Promoting CSR Procurement and the Diversification of Supply Sources
The Group will build a supply chain to conduct fair procurement and to consider the environment.
Awareness of Issues
Environment issues and human rights infringement by raw material suppliers are important management risks. We have been working on CSR procurement more than ever before, and we check the fairness of our suppliers' activities based on our CSR Procurement Guidelines. We also recognize that the stable procurement of high-quality raw materials at reasonable prices leads to stable production and high-quality products.
Promoting CSR Procurement
The Shin-Etsu Group is working on CSR procurement, and we have created the Basic Procurement Policy, which serves as the basis for the CSR procurement, and have made it known throughout the Group and posted on our website. We ask suppliers to understand the "Basic Procurement Policy" and to incorporate the content of the policy into their supply contracts. To let suppliers better understand the policy, we created the CSR Procurement Guidelines, which is posted on the website. We held meetings to explain the guidelines to suppliers in July 2017 and January 2018, asking suppliers for their understanding and cooperation in promoting CSR.In FY 2022, we also sent the “Basic Procurement Policy” and “CSR Procurement Guidelines” to business partners of our group companies to familiarize them with our group's approach to CSR procurement.
In January 2018, we established the Supplier Hotline to ensure the transparency and fairness of transactions between the Group and suppliers. Business partners of the Group can report by e-mail.
Basic Procurement Policy
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)Respect for humanrigths and promote anti-discriminatorypractice. 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 preservation.
- (7)Avoid the purchase of Minerals that are clearly involved in conflicts and human rights infringement in conflict-affected and high-risk areas(CHAHRA).
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 charge of purchasing and procurement attend seminars on the Subcontract Act to gain an understanding of it. We also conduct regular internal audits of subcontracting transactions to ensure full compliance with the Subcontract Act. In addition, we make sure that all 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.
In our "Basic Procurement Policy," the Group has declared our dedication to eliminating minerals from conflict-affected and high-risk areas (CAHRAs) that are clearly involved in conflicts and human rights infringement in 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 smelting process. Furthermore, in February 2021, the Company participated in a meeting of the Roundtable on Sustainable Palm Oil (RSPO) as an associate member. The RSPO is a non-profit organization that promotes sustainable growth and use of palm oil by way of cooperation within the supply chain and open dialogue with interested parties. The Company agreed with the purpose and participated in the RSPO, and obtained mass balance certification in March 2023.
Announcing the "Declaration of Partnership Building"
We announced the "Declaration of Partnership Building" in December 2020, agreeing with its concept “Building the mutually beneficial relationships among entirety of the supply chain”. In particular, during a negotiation of the pricing of a deal, we agree to include the appropriate profits of suppliers in the pricing and make sure that we do not make unreasonable cost reduction requests.
By asking suppliers to complete 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.
The Purchasing Department holds a company-wide meeting every six months with all purchasing department personnel to discuss material procurement. In this meeting, we do not only report material procurement, but we also train purchasing department personnel according to the "CSR Procurement Guidelines," check the status of CSR procurement, and learn the latest examples of CSR procurement inside and outside the Company.
Control of Chemical Substances Used as Raw Materials
The Group checks the ISO 14001 acquisition status of business partners and considers prioritizing suppliers that have an ISO certification so as to purchase materials with smaller environmental impact. When signing contracts on specifications for the supply of raw materials, we work to confirm the following:
- ・Compliance with relevant laws and regulations regarding the use of chemical substances that affect the environment in products and packaging materials
- ・Compliance with the RoHS Directive
- ・Substance management using SDS or chemSHERPA
SE Tylose (Germany)
1.Please tell us about your current responsibilities.
I am purchasing raw materials and packaging materials and acting as Head of Purchasing and Supply Chain Logistics at SE Tylose.
2.Please tell us about your company's initiatives for sustainable procurement. How do you manage the supply chain?
Over the last years Sustainability initiatives are becoming increasingly important also for SE Tylose. In order to focus the activities and results onto this subject, in 2021 a sustainability team, of which I am also part, was established.
This working group contains of members of different departments, like Environment and Safety, R&D, Human Resources, Purchasing and also our Site Manager is part of this team.
In regard to purchasing, we have developed a code of conduct for our business partners and have added sustainability items to our supplier surveys as well as to our supplier audit questionnaire.
My experience in Purchasing is helpful in order to manage the current and future challenges arising from the “Act on Corporate Due Diligence Obligations in Supply Chains”. This law requires companies to ensure that all purchasing activities are in line with social and legal standards of the European Union, and my team is expected to comply with this law.
3. Do you ask suppliers to comply with the Shin-Etsu Group's Basic Procurement Policy and CSR Procurement Guidelines? Do you conduct CSR procurement audits?
From 2022, we have started sending our Group Code of Conduct to our suppliers. We want to achieve on the long term, all of our main supplier to accept the here defined principles and requirements.
In addition, we conduct audits at suppliers on a frequent base and I am part of the audit team. During these audits, we investigate that our suppliers comply with our policies and sustainability goals. All audits are documented to ensure suppliers are making progress and meeting recommendations based on our findings.
4. Do you provide training on CSR procurement to employees in the Purchasing Department?
As supervisor of this team the regular discussion about this topic is part of my responsibility of my job. As our Purchasing Department is a manageable team of 5 colleagues all of them are aware about the growing importance of CSR, and involved into current projects. As a member of our sustainability team I frequently share my knowledge and newly acquired information on CSR procurement with my colleagues.
5. What do you intend to focus on in the future regarding of Sustainable Procurement?
At the moment we are investigating a frequent change from fossil raw materials to sustainable raw materials during the next years in order to achieve the targets of the European Union for 2030 .
The focus here is on petrochemical products. We still have a long way to go, but we want to be a pioneer on this important and forward-looking topic, and we are also interacting with leading producers. For our major raw material wood pulp we are already on a successful path as all of our suppliers are able to confirm by certification that the pulp is processed in a sustainable manner. We are also currently checking the option to purchase Caustic Soda that is produced using green energy. Another important subject is circular economy, here the focus is on packing material, mainly how we can reuse material and reduce waste. We have started several projects, in order to partially replace virgin materials by recycled materials and are looking for options to reuse.
Sustainable procurement has a significant impact on ESG rating, and my target is to contribute together with my team to further improve our rating.