Foundation Underpinning ESG Management
Responsible Procurement
Based on the Vision 2030 Long-term Vision’s Vision Statement of Innovation for the Earth: In order to realize a sustainable society, we support the basis of LIFE and will continue to create peace of mind for the future, we believe we must continue to stand accountable, be transparent, respect stakeholder interests, change, and evolve as part of procurement activities. In addition to the existing concept of Q (quality), C (cost), and D (delivery), we therefore revised and made additions to the Basic Procurement Policy, guidelines, and surveys during the current Medium-term Management Plan for the purpose of promoting responsible procurement that better considers society and the environment.
Under the next Medium-term Management Plan, we will work on listing all suppliers in our supplier due diligence, which considers the negative impacts that a company causes, contributes to, or is directly linked to, on people, the environment, and society. At the same time, we will consider the manner in which we can improve the efficacy of our due diligence. In addition, we will conduct a review in a timely and appropriate manner, taking into consideration trends in overseas statutory and regulatory requirements as well as directives, based on the understanding that the demands on companies from society will increase.
Revising the Basic Procurement Policy
Amid our efforts to promote CSR management, SEKISUI CHEMICAL Group formulated the existing SEKISUI CHEMICAL Group Basic Procurement Policy in October 2006 as our CSR procurement policy, which we also posted and disclosed on the Group website. In response to social issues and demands that emerged later on, we expanded the content in 2014 to cover conflict minerals, in 2018 to cover timber procurement, and in 2019 to consider the environment.
The existing SEKISUI CHEMICAL Group Basic Procurement Policy, however, fails to fully address further social issues and demands that have arisen in recent years, including human rights, sustainability, and anti-corruption issues that have emerged with the diversification in social demands on the supply chain.
For this reason, during the current fiscal year we investigated and formulated revisions to the Basic Procurement Policy, and posted these on the Group website on April 1, 2023*, to ensure broad recognition.
- For the Basic Procurement Policy,see here
Sustainable Procurement Guidelines (Supplier Code of Conduct)
Sustainable Procurement Guidelines (Supplier Code of Conduct) summarize the procurement objectives that SEKISUI CHEMICAL Group and its business partners aim to achieve. Sustainable Procurement Guidelines are in line with the UN Global Compact 10 Principles, UN Guiding Principles on Business and Human Rights, and SEKISUI CHEMICAL Human Rights Policy, as well as serves as the criteria that must be observed by all business partners involved with the Group and the production of its products.
We ask our business partners to understand and comply with the purpose and content of these guidelines as well as cooperate with us in our efforts to realize a sustainable society.
| Crucial Action Items in the Current Medium-term Management Plan | Details | Targets | Results |
|---|---|---|---|
| Expand the management scope of priority risks | FY 2021 | ||
| ・ Conduct CSR surveys of all domestic and overseas suppliers at once | Response rate 80% |
Response rate 67% |
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| FY 2022 | |||
| ・ Expand survey items related to conflict minerals, and survey overseas affiliates | Implementation rate 100% |
Implementation rate 100% |
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| Establish management regulations | FY 2021 | ||
| ・ Procurement Guidelines (Supplier Code of Conduct) | Formulate | 〇 | |
| ・ ”Sustainable procurement" Survey Manual | (Revised edition) | 〇 | |
| ・ ”Sustainable timber procurement" Survey Manual | (Revised edition) | 〇 | |
| ・ ”Responsible Mineral Procurement" Survey Manual | (Revised edition) | 〇 | |
| FY 2022 | |||
| ・ Basic procurement policy | (Revised edition) | 〇 | |
| ・ "Sustainable Timber Procurement Guidelines" | Formulate | 〇 | |
| Deploy use of self-audits and utilize external assessments | FY 2022 | ||
| ・ Conduct interviews of 13 high risk supplier candidates identified from the results of the CSR survey | Implementation rate 100% |
Implementation rate 100% |
|
| ・ Conduct an audit together with an external organization regarding one overseas company from the above | Implement | 〇 |
As for SEKISUI CHEMICAL Group procurement, the Purchasing Group of Corporate Headquarters plays a central role in conducting transactions in accordance with Sustainable Procurement Guidelines and basic policies in cooperation with the purchasing departments of business sites and Group companies, as well as the Overseas Management Group.
In order to achieve more appropriate procurement throughout the supply chain, we encourage our secondary and tertiary suppliers to achieve and maintain socially responsible operations through our primary suppliers.
Cooperation with business partners is indispensable for promoting our initiatives, so we are working to foster their understanding regarding sustainable procurement and surveys. We have also made our Basic policy on Sustainable Procurement and Guidelines available on our website in English and Chinese for our overseas business partners.
Building Supply Chains based on Sustainable Procurement Surveys
SEKISUI CHEMICAL Group conduct sustainable procurement surveys to assess whether our business partners are operating in a socially responsible manner. These surveys are aimed at building responsible supply chains to achieve and maintain sustainable procurement. Based on the survey results, we work with our business partners to resolve any outstanding issues.
In fiscal 2021, we significantly revised the sustainable procurement survey, changing survey content from the original ISO-based format to the latest version of the CSR/Procurement Self-assessment Questionnaire formulated by the secretariat of Global Compact Network Japan (GCNJ). These revisions enable us to conduct more comprehensive surveys that include items related to human rights. In addition, the timing of the surveys had previously not been standardized, but we have made changes to ensure that surveys are conducted simultaneously worldwide. We plan to expand the scope of the survey as appropriate.
| Previous Surveys | Surveys from Fiscal 2021 Onward | |
|---|---|---|
| Questionnaire | SEKISUI CHEMICAL Group’s original questionnaire that referred to ISOs, etc. | Questionnaire using the latest version of the GCNJ CSR Procurement Self-Assessment Questionnaire |
| Survey scope | Purchasers with annual transactions of 30 million yen or more, cumulative top 80% of purchasers by Group company | Major purchasers possessing a defined amount of capital, with annual transactions of 30 million yen or more |
| Schedule | Sequential implementation (generally three years to complete surveys of all eligible companies) | Simultaneous surveys conducted every three years |
Sustainable Procurement Survey Process
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Survey Scope:1 Suppliers mainly of raw materials and materials (including packaging materials) that constitute or accompany products
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2Utility-related business partners
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3Production equipment-, construction work-related business partners
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4Trading companies and actual manufacturers if the business partner is a trading company
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5Not applicable if the business partner is a SEKISUI CHEMICAL Group company
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Frequency:every time for new business partners and once every three years for existing ones
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Survey method:surveys are conducted using the latest version of the CSR/Procurement Self-assessment Questionnaire
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Survey structure:The Purchasing Group of Corporate Headquarters manages the entire survey, while business site and group company purchasing departments are responsible for requesting that business partners fill out questionnaires and collecting their responses. The Overseas Management Group and Group company purchasing departments are tasked with conducting surveys of business partners abroad.
Fiscal 2022 Sustainable Procurement Survey
In regard to 13 suppliers who provided low self-assessments under the Sustainable Procurement Survey conducted in fiscal 2021, in fiscal 2022 we held direct interviews for the purpose of verifying the presence of any potential risks and confirmed their situation.
Based on the results, in regard to one overseas manufacturer that agreed to engage in improvements involving sustainable procurement in cooperation with the Group, we conducted interviews of local workers together with consultants to advance efforts toward improvement.
Requests to Sign the Supplier Code of Conduct
We ask our suppliers to sign the Supplier Code of Conduct when conducting sustainable procurement surveys. The Supplier Code of Conduct is formulated to ensure that our suppliers maintain high standards of safe working conditions, fair and respectful treatment of employees, and ethical practices. We have included in the Supplier Code of Conduct a section that requires business partner supply chains (secondary and tertiary suppliers) to achieve and maintain socially responsible operations. In so doing, SEKISUI CHEMICAL Group will work to expand sustainable procurement.
Declaration of Partnership Building
In March 2022, SEKISUI CHEMICAL Group signed the Declaration of Partnership Building, declaring that the Group will focus on coexisting in mutual prosperity throughout the supply chain, forging new partnerships (inter-company collaboration, IT implementation support, expert personnel matching, green procurement, etc.), and adhering to promotion standards.
Declaration of Partnership Building
Fiscal 2022 Responsible Mineral Procurement Survey
In fiscal 2022 we conducted surveys based on the newly revised Responsible Mineral Procurement Survey Manual. In advance of these surveys, we held in-house training sessions to deepen the understanding of the surveys in regard to the background behind conflict minerals (minerals used by armed insurgents as a source of funds) to be surveyed and social changes (child labor and other human rights violations).
Upon surveying 35 domestic locations and 16 overseas locations that handle the surveyed minerals, of those raw materials containing the surveyed minerals, in Japan the results identified 90% at smelters, while 5% were undisclosed and 5% were unknown. Overseas, the results identified 78% at smelters, while 2% were undisclosed and 19% were unknown. In fiscal 2023, we will investigate actions in line with the risk levels of undisclosed and unknown raw materials.
Changes to the Responsible Mineral Procurement Survey
| Previous Surveys | Surveys from Fiscal 2021 Onward | |
|---|---|---|
| Target risks | Whether they fund armed insurgents |
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| Target regions | The Democratic Republic of Congo and neighboring countries Total: 10 countries |
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| Target minerals | 3TG (tantalum , tungsten, tin and gold) | 3TG+ cobalt, mica |
| Target raw materials | Product raw materials for which customers have requested investigations | Raw materials containing target minerals |
| Report content |
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Sustainable Timber Procurement
In the course of our business activities, the Group procures wood itself or wood-based raw materials and recognizes that this may have negative impacts with regard to human rights and the environment.
In addition, at COP26 in November 2021, leaders from over 100 countries, including Japan, signed a document committing to end deforestation by 2030.
In response to this, we significantly updated our existing due diligence procedures in fiscal 2022.
Specifically, we have set a new target of 2030: Zero Deforestation and revised our Timber procurement policy* to achieve this goal.
For thetimber procurement policy, see.
| Previous Policy | Policy for 2022 and Beyond | |
|---|---|---|
| Environment | − | Promote the procurement of timber from forests that are properly managed for sustainable use. |
| − | Promote the procurement of timber that does not lead to natural forests being converted to other uses. | |
| − | Procure timber from forests other than those with high conservation value, such as biodiversity conservation. | |
| − | Procure timber from non-threatened tree species. | |
| We will use timber- and wood-based materials that are already used in markets, as well as unused thinnings and branches. | Procure wood materials that contribute to resource circulation, such as recycled materials and unused thinned wood. | |
| − | Proactively employ suppliers that are implementing activities that lead to an increase in forests. | |
| Society | − | Promote procurement in a manner that does not have a negative impact on local communities and respects local cultures, traditions, and economies in the sales channels, including logging and processing of timber products. |
| − | Promote procurement that respects the rights of indigenous peoples. | |
| − | Promote procurement that respects the rights of all workers. | |
| Governance | We make every effort to ensure that the timber used in products is logged in accordance with statutory and regulatory requirements. | Comply with all laws and regulations relating to forest procurement. |
| We implement small quantity investigations on the logging area, tree species, and quantity of timber materials, in order to ensure traceability. | Ensure traceability of timber and timber products, and promote clear place of origin and problem-free procurement of timber and timber products. |
And in order to realize procurement in line with the timber procurement policy, we have established new Sustainable Timber Procurement Guidelines, and have launched initiatives to reduce the negative impact of deforestation on the human rights and environment of indigenous peoples, performing legal timber procurement to date as a matter of course.
The details of these initiatives include conducting questionnaire surveys of 57 suppliers in regard to tree species and logging areas, holding interviews with suppliers among these 57 who handle raw materials that are endangered species and that are from countries with high-risk logging areas, and clarifying traceability. As a result of these surveys, we identified four suppliers along the supply chain that are at risk, although we do not purchase directly from them. We will continue to engage in efforts to reduce identified risks.
The procurement breakdown by region is shown as follows.
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Timber Procurement Ratio by Area (Fiscal 2022)
