Promoting CSR Procurement and the Diversification of Supply Sources
Basic Procurement Policy
Created by the Group, this policy is shared within the company and posted on the 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 January 2018, we established the Supplier Hotline to ensure the transparency and fairness of transactions between the Group and suppliers.
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
Shin-Etsu Chemical Head Office
Mr. MA and Mr. JS, Purchasing Department
Working with suppliers to create a sustainable society
1. Please tell us about your job.
We are responsible for the procurement of electricity, gas, and raw materials such as chemical products and pulp used by Shin-Etsu Chemical.
2. What prompted you to create the "CSR Procurement Guidelines" (hereinafter referred to as the Guidelines) in 2017?
The Purchasing Department has been working on CSR procurement for a long time and had a "Basic Procurement Policy." We prepared the Guidelines to explain the "Basic Procurement Policy" in detail and to help our business partners to understand it.
The Guidelines were developed based on version 5.0 of the EICC (currently RBA)1 Code of Conduct, which was the industry standard at the time. We added our own items, such as business continuity planning, to the document. By developing the Guidelines, we have clarified what we should keep in mind regarding CSR procurement as the Purchasing Department and what we need to ask our suppliers to do.
3. What was the focus of the 2020 revisions?
Additions and revisions to "RBA Code of Conduct Version 6.0" for 2018 were reflected in the Guidelines. In addition, the content and the text was revised in line with the update of CMRT2 in 2020.
At the same time, specific examples of business continuity plans were provided to make them easier to understand.
4. Please tell us about your supply chain management plans for the future.
We have already asked our major suppliers to participate in briefing sessions and questionnaires based on these Guidelines. By expanding the scope, more suppliers can learn about them, which will lead to stable, fair, and impartial procurement activities.
5. How was procurement affected by COVID-19 infections?
Raw materials procurement from overseas was partially affected by production suspension caused by lockdown. However, our manufacturing was unaffected as we had secured substitute raw materials by doing multiple-source purchasing. While preventing COVID-19 infection cases, we managed to continue purchasing operations through remote work and staggered working hours as well as customer meetings using a web conference system.
- 1EICC (currently RBA)
A CSR alliance for the electronics industry. In 2018, it was renamed to the Responsible Business Alliance (RBA). It sets standards to ensure that the work environment is safe, to treat workers with respect and dignity, to fulfil environmental responsibilities, and to implement ethical business practices in the electronics industry or industries and supply chains that use mainly electronic components.
A tenplate for conflict minerals reporting created by RBA's conflict minerals free promotion initiative titled "Responsible Sourcing of Minerals Initiative." This template is an information control tool for the entire supply chain, intended to enable procurement of raw materials free of conflict minerals.
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.
Internal auditing for compliance with the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors
(December 2019, Shin-Etsu Chemical Kashima Plant)
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 of the RSPO and decided to participate.
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.
Procurement conference (March 2020, 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 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