Sustainable procurement

We conduct fair and just procurement activities in order to operate honestly towards all stakeholders.
We have established a basic procurement policy, general regulations regarding procurement activities, and our own sustainable procurement guidelines, with the aim of contributing to the realization of a sustainable society throughout the entire supply chain.

The environment surrounding companies is becoming more diverse, and in order to achieve sustainable development, it is expected that each company will actively work to fulfill its social responsibility not only through one company, but throughout the entire supply chain. Based on Management Philosophy and Action Mindset, our group has established a basic procurement policy, and through procurement activities based on Integrity ethical standards, we will co-create a "society where sustainable development is possible" with our business partners throughout the supply chain. In order to fulfill this responsibility, we have formulated our own sustainable procurement guidelines based on the international standards ISO26000 (guidance on social responsibility), ISO28001 (supply chain management system), and ISO20400 (guidance on sustainable procurement), as well as the SDGs (Sustainable Development Goals) and the 10 principles of the United Nations Global Compact, from the perspectives of ① organizational governance, ② human rights, ③ labor practices, ④ the environment, ⑤ fair business practices, ⑥ consumer issues, and ⑦ social contribution. We exchange information with our business partners about the status of our sustainability efforts and strive to mutually improve our level.

In promoting sustainable procurement, the Procurement Department plays a central role and works closely with business partners in accordance with the Sustainable Procurement Guidelines.
Any risks that become apparent are reported to Risk Management and Compliance Committee and Board of Directors, and appropriate measures are taken under an appropriate supervisory system.

To promote sustainable procurement, we make selections in accordance with our supplier selection policies when purchasing materials, construction works and services, and we take steps such as ensuring that our suppliers understand our policies regarding procurement activities.

We believe that true "dialogue" based on trust with business partners is important in building a healthy supply chain through sustainable procurement activities.
Our dialogue with business partners follows the steps outlined in the diagram below (diagram of dialogue cycle with business partners). In the first half (steps 1 and 2), we ask each business partner to carry out a self-assessment based on a self-assessment form, which leads to the early detection and response of actualized risks. After that, if necessary, we move on to direct dialogue with a view to uncovering potential risks (steps 3 and 4).
In these dialogue, issues identified from the perspective of sustainable procurement are discussed beyond the positions of ordering and receiving parties, and actions for improvement are confirmed by both parties.

In fiscal 2023, we expanded the scope to 11 major purchasing departments ^* and conducted self-assessments of sustainable procurement for 361 suppliers. We have also held dialogues with a cumulative total of 134 companies. We will continue to engage in dialogue in fiscal 2024, and plan to expand our activities to include suppliers across the entire Group in fiscal 2025.

As part of our procurement activities, we communicate at in-house study sessions that we will fulfill our social responsibilities throughout the supply chain through collaboration with our business partners. Furthermore, when selecting new business partners, we follow the Sustainable Procurement Guidelines.

We strive to deepen mutual understanding by communicating our thoughts on sustainable procurement and Human Rights Policy. Specifically, we are making improvements such as sharing our "Cyber Security Letter" with business partners who request it from the perspective of "protecting against threats to computer networks" and setting up a reporting desk for the supply chain. In addition, we also support each company in resolving issues, such as providing templates for creating various regulations and implementing in-house education on biodiversity, as necessary.