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 diversifying, and in order to achieve sustainable development, each company is expected to actively work to fulfill its social responsibilities not only by one company but throughout the entire supply chain. Masu. Our group has established a basic procurement policy based on Management Philosophy and Action Mindset, and through procurement activities based on Integrity ethical standards, we work together with our business partners to create a "society that is capable of sustainable development" throughout the supply chain. In order to fulfill this responsibility, we have adopted the international standards ISO 26000 (Guidance on Social Responsibility), ISO 28001 (Supply Chain Management Systems) and ISO 20400 (Guidance on Sustainable Procurement), SDGs (Sustainable Development Goals), and the 10 principles of the United Nations Global Compact. For reference, we have formulated our own sustainable procurement guidelines 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 regarding the status of their sustainability initiatives and strive to improve our mutual performance.

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 the Risk Management & Compliance Committee and the 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 the 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 sheet, 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 dialogues, 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.

Procurement Department, Petroleum Marketing Department, Distribution & Operations Department, Power/renewable energy Business Department, Electronic Materials Department, Lithium Battery Material Department, Advanced materials & Performance Chemicals Department, Lubricants (Part 1), Bitumen (High Performance Asphalt) Business Department, General Affairs Department, Supply and Integrated Supply & Trading Department

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 our sustainable procurement and basic human rights policies. Specifically, from the perspective of "defending against computer network threats," we are making improvements such as sharing our Cyber Security Letter with business partners who have requested it and establishing a supply chain reporting desk. . Additionally, as needed, we support companies in resolving issues, such as providing templates for creating various regulations and providing in-house education on biodiversity.