Promotion of Sustainable Procurement

Basic ideas and policies

We are currently facing a range of social issues, including environmental problems such as the depletion of resources and energy issues as well as problems related to human rights, corporate ethics and compliance.
Through its business activities and the provision of products and services, the Resonac Group has been striving to contribute to the solution of these social problems and to the creation of a society where affluence and sustainability are harmonized. On the other hand, our business activities cover many fields, and our supply chains extend into various industries. Accordingly, in order to promote our social contribution activities, we need to gain the understanding and support of all stakeholders of the Group.
Based on this recognition, we established “Resonac Group Sustainable Procurement Guidelines,” which we share with our suppliers (business partners) so that we can increase each other’s corporate value through compliance with the guidelines.

The guidelines clearly show the policies and measures that the Resonac Group expects suppliers to implement for 9 items related to society, environment and the promotion of CSR. For example, for “Working hours” in the “Human rights and labor” section, we ask each supplier to “keep employees’ overtime working hours from exceeding legal limitations of the home country” and “have a campaign to restrain long working hours.” For “Freedom of association,” we ask each supplier to “observe its home country’s laws and regulations concerning employees’ rights to organize and bargain collectively,” and to “respect these rights.” For “Wages and welfare programs,” we ask each supplier to “pay wages, including overtime allowances, to its employees not less than the amount of minimum wage stipulated by home country’s laws and regulations.” Moreover, we invite suppliers to attend briefing sessions held at our sites in order to directly communicate our policies for society, the environment and the promotion of CSR, thereby raising their awareness of the guidelines.

In order to evaluate the risks related to suppliers,we conduct the following three activities: “CSR self-assessments,” “CSR visits” and “follow-up.” We foster these activities in a cycle of three years, targeting in principle all the goods and services that we purchase.

1. “CSR self-assessments”: We send CSR self-assessment questionnaires to our business suppliers and ask each of them to fill out the form to check for themselves how they are conducting CSR activities. We collect the completed forms, summarize the results and give feedback to the suppliers.
   
   • New suppliers
     For new suppliers, before starting to transact with them, we ask all of them to fill out the CSR self-assessment questionnaire. Then, based on the results, we conduct due diligence and evaluate the risks related to the suppliers.
   • Existing suppliers
     Also, for existing suppliers, we ask them to fill out the CSR self-assessment questionnaire once every three years. Based on the results, we conduct due diligence and evaluate the risks related to the suppliers as a precondition to continuing to transact with them.
2. “CSR visits”: The objective of CSR visits is to check how the business suppliers that are particularly important for the business continuity of our company and other business suppliers are conducting CSR activities. Our purchasing personnel visit these suppliers in person and check their CSR activities through interviews. We will continue to dialogue with as many suppliers as possible through the CSR visits as well as through the CSR self-assessments.
3. “Follow-up”: If any area needing improvement is found at any business supplier as a result of a self-assessment and/or a CSR visit, we work closely together with the supplier for improvement. Based on our findings, we might also propose improvement measures to the supplier.

Eco-friendly goods will be purchased as part of CSR procurement. Business divisions in charge will decide on the details of items to be surveyed.

Purchasing minerals (tin, tantalum, tungsten and gold) from Congo and its neighboring countries is considered a large international problem because, by purchasing these minerals, you fund local armed groups and consequently have a part in local conflicts and cause human rights violations and environmental destruction. The Resonac Group incorporates measures to deal with the issue of conflict minerals in “Resonac Group Sustainable Procurement Guidelines.” We ask our business suppliers to provide us with related supply chain information to avoid the purchase and use of these minerals. Also, in line with the recent social trends toward responsible minerals sourcing, we will add cobalt to the target of measures in addition to the aforementioned four minerals. We will continue making contributions to the international initiative for responsible minerals sourcing, recognizing the role to be played by the Group.

Resonac Group might ask business suppliers to make improvements depending upon the results of the CSR self-assessments and CSR visits. We will also review our business relations with suppliers who we think do have a serious negative impact on our business continuity. According to the level of negative impact that might be caused by a supplier, we will stop requesting quotes from and placing orders with the supplier for a certain period, reduce the trade volume, or cancel the sales contracts concluded with the supplier. We will decide whether to resume transactions with the supplier or not after our purchasing personnel check how the supplier has made improvements by interviewing the supplier and confirm that our concerns about the negative impact have been mitigated or eliminated. We are responding rigorously to any instances of noncompliance with laws and regulations or with “Resonac Group Sustainable Procurement Guidelines.”