Shin-Etsu Group Key CSR Issues

Shin-Etsu Group Key CSR Issues

Key Issue4: Promoting CSR procurement and the diversification of supply sources

Policy

The Group will procure fairly and build an environmentally conscious supply chain.

Basic Procurement Policy

This policy is ensured in the Group and posted on the website. Suppliers are expected to understand the Basic Procurement Policy and asked to incorporate the content of the Policy into their supply contracts.
In addition, in order to gain a deeper understanding of the Basic Procurement Policy, we have created the CSR Procurement Guidelines, which we publish on our website.
We held an explanatory meeting of the guidelines for suppliers in July 2017 and January 2018. It was to ask suppliers for understanding and cooperation to our promotion of CSR procurement.
In January 2018, we established the Supplier Hotline to ensure the transparency and fairness of transactions between the Group and suppliers.

Shin-Etsu Group's Basic Procurement Policy

1. Legal compliance

As the most important of its management objectives, the Company conducts all of its business activities in a law-abiding spirit. Each and every staff member is made fully aware of corporate social responsibilities and they carry out their business activities in strict conformity with the law, business ethics and the various rules and regulations of the Company. In its purchase and procurement activities, the Company acts in good faith and in a fair manner, and does not practice favoritism, nor make improper demands. In addition, based on mutual trust, not only between the Company and the suppliers that the Company directly procures from, but also with vendors in the linked supply chain, all those companies involved carry out their business activities in strict accordance with the principal labor standards of International Labor Organization (ILO), any laws and regulations related to protection of the environment andbusiness transactions including those of small- and medium-size enterprises.

2. Promotion of corporate social responsibility

The Company places primary importance on corporate social responsibility (CSR) activities.. For the promotion of CSR, the cooperation of all the Company’s suppliers is essential, and we ask you to comply with the Company’s policies in the areas listed below. At the same time, we will strive to maintain mutual trust and close, friendly relationships.

  • (1) Strive to strengthen and promote conformance with social norms, business ethics and laws.
  • (2) Place first priority on assuring safety, protection against disasters and effective environmental preservation(Cooperate in "Green" environmentally friendly purchasing and procurement activities, and at the same time, each person should have a consciousness of the importance of these issues.
  • (3) Conduct risk management activities such as paying attention for accurate and fair disclosure of information on assuring the delivery of safe and reliable products and taking speedy measures to deal with various contingencies
  • (4) Resperct for human rigths and promote anti-discriminatory practice. Comply with the labor standards of the International Labor Organization (ILO) and prohibit unfair labor practices.
  • (5) Protect against the disclosure of classified information, personal confidentiality and respect the rights of the third party’s intellectual property.
  • (6) Pay attention to biodiversity preservstion.
  • (7) Avoid the purchase of conflict minerals that directly or indirectly finance or benefit armed groups in the Democratic Republic of the Congo or adjoing countries.
3. Supplier selection

The Company follows an open-door policy regarding its purchasing activities and globally seeks suppliers based on open, fair, impartial and equal-opportunity principles. The company selects suppliers in a rational and comprehensive manner,  taking into consideration the following core considerations:
1. Globally competitive in product quality, price, delivery time and supply stability
2. Objective standards such as suppliers’ management stability, reliability and technological superiority.
3. Matters as mentioned in “2. Promotion of corporate social responsibility” above

4. Development and review of the suppliers

The Company provides suppliers with the essential information necessary for transactions and also cooperates with suppliers’ VA and VE improvement activities as well as in activities related to the maintenance and improvement of product and service quality. The Company also routinely or as necessary promotes evaluation and review of suppliers’ performance.

  • *VA:Value Analysis, VE:Value Engineering
    Method for developing high value new products satisfying customers and improving existing products

Compliance with the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors

Staff members in change of purchasing and procurement attend seminars on the Subcontract Act to gain an understanding of the Act. We also conduct regular internal audits of subcontracting transactions to ensure full compliance with the Subcontract Act. In addition, we make sure that all the subcontractors that are subject to the Subcontract Act are in full compliance by periodically checking the details of existing transactions and reports on new transactions.

  • Internal auditing for compliance with the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors (December 2017, Shin-Etsu Chemical Naoetsu Plant)

    Internal auditing for compliance with the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors (December 2018, Shin-Etsu Chemical Gunma Complex)

Initiatives Aimed at Eliminating the Use of Conflict Minerals

In our Basic Procurement Policy, the Group has declared our dedication to eliminating conflict minerals1 from all product procurement. We ask that all suppliers adhere to this policy, and we regularly perform studies of pertinent minerals, tracking their production all the way back to the smeltery level.

  • 1 Conflict minerals
    Minerals used to fund armed groups in conflict areas in the Democratic Republic of the Congo and its neighboring countries. These conflict minerals are tantalum, tin, gold, tungsten, and their derivatives.

Procurement Audit

By asking business partners to reply to a supplier CSR procurement questionnaire, we confirm whether they conduct business activities in accordance with the Group's CSR Procurement Guidelines. Additionally, we visit suppliers in Japan and overseas whenever necessary to carry out audits.

Procurement Conferences

The Purchasing Department holds a company-wide meeting every six months with all purchasing department personnel company-wide to discuss material procurement. This meeting is not only for reporting material procurement but also for training purchasing department personnel according to the Guidelines for CSR Procurement and checking the status of CSR procurement as well as learning the latest examples of CSR Procurement inside and outside the Company.

  • Procurement conference (Shin-Etsu Chemical Head office)

    Procurement conference (March 2019, Shin-Etsu Chemical Head office)

Control of Chemical Substances Used as Raw Materials

The Group checks the ISO 14001 acquisition status of business partners and considers giving a priority to do business with suppliers that have ISO certification so as to purchase materials of lower environmental impact. On making contracts on specifications for raw material supply, we work to confirm the following.

  • - The suppliers' use of chemical substances that impact the environment in products and packaging, compliance with the relevant laws and regulations
  • - Compliance with the RoHS Directive
  • - Substance management using SDS / chemSHERPA

Shin-Etsu Group Key CSR Issues