In addition to ongoing concerns about the spread of weapons of mass destruction, changes in the international security balance necessitate further risk management addressing security trade controls. Toray Industries, Inc. convenes a Security Trade Administration Committee comprising officers of divisions that are involved in exports and technology transfer. In fiscal 2024, the committee decided on measures to implement for fiscal 2025 after considering the risks to be addressed based on recent international circumstances and regulatory trends. The committee members also convene a Divisional Security Trade Administration Committee that communicates corporate measures and implements supplementary programs, such as precautions to be taken by departments and group companies under its supervision.

Toray Group performs risk management of security trade controls for the export of all products, devices, materials, and samples, as well as the provision of technology to non-residents of Japan (including residents falling under specific categories). In particular, Toray Group strictly controls the list-control items that require the approval of the Japanese Minister of Economy, Trade and Industry when exporting, such as TORAYCA™ carbon fiber and its composite materials, manufacturing equipment, coating agents for semiconductors, and water treatment membranes.
In addition, from the perspective of economic security, regulations under Japan’s Foreign Exchange and Foreign Trade Act are increasingly being strengthened. These changes aim to prevent technology leakage and to clarify the distinction between conventional weapons applications and civilian uses, which can be difficult to cleanly classify. In response, Toray Group focuses on promoting appropriate understanding and disseminating rational responses through the exchange of opinions and other means, mainly in departments and group companies dealing with sensitive catch-all control technologies, such as in designated critical technology fields.
The following measures to enhance risk management associated with security trade controls have been implemented based on conditions in and outside of Japan.

1. Enhanced employees’ capacity for accurate judgment within Toray Industries’ divisions and group companies

Toray Industries is continuously improving and expanding its training programs. In fiscal 2024, the Company conducted internally developed training programs focused primarily on key personnel and executive officers who play a central role in security trade control, covering topics such as practical skills related to determining classifications. Training was also given to newly appointed managers to promote appropriate management on the front lines. Study sessions and discussions focused on individual departments or group companies were held to enhance appropriate internal understanding and rational responses regarding transaction information reliability and technology transfer management. (A total of 11 courses were held with 1,249 employees participating)
In addition, the Company systematically encourages employees to take the various qualification exams authorized by the Center for Information on Security Trade Control (CISTEC) in Japan. In fiscal 2024, 322 Toray Group employees passed the exam, bringing the cumulative number of Toray Group employees who have passed the exam to 5,183 persons.

2. Conducted regular audits

Toray Industries carried out paper audits and onsite audits of group companies, and provided individualized guidance based on the results to help group companies make improvements.

3. Enhanced information sharing and reporting

Toray Industries integrated and centralized information on concerns such as suspicious trade inquiries, and on transactions suspected of violating laws or internal management rules. The Company reported or consulted with the appropriate authorities as necessary and took appropriate measures. Toray industries centrally aggregated information on suspicious inquiries and other concerns, as well as information on transactions that violated laws and regulations or were suspected to contradict internal management rules, and reported to and consulted with relevant authorities as necessary to respond appropriately. The Company also shared suspicious trade information at various company meetings, and took steps to improve its risk management.

4. Improved inspection systems

Toray Industries has fully linked its security trade control system with its backbone sales system in order to prevent legal violations due to human error. The system increases the reliability of transaction information by thoroughly reviewing automatic matching results with CISTEC chaser information (i.e. high-risk entities from various watch lists). Support was also provided for the system's implementation across group companies in Japan. (The system has been implemented at Toray Research Center Inc. Implementation is under review at the following companies: Du Pont-Toray Co., Ltd., Toray Celanese Co., Ltd., and Toray Fine Chemicals Co., Ltd.)