JAPANESE

Sustainability
Procurement Survey

We conduct an annual sustainability procurement survey of our significant suppliers in order to identify potential sustainability risks in our supply chain and take appropriate measures.

Risk management and KPIs

We use the following steps to identify and manage sustainability risks throughout our supply chain.

  1. Conduct an annual sustainability procurement survey of significant suppliers and analyze survey results to identify potential sustainability risks in the supply chain.
  2. For suppliers classified as “high-risk suppliers” as a result of the survey, we conduct interviews to confirm whether or not they plan to make improvements regarding evaluation items (e.g. human rights) that we consider important, and conduct on-site audits as necessary. Second-party audits (conducted by purchasing staff) and third-party audits (based on the legal requirements of each country and the requirements of global standard audit standards such as ILO ordinances and RBA) are conducted.
  3. Send suggestions for improvement to high-risk suppliers regarding items requiring improvement, and work together to improve their efforts.
  4. Monitor the status of items requiring improvement through annual sustainability procurement surveys.

In conducting the sustainability procurement survey, we set the following KPIs to achieve our goal of “fair and good business relationships with suppliers”, and together we aim to address sustainability-related issues, provide safe and reliable products and services to our customers, and conduct corporate activities that earn the trust of society.

KPI Target Target Year Results
FY2024 FY2025
Number of respondents who completed the sustainability procurement survey Coverage of at least 85% of total transaction value (More than 75 suppliers) Every year 81 80
Supporting improvement activities for high risk suppliers 100% implementation Every year 100% 100%
Conducting supplier inspections and audits FY2024: More than 20 companies
FY2025: More than 23 companies		 Every year 22 companies 24 companies

Supply chain overview

We have more than 2,000 suppliers around the world, and in our supply chain management, we identify significant suppliers from the perspective of transaction volume, substitutability and ESG aspects of environmental, social and governance and conduct appropriate supply chain management as a significant supplier among a wide range of suppliers.

Supplier classification FY2025
Tier 1 Supplier No. of suppliers 2,943*
Significant suppliers No. of suppliers 89 (Proportion of Total Purchase Amount: 85%)*
(SoftBank affiliates are not included in the survey)
No. of Tier 1 Suppliers 81*
No. of Non-Tier 1 Suppliers 8*
[Note]
  1. *
    Third-party verification is conducted.

Overview of the survey

Since fiscal 2020, we conduct annual sustainability procurement surveys of significant suppliers.

In FY2024, we introduced EcoVadis*1 , a third-party evaluation platform, and Three companies (NTT, KDDI, SoftBank) Sustainable Procurement Common SAQ*2 (In-house evaluation survey) for sustainable procurement to survey suppliers*3. 70% of our significant suppliers have taken the EcoVadis survey, and we will continue to recommend EcoVadis to our suppliers, aiming to further strengthen risk management and engagement throughout the supply chain by expanding highly transparent and fair sustainability assessment.

Results of the analysis of each item are fed back to the surveyed suppliers so that they can compare their own score with the average score of other companies for each item, reconfirm the strengths and weaknesses of their own activities, and use the results as reference in their efforts to continuously improve.

Survey Method All Suppliers Significant Suppliers
EcoVadis 198 suppliers 62 suppliers
Common SAQ 39 suppliers 18 suppliers
Total 237 suppliers 80 suppliers*4
[Notes]
  1. *1
    Sustainability assessment service consisting of four parts: Environment, Labor Practices and Human Rights, Ethics, and Sustainable Sourcing.
  2. *2
    Sustainability questionnaire standardized by NTT, KDDI, and SoftBank in FY2023; SAQ identifies items such as environment, human rights and labor, health and safety, fair trade and ethics, quality and safety, and information security to be shared between buyers and suppliers regardless of industry structure.
  3. *3
    Target suppliers: In fiscal 2025, we surveyed significant suppliers that are included in the top 85% of purchases.
  4. *4
    Responses were obtained from 80 of the 89 significant suppliers in FY2025 (response rate: 89.9%). Third-party verification is conducted for this data.

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 suppliers having ESG issues or potential risk, we conduct a sustainability procurement survey that evaluates suppliers from eight 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 eight criteria are classified as Rank D suppliers, and we work with them to advance initiatives for improvement.

In FY2025, we identified suppliers that are behind in addressing human rights issues and environmental issues such as setting GHG emission reduction targets as Rank D 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.

Risk Rank Evaluation Score Description
Rank A Total 86 or greater with no applicable significant risk items Suppliers able to act at the level required by our Supplier
Code of Ethical Conduct.
Rank B Total 66-85 with no applicable significant risk items There are items where suppliers are not acting at the required level of our Supplier Code of Ethical Conduct, but voluntary improvements are made.
Rank C Total 65 or lower with no applicable significant risk items Need to monitor the status of items for which suppliers are not acting at the required level of our Supplier Code of Ethical Conduct based on the improvement plan.
Rank D
(high-risk)		 Total 65 or lower with applicable significant risk items Items that are not performed at the required level of our Supplier Code of Ethical Conduct (some items in human rights, labor, environment) are considered potentially risky and a corrective action plan needs to be created.

Supporting improvement activities

For suppliers identified as having sustainability risks as a result of the sustainability procurement survey, which includes items related to human rights, environment, etc., we 1) share the results of the analysis, 2) conduct additional interviews to clarify concerns, and 3) discuss the direction of action to support improvements. In fiscal 2025, we requested seven suppliers (including two significant suppliers) identified as having potential sustainability risks to prepare corrective action plans, and received improvement plans from all targeted suppliers. No significant suppliers were subject to contract termination in FY2025.*

Type of risk Contents Number of supported suppliers for improvement
in FY2025		 Improved guidance rate
Human Rights No human rights and labor regulations have been established. 0 companies 100%
Environmental Risks Emission status is not visualized or no specific quantified reduction targets have been set for GHG emissions. 7 companies
Total 7 companies (including 2 significant suppliers)* 100%
[Note]
  1. *
    Third-party verification is conducted.

Conduct supplier visits
and audits

Since FY2021, we have been inspecting suppliers' compliance with the Supplier Ethics and Rules of 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 standards and RBA. As a result of the audit, if an ESG issue or potential risk that needs improvement is discovered, an improvement plan will be formulated and implemented after the audit.
In addition to significant suppliers, suppliers subject to visits and audits are selected based on a risk-based approach, taking into account factors such as business activities, procured products and services, geographic location, and sustainability risk assessment results.

On-site audit FY2024 FY2025 FY2026
Target 20 companies or more 23 companies or more 23 companies or more
Achievements 22 companies 24 companies (including 6 significant suppliers)* -
[Note]
  1. *
    Third-party verification is conducted.

Responsible sourcing of minerals

In order to fulfill our social responsibility in our purchasing activities, we are working with our suppliers to eliminate the use of products containing conflict minerals.
Specifically, our Supplier Ethics and Rules of Conduct stipulates that we do not use tantalum, tin, tungsten, or gold, which are sources of funding for rebel groups that commit human rights abuses in the Democratic Republic of Congo and its neighboring countries, and we require our suppliers to comply with this stipulation.

Survey results

Since 2020, we have conducted a survey of primary suppliers on the country of origin of conflict minerals contained in their products using the Conflict Minerals Reporting Template (CMRT*1) and received responses from 17 companies.

Survey Results Tantalum (Ta) Tin (Sn) Tungsten (W) Gold (Au)
Total number of refineries for each metal 39
(Of which, 1 company in target country*2)		 87
(Of which, 1 company in target country*2)		 50
(No target countries)		 156
(No target countries)
[Notes]
  1. *1
    CMRT (Conflict Minerals Reporting Template): A survey format for reporting conflict minerals provided by the Responsible Mining Initiative (RMI), which has established international guidelines on conflict minerals.
  2. *2
    Target Countries: This refers to the Congo and a total of 10 countries designated as target countries for conflict minerals: Angola, Zambia, Tanzania, Uganda, South Sudan, Rwanda, Central African Republic, Republic of Congo and Burundi.

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

Information on a Social Dimension Verification Report_JQA