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.
  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 CSR-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
FY2022 FY2023
Percentage of respondents who completed the sustainability procurement survey More than 90% Every year 94% 94%
Supporting improvement activities for high risk suppliers 100% implementation Every year 100% 100%
Conducting supplier inspections and CSR audits FY2022: More than 10 companies
FY2023: More than 15 companies		 Every year 12 companies 16 companies

Supply chain overview

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

Supplier classification FY2023
Tier 1 Supplier No. of suppliers 2,811*
Significant suppliers No. of Tier 1 Suppliers 81
(Portion of purchase: 80%)*
(SoftBank affiliates are not included in the survey)
No. of Non-Tier 1 Suppliers 0*
[Note]
  1. *
    Third-party verification is conducted.

Overview of the survey

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

In FY2023, we conducted Three companies (NTT, KDDI, SoftBank) Sustainable Procurement Common SAQ*1 (In-house evaluation survey) for sustainable procurement to surveyed suppliers*2. In FY2024, we introduced EcoVadis*3, a third-party evaluation platform, to further strengthen our engagement with suppliers.

[Notes]
  1. *1
    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.
  2. *2
    Target suppliers: In fiscal 2023, we surveyed significant suppliers that are included in the top 80% of purchases.
  3. *3
    Sustainability assessment service consisting of four parts: Environment, Labor Practices and Human Rights, Ethics, and Sustainable Sourcing.

Results of the survey

The average score rate for the total of the nine items was 85%. The peak values with a high score rate were 1. Respecting the Laws and Internationally Recognized Standards, 2. Human Rights and Labor, 6. Quality and Safety and 7. Information Security, while the peak values with a low score rate were 4. Environments, 5. Fair Trading and Ethics and B. Supplier Management. 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.

Results of the survey
Sections Maximum point yield Average scoring rate
1. Respecting the Laws and Internationally Recognized Standards 100 90
2. Human Rights and Labor 100 90
3. Health and Safety 100 79
4. Environments 100 68
5. Fair Trading and Ethics 100 78
6. Quality and Safety 100 93
7. Information Security 100 100
8. Business Continuity Planning 100 88
A. Establishing a Management System 100 89
B. Supplier Management 100 69
C. Establishing a Grievance Mechanism 100 87
Total 100 85

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 FY2023, we identified suppliers that are behind in addressing human rights issues 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.

Risk Rank Evaluation Score FY2023 Description
Rank A Total 86 or greater with no applicable significant risk items 33 suppliers
(51%)		 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 22 suppliers (34%) 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 under with no applicable significant risk items 3 supplier (4%) 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 under with applicable significant risk items 7 suppliers (11%) 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.
Total 65 suppliers* Including significant suppliers.
[Note]
  1. *
    Third-party verification is conducted.

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 2023, seven suppliers were identified as having potential risks to prepare corrective action plans, and we have asked suppliers to take advantage of this assessment to improve their initiatives.

Type of risk Contents Number of supported suppliers for improvement
in FY2023		 Improved guidance rate
Human Rights No human rights and labor regulations have been established. 2 companies 100%
Environmental Risks Emission status is not visualized or no specific quantified reduction targets have been set for GHG emissions. 5 companies
Total 7 companies (including overlaps)* 100%
[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.

On-site audit FY2022 FY2023 FY2024
Target 10 Companies or more 15 Companies or more 20 Companies or more
Achievements 12 Companies 16 Companies or more* -
[Note]
  1. *
    Third-party verification is conducted.

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

Information on a Social Dimension Verification Peport_JQA
(PDF: 136KB/1 page)