Sustainability
Procurement Survey

Overview of the survey

Since fiscal 2020, we have adopted the Self-Assessment Questionnaire (SAQ^*1) developed by the United Nations Global Compact Network Japan (GCNJ) in 2017 to conduct our annual sustainability procurement survey of major suppliers. The SAQ is based on the 10 principles of the Global Compact, international guidelines such as ISO 26000 and CSR questionnaires from specific industries and identifies nine core items that can be shared between buyers and suppliers regardless of industry.

Global Compact Network Japan “CSR Procurement Self-Assessment Tool Set” (in Japanese)

In FY2022, we have also conducted a “High Risk Management Questionnaire^*2” which is divided into two parts: human rights, including conflict minerals and the foreign technical internship system, and environment, including CO2 emissions in light of Scope 1, 2, and 3.^*3.

[Notes]

1. *1
   The SAQ is based on the 10 principles of the Global Compact, international guidelines such as ISO 26000 and CSR questionnaires from specific industries and identifies nine core items: (1) Corporate governance related to CSR, (2) Human rights, (3) Labor, (4) Environment, (5) Fair corporate activities, (6) Quality, (7) Information security, (8) Supply chain, (9) Coexistence with local communities, that can be shared between buyers and suppliers regardless of industry.
2. *2
   The survey covers critical issues such as human rights, environment, etc.
   which are not covered by each company policy or guidelines (code of conduct).
3. *3
   Target suppliers: In fiscal 2022, we surveyed major suppliers that are included in the top 90% of purchases.

Identifying sustainability risks

We define “sustainability high risk” as a situation in which suppliers human rights, labor, or environmental practices are inadequate and are likely to have a significant negative impact on our business activities, such as human rights violations that could affect our corporate reputation, poor labor conditions that could reduce the quality of our products and services, or violations of environmental or labor-related laws and regulations.

To identify high-risk suppliers, we conduct a sustainability procurement survey that evaluates suppliers from nine perspectives, including human rights, labor, and the environment. Suppliers with an average score of 65% or lower and do not meet the criteria to be considered as having a particularly significant risk on the nine criteria are classified as “high-risk” suppliers, and we work together with them to improve our initiatives.

In FY2022, we identified suppliers that are behind in addressing human rights issues such as the foreign technical internship system and environmental issues such as setting GHG emission reduction targets as high-risk suppliers and promote corrective measures to address these issues, while striving to raise awareness of the required level of our Supplier Code of Ethical Conduct.

[Note]

1. *
   Third-party verification is conducted.

Conduct supplier visits
and audits

Since FY2021, we have been inspecting suppliers' compliance with the Supplier Code of Ethical Conduct in the areas of human rights, labor, health and safety, and the environment during on-site inspections of suppliers' factories and other facilities by purchasing managers, and have been accumulating records of such inspections.In fiscal year 2022, we have started to conduct third-party audits. The items are based on the legal requirements of each country and the requirements of global standard audit standards such as ILO ordinances and RBA. As a result of the audit, if a company is assessed as a high-risk company that needs to make improvements, an improvement plan will be formulated and implemented after the audit.

[Note]

1. *
   Third-party verification is conducted.

We have obtained third-party assurance (Japan Quality Assurance Organization) for our sustainability procurement surveys.