procurement-related divisions. Thus, the Company has sought to penetrate equal and fair transactions. In fiscal 2006, DENSO expanded the distribution of “Business Etiquette for Buyers” to include manufacturing and engineering departments. Also, the Company associates exchanged opinions at workplace meeting about business etiquette and they confirmed another penetration of the etiquette.

[Content of key efforts]•Establish an environmental management system•Manage and reduce environmentally hazardous substances•Work on the environmental improvement in the production stage at suppliers

•Respond to Life Cycle Assessment (LCA) *•Reduce CO2 emissions, and the materials for packaging and packing, in logistics

Procurement information http://www.denso.co.jp/PURCHA/index.htmlURL

DENSO Group GreenProcurement Guidelines

Homepage for procurement activity (in English)

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*An approach to quantitatively comprehend and assess the environmental impact in a product’s lifetime, from raw material collection to product disposal.

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With the Global andLocal Communities


Repairing wheelchairs (Thailand) First WAFCA East Asian Friendship Game

To contribute to the continuous development of society, DENSO proactively promotes corporate citizenship activities suitable for a good corporate citizen. In this way, the Company aims to be trusted and supported by its stakeholders.

Basic policyIn fiscal 2006, DENSO has set the “Basic Policy of Corporate Citizenship.” Following this policy, the Company promotes unique activities of corporate citizenship, sharing the approach of efforts and the key areas of the activities within the Company.

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Promotion structureIn 1990, DENSO organized the “Social Contribution Committee” (Secretariat: General Administration Dept.). Since then, the committee has counseled and discussed on respective corporate policies and plans, and the results of assessment. The Company is particularly pours its efforts to enhance the original programs and to build a participative climate among associates. As such, DENSO addresses the key areas of “Hitozukuri” (welfare for the physically challenged and development of youth) and “Harmony with the environment.” The Company formulates the annual plan for corporate citizenship activities, thereby systematically promoting the plan. Also, DENSO collaborates with highly specialized NPOs and through the projects of such NPOs the Company makes efforts to address various social issues.

On the other hand, DENSO has implemented surveys for participants by activity to seek to improve the level of corporate citizenship. In fiscal 2006, the survey was implemented encompassing 1,100 citizens, 600 NPO members, and 3,800 associates. The opinions and requests received will be reflected in the activities for the following years.

Welfare for the physically challengedAiming to realize a barrier-free society, DENSO has conducted supportive activities for the physically challenged so that they participate in society and thus they live on their own. For instance, in 1999 the Company established a NPO named “Wheelchairs and Friendship Center of Asia (WAFCA).

(1) Expansion of support through WAFCA WAFCA aims at the contribution in a barrier-free society through the permeation of wheelchairs and sports for the physically challenged. The organization makes efforts to build the background in which physically challenged Asians live on their own, and support the aspects of sports and education. Up to now, WAFCA has conducted supportive production, repair, and donation of wheelchairs in Thailand and the neighboring countries. In fiscal 2006, WAFCA hammered out a new fiscal policy to enhance its activity throughout East Asia. From July 2007 onward, in cooperation with DENSO, WAFCA will support the establishment of a wheelchair factory in Beijing, China and starts a donation activity in the country.Also, with the aim of permeating sports for the physically challenged, every year DENSO holds a friendship game for wheelchair basketball which is jointly sponsored by the Company and Aioi Insurance Co., Ltd. In fiscal 2006, among China, South Korea, and Japan, the first “DENSO/AIOI CUP WAFCA East Asian Wheelchair Basketball Friendship Game” was held (August, in Nagoya, Aichi, Japan). 170 associates of the Company voluntarily supported its administration. Besides, DENSO supported the DENSO CUP INAS-FID Basketball World Championship 2006 (hosted by the International Sports Federation for Persons with Intellectual Disability) which was held from September to October in 2006.

Specialized organization seeking to promote activities of corporate citizenship and volunteer

•Promotion structure

General AdministrationDept.

In charge of promoting the activities at each plant

Section of generalaffairs at each plant

Spread out voluntary programs

Society (Stakeholders)

DENSO ‘Heartful’ Clubs(Groups comprising voluntary associates)

Social Contribution Committee(Counsels and discusses corporate-wide direction)

Support

Individual associates

Volunteer activity

Key areas1. “Hitozukuri” (human resources development)

•Development of youth (education in scientific technologies and skills)•Support of the socially disadvantaged (welfare for the physically

challenged)

2. Harmony with the environment•Protection of local environment•Protection of global environment

Corporate cultureCreation of a culture in which every associate participates in respective activities

Basic Policy of Corporate Citizenship(key activities are excerpted below)

Corp

orate citizenship

Social contribution of individual associates


Summer school of monozukuri

DENSO ECO-Ranger 21 (Anjo course: Aichi, Japan)

(2) Supporting community welfare facilities and self-reliance of the physically challenged

Since 2002, DENSO has continued the donation of used personal computers. The aim of this activity is the contribution in creating job opportunities for the physically challenged and the support for the efforts of non-profit organizations. In the activity, the used personal computers collected from group companies in Japan are cleaned and tested at DENSO Taiyo Co., Ltd. (see p. 31), and then donated. In fiscal 2006, 250 computers were collected from eight group companies in Japan and donated to 198 organizations. The computers are used in the instruction of personal computers for the people with disability and the transcribing in Braille.

Development of youth Amid the public opinion on the dislike of science among the students at elementary and junior high school in Japan, DENSO continues holding events to provide the experience of science and technology with attraction and profundity.

(1) Support of the Young Invention ClubThe activities of the “Young Invention Club,” which fosters children’s creativity and interest towards science, are thriving in the Mikawa region of Aichi Prefecture, Japan, in which the plants of DENSO are densely located. To instruct handiwork, many associates voluntarily participate in the Invention Clubs in Kariya city and Nishio city, both in Aichi Prefecture, Japan. As such, DENSO guides the fun of monozukuri.

(2) DENSO summer school of monozukuriEvery year, the facilities of the DENSO Technical College (Anjo City, Aichi, Japan) are opened to let local students, ranging from elementary level to high school level, experience the attraction of monozukuri. Some 15 kinds of lectures on handiwork and experiments are held. In fiscal 2006, about 1,500 participants enjoyed making tabletop-size bipedal robot, key-holder, and more. The associates and retirees of DENSO, as well as the instructors and students at the DENSO Technical College, voluntarily instructed the lectures.

Harmony with the environmentDENSO conducts many activities for environmental conservation such as: an environmental education program for children named the “DENSO Eco-Ranger 21;” the protection of environment around the plants of the Company; the protection of precious flora and fauna; and the clean-up.

(1) DENSO ECO-Ranger 21The “DENSO Eco-Ranger 21” started in 2001 as a hands-on educational program in plentiful local nature or at the biotope in DENSO’s plants. This program is targeted to children who will bear the future. In this program environmental specialists and citizens involved in local environmental activities are invited to give lectures. In addition, many associates voluntarily participate in this program. In fiscal 2006, this program was conducted in eight cities of Aichi and Mie Prefectures, Japan and around 300 children participated in the program.

(2) DENSO Eco-Point system: DECOPONIn December 2006, DENSO started a unique Eco-Point system named “DECOPON” with the aim of promoting environmental activities among associates and their families. For more details, please refer to the “DENSO CSR Challenge” section. (see 17-18)

(3) DENSO Green ProjectTogether with citizens, DENSO is working on the “Greening to Harmonize with Community.” Many associates and their families voluntarily participate in this project. For more details, see the “Coordination with society” section. (see p. 65)

Corporate citizenship activities http://www.denso.co.jp/csr/social/index.html URLURL

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The DENSO Group CommunityService Day

DENSO, which spreads out its business in 32 countries around the globe, considers the importance of the corporate citizenship activities in step with local communities. Also, the Company believes that the proactive participation of its associates in these activities leads to the expansion of their perspective and to the progress in their social abilities. Following such policy, in 2004 the group companies of DENSO worldwide chose a day for “Community Service Day,” thereby setting their own “DENSO Group Community Service Day.” On the day, the activities of corporate citizenship have been conducted. Now, under the slogan of “Turn Compassion

Support of volunteer activities by associates

DENSO has established the “Volunteer Support Center” to support volunteer activities by its associates. It provides information by in-house magazines, intranets, and the Internet. Also, the Company has furnished the systems of “Matching Gifts”*1, the ‘Heartful’ Fund, and the awarding*2. As such, DENSO strives to encourage volunteer activities.

(1) The DENSO ‘Heartful’ ClubThe DENSO ‘Heartful’ Club is a membership club which consists of voluntary associates. The club is organized by plant and conducts the activities cohered with respective local communities. (Current membership: 1,519 associates). In fiscal 2006, at the “General Meeting of DENSO ‘Heartful’ Club,” 30 NPOs and volunteer groups displayed their booths and associates and local citizens sought to exchange there.

(2) ‘Heartful’ FundThis is a fund that accumulates the donations from associates and the deduction in units of 100 yen from the monthly pay or bonus of the applied associates. The funds is expended for the running cost of the NPOs or the volunteer organizations, in which the donated associates are involved, and for disaster relieves. From fiscal 2006, the scope of donators for the fund was expanded to include those who at group companies.

*1 A system in which, so far as an external public organization for which an associate donates personally or in group is qualified by the Company, the Company adds donation in the same amount as that of the associate.

*2 A system in which the Company awards individuals or groups which actively, as well as continuously, make contribution to society through volunteer activities.

V O I C E

Volunteering to repairwheelchairs

“Hitozukuri from monozukuri”at Invention Club

As I empathized with the activities of WAFCA, every year, in Thailand and in Laos, I repair wheelchairs and customize them by the degree of disability. I have seen the villagers who had acquired my skill following the examples. I have heard such voice that “I have owned a wheelchair and it has made the way for schooling.” This is such a heartwarming experience.

I have been continuing handiwork instruction at the Invention Club in Nisho city for 20 years. I guide children the attraction of monozukuri, as well as such etiquette and rules as the worth of tools and clean-up. My greatest pleasure is to see the children growing as a person through the process of drawing, thinking, and creation.

My environmental awareness was greatly changed, as I was surprised and excited at the ecology of nature and creatures from the viewpoint of children. I perceived as real the serious meaning of reducing CO2 emissions. It is not a mere theory. This is a proof of my growth through volunteering.

Quality Control Department

Kenichi Nobata

Air-conditioning Manufacturing Dept.1

Kiyoshi MiwaGrowing together with theECO Rangers outdoors

Electronics Device Manufacturing Dept. 2

Toshihiro Okamura•Major results for fiscal 2006 (Associate participation rate 14%) The DENSO ‘Heartful’ Club membership 1,519

The ‘Heartful’ Fund membership 2,732

Donation and relief from the Fund around 8 million yen to 18 organizations

The DENSO Eco-Point system membership 1,956

Matching Gift applications 523

Volunteer activity award recipients 2

•Corporate citizenship expenditures in fiscal 2006 (DENSO Japan)

Total:1,374 million yen

Local communitiesand others

37%

Development of youth23%

Environment 5%Art and culture 14%

Welfare 21%


into Action,” associates conduct a wide variety of contribution activities. In fiscal 2006, 67 out of 102 group companies (participation rate 66%) and the total 16,800

DENSO Group Community Service Day http://www.denso.co.jp/SOCIAL/heartful_day/ URLURL

Focus Hope Walk (DIAM: the U.S.A.)Participants walked for three miles in Detroit, calling for “human rights, equal opportunity, and the reduction of racial discrimination, inequality, and poverty.” DIAM associates participate in it every year, and DIAM will donate 200 thousand dollars between 2004 and 2008. (October 2006)

Free wheelchair repair service (DENSO group companies in Thailand) 48 associates from 5 group companies in Thailand checked and repaired some 70 wheelchairs donated by WAFCA to support people of economically disadvantaged and of physically challenged, who live in Chaiyaphum Province, Thailand. (December 2006)

Thanksgiving meal provision (DSCA: the U.S.A.)A four-member family portion of food basket containing a thanksgiving meal was delivered to disadvantaged families in Long Beach, California. 100 associates participated in this activity. (November 2006)

Visiting “Children’s House” (DSKR: Korea)The associates of DSKR visited a facility for underprivileged children in Seoul and deepened the exchange through clean-up activity and playing. Also, DSKR donated 1.1 million won of charity.(December, 2006)

Clean-up of road (DNTW: Taiwan)DENSO Taiwan conducted a clean-up activity on the road around its plant with a length of 2.5 kilometers. Local residents pleased, saying, “It looks pretty and is very comfortable now.” (October 2006)

Japanese culture demonstration at an eldery home (DNEU: The Netherlands)Japanese food, tea, calligraphy, and music were introduced to the residents of an elderly home facility in Weesp. 10 associates at DNEU volunteered to participate in this event. (October 2006)

Lunch at hospital (DNMX: Mexico)DNMX conducted a charitable activity in which sandwiches and tacos were served to the families who were outside a public hospital, worrying about the condition of their hospitalized family member. (June 2006)

Tree donation and New Year’s Greetings (DNTR, Turkey)DNTR donated 200 trees through “The Turkish Foundation for Combating Soil Erosion, for Reforestation and the Protection of Natural Habitats.” DNTR also sent its suppliers a New Year’s Greeting card which certified the tree donation. (December 2006)

Charitable activity on Christmas Day (DIAS & DISP: Singapore)11 associates at DIAS and DISP paid a visit to the MINDSville@Napiri - an accommodation facility for children and adults of mentally challenged and deepened the exchange. (December, 2006)

Kariya Green Walk (DENSO Japan: Aichi Pref., Japan)In order to make contribution in the environmental beautification of Kariya City, 310 associates made efforts together with local citizens to clean up the City, plant seedlings (1,600 in total), and make the Green Map. (November 2006)

No Garbage Activity (Anden Co., Ltd.: Aichi Pref., Japan)305 associates participated in the activity of picking up garbage around the plant in Anjo City and Okazaki City. The participants collected and sorted the the garbage such as cans, bottles, and cigarette butts, scattered over sidewalk, shrubbery, or gutter.

Mochi (rice cake) pounding party (DENSO Airs Corporation: Aichi Pref., Japan)The history of exchange between DENSO Airs Corporation and the Toyokawa Mentally Challenged People Nurturing Association has been lasting for10 years. The pounded mochi was delivered to a child welfare facility “Kokiryo.” (December 2006)

Water source forest preservation activity in Asuke, Japan (DENSO Unity Service Corporation: Aichi Pref., Japan)It was the third year of showing the thanks to waters and the gratitude to the forest in the area. The activities included tree-thinning, bridge-building, and step-building on a steep slope. Also, for the families, the bench-building and mushrooming were conducted. (October, 2006)

associates conducted community service activities in such areas as environment, welfare, and education.

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DENSO finds it important to confront the issues faced by

a society and to probe the way for solution, while

deepening the dialogs with many stakeholders. Thus, the

Company sets a variety of occasions and opportunities

for communication.

[Customers]Founding the four pillars of “quality, technology, service, and customer response,” DENSO is striving for the trust and satisfaction of customers by enhancing the opportunities for gathering requests and opinions of customers. The Company reflects the requests and opinions into the development of new products and services.

[Opportunities and means of dialog]•Customer Service Desk, customer desk at service

stations•DENSO Gallery (a display hall), technical

exhibitions, environmental exhibitions•Website (Information on products, services, and

technologies) •Product pamphlets, technical reviews

[Shareholders and Investors]DENSO discloses business and financial information promptly, as well as precisely, to allow its shareholders and investors a long-term stable investment. Also, the Company is striving for an interactive communication with its investors through proactive IR activities.

[Opportunities and means of dialog]•General Meeting of Shareholders; information

meetings; factory tours; motor shows; IR Fairs•Website (investor information)•Business reports, annual reports, securities reports

[Suppliers]Based on our “Open-Door Policy,” DENSO broadly discloses its procurement policy. Also, the Company is promoting fair transactions, while mutually deepening communications through the DENSO Suppliers Convention, technology exhibitions, and supportive activities.

[Opportunities and means of dialog]•DENSO Suppliers Convention, DENSO HISHO-KAI,

technology exhibitions •Website•Supportive activities, surveys, Business Ethics

Hotline

[Global and local communities]As a member of local communities, DENSO continues making efforts to solve social issues through the activities of environmental conservation and corporate citizenship.

[Opportunities and means of dialog]•Service desk at plants•Regional meetings, factory tours•Corporate citizenship activities, volunteer activities,

local exchange events •Corporate citizenship reports, website (CSR)

Communications for CSR

Associates

CustomersShareholdersand Investors

Global andlocal communitiesSuppliers

DENSOGroup

[Associates]DENSO is striving to build a climate in which associates exercise their maximum potential and work vigorously through honest dialogs and discussions at their workplaces. Also, the Company listens to the voices reached to the Motivation Survey and the Business Ethics Hotline. The Company reflects them into the measures of improvement in respective systems, for instance.

[Opportunities and means of dialog]•Interview with superiors, Business Ethics Hotline,

counseling, Motivation Survey•Labor relation forum at workplaces, Associate

Relations Reviews •Various in-house activities, intranets, in-house

magazines•CSR Forums


For years, DENSO has held the “Open House.” This has allowed individuals of different standpoints to look around the efforts of DENSO from their viewpoints. Thus, this event has been an occasion for finding new issues through dialogs. In fiscal 2006, when the fourth time of this event was going to be held, its name was revised to the “Stakeholder Dialog.” The event was held anew emphasizing worksite tour and opinion exchange with regard to the activities of CSR. The Company received participants on its website and welcomed 25 participants, more than the previous time. DENSO was pleased to have many opinions with regard to corporate citizenship, environmental conservation, and respecting associates. The Company will employ these opinions and suggestions in its future efforts. Some of them have already reflected in this report. (see p. 67)

Opinion exchange Tour of the DENSO Engineering andTechnical Skills Training Center

Dialogs with stakeholders

Date : February 27 and 28, 2007Participants : 25 (6 students, 1 supplier, 3 non-profit organization representatives, 9 business people, 6 others)Contents: Explanation on the activities of CSR at DENSO; Tour of the DENSO Engineering and Technical Skills Training Center; Tour of the Anjo plant; Opinion exchangeFacilitator: Hideto Kawakita, the CEO of IIHOE, International Institute for Humans, Organizations, and the Earth

“Report on DENSO Stakeholder Dialog” (in Japanese)http://www.denso.co.jp/ja/csr/environment/dialog2006/

URL

Details are shown on the following website.

1st: Opening forum (April 13, 2006)Announced the idea of CSR at DENSO and declared the start of respective activities•Announced the “DENSO Group Declaration of Corporate Behavior” and the “Code of Conduct for DENSO Associates”

•Released the activity plans by area•Held lectures by specialists and the persons at companies preceding in CSR

Participants: Associates of group companies (directors, managers, CSR Leaders) (around 390 participants)

2nd: Corporate citizenship forum (July 16, 2006)Instilled the activities of corporate citizenship at DENSO and raised awareness of participation in the activities•Held lectures by experts•Held a panel discussion by experts, persons at companies preceding in corporate citizenship, and representatives of DENSO associates

•Reported the activities of DENSO ‘Heartful’ Club

Participants: Associates and their families of group companies, citizens, representatives of NPO (around 390 participants)

4th: Business ethics forum (October 2, 2006)Raised the role awareness of persons in charge of compliance affairs•Held the lecture by a lawyer: “Management for preventing wrongdoing”

Participants: Associates of group companies, Compliance Leaders (around 350 participants)

5th: Women’s Forum (December 11, 2006)Furthered mutual understanding between management and female associates•Held the lecture by the person in charge at a company preceding in the success of female workers

•Held panel discussion by lecturer, managers and female associates at DENSO Japan

Participants: Associates of DENSO Japan (managers, female associates) (around 370 participants)

3rd: Disaster prevention forum (September 19, 2006)Increased responsiveness and raised awareness for the assumed Tonankai Earthquake•Held lecture by expert: “Preparing for the coming big earthquake”

•Held panel discussion by experts, representative of other companies, and representatives of DENSO associates

Participants: Associates of DENSO group in Japan (members of Risk Management Meeting, risk managers) (around 300 participants)

“Stakeholder Dialog”

Occasions of awareness-raising and dialog for associates “CSR Forums”

Since fiscal 2006, DENSO has held CSR Forums to diffuse corporate-wide the idea of CSR at the Company and its activities of CSR. The forums have also been the occasions to listen to the opinions and suggestions of stakeholders. to

reflect them afterwards. The forums comprise a series of themes. The details and the survey results of the forum are carried in in-house magazines, thereby drawing on to raise awareness and improve respective activities.

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As the Kyoto Protocol’s first commitment

period (2008-2012) for reducing CO2

emissions nears, the move to prevent

global warming has been accelerated and

the governmental moves, as well as the

discussions over initiative, have surfaced.

On the other hand, the expectations for

energy-efficient Japanese technologies

have been growing with the aim of the

fundamental solution for global warming.

Under these circumstances, we at DENSO

made efforts during the first year of the “Environmental Action Plan

2010” based on the “DENSO ECO VISION 2015,” an environmental

guide to realize a sustainable society. In the action plan the

group-wide issues to promote are corresponded to “Prevention of

Global Warming,” Resource Recycling,”and “Control and Reduction of

Environmentally Hazardous Substances.” Of which, the “Prevention of

Global Warming,” a particular challenge, has started spreading out

globally, encompassing our supply chain.

For products, the Company has introduced the Environmental Factors.

Also, the technological innovation for the main parts of gasoline

vehicles, diesel vehicles, and hybrid vehicles has progressed.

With regard to manufacturing, substantial progress in the activities of

energy saving and zero emissions at overseas group companies was

seen. An energy-saving technology spread out to the site in Malaysia

was approved as a “Project of Clean Development Mechanism” by the

Japanese government. Afterwards, DENSO plans to further the

reduction of CO2 emissions globally.

Meanwhile, some issues remain. That is, in Japan, the Company did

not accomplish its restrictive target for CO2 emissions because the

increase in production caused more CO2 emissions than those

reduced.

From now on, with our spirit of Collaboration, we will work on

innovative technologies tied to the environment whereby we will

accelerate our environmental activities in all areas, deepening the

coordination with more stakeholders.

Promoting ECOVISION 2015 Globally

Executive Vice President

Shinro IwatsukiChairperson

Environment Committee

Plate Spiral

EDU

VCT

Roller

Intake Camshaft

Motor


Ecofactory

Ecofriendly

Ecoproducts

Ecomanagement

Environmental management Eco management

Development and designing Eco products

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P45 P46

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P60 P62 P64

P65 P66P66

DENSO ECOVISION 2015 Honored with the Performance Track Award Green Procurement Guidelines

Environmental report of DMUK (the U.K.)

PCU for hybrid vehiclesElectric VCTSeminar on the Environmental Factors for Products

A co-generation facility in Daian Plant

The DENSO Forest in Nukata Environmental staff received anew the prize

An environmental protection organization awarded DNMX Modal shift by using rail transport

Power device in betweencooling tubes

Double-sidedcooling tube inlayer structure

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Highlights of activities for fiscal 2006

Formulated five-year environmental action plan at 170 group companiesBased on the “DENSO ECOVISION 2015,” 170 group companies of DENSO have formulated a five-year environmental action plan until 2010.

EPA awarded DMMI (the U.S.A.)DMMI was honored by the United States Environmental Protection Agency (EPA) with the Performance Track Award for its exceptional environmental improvements.

Formulation and introduction of Environmental Factors for ProductsIn partnership with the Japan Auto Parts Industries Association, DENSO has developed the “Environmental Factors for Products.” With the factors, the environmental performance of products is quantitatively assessed. The factors

have been introduced within the Company.

Development of world’s first “Electric VCT” The electric VCT electrically controls VCT (Variable Cam Timing) which optimizes the intake/exhaust valves of an engine. The electric VCT has improved power, fuel efficiency, and performance on purifying exhaust gases.

Improvement in performance of components for new hybrid vehiclesDue to the world’s first original cooling technologies, the PCU (Power Control Unit), which is indispensable to increase the output, added its performance, while cutting its size and weight.

Manufacturing and logistics Eco factory

Promotion of building Perfect Energy FactoryAiming at the prevention of the global warming, DENSO sought to spread out energy-saving technologies and to promote the introduction of co-generation facilities.

The first accomplishment of zero emission among group companies in North America by DNMX (Mexico) Due to a coordinated promotion of recycling with the government and the introduction of food scrap composting brought in from DENSO India, DNMX has accomplished zero landfill.

Extensive spread-out of modal shift by rail transportAiming at reducing CO2 emissions from logistics, DENSO has increased the number of railway delivery between the sites in Aichi Prefecture and Kitakyushu City, Fukuoka Prefecture, both in Japan.

Coordination with society Eco friendly

Promotion of the “DENSO Green Project” in harmony with communitiesDENSO has afforested the periphery of the Nukata Proving Ground as the “DENSO Forest.” Also, the Company has promoted the greening around its plants, as well as alongside motorways.

DMHU (Hungary) honored with environmental prize for the second time In recognition of contribution in environmental conservation through school education programs and clean-up activities, DMHU was awarded afresh from the state.

Overseas group companies published their first environmental reportsFollowing the group companies in Hungary and Spain, a group company in the U.K. published its environmental report whereby DENSO sought to enhance the information disclosure.

Revised Green Procurement GuidelinesThe procurement guideline has enhanced its scope of companies and guideline items, to seek to strengthen the coordination with business partners.

P55

Prevention of global warming

Environmentally hazardous substancesRes

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Environmental ManagementEco Management



DENSO

Eco factoryEco friendly

Develop new technologiesand products that

emphasize the environmentEco products

Strengthen coordination with group

companies, as well as partnersEco management


Environmentally hazardous substancesRes

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•DENSO ECOVISION 2015

DENSO is oriented to create an advanced automotive society and to contribute in building a sustainable society. For these sakes, the Company reduces the environmental impact of its all business activities. DENSO aims to be a corporate group which possesses the environmental efficiency and the resource productivity of the world’s top tier.

DENSO’s environmental managementDENSO recognizes that the management which emphasizes the environment “will bring the creation of a new action style for a company in the 21st century.” As such, aiming to be in harmony with society and to realize a sustainable society, the Company is oriented to be an environmentally-leading company, continuously working on it with the spirit of Collaboration.

(1) DENSO ECOVISION 2015To promote environmental management, DENSO has set the medium and long-term goal of the “DENSO ECOVISION.” The vision has been shared with group companies and it has reflected in their environmental action plans. When the Company formulated a long-term plan from fiscal 2006 to 2015, it re-examined global environmental issues and a desirable automotive society. Then, the Company posted the three main themes of

“prevention of global warming,” “resources recycling,” and “control and reduction of environmentally hazardous substances.” In this way, DENSO released the “DENSO ECOVISION 2015.” At the same time, the Company set a

five-year action plan named “2010 Environmental Action Plan (the 4th)” with specific goals. The efforts for the plan at all group companies have been accelerated.

(2) Spreading out consolidated environmental management globallyIn order to promote the efforts of DENSO group as a whole, the Company shares environmental policies and guidelines with companies in consolidation*, sets common issues, and spreads out a consolidated environmental management. In fiscal 2006, all 170 companies listed in the annual plan of Company have formulated a five-year plan for environmental action to spread out the“DENSO ECOVISION 2015” on a global basis.

DMMI (the U.S.A) honored with the Performance Track Award

•Formulated a five-year environmental action plan at 170 group companies consolidated for environmental management

•Strengthened promotion structure overseas by establishing anew the China Environment Committee

•Revised the Green Procurement Guidelines and strengthened the coordination with business partners

•Promoted the development of environmentally-conscious products that contribute to environmental improvement

•Formulated a medium and long-term scenario to reduce greenhouse gases from all of its business segments

Major results for fiscal 2006 (DENSO ECOVISION)

T O P I C S

DMMI (the U.S.A.) honored with Performance Track Award

DMMI, a DENSO group company in the U.S.A., was presented the Performance Track Award by the United States Environmental Protection Agency (EPA). DMMI was recognized for its performance of environmental activities in fiscal 2005 (reduction in wastes, greenhouse gases, and water usage) and its support in water source

protection. Among 496 sites (or companies) participated in the “National Environmental Performance Track program,” which EPA has promoted since 2000, those attained substantial performance were selected and awarded.

* The companies in consolidation for the environmental management at DENSO exclude the companies that were newly established in cument year or that have not passed certain period of time after the managerial involvement of DENSO. Therefore, the number of companies consolidated for environmental management differs from that for the purpose of financial reporting.

Reduce environmentalimpact of production globally

Enhance external coordinationand exchange, together

with information disclosure

•Share basic policies and action guidelines

•Formulate and spread out action plans

•Acquire ISO14001 certification

•Organize the Environment Committee

•A shared system for environmental information

•Environmental accounting

1. Reduce wastes

2. Reduce environmental wastes from factories

3. Prevent global warming (reduce CO2)

4. Establish an environmental management system (ISO 14001)

5. Implement preliminary environmental assessment for products

6. Spread out green procurement

7. Streamline logistics

[Seven items to make common efforts]

[Policies and guidelines shared within DENSO group]


•Promotion structure

DENSO Group Overseas Regional Environment CommitteesPromote regional activities corresponded to the characteristics of such regions as North America and Europe

Business Group Environment CommitteeSummarize and promote environmental conservation activities within each business group

DENSO Group Environment and Safety Committee in JapanNotify group companies in Japan of policies and promote common assignments

Product Environment SubcommitteeFormulate policies to reduce the environmental impact of products

Product Recycling Division(Development Planning Council)

Meeting of environmental planning officers at business groups

Exchange group for the reductionof resource lossesExchange group for energy saving

Environment committee of each section

Meeting of environment and safety officers

Powertrain Control Systems Business Group

Electric Systems Business Group

Electronic Systems Business GroupEnvironmentCommittee ofeach groupThermal Systems Business Group

Information & Safety Systems Business Group

Meeting of officers for Regional Environment CommitteeNorth America Environment Committee

Europe Environment Committee Three divisions

Asia Environment Committee

China Environment Committee

Energy Division Promote in coordination with related committees

Logistics DivisionPlant Environment Division

Project for environmentallyhazardous substances

Production Environment SubcommitteeFormulate policies to reduce the environmental impact of production

Social Environment SubcommitteeRaise awareness of associates and release information

EnvironmentCommitteeChairperson:Shinro Iwatsuki,Executive VicePresident

Environmental managementDENSO has strived to proactively acquire and renew ISO 14001 certification on a global scale, encompassing its manufacturing companies, as well as non-manufacturing companies (such as regional headquarters, sales companies, service companies), comprehensively. This is because that ISO 14001 is an effective tool for the Company to promote environmental management. The followings are the state of ISO 14001 acquisition among the consolidated companies for environmental management. By the end of fiscal 2006, 74 (out of 100) manufacturing companies have acquired the certification. So have 25 (out of 70) non-manufacturing companies.

(1) Strengthening promotion structure The “Environment Committee” has been established as the highest decision-making body with regard to the promotion of environmental management. It is chaired by the director responsible for environmental management. The attendance of the committee comprises directors, managing officers, presidents of overseas regional headquarters, and persons who are responsible for environmental management at group companies. The committee convenes twice a year, and there, respective policies are formulated, the state of progress in related activities is examined, and specific issues coupled with their solutions are discussed. In fiscal 2006, the “Environment Committee” was revised in its position to a expert panel of the “CSR Promotion Committee” (Chairperson: President Fukaya), in order to promote environmental efforts integrating into group management from the viewpoint of CSR. In this way, DENSO strives to wholly optimize its environmental promotion structure whereby the Company aims at more effective operation. Also, following this change, the name of the “Environmental Communication

Subcommittee” was revised to the “Social Environment Subcommittee.” By this means, DENSO will promote the coordination with society, that is, an eco-friendly activity, more effectively and intensively. (2) Strengthening efforts in region centering ChinaThe “China Environment Committee” was established in fiscal 2005 as a part for promoting the global environmental management of DENSO. From fiscal 2006 the committee started its full activity. The committee is going to seek to promptly respond as DENSO group to meet the expectations of Chinese society, in which environmental issues are concerned amid a rapid economic growth. Specifically, the committee has set policies and goals following the DENSO ECOVISION 2015, and has investigated 13 worksites on the compliance and the management structure for the environment and safety. The committee also held liaison meetings for these worksites. As such, the committee seeks to raise awareness of the environment and strengthen the environmental management structure (see p. 52)

(3) Strengthening coordination with business partnersThe business activities of DENSO are maintained by the supply of components or raw materials from its many business partners. For that reason alone, a close coordination with them is indispensable for the environmental efforts

of the Company. As such, in August 2006 DENSO revised the “Green Procurement Guidelines,” the guidelines for its procurement activity, thereby asking wider range of suppliers to cooperate with the Company. In this way, DENSO requested its suppliers to expand and strengthen their efforts. (see p.36)

Green Procurement Guidelines

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Procurement informationhttp://www.denso.co.jp/PURCHA/index.html

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Aspect Category Items in DENSO ECOVISION

(2) Reinforce environmental partnerships with business partners

(3) Promote new businesses contributing to environmental improvement

(5) Develop new technologies and products which contribute to industry-leading fuel efficiency performance

(4) Reduce greenhouse gases in all business fields

(6) Promote the development of parts for clean energy vehicles

(7) Develop new technology and products for various energy sources

(8) Promote efforts for car air conditioning systems to reduce global warming

(9)Utilize ITS* technology to support traffic rationalization *ITS: Intelligent Transport Systems

(10) Reduce the usage of resources

(11) Develop recycling technologies

(12) Control and reduce environmentally hazardous substances contained in products

(13) Reduce exhaust gas emissions to improve the air quality in each country/region

(14) Establish an environmental assessment in the product designing and development stages

(15) Reduce CO2 emissions in production and logistics•Global CO2 reduction•CO2 reduction in logistics stage

(16) Reduce greenhouse gases in production

(17) Promote the effective usage of resources towards recycle-oriented society

(18) Reduce water usage

(19) Reduce discharge amount of object substances for VOC and PRTR*PRTR: Pollutant Release and Transfer Register*VOC: volatile organic compounds

(20) Encourage environmentally-friendly life (eco-life) for associates

(21) Promote proactive information disclosure and enhance mutual communication with stakeholders

(22) Enhance environmental education

(23) Enhance environmental and social contribution

(24) Foster external alliances towards the realization of a sustainable society

(1) Reinforce consolidated environmental management

Environmental management

Resource recycling

Resource recycling





4. Enhancement of external alliances and information disclosure regarding environmental action(Eco friendly)

3. Steady reduction of the environmental impact of global production(Eco factory)

2. Development and designing that considers performance improvement as well as the environment(Eco products)

1. Expanding group environmental management(Eco management)

Control and reduction of environmentally hazardous substances


General

General

Goals and resultsSpread-out of DENSO ECOVISION and the results of activities for fiscal 2006In fiscal 2006, the efforts to establish a group environmental management were made for such key issues as: (1) penetrating and diffusing the policies for environmental efforts on a global level; (2) penetrating a customer- credible environmental control, while pre-empting risks; and (3) developing products together with production technologies that lead to the prevention of global warming, that is, the accomplishment of reduction target for CO2. The following are the results by aspect.

①In the environmental management, 170 group companies formulated a five-year plan for environmental action. Also, the Green Procurement Guidelines were revised and the strengthening of environmental measures was requested among supply chain.

②In the development and designing, the “Environmental Factors for Products” was formulated and introduced. Also, the electric VCT* and the components for new hybrid vehicles, to name but a few, were developed to contribute the increase in fuel efficiency and performance of exhaust gas purification. At the same time, a reduction of such four environmentally hazardous substances as lead, cadmium, mercury, and hexavalent chromium was promoted.

③In the production, with the aim of preventing global warming group-wide, the building of factories compatible in energy saving and production efficiency was promoted. While the target for the basic unit of CO2 emissions was accomplished, neither the target for CO2 emissions in production nor that for logistics was accomplished. This was because that the emissions of CO2 increased following the rise in production surpassed those reduced by corresponding countermeasures. On the other hand, the throughput of wastes was reduced, exceeding the target.

④In the coordination with society, the environmental action of Company associates was encouraged by drawing on a Eco-Point system. Also, substantial progress was seen in the activities of afforestation in local communities. As a result, 42 out of 44 items have accomplished the target. The details of efforts for the target which were not accomplished are re-examined, by which the efforts are sought to be strengthened in fiscal 2007.


* A device for variable cam timing that optimizes the timing of opening and closing of the intake and exhaust valves.


(1) CO2 control target •DENSO Japan: Emissions, 117% or less, compared with year 1990 Basic unit, 56％ or less, compared with year 1990 •Consolidated: Basic unit, 80% or less, compared with year 1990

(2) Global management of CO2

•Global Eco factory, Group operation of CO2 fund (3) CO2 emissions in logistics: 41,300t or less of CO2 equivalent

•Modal shift in services to distant factories•Trial and assessment of measures for eco- driving

(1) Development and deployment of a five-year environmental activity plan at 170 consolidated companies for environmental management•Establish environment committee at each company•Install persons responsible for all environmental issues

(2) Establish and evolve China Environment Committee

(1) Support for spreading out activities of WAFCA in China and India Spread-out of a new program for youth education and afforestation

*WAFCA: (Wheelchairs and Friendship Centers of Asia) A NPO established by DENSO to support the physically challenged

(2) Diffusion and embedment of DENSO ‘Heartful’ day in Japan (otherwise the Community Service Day abroad)

(3) Continuation and expansion of the activities of ECO Ranger 21

(1) Promotion of activities of subcommittees at EPOC* for the prevention of global warming and the energy saving *EPOC (The Environmental Partnership Organizing Club): A voluntary organization for environmental activities of industry in the Chubu region, Japan

(2) Expansion of biotopes in factory premises

(1) Development of next household water heater using natural refrigerant

(1) Establishment of the medium and long term scenario by the end of fiscal 2006

(1) Conception and plan of "a combination technology for managing heat and electricity" which contributes to a low CO2 emission vehicles

(1) Cooperation with projects which correspond to the trend in new fuel

(1) Selection of specific products and setting of respective targets

(1) Setting of removal equipment in semiconductor manufacturing process

(1) Industry-wide standardization of Environmental Factors for Products Conception of assessment procedure that draws on the factors

(1) Development for the use of plant-based materials to products

(1) Product development which uses refrigerant with low global warming potential (2) Research on extensive application and product development for

ejector cycles

(1) Confirmation and monitoring of non-content of four environmental hazardous substances

(2) Pilot production of electronic and electrical components drawing on lead-free soldering

(3) Switch of hexavalent chromium (black/green)

(1) Product development for a system that utilizes GPS satellite information*GPS: Global Positioning System, which pinpoints a position on the earth using a satellite

(1) Promotion of the development of motor generators and power control components such as PCU for hybrid vehicles

(2) Development of control components for next environmentally -conscious vehicles

(1) Reduction of disposal from the manufacturing of current products and application of resource-saving processing technologies for next products

Reduction: 1,300t or more (DENSO Japan); 2,600t or more (consolidated)(2) Reduction of the usage of packing materials: 21,500t or less

(1) Measures for discharge control at existent facilities Incorporation of reduction technologies to new facilities and new

products

(1) Implementation and spread-out of the plans for equipping corporate cars (2) Planning and proposition of measures on a short, medium, and long

term bases to improve the convenience of commuting (3) Planning and proposition of “DENSO Green Project”

(1) Enhancement of global information release deploying the website(2) Enhancement of reporting e.g., sustainability report(3) More enhancement of the Stakeholders Dialog

(1) Spread-out of environmental education by organizational class(2) Holding of seminars for environmental staff overseas

(1) Formulation and spread-out of a measure based on 5-year activity plan Setting of targets by region under the “guidelines by region”

(1) Reduction in CO2 emissions: 96,000t-CO2

•DENSO Japan: CO2 emissions: 120% CO2 basic unit: 54%, compared with year 1990•Consolidated: CO2 basic unit: 73%, compared with year 1990

(2) Formulated a global standard for energy savingSpread out global PEF activities

(3) CO2 Emissions: 45,600t-CO2

Deployed Japanese Railway service in transport for Kitakyushu

(1) All 170 group companies formulated five-year plan •Furnished the structure at non-manufacturing companies in Japan•Held liaison meetings among consolidated group companies

in Japan•Audited and inspected 80 affiliate group companies inside and outside Japan on environmental activities for products

(2) Established and evolved the China Environment CommitteeHeld liaison meetings for staff in China

(1) Formulated new Green Procurement Guidelines Held the DENSO Suppliers Convention

(2) At an explanatory meeting regarding environmentally hazardous substances for suppliers, standardized the uniform JAMA/JAPIA Sheet for investigating environmentally hazardous substances

(3) Established a recycling system for toners(4) Certification rate: 97%

(1) Supported WAFCA in launching a production factory in China.

Proposed youth education program(2) Implemented DENSO ‘Heartful’ day in Japan

(otherwise the Community Service Day abroad)(3) Hosted the Eco-Ranger 21

(1) Held subcommittee activities

(2) Opened the Eco-Park at Daian Plant

(1) Discussed the development of next model(2) Donated 250 used personal computers to 198 organizations

(1) Formulated the Carbon Management Scenario

(1) Assessed vehicles

(1) Participated in the All-Toyota Energy Subcommittee

(1) Developed next common rail injectors

(1) Placed 11 of gas removal equipmentCO2 Emissions: 61,000t-CO2

(1) Made standard of method for calculating Factors, and incorporated operative method of factors into product EMS

(1) Assessed product assembly

(1) Assessed CFC substitutes

(1) Analyzed 100% in Japan and 71% overseas

(2) Promoted lead-free soldering for electrical automotive components

(3) 99.8% in Japan, 92% overseas

(1) Developed a interactive systems for vehicle and infrastructure, participated in a verification program for controlling traffic flow

(1) Mass-produced miniaturized hybrid-related products

(1) Reduction in emissions: 2,900t (DENSO Japan);4,300t (Consolidated)

(2) Internationally circulated containers, improved packing

(1) VOC discharge: 820t (DENSO Japan)Conducted basic assessment of alternative materials

(1) Rate of low-pollution vehicles: target: 80%, result: 88%(2) Launched a Eco-Point system(3) Conceptualized a whole picture of “DENSO Green

Project,” began afforestation at Nukata site, and proposed plans for motorway periphery

(1) Added contents to global website(2) Published CSR Report and its digest version(3) Held the Stakeholders Dialog

(1) Held seminars by organizational class to increase skills (2) Held staff seminars by region (China, Asia, North America)

(1) Formulated five-year plan at all sites, Began countermeasures at all sites

(1) To minimize environmental risk, expand and penetrate compliance auditing, set global environmental standards, and get through at global environmental conferences

(1) Spread out new Green Procurement Guidelines, extensively support suppliers of equipment and facility, spread out the guidelines to group companies overseas as well

(2) Expand the purchasing scope of environmentally-conscious products to include environmentally-friendly factory supplies

(3) Spread out environmental betterment campaign for fiscal 2007

(1) Support the start-up of WAFCA production factory and youth education program

(2) Extensively embed the DENSO ‘Heartful’ Day in Japan(otherwise the Community Service Day abroad)

(3) Continue and embed activities

(1) Promote activities of subcommittees for global warming and energy saving

(2) Promote the DENSO Green Project

(1) Develop and assess next models(2) Continuingly promote and embed donation activities

(1) Coordinately promote such as the Clean Development Mechanism with each site

(1) Assess the development

(1) Continuously participate in subcommittees(2) Develop products available for new fuels

(1) Develop diesel engine control systems

(1) Place 18 of removal equipmentEmissions: 60,000t-CO2 or less

(1) Attempt factors within companies

(1) Discuss mass-production

(1) Selected specific products and set discrete targets (1) Develop products which realize targets

(1) Develop air conditioning system using refrigerant with low global warming potential

(2) Promote development of ejectors for air conditioning system

(1) Analyze situation of overseas by the end of year 2007

(1) Develop systems utilizing GPS satellite information

(1) Promote mass-production of PCU components and further the development of motor generators

(2) Develop products such as sensors and pumps for next environmentally-conscious vehicles

(1) Continue reduction activities and management of results and trends(2) Target the reduction of 1,200t or more (DENSO Japan)(3) Expand container circulation by placing standard

container(4) Establish a structure to comprehend actual results at sites overseas

(1) Emissions of 804t or less(2) Decide the introduction of after-treatment equipment

(1) Accomplish 90% in the ratio of low-pollution vehicles

(2) Diffuse the system within DENSO Japan and further membership

(3) Promote the DENSO Green Project

(1) Enhance global information deploying website(2) Enhance CSR Report(3) Enhance opportunities for dialog

(1) Spread out environmental education by organizational class(2) Hold the Global Environment Conference

(1) Steadily promote reduction countermeasures(2) Spread out examples of reduction over the group

Targets for fiscal 2006 Results Plans for fiscal 2007 Assess-ment Page

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(1) Development and deployment of the "DENSO Group Procurement Guideline" corresponded to DENSO ECOVISION 2015

(2) A survey on the substances of the parts or materials supplied from 1st-tier suppliers and a management by registering internal system (Product MDS) Confirmation on continued building of environmental management system

(3) Expansion of purchasing of environmental products(4) Requirement for certification and renewal of “Denso Eco-service

Station” in the establishment and assessment of service stationsPromotion of a certification rate of 100% to service stations

(1) Development of next common rail injectors and new after-treatment systems

(1) CO2 Reduction: 96,000t-CO2

DENSO Japan: Emissions: 124% or less, compared with year 1990 Basic unit: 51% or less, compared with year 1990Consolidated: basic unit: 71% or less, compared with year 2000

(2) Decide on the positioning of targets and the supportive methods

(3) Expand transport by Japan Railway service (for Kitakyushu and Hiroshima in Japan)

(4) Raise load efficiency(5) Establish a structure to comprehend actual results at sites overseas



Material input and environmental impact of output in business activities

DENSO quantitatively collects the amount of input and output of materials and energy, thereby drawing them on to comprehensive and effective activities for reducing environmental impact. In fiscal 2006, due to a business expansion, production increased by 12% compared with the previous year. In response, the

Company increased the production efficiency and the resource recycling. However, the input of material and energy rose. As to the output of environmentally hazardous substances, some of them increased following the rise in production, though, the Company systematically promoted the reduction of environmental impact by each substance.

Resource and energy input

INPUT OUTPUTOutput of substances with environmental impact

CO2 1,410,000t-CO2 ( +13%)5gases* 60,000t-CO2 ( 2%)*Greenhouse gases other than CO2

Greenhouse gases 1,470,000t-CO2 ( +12%)

SOx 18.9t ( 39%)NOx 465.3t ( +14%)Fly ash 23.8t ( +5%)

Release to atmosphere 508.1t ( +10%)

Toluene/Xylene 88t ( 31%)Others 60t ( 9%)

Chemical substances 216t ( 1%)

Waste water 13,020,000t ( +21%)Chemical oxygen demand (COD) 96t ( 33%)Nitrogen 77t ( +11%)Phosphorus 3t ( 57%)

Release to water systems

Waste material 11,000t ( +48%)

CO2 emissions 103,000t-CO2 ( +57%)

Legend DENSO Japan and group companies in Japan DENSO Japan and group companies in Japan and overseas year-on-year change shown in parentheses

Electricity 1,838,370MWh ( +8%)Heavy fuel oil (A) 8,185kl ( 70%)Kerosene 5,738kl ( 18%)Light fuel oil 3,241kl ( +5%)Propane 2,345kl ( 39%)City gas 182,040,000m3 ( 2%)Natural gas 87,720,000m3 ( +318%)LNG 8,468t ( )

Energy 28,025,244GJ( +2%)

Chemical substances 1,507t (+16%)

Water 14,650,000t (+17%)

Raw materials 629,000t ( +7%)

Metals 596,000t ( +12%)Non-metallic materials 76,000t ( +35%)

Office supplies (Copier paper) 953t ( +7%)

Transportation fuel 2,339kl ( +7%)

Packaging materials 37,000t (+48%)

Logistics

Manufacturing

DENSO GroupProduction facilities

Stamping

Welding

Forging and casting

Machining

Painting

Assembly

Reused materials240,000t (+18%)

(recycling rate 96%)

−


•Environmental audit results (DENSO Japan)

External audits

Internal audits

Nonconformity (minor)

Observation

Improvement directives issued

Points noted for improvement

Number

53241

114

160Internal auditors (in total)

Target department/13

Environmental auditing and Eco-DiagnosisDENSO regularly conducts internal audits and external audits. The purposes of the audits are: continuous improvement of environmental management system; prevention of environmental accidents or disaster at plants; and increase in the credibility of environmental data to disclose.In the internal audit, the Company strives to increase the accuracy by a self-audit with 400 items and by mutual audit among plants. At the same time, DENSO seeks to increase the level of environmental management by implementing its unique “Eco-Diagnosis” to find out new issues and extensively spread out the examples of excellence. Some examples found in the diagnosis are disclosed on the intranet. Besides, the Company is pouring its efforts to nurture environmental auditors as a part of its specialized education on the environment. As of March 2007, 396 auditors have been registered.In the external environmental audit in fiscal 2006, there were five of minor nonconformity and the Company took corrective action immediately.

Environmental risk managementDENSO has specified risks (such as environmental accidents, pollution, and violations of laws) subject to the location and the business profile of each plant. As such, the Company makes efforts to prevent and minimize risks. In particular, DENSO emphasizes such risks as: “waste water and gas emissions that exceed voluntary criteria”; “leaks of oils or chemical substances”; “pollution of soil or ground water;” and “complaints from neighborhoods on such as noise.” In response to these risks, the Company conducts daily check, monitoring, measurement, and yearly drill of emergency response. These activities are pursuant to the policies of (1) do not cause any anomaly and (2) minimize damage and correctly disclose information in the event. To promote risk management, DENSO has set its own criteria that are stricter than environmental legislative regulations, and has applied them inside and outside Japan.In fiscal 2006, to minimize risk at the sites overseas, the Company poured its efforts to uncover risks and issues by a compliance audit. The deviation from legislative regulation level, complaints, and accidents found in the

audit are listed in the table below. Corrective actions have been completed for all the cases. The Company was not subjected to any fines or penalties inside and outside Japan. Also, the Company faced no environmental lawsuits.

Report on purifying soil and groundwaterDENSO has emphasized environmental conservation of soil and groundwater, and, since the 1980s, the Company has conducted voluntary investigation according to the usage record of environmentally hazardous substances. This investigation has encompassed all of its factories and plants. In the event that a pollutant is detected exceeding the regulation value, the Company immediately files a report with the government, while clarifying causes, assessing environmental impact, and conducting purification.In 1998, organic chlorine substance was detected at four sites of DENSO. Their amount exceeded environmental standard level and thus purification measures were taken. The purification of soil was completed in fiscal 2001, while that of groundwater is continued. The values measured and the progress of purification countermeasure are explained and reported to the government. The same information is reported and explained at community exchanges.

•Environmental incidents and complaints

Legal violations

Fines, penalties, lawsuits

Incidents

Complaints

Concerns

* Complaint of forklift noise late at night, complaint of odor from a sludge dryer.

DENSO Japan Group companiesin Japan

Group companiesoverseas

0002*

0000

0000

Daily check, Monitoring according to voluntary criteria, Maintenance,Drill of emergency response

Sampling and assessment of facilities and operations in riskInvestigation and check of risk handling

•Environmental risk management system

Maintenance・Management

Check and inspectionon environmentmeasurements

Risk analysis

Risk handling

Occurrence of incidents Emergency response, Collect and report informationDisclose and file information, Preventive measure for recurrence

Daily check, Monitoring according to voluntary criteria, Maintenance,Drill of emergency response

Countermeasures on hardware: Introduce equipment or facilitiesCountermeasures on process: Penetrate work procedures

The substances were detected only at the locations listed above.

•Measured value of trichloroethylene Environmental standard level:0.03 mg/l or less

Location Groundwater concentration at site (mg/l) Current status

HeadquartersIkeda PlantAnjyo PlantNishio Plant

Less than 0.002 up to 1.334




Under purification

Under purification

Under purification

Under purification

Precautionarymeasures

Minimizationof crisis

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119

664

Effects

Cost ofDENSO Japan

Costs

Consolidated, insideand outside Japan

81

542

70

•Environmental accounting (Environmental conservation costs and value of environmental effects)

700

600

500

400

300

200

100

0‘02 ‘03 ‘04 ‘05 ‘06 (Fiscal year)

280247

508

(200)(218)

47 60

(100 million yen)

(463)(519) (506)

•Environmental education in fiscal year 2006

Total seminar hours : 5,581 Total participants : 3,043

Excluding group companies inside and outside Japan

Total participants

New recruits

Skilled workers in medium-level

Assistant managers, team leaders

Managers (engineering)

Managerial level e.g., managers, general managers, plant managers

Organizational class

96459799696

390

Environmental educationDENSO has implemented environmental education in order that all associates continuously conduct activities with a high environmental awareness. The program is provided in accordance with organizational class and specialty area, and is comprised of the education on the environment in general and that on ISO 14001. In other words, the program corresponds to responsibilities, functions, and specialties of associates. To raise the attendance rate, an e-learning is deployed for the education on the environment in general whereby the constraints on schedule or place of lectures are reduced. In the education by specialty area, the Company is pouring its efforts to the “Seminar on Nurturing Leaders” for engineers. The seminar emphasizes the on-site education at the factories that deal with part-reusing or at the workplaces in charge of recycling. On the other hand, at the plants overseas, DENSO implements environmental education programs considering regional characteristics. Meanwhile, environmental officers at each company come to the headquarters of DENSO Japan for environmental seminars.

Environmental accountingDENSO appropriately allocates its environmental management resources, as quantitatively comprehending the costs and effects of environmental conservation. Meanwhile, as a tool for an efficient promotion of environmental management, the Company has deployed the “Environmental Accounting” since fiscal 1999. The results of the environmental accounting are used not only as a reference for a continuous improvement of environmental activities, but also as the data for the information disclosure which allows stakeholders to understand the Company. The “environmental conservation cost” for fiscal 2006 substantially increased to 12.2 billion yen, 22% higher than the previous year. This was because that, compared with the previous year, there were the increase of: 9 billion yen in capital expenditure; 4 billion yen in labor cost for research and development of products; and 1 billion yen in the cost for environmental advertisements. These increases were in step with the rise in investment for expanding production and strengthening research and development, amid a rising output of vehicles worldwide. On the other hand, “environmental conservation benefit” amounted to 11.9 billion yen, 47% or 3.8 billion yen higher than the previous year. This was because that, following the hike in price, the revenue from the sale of recycled materials was increased by 3.8 billion yen.

T O P I C S

Held “Eco-Seminars” and “Eco-Tours” in the education for environmental engineers In June 2006, as a part of events during the Month of the Environment at DENSO Japan, the Company held the “Eco-Seminar” for the selected 34 associates in product development and the “Eco-Tour” for the selected 142 associates in manufacturing. The Eco-Seminar included the lecture on the “Environmental Factors for Products” introduced at DENSO Japan and the visit to a vehicle recycling factory at the ARBIZ Co., Ltd., Japan. In the seminar, the associates learned about the development of environmentally- conscious products and the methods of recycling. In the Eco-Tour, the associates observed the examples of process improvement, which lead to energy saving, at the production lines of other

departments. The participants referred to the examples for the improvement in their departments.

Eco-Seminar Eco-Tour

The increase of costs after 2004 is due to a revision in calculation criteria for research and development cost (a change in its range to include the costs of preliminary research, pilot product development, and designing and development for mass-production )



Activities of China Environment CommitteeAiming to lead the harmony of economic growth and the environment In 1994, DENSO started manufacturing car air conditioning systems and compressors in Shandong. Since then, the Company has increased its sites in keeping with the growth of the automobile industry in China. At present, DENSO’s businesses of manufacturing, sales, and after-sales service have been spread out throughout the country, and about 7,300 associates work in such businesses. Meanwhile, the Chinese government is speedily furnishing the legislations to improve environmental problems. Amid such situations, in April 2006 DENSO set the

China Environment Committee to promote the “ECOVISION 2015.”Thus, the Company started its full-fledged activities with the aim of leading the environmental aspect in the region.

Pouring efforts to strengthen structure and develop human resources, as uncovering issuesIn fiscal 2006, as a first step, an on-site investigation was conducted at eight manufacturing sites listed for the consolidated environmental management whereby respective issues and risks were sought to uncover. At the same time, the “Environmental Liaison Meeting,” which comprises persons in charge of the environmental affairs at 13 sites in China, was launched. In the meeting, the penetration of compliance, the strengthening of management structure, and the development of human resources were discussed. From fiscal 2007 onward, DENSO is going to steadily spread out a PDCA cycle to accomplish seven targets including “promotion of energy saving,” “reduction in

material loss,” “voluntary reduction of chemical substances,” and “reduction of water usage,” which are based on the Common Guidelines for Group Companies Overseas.

China Environment Committee

A risk assessment activity at a site in China

Global highlight

•Results of investigation (Number of sites)

Air Water qualityNoise

Wastes

Environmental factorsClear ofproblem

Measures required

Onimprovement

Improvementrequired

to beinvestigated

75843

---2---1---

11---35

55555

•Situation of business spread in China

Manufacturing companiesNon-manufacturing companies

Regional headquarters

DICH

YSD

DHMW

TACK

DCSSDFI

DMGZ

TDSTDETDATTBGACTJDMTTTPE

CQD

TAMCTFDAJWCHDMTI

DMNSTBFCDJECAGU

V O I C E

We promote environmental management beyond the expectations of Chinese society

Amid a rapid economic growth, the environmental problems which Japan have experienced are appearing in China as well. The history has proved that a company succeeds when it precedes in environmental responsiveness. At present, five of DENSO sites in China have acquired the ISO14001 certification. DENSO will diffuse the environmental technologies together with the promotion structure which the Company has fostered. As such, DENSO will respond to the expectations of Chinese society.

Chairperson, the China Environment Committee

Noboru YamadaDENSO (China) Investment Co., Ltd.

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Green: those consolidated for environmental management Gray: Supportive affiliate companies (non-consolidated)

General wastes Special wastes


Development and DesigningEco products


•Environmental efforts on vehicles and DENSO products from lifecycle perspective

DENSO finds an environmental aspect of advanced automotive society in the product manufacturing which balances the “consideration of the environment” and the “enjoyment fulfilled with vehicle potential.” To realize such manufacturing, with the advantage of prominent technological prowess, DENSO is striving to reduce any environmental impact during the entire lifetime of a vehicle. Meanwhile, the Company is pursuing the product development to increase the functionality of vehicles as high as possible.

Working on product life-cycleIn product manufacturing, DENSO conducts the assessment on environmental impact encompassing the entire lifetime (life-cycle) of a vehicle, that is, from extraction of raw materials to development, production, delivery, and, through customer use, to recycling or disposal. Then, the Company specifies the life stages with large environmental impact, together with key issues. All of these findings are drawn on to reduce the environmental impact. The “Life Cycle Assessment (LCA)” is an important tool to assess environmental impact. As shown in the flowchart below, DENSO clearly positions the relationships of environmental issues and a vehicle or its components, thereby conducting development and designing.

Also, as a leading member of the Japan Auto Parts Industries Association, DENSO collaborates on the investigation and the data provision for the standardization of LCA by the Japanese Ministry of Economy, Trade, and Industry. Also, the Company collaborates on the data compilation for another LCA worked on by automakers.

Effectively reducing environmental impact from very beginning

In order to effectively reduce environmental impact during a product life-cycle, it is important to reflect environmentally-conscious technologies at the very beginning of product lifetime stage, that is, the development and planning stage, by conducting preliminarily assessment of environmental impact in successive lifetime stages. Basing its environment management system for products, DENSO sets developmental targets to increase fuel efficiency, raise recycling rate, and reduce the content of environmentally hazardous substances. These targets are set to solve the issues of “global warming prevention,” “resources recycling,” and “reduction of environmentally hazardous substances.” The results of the efforts are spread out to the development of new products that balance performance and environmental consideration.

Decrease of specified CFCsand CFC substitutes

Decrease of engine noise; improvement of mufflers and tires

Decrease of engineload by power-saving parts

Highly efficient carair conditioning systems, electric power steering motors, and others.

Purification ofexhaust gases

Exhaust fromtailpipes

Emission fromfuel systemsEmission duringrefueling

Improvement offuel-injection systems

Purification bychemical reactions

Prevention of gasolineemission into the atmosphere

Battery ECUs, DC-DC converters,electric compressors

Decrease of energyconsumption

Development of air conditioningsystem using natural refrigerant

Improvement ofengine efficiency

On-board ETC (electronic toll collection) equipment, car traffic control system

Improvement of engine-injection systems

Direct-injectiongasoline engine

Variable valve-timing mechanism

Diesel engines

Reduction of frictional resistance in each engine part

Decrease ofgreenhouse gas usage

Increase of fuel efficiency

Technology for utilizing shredder dust

Recycling of disposed vehicles

Energy saving

Reuse of CO2

Recovery and destruction of CFCs

Decrease of waste generation

Natural refrigerant (CO2) heat-pump water heater

CFC-free car air conditioning systems

Decrease of refrigerant filling

Decrease of refrigerant leak

Countermeasures for vehicles

Responses of DENSO

Development of energy-saving components

Hot-gas heating systems

Common rail system for diesel engines

DPF, monolithic substrate

Catalyst, A/F sensor

Reuse of parts

Equipment for reusing and recovering CFCs

Food scrap processor

Development of new power sources

Efforts to reduce environmentallyhazardous substances

Efforts to improve fuel efficiency of vehicles

Efforts to purify exhaust gases of vehicle

Efforts to decreasethe global warming impactof air conditioning systems

Efforts to develop clean-energy vehicles

Efforts to reuse automotive parts

Wasteissues

Wasteissues

Globalwarming

Airpollution

Resourcedepletion

Noise

Ozonedepletion

Environmentalissues

Environmentally-conscious designing

Recyclabledesigning

Development of substitute materials

Recycling-conscious designs

Reduction of environmentally hazardous substances

Improvement of recyclability rate

Natural gas vehicles, hybrid vehicles, fuel cell vehicles

Improvement of EFI, injectors for finer spray atomization

Components for direct-injection

Variable valve timing (VCT)

Common rail system

Improvement of powertransmission efficiency

Reduction of body weight

Decrease of congestions

Reduction of running resistance

Automatic transmission systems

Lightweight parts

ITS

Decrease of air resistance and rolling resistance

Stageof

develop-ment

Stageof use

Stageof

disposal

Establishing Environmental Factors for Products

(1) What is the Environmental Factors for Products?Reduction of environmental impact together with the increase in safety, driving performance, and comfort is demanded in the development of automotive components. As such, DENSO has made efforts to quantify the balance of “environmental performance” and “product value,” thereby deploying such quantification as a metric to compare a conventional product with a new product in terms of environmental performance and technological progress. These efforts have borne the “Environmental Factors for Products.” Since fiscal 2005, the Company has coordinately worked on the set-up of the factors with the Japan Auto Parts Industries Association. In March 2007, the “Guidelines for Environmental Factors for Products” were compiled to permeate the factors into automotive parts industry. In December 2006, with the recognition of “the set-up of the Environmental Factors for Products,” the Japan Forum on Eco-efficiency* awarded the Japan Auto Parts Industries Association with “the Eco-Efficiency Award, of which the Incentive Award for Promotion Activity.”

(2) The idea of calculating the factorsThe themes of the factors are “global warming,” “resource depletion,” and “emission of environmentally hazardous substances.” These themes were selected in accordance

with the Basic Environment Law in Japan. Among the variables for the calculation, the global warming potential and the impact of environmentally hazardous substances are based on the values which are widely used as standard. Also, striving for securing transparency, impartiality, and credibility, the entire life-cycle of a product is included in the scope of assessment.

(3) Introduction of the factors and future planFrom fiscal 2007, DENSO has started operating the Environmental Factors for Products. The Company is going to spread this out to the maximum possible number of product development. In this way, the Company is going to find out new issues and seek to improve the factors. At the same time, DENSO is going to openly disclose the data to business partners such as automakers, as well as the society, whereby the Company strives for the recognition and permeation of the factors. Additionally, in order to facilitate the indication of environmental values of a product, the Company is discussing on environmental labels such as “Green Product Declaration” for the products that have reached a certain environmental level.


•Established the procedure for the “Environmental Factors for Products” to increase product performance and decrease environmental impact throughout the product lifetime


As for a trial example, DENSO assessed the year 2002 model and the year 2006 model of gasoline engine ECU. The basic condition of this assessment is that the old model and the new model are equivalent in terms of product functionality. The results of the calculation are as follows. In comparison with the old model, the new model is: 1.8 times better in the global warming index; 1.6 times better in the resource depletion index; and 1.9 better in the environmentally hazardous substance index. Hence, the improvement in environmental technology has been quantitatively confirmed.

•A trial example of the Environmental Factors for Products

•Calculation method for Environmental Evaluation Factors for Products[Scoring of performance](1) Segment product performance(2) Give weight by score(3) Assess results and sum up scores

[Global warming: calculation of CO2 emissions](1) Set assessment stages

materials -> parts-> production -> use -> disposal(2) Calculate CO2 emissions in each stage(3) Sum up CO2 emissions in all stages

[Calculation of the environmental impact level of environmentally hazardous substances](1) Investigate the content of target substances

following the Material Safety Data Sheet(2) Calculate the environmental impact by

substance based on a conversion table(3) Sum up the impact of each substance

[Resources depletion: Calculation of amount of materials used](1) Calculate the mass of materials used following

the Material Safety Data Sheet(2) Calculate the usage amount of recycled materials (3) Calculate the amount of recycled resources(4) <(1) – (2)> + <(1) – (3)>

Eco-efficiency

=

Environmental Factorsfor Products

=

Product performance(positive aspect)

Environmental impact(negative aspect)

Eco-efficiency of new products

Eco-efficiency of conventional products

In the calculation of the factors, the objectivity persuasive for a majority of people is demanded. As such, the concept of the “Factors,” which has proposed since the 1990s by researchers worldwide and the World Business Council for Sustainable Development (WBCSD), is applied. The “Factors” are calculated in a positive way by deriving the “eco-efficiency” of a product or service, thereby positively assessing technological progress with the Factor X.

Degree ofimpact:3500

15.5/3500=0.0044

Degree ofimpact:3100

26/3100=0.0084

0.0084/0.0044=1.9 times

Amountused:538g

15.5/538=0.029

Amountused:580g

26/580=0.045

0.045/0.029=1.6 times

CO2:18kg

Globalwarming

Resource depletionEnvironmentally hazardous substances

Product performance

Environmentalimpact

Eco-efficiency

Eco-efficiency

Old product (year 2002 model) New product (year 2006 model)

Factors

Product

15.5/18=0.86

CO2:17kg

15.5 26.0

26/17=1.53

1.53/0.86=1.8 times

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*An organization to investigate, research, diffuse, and advocate the environmental efficiency.

An seminar on Environmental Factors for Products at the Japan Auto Parts Industries Association

The representative of the Japan Auto Parts Industries Association received an award from the Japan Forum on Eco-efficiency

Express the comparative advancement against conventional products in a factor (multiplier)



•Function and structure of the VCT

Electric VCT

•Mechanism of double-sided cooling

•Improved combustion efficiency by developing the world’s first Electric VCT

•Installed new PCU in hybrid vehicles•Increased fuel efficiency by improving the efficiency of air conditioning

systems and heat storage systems•Researched new navigation systems that contribute the improvement

in traffic flow


VCT


Reducing CO2 by increasing fuel efficiency

(1) Developing world’s first Electric VCTThe combustion efficiency of an engine increases by intaking fuel-air mixture and exhausting combustion gas in an optimal timing. As a result, power and fuel efficiency increase, while reducing exhaust gases. The “VCT”* is a device which controls the opening and closing of the valves that allow these performances. DENSO realized, for the first time in the world, the electrification of VCT by motor drive, instead of oil hydraulics control that has been used in conventional VCTs. The electric VCT enables precise valve control at the engine starting and the low range of revolution, which is difficult for the hydraulically controlled VCTs. The system was firstly resulted from the development of a key mechanism (the plate spiral) comprised by the components with spiral grooves, and secondly from the

success in mass-production technology that allows a precise machining at the micron level. The electric VCT increased the power by 1%, the fuel efficiency by 3.6%, and the performance of exhaust-gas purification by 21%. This product is installed in Toyota’s “Lexus LS460,” which has been on sale since September 2006.* Variable Cam Timing

(2) Improving performance of components for hybrid vehicles The PCU is a crucial component that consists of the “converter,” which raises the main battery voltage (288V) up to the maximum system voltage (650V), and the “inverter,” which converts the direct current generated by the engine drive into alternate current and controls the revolution of main traction motor within an optimum frequency. In recent years, as medium-sized vehicles become hybrid, the PCU which is smaller in size and higher in output is demanded. However, as to realizing high output, the restraint of rising temperature has been the issue.Confronting this issue, DENSO applied its unique technologies in power semiconductor devices and radiator manufacturing, whereby the new PCU was developed . In this PCU, the thermal resistance is substantially reduced due to the downsized semiconductor devices and the world’s first “Sandwiched cooling layer structure.” The output power per unit volume was increased by roughly 60% in comparison with the conventional model of the

[Conventional] Cool device from one sideHeat resistance: 0.5°C/W

[New] Elements cool from both sidesHeat resistance: 0.2°C/W

Power devicePower device inbetween cooling tubes

Double-sided coolingtube in layer structure

•Structure of cooling system for hybrid vehicles

PCU (with double-sided cooling tube)

Transaxle(such as motor)

Special radiatorfor hybrid

Airflow

Water

Waterpump

Absorb heat

Dissipate heat from both sides

Camshaft Intake valve

Intake valve

Exhaust valve

IntakeExhaust

Radiateheat Supply

water

Power device in between cooling tubes

Double-sided cooling tube in layer structure


Company and, provided the output is the same, the product volume can be reduced by 30%, as well as the weight by 20%, compared with the conventional models of the Company.At the same time, the Company sought to improve the radiator (heat exchanger), which radiates the heat of water warmed by PCU, and the condenser in air conditioning system. Thus, a roughly 45% reduction (thinning) in the total size of the cooling module was achieved. As of May 2007, this system has been installed in Toyota’s “Lexus Hybrid LS600h/LS600hL.”

(3) Improving efficiency of car air conditioning systemA car air conditioning system compresses and liquefies the refrigerant by a compressor, vaporizes it in a cabin unit called evaporator, and dissipates the heat. This is the mechanism of cooling. During this process, the refrigerant reciprocates vaporization and liquescence, while repeating the states of high or low temperature. These two states of refrigerant are separately brought by discrete pipes. DENSO took note of this difference in temperature. Then, the company developed the “double-pipe internal heat exchanger.” The heat exchanger integrated two pipes, which had been separated in a conventional refrigeration cycle, into one pipe which consists of inner and outer tubes. As a result, the cooling performance was increased by 5-12%. The length in which the two pipes are combined as a double pipe is just 40cm, though, a unique “spiral groove” on the inner pipe

realizes such high heat exchange performance.In January 2006, a new air conditioning system featuring this heat exchanger was installed in the Toyota “Landcruiser” (for sale in the Middle East and North America).

(4) Improving traffic flow using ITS technologyDENSO has participated in a cooperative research on the PRONAVI*1, which involves industry, academia, and government. The PRONAVI is the next navigation system capable of forecasting traffic jams and showing the optimal travel route with reference to the past and present data in probe information*2 (see p13-14)

*1 The name of a navigation system under a cooperative development in the “P-DRGS Consortium,” which consists of the Nagoya University, the Japan Weather Association, and private industries

*2 A technology in which each vehicle is considered as a “probe” in a traffic society and the vehicles are equipped with sensors so that they transmit data to be used to avert such as traffic jams.

•Heat-storage tank using thermos technology

Double-pipe internal heatexchanger

•Structure of a double-pipe internal heat exchanger

Cutawaysection

Heat storage tank

Water pump

Gas flow in inner tube

Inner tube

Outer tuber

Liquid flow in spiralgrooves on inner tube

T O P I C S

Production of heat storage system for engine warm-up has surpassed 300 thousand units

If an engine is cold on its start-up, it functions less than its real potential, and thus the engine in such condition increases the concentration of hydrocarbons (HC)*1 in the exhaust gas, compared with a warmed-up engine. In order to improve this issue, in 2003, DENSO, the Toyota Motor Corporation, and the Tiger Corporation cooperatively developed the world’s first heat storage system for engine warm-up and the system has installed it in the Toyota “Prius” for sale in North America. In this system, a portion (three liters) of the cooling water warmed during the driving is stored in the tank born from heat retention technologies for thermos bottles. Then, the hot water at 65ºC or higher is supplied on next engine start-up, whereby the engine is quickly warmed up. As a result, this system reduces the content of HC in exhaust gas on engine start-up by 14%, efficiently using the heat energy that has been wasted. In November 2006, the production of this heat storage system has surpassed 300 thousand units.

*1 It is generally understood that unsaturated hydrocarbons react with ultraviolet ray and thus cause photochemical smog.

*2 Given the cooling water warmed to 85°C in a vehicle has left for 24 hours in an ambient air temperature of 22°C.

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•Promoted research and development of plant-based plastic materials •Spread out assessment of plastic reprocessed from PET bottles•Produced and permeated rebuilt parts


DENSO REMANI Corporation http://densoremani.co.jpURL

Before reconditioning

Alternator

After reconditioning

Resource recycling

Improving recyclabilityBoth a long-time usage of components by the re-using and an increase in recyclability of disposed vehicles are important to effectively use raw materials. As such, for the stage of product development and designing, DENSO has set the target to apply the product structure easy to dismantle and the materials easy to recycle . In the meantime, the Company has been proactively working on the development of technology to retrieve materials from used products. Besides, the Company has been making active efforts to develop materials that do not increase CO2 in the atmosphere through the incineration process of thermal recycling.

Researching plant-based plasticsThe thermal recycling, in which heat energy is reclaimed by incineration, is considered to be a mainstream of recycling for plastic components. However, there is a concern, in that thermal recycling would increase CO2 in the atmosphere. But, if a plant-based plastic were burnt, it would not increase the total amount of CO2 in the atmosphere, unlike fossil fuel-based plastics. Also, the use of plant-based plastics would reduce the consumption of fossil fuel, which is concerned to be depleted.DENSO is currently making efforts to switch the main resins, such as polypropylene (PP), polyamide (PA) 66, and polybutylene terephthalate (PBT), to plant-based plastics. Also, the Company is researching the mass production of the new plastics. In fiscal 2006, DENSO assessed and selected the possible alternative plant-based plastics. Also, the endurance assessment was conducted on some products with these plastics.

Extending lifetime of products by rebuildingEfforts at DENSO REMANI CorporationMany of alternators (electric generator) and starters removed from used automobiles can be sufficiently functioned if their abraded components, such as brushes and bearings, are replaced and refined. DENSO REMANI Corporation (Anjo City, Aichi, Japan) reconditions such products. The quality of the reconditioned products is

assured by the performance inspection comparable to that for a new product. These products are shipped as the “rebuilt” products. In fiscal 2006, about 70 thousand units were shipped to the marketplace in Japan. Since fiscal 2000, 320 thousand units of rebuilt products have been produced whereby the corporation has been contributing the product longevity and resource recycling.

Controlled and reduced environmentally hazardous substances

Control and reduce environmentally hazardous substances

To increase the performance and maintain the quality, the environmentally hazardous substances, such as lead, cadmium, mercury, and hexavalent chromium, have been used in automotive components. However, once the components have been disposed at the end of their lifetime, such substances would harm human body, as well as ecology. As such, since 2000, statutory environmental regulations addressing the product disposal stage have been set and strengthened. DENSO considers the reduction and the elimination of these substances as an urgent task. Thus, by means of substitution, the Company is making efforts to reduce and eliminate not only the regulated substances but also those of non-regulated.

•Established a structure at group companies inside and outside Japan to assure the non-content of environmentally hazardous substances

•Substituted hexavalent chromium contained in products•Promoted the use of lead-free solder


•DENSO’s response to laws and regulations

Set up voluntary targets Reviewed voluntary targets

Year

Europe

Japan

DENSO

98 99 00 01 02 03 04 05 06 07 08

Enforced in JanuaryEnacted in July

Enacted ineach country

Japan AutomobileManufacturers Association

End-of-Life VehicleRecycling Law

EU-ELVDirective Enacted

Reviewexemption Prohibited in principle the use of hexavalent chromium,

lead, cadmium, and mercury (with some exemptions)

Enforced in July

Instead of legislation, set up voluntary target of industry


•Strengthened the efforts on the certification system of the DENSO Eco-service Station


(1) Control structure for environmentally hazardous substances

To control and reduce environmentally hazardous substances, a firm promotinal structure in coordination with supply chain is indispensable. DENSO has set the “Restrictions on the use of environmentally hazardous substances to materials or products (DDS2004).” At the same time, the Company has been striving to spread out and re-penetrate the measures to prevent the market release of the four substances hazardous to the environment (lead, cadmium, mercury, hexavalent chromium), thereby eliminating such substances from any DENSO- brand products.As a part of the measures, in fiscal 2006 DENSO listed the group companies, as well as the affiliate companies, which are related to the designing and manufacture of DENSO- brand products (of which 32 in Japan, 48 overseas). Then the Company paid a separate visit to these companies for the purpose of issue extraction, improvement instruction, and supportive activity so that the Company established and strengthened its control structure. Also, since 2003, DENSO has been working on an industry-wide activity to standardize and integrate a set of questionnaire prepared by the Japan Automobile Manufacturers Association (JAMA) / Japan Auto Parts Industries Association (JAPIA).The objective of this activity is to streamline the investigative job on environmentally hazardous substances used in the supply chain. In fiscal 2006, DENSO compiled and applied this questionnaire group-wide.

(2) Replacing hexavalent chromiumHexavalent chromium is widely used for anti-rust plating. DENSO has worked on switching hexavalent chromium to such as trivalent chromium, which is less hazardous to the environment. By the end of March 2007, the Company has almost completed the switch inside and outside Japan.

(3) Substituting lead solderSolder, which is commonly used for the connection on the conductive points in electronic and electrical components, contains lead alloy. Although solder is

exempted from such regulation as the EU-ELV Directive, DENSO continuously makes efforts to substitute solder and phase the solder substitutes in to newly-designed mass products.

Efforts in the stage of product usage

Certification system of the DENSO Eco-service Station

In Japan, as to the after-sales service of DENSO, the eight regional sales companies and 691 service stations (designated service stations and dealerships) coordinately check, repair, reuse, and recycle automotive components.In 2001, in order to promote environmental measures, DENSO set a system in which an excellent station in environmental profile is certified as a “DENSO Eco-service Station.” In this system the following points are audited every year: (1) proper recovery of CFC gases; (2) processing of industrial waste; (3) identification of environmentally hazardous emissions; (4) energy saving; (5) awareness of associates together with a furnished occupational environment; and (6) proper response to the End-of-life Vehicle Recycling Law in Japan. A station which has received a full score in all items is certified as an Eco-service Station. The rate of certification has been increasing year by year. By the end of fiscal 2006, 669 stations, or 97 percent of total stations have been certified (94 percent at the last fiscal year-end). Also, in fiscal 2006, 109 stations (86 stations in the last fiscal year) were acknowledged as the model of “Environmentally-Friendly Automobile Service Station,”* under a project promoted by the Japanese Ministry of Land, Infrastructure, and Transport.* A recognition which acknowledges and publicizes the businesses that proactively make efforts in environmental countermeasures such as the recycling of automotive components and the collection of CFCs to address a recycling-based society.

Work at a service station Eco-service Station certificationBefore switch After switch

Switch of hexavalent chrome

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Manufacturing and LogisticsEco factory


•CO2 basic unitConsolidated: Target: 80% or less, compared with year 2000; Result:

73% (accomplished)DENSO Japan: Target: 56% or less, compared with year 1990; Result:

54% (accomplished)•CO2 Emissions

DENSO Japan: Target: 117% or less, compared with year 1990Result: 120% (not accomplished)

•Wholly checked improvement in energy saving (making reduction

“visible,” scoring)•Settled gas removal facilities to reduce the five gases•Started spreading out DENSO Energy Saving Standards worldwide


With the aim of an environmentally-leading company, DENSO promotes the saving in resource and energy to steadily reduce the global environmental impact of manufacturing. At the same time, the Company sets voluntary targets according to regional characteristics around the world, thereby working on the production activity in harmony with the environment.

Turning manufacturing sites across the world into Eco-factories

As a desirable figure of factory addressing a sustainable society, DENSO placed the “Eco-factory” in the “Fourth Environmental Action Plan.” The aim of “Eco-factory” is to enhance the previous efforts of the Company and build a factory in which the environmental impact in all manufacturing stages are reduced. As such, DENSO strives to achieve high production efficiency, while reducing environmental impact as much as possible by means of continuous improvement. In order to achieve the aim, DENSO is going to set respective targets and build model factories. As such, the factories of the Company in the world will be turned into Eco-factories.To increase the efficiency of energy usage at its factories, while minimizing energy loss, in fiscal 2006 DENSO spread out the activities for the Perfect Energy Factories. In addition, the Company spread out the following: reduction in generation and emission of wastes; activities for zero emission (zero landfill waste); and reduction in the usage of environmentally hazardous substances such as chemicals.


Minimization of energy loss and streamlining

Efforts towards 2010In “The First Environmental Action Plan (formulated in 1993),” DENSO set the energy saving as one of the substantial items to work on. Since then, the Company has worked out a unique system to make the energy consumption in a manufacturing process “visible,” and charge directly the energy cost by manufacturing department. Meanwhile, the Company has strived to raise the awareness of energy saving. Thus, DENSO has strengthened the environmental efforts in the production.In “DENSO ECOVISION 2005 (formulated in 2000), DENSO placed three major pillars of “Building PEF (Perfect Energy Factories),” “Researching and developing energy-saving technologies for processing,” and “Spreading out co-generation facilities speedily.” As such, the Company has strengthened its energy-saving activities. Now, in “The Fourth Environmental Action Plan,” which is based on “DENSO ECOVISION 2015 (formulated in 2006),” DENSO aims to minimize the impact of entire corporate activity on global warming by 2010, keeping an eye on the target period of the Kyoto Protocol. In this way, the Company is pouring its entire efforts to promote respective group-wide activities.

Activities for fiscal 2006In the factories in Japan, DENSO has set the base of activities for PEF to minimize energy loss. Then, the seven themes, including the use of blowers for the air-blow

100 96 93

79 79

100

50

0

(index)•Shift in CO2 basic unit of the DENSO group

‘02 ‘03 ‘04 ‘05 ‘06‘90 ‘01 (Fiscal year)

(Fiscal year)

DENSO Japan

Consolidated Basic unit =CO2 emissions

Sales

89 8781

7266

59

73

54

Target for 2010Consolidated80% or less, compared with 2000DENSO Japan60% or less, compared with 1990

‘04

81.913.7

68.2

‘05 ‘06

82.615.0

67.6

‘02

76.911.7

65.2

35.7 42.7*

84.8

15.4

69.4

56.045.4

‘03

79.013.0

66.0

Group companies overseas

Group companies in Japan

DENSO Japan38.5

*Partial calculation

(unit: 10,000 t-CO2)

100

50

0

•Shift in CO2 emissions of the DENSO group

Target for 2010 DENSO Japan90%, compared with 1990

Please refer to page 60 for the calculation method of the CO2 emissions


function in cleaners and the use of energy-saving nozzles for air guns, were spread out Company-wide. Also, the Company miniaturized and rationalized processing equipment with newly developed technologies. Moreover, the Company poured its efforts to operate co-generation facilities efficiently.In the group companies inside and outside Japan, DENSO has started spreading out the “DENSO Energy-Saving Standards” by which the following have been incorporated into environmental management: the indexation of reduction in CO2 emissions; the operative procedure for energy saving; and the energy saving of equipment. For the first step, the Company conducted worksite diagnoses (17 companies in Japan and 42 companies overseas). The progress of environmental efforts was classified into four stages of “Understanding -> Founding -> Developing-> Maturing.” The standards will be phased in following the state of efforts by company. As a result of these activities, both on consolidated basis and non-consolidated basis, the target for basic unit of CO2 emissions was accomplished. On the other hand, DENSO Japan did not accomplish its target for total CO2 emissions, because the production rose above the plan. This outcome left the Company an issue for the next fiscal year.

Building Perfect Energy Factories(1) Reducing energy loss to nearly zeroEliminating energy loss is important for DENSO to promote energy saving. In particular, the Company is making efforts to reduce the usage of electricity, which represents 68 percent of its energy usage. The bases of these efforts are: to make energy consumption “visible” in the manufacturing process; to make explicit the issues by scoring the progress of activities; and thus to do every possible improvement measures. In fiscal 2006, DENSO

•Measures to reduce CO2 emissions

Procedures

Reductionmeasures

•Share DENSO ECOVISION 2015 •Announce concept of DENSO Eco factory •Spread out “DENSO Energy-Saving Standards” inside and outside Japan

•Launch new energy-saving factory lines •Spread out energy-saving air blowers over the group•Spread out energy-saving air nozzles at once•Check and repair leaks of compressed air •Electrify molding machines•Penetrate turning facilities off between operating times•Educate energy saving to all associates

•Miniaturize equipment for machining and heating •Circulate waste heat and the cold •Introduce machining machines for dry processing

•Introduce co-generation facility with 15,000kW at Daian Plant, Japan

•Supply electricity with wind power generators (0.5kW at Toyohashi Plant, 0.5kW at Daian Plant, 3kW at Agui Plant, all in Japan)

Development of energy-saving technologies

for processing

Co-generation facilities

New facilities of utilities

Activities for Perfect Energy Factories (PEF)

Co-generation facility at Daian Plant

16 17

30

20

10

0

(%)

•Shift in in-house power generation deploying co-generation

‘91

=Rate of in-house

power generationRate of

in-housepower

generation

Amount of in-house power generationTotal usage of electricity

(Purchased power + in-house power generation)

18 21

31 31

Conversion factors for CO2 used in the calculation of CO2 emissions

Electricity

Heavy fuel oil (A)

Kerosene

0.3817kg-CO2/kWh

2.7000kg-CO2/L

2.5308kg-CO2/L

Propane

City gas

3.0094kg-CO2/kg

2.2559kg-CO2/m3

*Reference of conversion factor for CO2: A publication of Japan Automobile Manufacturers Association

introduced the blower facility with high energy-saving effect and spread out the 4,000 units of energy-saving air gun at once. These facility and tool address the reduction in the usage of compressed air which has been commonly used to dehydration or blowing. In addition, in the activity of full-check at all production lines, the Company scored the degree of progress in countermeasures. The total average score was 97 (out of 100).

(2) Deploying co-generationSo far, DENSO has introduced 13 of highly energy-efficient co-generation facilities in which thermal power generation with natural gas and exhaust heat are used in combination. In fiscal 2006, the electricity generated within the Company was 474 thousand MWh, reaching 31% of total electricity usage. In April 2007, the equipment with generation capacity of 15 thousand kW has been introduced at the Daian Plant (Mie, Japan), whereby the Company plans to increase the rate of in-house power generation to 38%.

(Fiscal year)‘02 ‘03 ‘04 ‘05 ‘06‘01

Basic idea on the calculation of total greenhouse gas emissions at DENSOAt DENSO, all greenhouse gases defined in the Kyoto Protocol are added up. That is, CO2,

the energy-related greenhouse gas, and five non-energy-related greenhouse gases including PFC, HFC, SF6, N2O, and CH4. The annual emission coefficient set by region is the conversion factor for CO2 at DENSO. Inside Japan, the Company uses the conversion factors shown in the table below. Outside Japan, the Company uses the factors publicly announced in each global region. Please note that, in this report, the conversion factor for electricity is fixed for years, so that the company can assess the improvement in electricity usage. On the other hand, the reduction effect of CO2 by co-generation is converted by the average of conversion factors for different types of thermal power generation. The effect of co-generation is included in the CO2 emissions of the Company. As to the emissions of the five gases, their greenhouse effect caused by the Company had been calculated with the coefficient that assumes all the gases used are exhausted. However, from fiscal 2006, the Company has begun using another emission coefficient for the five gases. The coefficient is specified in detail by operational background in the manual in the “Law Concerning the Promotion of the Measures to Cope with Global Warming,” enacted and enforced in Japan.

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(3) Study group for energy-saving processing Since 1990, DENSO has organized a specialized team named “the study group for energy-saving processing” which has been developing and manufacturing the production equipment that contributes to energy saving. The team has been developing new technologies for 15 categories, including machining, plastic molding, heat treatments, die-casting, and cleaning. Such technologies have been phased in to each factory. The main themes of the development have been “downsizing,” “simplifying,” and “slimming.” So far, the team has developed a compact melting furnace and a molding machine, both for die-casting, a waste-heat recovery system, a compact machining machine, and the insulation materials with shorter hardening time. In fiscal 2006, eight themes in technological developments were newly brought into practical use, thereby reducing 3,800 tons of CO2 equivalent.

Reducing non-CO2 greenhouse gases Aside from CO2, five types of gases* are specified as greenhouse gases, and, from fiscal 2007, pursuant to the “Law Concerning the Promotion of the Measures to Cope with Global Warming,” enacted and enforced in Japan, a reporting on the five gases to the government is obligated. DENSO has set the target of “reducing emissions of the five gases to 70% or less, compared with that of 2003 by 2010.” As such, the Company has formulated a five-year reduction plan. In fiscal 2006, 11 units of equipment were set to remove the CFC substitute (perfluorocarbon (PFC)) used in semiconductor manufacturing process. As a result, 1,200 tons of CO2 equivalent were reduced. Also, the Company plans to precede the reduction of hydrofluorocarbon (HFC). * Perfluorocarbon (PFC) and hydroflurocarbon (HFC), collectively CFC substitutes, sulfur hexafluoride (SF6), dinitrogen monoxide (N2O), methane (CH4)

Various efforts to promote energy saving

Tennessee Chamber of Commerce & Industry awarded a group company, recognizing the saving in energy and water sourceDMAT, a DENSO group company in the U.S.A., has reviewed the operational state of seven cooling units for air conditioning and temperature control. Following the review, DMAT turned off some units and limited the operation rate during winter. As a result, 729m3 of water and about 1.6 million kW of electricity were saved. This reduction is equivalent to the annual 300 tons of CO2 emissions. In recognition of these results, the Tennessee Chamber of Commerce awarded DMAT with two prizes with reference to water resource and emission containment.

Introducing “Improvement in energy saving by compressed air” to skill trainingDENSO has incorporated the program of “Improvment in energy saving by compressed air” into the skill training which comprises a part of the corporate education system. This is also a part of energy-saving education at DENSO. It is held four times a year. The training consists

of practical training on air blower, measurement of air impingement pressure, the detection and repairing of air leakage, and the calculation of improvement effects. In the training, the acquisition of skills using actual manufacturing facilities is emphasized.

Energy-saving furnace for brazing aluminum Received the “Prize of the Chief, Chubu Bureau of Economy, Trade and Industry”

’06’00 ’03 (Fiscal year)

•Development on energy saving with aluminum brazing furnace

Increaseefficiency

Miniaturize

CO2 emissions

Decreased by 26%

Development of a energy-saving brazing furnace for aluminumA substantial theme for reducing CO2 at DENSO is to spread out the energy saving with new equipment. Since fiscal 2001, the Cooling Systems and Components Manufacturing Department has been developing an energy-saving brazing furnace for aluminum. The furnace is a type of hybrid heating sourced by an effective combination of city gas and electricity. The Department has spread out the furnace to the sites inside and outside Japan.In fiscal 2006, when another production line for round-type aluminum coolers (ATF warmer) was established, DENSO developed a new furnace called “compact, full-electric type,” in which efficient thermal conduction and radiant heating were used. This furnace reduced CO2 emissions by 26%. This effort was awarded with the “Prize of the Chief, Chubu Bureau of Economy, Trade and Industry,” in recognition of an excellent example of improving energy saving.

Education on improvement in energy saving

Conventionalfurnace

Electricity+

gas

Full-electric

Tennessee Chamber of Commerce & Industry awarded DMAT



•Reduced 2,900 tons of waste at DENSO Japan (Target: 1,300t or more)•Reduced 4,300 tons of waste at environmentally consolidated group

companies (Target: 2,600t or more)•Three overseas sites of DNMX (Mexico), DNMY (Malaysia), DNAZ

(Brazil) accomplished the zero emission


Amount ofwastegenerated Amount of waste disposed

(sum of incineration and direct landfill)

Amount of recycling

250

200

150

10

5

0(Fiscal year)’03 ’04

194

’05

220

’06

211

(1,000 t)

184.5 210 203

9.5 10.47.0

252

242

10.7

DENSO Japan

100

90

80

50

0’03 (Fiscal year)

80 8185

99

’04

99

’05

99 99

’06

(%)

Group companies overseasGroup companies in Japan

99 99

84

99

99

Resource recycling

Reducing waste and emissionsDENSO Japan and its 18 group companies in Japan have been practicing the zero emission since fiscal 2003. Meanwhile, the Company has developed the processing methods considering resource saving and has designed the products with less waste. In this way, the Company has been making efforts to contain the generation of wastes and emissions of subsidiary materials (fats, oil, and chemicals) and main materials (metals, plastics). In fiscal 2006, DENSO promoted: the increase of raw material yield; the decrease of off-spec products; the dehydrartion of effluent and sludge; and the prolongation of the lifetime of fats and oil. As a result, the waste reduction targets were accomplished. At the sites overseas, the Company promoted the activities of waste reduction following the discrete guidelines by region. In fiscal 2006, three overseas sites have newly accomplished the zero emission. At present, 11 out of 35 main sites are practicing zero emission.

Reducing water usageAmid a concern over the water supply with the backgrounds of economic development and rapid increase in the world population, DENSO has set the

action item of “reducing of water usage” in ECOVISION 2015. In this way, the Company has been working on the efficient water usage. For instance, the Company has been making efforts to use water efficiently and reduce wastewater by setting respective guidelines by region. At the manufacturing sites in Japan, DENSO deploys a multi-stage circulation in the cleaning process of plating and device treatment. Also, the Company applies a closed system to handle the wastewater from the undercoating treatment process. As such, DENSO is striving for a thorough purification and reuse of water. As an example of the efforts at the sites overseas, DMUK (the U.K.) has been keeping the precipitation in a tank and has been supplying it to its factory since 1997. In this way, DMUK takes its locational advantage of pluvious climate. By this effort, DMUK saves 15 thousand m3 of water every year.Other sites overseas have also been making the comparable efforts following their regional characteristics.

•Positioning of zero emission and the activities for reducing waste and emissionsReduce waste materials with the three Rs

Recycle (re-sourcing) Reduce (saving)Reuse (reclaiming)

Realize a production linewith less defects and waste

Design products with lesswaste generation

Develop processing methods considering resource saving

Reducing scrap by the review on application method for adhesives

DNMX (Mexico) and DMUK (the U.K.) were honored with environmental awards for zero emission activityIn 2005, DNMX started working on the educational activities to penetrate waste sorting. The infrastructure for recycling had been inadequately furnished, though, DNMX promoted the recycling of hazardous substances in coordination with the government. Also, referring to the example at DNIN (India), DNMX also promoted the composting of food scraps from cafeteria with the use of earthworms. In September 2006, DMMX finally accomplished the zero emission. A series of effort at DNMX was awarded by an environmental organization in the Estado de Nuevo León with the “Prize of Excellence in Environmental Activity.” Besides, in March 2006 DMUK accomplished the zero emission. In November 2006, with the recognition of this accomplishment, DMUK was nominated to one of the four finalists for the “National Recycling Award (industry category),” hosted by the publisher of “Material Recycling Week” in the U.K.

In the process of adhesive (silicone rubber) application to the “inertia sensor,” a component related to a vehicle braking system, the air had been contaminated into the adhesive at the change of adhesive cartridge. To purge the contaminated air, a portion of the adhesive had to be disposed (a wasting shot). Electronics Device Manufacturing Department 1 worked out an air purging method which drew on the characteristics of the adhesive and the lightness of air. In this method, the air is purged by leaving an adhesive cartridge for 20 minutes without pressure. Thus, the annual amount of waste adhesive generated from the wasting shots was reduced by 1.2 tons. This method was presented at the “2006 National QC Competition” held in Japan.

DNMX honored with the Prize of Excellence in Environmental Activity

DMUK recognized as a finalist for the “National Recycling Award (industry category)

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T O P I C S

Zero emission Reduction in loss of subsidiary materials

Reduction in loss of main materials

•Shift in the amount of recycling and waste processing •Shift in recycling rates


•Accomplished the target for the emissions of object substances for PRTR DENSO Japan: 83t (Target: 91t or less)Group companies in Japan: 151t (Target: 186t or less)Group companies overseas: started formulating a five-year plan at all of 42 sites

•Accomplished the target for VOC Emissions: DENSO Japan: 820t (Target: 830t or less)Group companies in Japan: 1,200t (Target: 1,300t or less)Group companies overseas: started formulating a five-year plan at all of 42 sites


‘02 ‘03

190 14%

‘04

120 74%

‘05

96 75%

‘06

89 76%

83 72%

‘98

367

(Fiscal year)

First prioritysubstances(5 substances)*

Toluene and xylene

Other substances (21 substances)

(tons per year)

•Shift in reduction of object substances for PRTR (DENSO Japan)

* First priority substances: hexavalent chromium compounds, lead compounds, cyanogen compounds, formaldehyde, tetrachloroethylene.

Accomplishedtarget oneyear ahead

*1 Volatile Organic Compounds*2 100 substances are specified by the Japanese Ministry of the Environment, while 138 substances are specified by JAMA and JAPIA

•Emissions of object substances for PRTR

(unit: tons per year)

Chemical substances(Subsidiary materials)

Recycling

Removal

Consumption

Products

Disposal

9795

1,160

Emissions ofobjectsubstancesfor PRTR

239

260

431

2908 Soil

Atmosphere

Waters

All Group companies in Japan (excluding group companies overseas)


Reducing object substances for PRTR*1

Since fiscal 2001, with the “MACAS” *2 , DENSO has been collectively controlling all chemical substances used in materials, procured components, and manufacturing process. The Company continues reducing the amount of chemical substances used or emitted, together with the development of alternative technologies. As for the emissions of object substances for PRTR (354 substances), the Company has set the targets such that “ by 2010, in comparison with 1998 level, the emissions of the object substances is reduced by 75% at DENSO Japan, by 65% at group companies in Japan,” and that “at the group companies overseas, by 2010, in comparison with 1998 level, the emission basic unit for the object substances is reduced by 30% in accordance with the legislative regulations by region.” In

this way, DENSO is working on the process improvement and the substitution. In fiscal 2006, a progress was made in the introduction of water paint for the outside finish of conductive components. Thus, both DENSO Japan and the group companies in Japan have accomplished respective annual targets.

Reducing VOCs*1

In fiscal 2006, DENSO extended the reduction target of the VOCs to include 138 substances*2 such as toulene and xylene used in the process of painting, adhesion, or cleaning. Also, the Company promoted respective process improvement and technological development. These activities are based on the target such that “by 2010, in comparison with 2003, VOC emissions is reduced by 35% (ECOVISION 2015).” On top of that, the activities are subject to the amended “Air Pollution Control Law” (Emission control system for VOCs) enforced in 2006 in Japan. For the sake of process improvement, DENSO worked out the following: the evaporation of VOCs was restrained by reducing the outflow to an evaporation tank; the work lines were merged; and the methods for the painting of drip-proof agent was changed. To develop respective technologies, a working group was launched. The working group developed a “water-based drip-proof agent” with low environmental impact and assessed the equipment for recovering and removing VOCs. As a result, DENSO and its group companies in Japan accomplished their annual fiscal targets for the amount of reduction and emissions of VOCs.

*1 Pollutant Release and Transfer Register*2 Material Chemical Assessment System


64

•Not accomplished the target for CO2 emissions (DENSO Japan) 45,600t CO2 (Target: 41,300t -CO2)

•Accomplished the target for packaging material usage (DENSO Japan) 21,400t (Target: 21,500t)

Major results for fiscal 2006 (ECOVISION)

Overseas customers

•Logistics of DENSO

Procurement logistics Production logistics

Export and import

Distribution logistics

Overseas sites

‘07

21.0

‘95

30.5

‘06

21.8

(Fiscal year)

DENSO Japan

Target

(1,000 tons)

40

30

20

10

0

•Shift in amount of packaging materials used

‘07

45.8

‘90

42.6

‘06

45.6

(Fiscal year)

DENSO Japan

Target

(1,000 tons-CO2)

706050403020100

•Shift in CO2 emissions from logistics

Environmental considerations in distribution

Reducing CO2 emissionsIn volume, DENSO ships 33 thousand m3 of products every day. The products are transported by trucks, railways, and vessels to customers inside and outside Japan.In coordination with DENSO Logitem, a subsidiary to which DENSO subcontracts its logistics, DENSO is making efforts “to reduce CO2 emissions by increasing loading efficiency and to decrease packaging materials.”In Japan, the amended “Law Regarding the Rationalization of Energy Use” has been enforced as of April 2006, thereby obligating specified shippers the reporting on the amount of energy used. Amid this situation, DENSO has set the medium-term target for CO2 emissions. Following the target, the Company has been increasing loading efficiency and promoting energy-saving transport with optimized routes. Additionally, in fiscal 2006 the Company worked on another promotion of modal shift* and the decrease of transport distances by production transfer. However, the annual target for CO2 emissions was not accomplished due to a sharp increase of transportation quantity following the rise in production. In fiscal 2007, the 20 group companies in Japan are scheduled to comprehend their state of logistics and build up their logistics structure. Thereafter, from fiscal 2008, the management by target is going to be phased in. As for 50 of group companies overseas, the management of CO2 emissions by target is

also going to be phased in from fiscal 2008 onward.

(1) Promoting modal shiftIn fiscal 2006, the number of railway transportation between the Nishio Plant (Aichi, Japan) of DENSO Japan and the plant of DENSO Manufacturing Kitakyushu Co., Ltd. (Fukuoka, Japan) was increased from one service per day to three services per day. As a result, the annual 700 tons of CO2 equivalent were reduced. From fiscal 2007,

the railway transportation is going to be enhanced to include the direct delivery service for an automaker in Hiroshima Prefecture, Japan.

(2) Reducing CO2 by production transferAs a new countermeasure to decrease transportation distance, in fiscal 2006 DENSO started discussing on the production transfer to group manufacturing companies (in Kanto and Kyushu areas, both in Japan). In fiscal 2007, the first step of the transfer is going to be taken by delegating the manufacturing of several thermal system products to the Sankyo Radiator Co., Ltd. (Hachioji City, Tokyo, Japan). The estimated annual reduction in emissions of CO2 equivalent by this delegation is 400 tons.

Reducing packaging materialsAddressing the reduction in packaging materials, DENSO has set the target such that “by 2010, in comparison with the level in 1995, the amount of packaging materials is reduced by 35%.” In this way, the Company is promoting a simple packaging and the returning (reusing) of packages. In fiscal 2006, in place of carton boxes, the Company expanded the use of plastic “circulation containers” for the shipment to its production sites and sales companies abroad. As such, despite the increase in shipment, DENSO reduced the usage of carton boxes and thus has accomplished the annual target for the usage of packaging materials.

Railway service between Aichi Pref. and Fukuoka Pref., both in Japan

* Switching transportation means to those with less environmental impact such as mass transportation with railways or vessels.

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Transit pointsAutomakersAuto dealers

Component dealersSuppliers Factories



•Promoted the “DENSO Green Project” such as the “DENSO Forest” to be in harmony with communities

•Implemented measures to increase commuting convenience by commuter shuttle buses

•Promoted the publication of sustainability report by business entities of DENSO group abroad


In order to build a sustainable society, both the coordination with a wider variety of stakeholders and the promotion of activities for environmental conservation are indispensable. DENSO proactively works on the external coordination beyond its business domain such as industrial sector. Also, the Company makes active efforts to release the information. In the meantime, the company pours its efforts on the enhancement of environmental communications with all stakeholders.

Encouraging the “Eco-life” of associates(1) The DENSO Green ProjectTogether with the people of local communities, DENSO promotes the greening, which will bring a community asset in the future, whereby the Company will be in harmony with local communities. The greening activity consists of two pillars of 1) “the DENSO Forest,” a greening of worksite surrounds, in that DENSO produces products there, and 2) “DENSO Green Highways,” a greening of motorway periphery, in that vehicles are used there.With regard to 1) above, since December 2006 DENSO has been conducting an activity to finely afforest the 600 thousand m2 of corporate woodland around the Nukata Proving Ground (Okazaki City, Aichi, Japan). The Company will grow the woodland to be the place in which diverse flora and fauna live. Also, twice a year, with 100 or more participants every time, the Company has been holding the events such as woodworking and voluntary afforesting, pruning, or thinning. In March 2007, about 140 associates and their families and 30 members of local NPOs or forestry cooperatives participated in the event. In June 2007, around 700 seedlings of broad-leaf trees in 24 kinds, such as cherry and maple, were planted by 160 associates on the premise of the Zenmyo Plant (Nishio City, Aichi, Japan).

The 2) above is the first pilot effort in Japan. In this coordinated effort with the Central Nippon Expressway Company Limited, the periphery of motorways near DENSO facilities in Aichi and Mie Prefectures, Japan are greened so that CO2 is absorbed and thus the Company makes a contribution to the prevention of global warming. In May 2007, the Company held the first greening activity of “DENSO Green Highways.” In this activity, 40 civil volunteers, mainly consisted of associates and their families of DENSO, planted 465 seedlings of broad-leaf trees in 13 kinds, such as cherry and maple, on the slopes alongside the Tomei Expressway (in Okazaki City, Aichi, Japan). The associates who participated in this activity earned the points for the DENSO Eco-Point system, DECOPON (see p. 17-18).

(2) Activities for global-warming prevention during the Month of Environment

Historically, every June has been the Month of Environment at DENSO Japan. In the month, the facilities in plants or factories have been self-checked to conserve the environment. Also, their respective localities have been cleaned up. From fiscal 2007, the Month of Environment is positioned as the period to diffuse the ECOVISION and enhance environmental action of associates. During the month, all associates are called for their environmental action. During June 2007, under the theme of “global warming prevention,” the managers at DENSO Japan and its group companies in Japan were gathered to the lectures on the environment. Also, the responsible persons and engineers for environmental affairs were listed to participate in the Eco-tours and the Eco-seminars. In the meantime, the clean-up activity for the neighboring localities was spread out. As such, the associates of the Company raised and mutually brushed up their environmental awareness.

(3) Introduction of commuter shuttle bus serviceIn November 2006, the shuttle bus service was started, connecting DENSO Headquarters, the training center in Obu City, and the neighboring company residences. At DENSO headquarters, the associates who commute in

•Educational event in the Month of Environmental (June, 2007)

Listed associatesEducational events

Lecture: “Mobility business to create a sustainable society”

Managers at DENSO Japan and its group companies in Japan

Special environmental education•Eco-tours (Visit to factories of other divisions)•Eco-seminars (Visits to sites of product recycling)

Persons responsible for the environment at factories Mid-Career engineers responsible for product designing

Education on the environment in general•Showing of the movie “An Inconvenient Truth”•Quizzes on the environment

General associates

Coordination with societyEco friendly

DENSO Forest in Nukata Activity of DENSO Green Highways



An Eco-Park at Daian Plant Environmental education at Eco-Park

Eco-Products 2006

vehicle comprise 65% of total associates. Thus, this is an attempt to encourage such car commuters to switch to bus commuting. This attempt addresses the promotion of energy saving, as well as the ease of traffic jams. The attempt has been designated a model project of the “Mobility Management”* advocated by the Japanese Ministry of Land, Infrastructure, and Transport, et al. DENSO Japan harnesses the “DECOPON” point system to the bus commuting whereby a proactive switching is encouraged.

Environmental communications (1) Publication of sustainability reportIn 1999, as a part of the information release and the mutual communications with stakeholders, DENSO published the first environmental report. Since then, the Company has continued the publication of environmental and social report, or CSR report.Also, DENSO has been encouraging its group companies overseas to publish their own report. Since 2001, DMHU (Hungary) and DNBA (Spain) have been publishing their sustainability report. In 2006, DMUK (the U.K.) published its first environmental report.

(2) Exhibiting in the event “Eco-Products”In order to increase the understanding for the environmental efforts of the Company and exchange with a variety of people, DENSO has been proactively appearing in environmental exhibitions. At “Eco Products 2006” (Tokyo, Japan) held in December 2006, the Company displayed environmentally-friendly products and technologies and hosted hands-on events. In this way, DENSO deepens the communication with many people.

Conserving biodiversityRaising environmental awareness at the DENSO Eco-ParkOn the Earth, a wide variety of flora and fauna live in a complex balance of ecosystem. However, it is said that, over the last 100 years, human activity has resulted in the distinction of species at a rate of 1,000 times higher than that of in nature. Hence, the conservation of biodiversity has become a serious issue.As a part of the activities to conserve the environment, as well as flora and fauna, of the surrounding localities, DENSO has settled flower gardens, biotopes, or the Eco-Parks in the premise of its plants in many countries. As such, the Company is protecting the havens for birds, plants, and several endangered species of freshwater fish. In June 2006, the Eco-Park with the area of 4,000m2 named “Sui-Yuu-Shin” (Water-Playing-Forest) was opened in the premise of the Daian Plant (Mie, Japan). In the park, bird-watching huts, scrap-wood paths, and bio-toilets are placed. The electricity for the park is generated by wind power. The Eco-Parks are also used for the environmental learning for children. In fiscal 2006, there were 700 or more visitors of local government, schools, and businesses. Besides, in the fiscal 2006 there were about 2.7 thousand visitors in total for the in-house events such as the “Family Open House Day” (in August), the “DENSO ECO Ranger 21” (in October), and the “Daian Enjoy Festa” (in October).

DMUK (the U.K.) DMHU (Hungary) DNBA (Spain)

DMHU (Hungary) honored with Environmental Award for the second time

In November 2006, DMHU (Hungary) was awarded the “Business for the Environment” from the Hungarian government. DMHU was recognized with its cooperative contribution with local corporations

for improving the level of local environmental activities through outreach programs for school education and clean-up activities. DMHU was presented with the award for the second time.

DMHU received the award for the second time

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*Traffic measures that promote the prevention of global warming using such as public transportation and bicycles


A variety of opinions and proposals on the activities of CSR at DENSO have been presented through the comments of third party, the Stakeholder Dialog, the reporting on CSR, and the websites of the Company. Accordingly, the Company has strived to improve its activities of CSR and respond to the opinions or proposals. The major items are reported as follows. Please notice that the opinions and proposals presented at the Stakeholder Dialog are shown in detail on the website.

Opinions from Stakeholders and Responses of DENSO

Others

Corporatecitizenship

Environment

CSR ingeneral

[Comment of a third party]The occupational safety throughout the supply chain ought to be improved, considering human rights. Also, the state of the workers on temporary or contract basis, and the situation of developing countries ought to be investigated, while strengthening related supportive activities.

[Comment of a third party]In order to continuingly realize CO2 reduction embracing the expanding production, the process to accomplish targets ought to be clarified.

[Comment of a third party]As an international cooperation, recovery and disposal of substances with a high global warming potential ought to be supported proactively.

More voices of stakeholders ought to be carried in CSR Report.

Opportunities for the dialog with citizen ought to be expanded.

Lecture about CSR could be offered to every associate.

The activities of CSR could be incorporated into the evaluation (target management) of associates.

The products that allow users to feel in real the decrease of environmental impact ought to be produced (e.g., making CO2 emissions “visible”)

A coordinated recycling method with the companies in dismantling business could be discussed.

Seminar programs and corporate facilities ought to be opened to support the self-reliance of the “NEET” (“Not in education, employment, or training”) people, shutting-in people, foreign people, and the youth.

The labor issues regarding such as contract foreign workers ought to be addressed.

Addressing the success of female associates, a “mentor” system could be introduced.

The use of childcare leave and shorter working hour by male associates ought to be increased.

In consideration of the environment, procurement logistics (such as the just-in-time) ought to be reviewed.

A proposal procedure from suppliers to DENSO on environmental improvement ought to be set.

Traffic safety during the product transport ought to be penetrated.

Disaster drill ought to be cooperated with communities, and evacuation spaces ought to be offered.

A Business Continuity Plan (BCP) assuming the Tokai and Tonankai Earthquake could be necessary.

Meetings with the organizations capable of making professional remarks or suggestions could be held.

The support for those who have resigned after the childbirth leave or the childcare leave ought to be enhanced.

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30 32

30

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In fiscal 2006, DENSO spread out the “DENSO Declaration of Group Corporate Behavior” to 1,400 of its suppliers. In this way, the Company penetrated the understanding of human rights, labor, and safety. In fiscal 2007, DENSO will incorporate the engagement in CSR into basic business contracts with its business partners. Also, the Company has been conducting periodically the Global Associate Relations Reviews in developing countries. Moreover, the Company continues strengthening the support for temporary and contract workers.

DENSO will strive to enhance the contents by expanding the coverage in CSR Report or on its website.

In fiscal 2006, DENSO deepened the dialog anew at the “CSR Forums,” regional meetings, exhibitions, the Stakeholders Dialog, and the Family Open House.

DENSO is holding lectures and opinion exchanges at CSR Forums. However, there is a capacity limit on the number of participants. Therefore, the Company is striving to diffuse its CSR by video materials and in-house magazines.

In fiscal 2006, DENSO started to spread out the “DENSO Energy Saving Standards” and the activity of “Perfect Energy Factories” globally. The Company has also set specific factors to reduce CO2. Meanwhile, the Company is spreading out energy saving technologies to the group companies overseas. On top of that, DENSO is applying to the United Nation for the “Clean Development Mechanism” to Malaysia, with the provision of an energy saving technology using compressed air.

Associates set activities of CSR as a job assignment whereby performance evaluation is connected to CSR, following the degree of accomplishment.

DENSO develops and manufactures the instrument clusters for hybrid vehicles and the car navigation systems which allow users to feel the energy saving for real. Additionally, in fiscal 2006 the Company introduced a quantitative “Environmental Factors for Products.”

The overseas allied service stations of DENSO continue settling the equipment for recovering and reusing refrigerant so as to prevent chlorofluorocarbon chemicals from releasing. This is the same at the allied service stations in Japan.

Historically, there has been the coordination between DENSO and dismantling businesses in the recovery of chlorofluorocarbon chemicals and the dismantlement of airbags. Also, the Company is promoting the use of materials which are easy to recycle to its products.

DENSO will discuss on what responses are necessary and whether the Company is capable of such responses. In the meantime, the Company will talk the issue over in coordination with the government or economic organizations.

As a part of the activities of corporate citizenship, DENSO will discuss on what responses are necessary and whether DENSO is capable of such responses.

DENSO is now conducting collaborative projects for the activities of corporate citizenship with different external organizations. The Company will continue such projects.

In fiscal 2006, DENSO enhanced its supportive system by extending the term of childcare leave.

DENSO will take this as a future issue to discuss, as investigating the needs of female associates.

DENSO is releasing various kinds of information whereby the Company is promoting a climate building to facilitate male associates to use such systems.

DENSO will implement environmentally-friendly logistics with its suppliers by enhancing highly-efficient means such as cooperative transportation.

DENSO has already set a system in which suppliers can make proposals to the Company not just on environmental aspect but also on other aspects. The proposals are discussed and fed back within the Company.

DENSO continues instructing transport companies to penetrate an eco-friendly and safe driving.

In the event of an earthquake or flood, DENSO will offer certain athletic grounds for evacuation spaces in response to the needs of the government and local communities.

Every year DENSO implements a drill assuming a big earthquake. As to BCP, the Company will complete formulating it in fiscal 2007.

Relatedpages Area Opinions and proposals Responses and regards of DENSO

Recycling

Procurement

Riskmanagement

Issues onforeigners and

youth

Collaborationwith NPOs

Structure

Communication

Assessment onactivities of CSR

CO2 reduction

Respectingassociates

Balance inwork and life


A Third-party Comment on DENSO CSR Report 2007

Founded in 1994 “for Democratic and Balanced Development for All the Lives on the Earth,” IIHOE has been served as a management consultant for non-profit organizations and social entrepreneurs, while supporting CSR engagement of major Japanese corporations.

http://blog.canpan.info/iihoe/(Only in Japanese)

This comment was written with reference to the contents of this report and the hearings with the DENSO associates responsible for the environment and procurement.

Points recognized as at the world’s highest level•Based on the “DENSO Group Declaration of Corporate Behavior,” the Company has drew up and practiced a group-wide CSR promotion plan that quantitatively set a wide range of target encompassing the social aspect. Such targets include the reduction of environmental impact, the increase of its human diversity, and the support of its customers. The Company has also established a PDCA (management cycle) to manage the progress of the plan, thereby clarifying new issues. All of these are at the level of a global model for other companies.

Highly recognized points•The Company continuously holds the “DENSO CSR Forums,” with compulsory attendance of managers including the president, as the opportunities to understand in depth a range of aspects in CSR. As such, the Company improves the literacy in CSR corporate-wide (p. 42). Also, since fiscal 2007, the Company has added “Compliance” and “CO2 Reduction” to monthly management targets for managers.

•Applying the “direct charge,” the Company comprehends the hourly usage of electricity and compressed air by equipment (not by work line on a monthly basis). In this way, the Company makes the progress in the usage amount and the reduction efforts “visible,” thereby globally spreading out the ”Energy-Saving Standards” which comprises 115 points for improvement. Thus, the Company enhances its efforts to build the “Perfect Energy Factories (PEF)” (p. 14-15, p. 60-61).

•The Company encourages the efforts on compliance and risk management worldwide. In Japan, the Company implements a countermeasure drill for business resumption that involves about 40,000 associates. The Company also encourages its associates to register for the in-house safety confirmation system.

•The company steps forward to prepare supportive measures to improve the balance between work and life. Such instances include the enhancement of the systems for leaves and shorter work hours and the joint establishment of infant daycare centers with four other companies in Toyota group (p. 30, p. 32).

•The Company furnished and started spreading out so-called the “Spreading-out tool for Suppliers” to encourage its suppliers to practice CSR (p. 35).

•The Company encourages its associates and their families to participate in corporate citizenship programs for society or community by developing and operating a unique Eco-Money named “DECOPON” in coordination with NPOs (p. 37-40).

•The Company continues and expands the opportunities for dialogs with stakeholders and is going to steadily realize the opinions and suggestions presented in the dialogs (p. 42).

Points that require more work•As to the increase in occupational accidents, the Company should analyze the causes and reconfirm associated risks. At the same time, the Company should accelerate the efforts for raising the awareness of human rights and safety with a scope including the whole supply chain, in order that all the people who deal with raw materials, parts, and products of the Company can work continuously under an appropriate labor conditions and a hygienic environment. In particular, the Company should examine in depth on the state of temporary or contract workers and developing countries, to strengthen the support for them.

•The Company should accelerate the development of diverse human resources capable of corresponding to the globalization of its corporate management. Also, the Company should not solely depend the human resources development on each department. Rather, in the same manner for handing down and on monozukuri skills, the Company should increase the corporate human resources,.

•As an international cooperation on environmental aspect, especially in developing countries, the Company should proceed the preparation to support the recovery and disposal of substances with a high global warming potential.

This fiscal year, too, DENSO consulted Hideto Kawakita, the CEO of IIHOE (the International Institute for Human, Organization, and the Earth), a third-party comment.This fiscal year, the Company established issues and targets for the nine areas of the activities of CSR (for specific contents, please refer to page 10), based on the “DENSO Group Declaration of Corporate Behavior,” whereby the Company promoted respective activities corporate-wide. The Company also strived to improve and respond to the items pointed out in the last fiscal year. As a result, the Company sincerely received positive feedback with regard to its all-over efforts in the activities of CSR (see page 67 for details). The Company considers that the efforts for rooting the activities of CSR into every single associate must be important in the future. Therefore, DENSO is determined to heighten more the activities of CSR which is consistent with the corporate behavior that considers the problems and issues faced by each global region.

As presented the third-party comment

CSR Promotion Center, Corporate Planning Department, DENSO Corporation

CEO, International Institutefor Human, Organizationand the Earth (IIHOE)

Hideto Kawakita

70 percent of the wood pulp used for the paper of this report is made from Japanese wood, of which 10 percent is the thinned wood that causes less increase of CO2 emissions in Japan. Neither surface coating nor special coating was done on the paper for this report. This report was printed with 100 percent vegetable ink which does not require petroleum solvent, does not cause volatile organic compounds (VOCs), and does not contain heavy metals such as lead, mercury, and cadmium.Printing method for this report is the waterless printing in which ink is transferred without the dampening water containing isopropyl alcohol.To save resources and energy, the plate of this report is made using the computer-to-plate (CTP) method which does not use polyester film or acetate film and does not require alkaline developer. This report was printed at the factory with ISO 9001 certification.

DENSO CORPORATION1-1, Showa-cho, Kariya, Aichi 448-8661, JapanTel. +81-566-25-5511 (Information Center)www.globaldenso.com

•For inquiries on this report, please contact: CSR Promotion Center, Corporate Planning Dept.

Tel. +81-566-25-6543 Fax. +81-566-25-4505

E-mail contact is available on the website above.

07Z-25B3

Index in accordance with GRI (Global Reporting Initiative) Guidelines (G2)

DENSO CSR Report 2007 DATA>GRI Index 1

1. Vision and Strategy 1.1 Statement of the organization’s vision and strategy regarding its contribution to sustainable development. p3-41.2 Statement from the CEO (or equivalent senior manager) describing key elements of the report. p3-4 2.Profile Organizational Profile 2.1 Name of reporting organization/ p52.2 Major products and/or services, including brands if appropriate. p52.3 Operational structure of the organization. p52.4 Description of major divisions, operating companies, subsidiaries and joint ventures. p52.5 Countries in which the organization’s operations are located. p62.6 Nature of ownership; legal form. p52.7 Nature of markets served. p52.8 Scale of the reporting organization. p52.9 List of stakeholders, key attributes of each and relationship to the reporting organization. p8Report Scope 2.10 Contact person(s) for the report, including e-mail and web addresses. Back cover2.11 Reporting period (e.g., fiscal/calendar year) for information provided. p12.12 Date of most recent previous report (if any). p12.13 Boundaries of report and any specific limitations in its scope. p12.14 Significant changes that have occurred since the previous report. N.A.2.15 Basis for reporting that can significantly affect comparability from period to period and/or between reporting organizations. p1・5-62.16 Explanation of the nature and effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement. N.A.Report Profile 2.17 Decisions not to apply GRI principles or protocols in the preparation of the report. p12.18 Criteria/definitions used in any accounting for economic, environmental and social costs and benefits. p512.19 Significant changes from previous years in the measurement methods applied to key economic, environmental and social information. p542.20 Policies and internal practices to enhance and provide assurance about the accuracy, completeness and reliability that can be placed on the sustainability report. p102.21 Policy and current practice with regard to providing independent assurance for the full report. p682.22 Means by which report users can obtain additional information and reports about economic, environmental and social aspects of the organization’s activities. p1 3. Governance Structure and Management Systems Structure and Governance 3.1 Governance structure of the organization, including major committees under the board of directors that are responsible for setting strategy and for oversight of the organization. p193.2 Percentage of the board of directors that are independent, non-executive directors. p193.3 Process for determining the expertise board members need to guide the strategic direction of the organization. N.A.3.4 Board-level processes for overseeing the organization’s identification and management of economic, environmental and social risks and opportunities. p19-213.5 Linkage between executive compensation and achievement of the organization’s financial and non-financial goals . N.A.3.6 Organizational structure and key individuals responsible for oversight, implementation, and audit of economic, environmental, social and related policies. p193.7 Mission and values statements, internally developed codes of conduct or principles and polices relevant to economic, environmental and social performance and the status of implementation. p7-83.8 Mechanisms for shareholders to provide recommendations or direction to the board of directors. p19Stakeholder Engagement 3.9 Basis for identification and selection of major stakeholders. p7-83.10 Approaches to stakeholder consultation reported in terms of frequency of consultations by type and by stakeholder group. p41-423.11 Type of information generated by stakeholder consultations. p673.12 Use of information resulting from stakeholder engagements. p41-42・67Overarching Policies and Management Systems 3.13 Explanation of whether and how the precautionary approach or principle is addressed by the organization. p213.14 Externally developed, voluntary economic, environmental and social charters, sets of principles or other initiatives to which the organization subscribes or which it endorses. N.A.3.15 Principal memberships in industry and business associations, and/or national/international advocacy organizations. p543.16 Policies and/or systems for managing upstream and downstream impacts. p35-36・533.17 Reporting organization’s approach to managing indirect economic, environmental and social impacts resulting from its activities. p35-36・65-663.18 Major decisions during the reporting period regarding the location of, or changes in, operations. N.A.3.19 Programs and procedures pertaining to economic, environmental and social performance. p10・19-22・25-26・28-33・45-46・50-513.20 Status of certification pertaining to economic, environmental and social management systems. p45-46 Economic Core Performance Indicators Customers EC1. Net sales. p5-6・34EC2. Geographic breakdown of markets. p6Suppliers EC3. Cost of all goods, materials and services purchased. p5EC4.Percentage of contracts that were paid in accordance with agreed terms, excluding agreed penalty arrangements. N.A.EmployeesEC5. Total payroll and benefits broken down by country or region. N.A.Providers of Capital EC6. Distributions to providers of capital broken down by interest on debt and borrowings and dividends on all classes of shares, with any arrears of preferred dividends to be disclosed. p34EC7. Increase/decrease in retained earnings at end of period. p5Public SectorEC8. Total sum of taxes of all types paid broken down by country. p5EC9. Subsidies received broken down by country or region. N.A.EC10. Donations to community, civil society and other groups broken down in terms of cash and in-kind donations per type of group. p39

*NoteN.A.: Not ApplicableH P: Posted on the website

�

Index in accordance with GRI (Global Reporting Initiative) Guidelines (G2)

DENSO CSR Report 2007 DATA>GRI Index 2

Environmental Core Performance IndicatorsMaterials EN1. Total materials use, other than water, by type. p49EN2. Percentage of materials used that is waste from sources external to the reporting organization. N.A.Energy EN3. Direct energy use segmented by primary source. p49EN4. Indirect energy use. p49Water EN5. Total water use. p49Biodiversity EN6. Location and size of land owned, leased or managed in biodiversity-rich habitats. N.A.EN7. Description of the major impacts on biodiversity associated with activities and/or products and services in terrestrial, freshwater and marine environments. p66Emissions, Effluents, and Waste EN8. Greenhouse gas emissions. p49・59・64EN9. Use and emissions of ozone-depleting substances. N.A.EN10. NOx, SOx and other significant air emissions by type. p49EN11. Total amount of waste by type and destination. p49・62EN12. Significant discharges to water by type. p49EN13. Significant spills of chemicals, oils and fuels in terms of total number and total volume. p50Products and Services EN14. Significant environmental impacts of principal products and services. p53EN15. Percentage of the weight of products sold that is reclaimable at the end of the products’ useful life and percentage that is actually reclaimed. p57Compliance EN16. Incidents of and fines for non-compliance with all applicable international declarations/conventions/treaties and national, sub-national, regional and local regulations associated with environmental issues. p50

Social Core Performance Indicators Labour Practices and Decent work Employment LA1. Breakdown of workforce, where possible, by region/country, status, employment type and employment contract. p6・28LA2. Net employment creation and average turnover, segmented by region/country. p28・30Labour/Management Relations LA3. Percentage of employees represented by independent trade union organizations or other bona fide employee representatives broken down geographically. N.A.LA4. Policy and procedures involving information, consultation and negotiation with employees over changes in the reporting organization’s operations. p28Health and Safety LA5. Practices on recording and notification of occupational accidents and diseases. p32LA6. Description of formal joint health and safety committees comprising management and worker representatives and proportion of the workforce covered by any such committees. p32LA7. Standard injury, lost day and absentee rates and number of work-related fatalities. p32LA8. Description of policies or programs on HIV/AIDS. N.A.Training and Education LA9. Average hours of training per year per employee by category of employee. p51Diversity and Opportunity LA10. Description of equal opportunity policies or programs, as well as monitoring systems to ensure compliance and results of monitoring. p20・30LA11. Composition of senior management and corporate governance bodies, including female/male ratio and other indicators of diversity as culturally appropriate. p19・30

Human Rights Strategy and Management HR1. Description of policies, guidelines, corporate structure and procedures to deal with all aspects of human rights relevant to operations, including monitoring mechanisms and results. p8・28HR2. Evidence of consideration of human rights impacts as part of investment and procurement decisions, including selection of suppliers/contractors. p35HR3. Description of policies and procedures to evaluate and address human rights performance within the supply chain and contractors, including monitoring systems and results of monitoring. p35Non-discrimination HR4. Description of global policy and procedures/programs preventing all forms of discrimination in operations, including monitoring systems and results of monitoring. p28-32Freedom of Association and Collective Bargaining HR5. Description of freedom of association policy and extent to which this policy is universally applied independent of local laws, as well as description of procedures/programs to address this issue. p28Child Labour HR6. Description of policy excluding child labor as defined by the ILO Convention 138 and extent to which this policy is visibly stated and applied. HPForced and Compulsory Labour HR7. Description of policy to prevent forced and compulsory labor and extent to which this policy is visibly stated and applied. HP

Society Community SO1. Description of policies to manage impacts on communities in areas affected by activities, as well as description of procedures/programs to address this issue. p37Bribery and Corruption SO2. Description of the policy, procedures/management systems and compliance mechanisms for organizations and employees addressing bribery and corruption. p19-20・HPPolitical Contributions SO3. Description of policy, procedures/management systems and compliance mechanisms for managing political lobbying and contributions. HP

Product Responsibility Customer Health and SafetyPR1. Description of policy for preserving customer health and safety during use of products and services, and extent to which this policy is visibly stated and applied. p25Products and Services PR2. Description of policy, procedures/management systems and compliance mechanisms related to product information and labeling. p26Respect for Privacy PR3. Description of policy, procedures/management systems and compliance mechanisms for consumer privacy. p22PR11. Number of substantiated complaints regarding breaches of consumer privacy. N.A.

*NoteN.A.: Not ApplicableH P: Posted on the website

www.Corporateregister.com 24/01/2008

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