Supply Chain Management
Basic Approach
Zeon Group believes that in order to fulfill social responsibilities such as environmental and human rights considerations across the entire supply chain, it is essential not only for our Group but also for our business partners to align our direction and advance initiatives together. As guidelines for our initiatives, we have established the Zeon Group Sustainable Procurement Guidelines, and we share the guidelines with our business partners and ask for their understanding of the objectives.
Going forward, we will continue to review the guidelines as appropriate in light of social demands for a sustainable supply chain, and, through collaboration with our business partners, fulfill our social responsibilities including environmental and human rights considerations.
Structure and System
We aim for a robust and sustainable supply chain by considering each of the environmental, social, and governance (ESG) aspects. As a system to advance this effort, we have established the Sustainability Conference and the Sustainability Committee under it, each of which meets regularly twice a year. These bodies also deliberate and decide as necessary on initiatives related to respect for human rights and the environment while also factoring in the supply chain, steadily advancing our measures. We have also established a supply chain reporting hub as a point of contact for any legal or compliance violations or human rights abuses within the supply chain.
Key Initiatives
Sustainable procurement initiatives
To promote sustainable procurement, Zeon works with its business partners to implement measures that embody concern for CSR (including human rights and environmental protection) throughout the supply chain. We take the steps outlined in the diagram below.
1. Sharing of our Sustainable Procurement Guidelines
In FY2023, to share our approach to building a sustainable supply chain with our business partners, we established our Sustainable Procurement Policy, which outlines the Group’s fundamental approach to procurement. To share this approach with our suppliers and build a sustainable supply chain, we then formulated the Sustainable Procurement Guidelines. In FY2024, we distributed the guidelines to our business partners to promote understanding of our sustainability stance and action policies throughout the entire supply chain.
Zeon Group conducts responsible procurement activities based on our " Sustainability Policy" aiming to realize a sustainable society throughout the supply chain.
- 1Compliance with laws and social norms
We comply with laws and social norms and conduct fair procurement activities based on corporate ethics.
- 2Optimal procurement of raw materials, products, and services
We strive to ensure the optimal procurement of raw materials, products, and services in respect of safety, quality, price, delivery date, supply stability, and technical capabilities to provide better products.
- 3Consideration for the global environment
We strive to procure raw materials and products that have less negative impact on the global environment, giving consideration to conservation of environment, resources and biodiversity.
- 4Consideration for human rights
We respect human rights in our supply chain and strive to procure raw materials, products, and services that are human rights friendly.
- 5Promoting responsible mineral sourcing
We strive to responsibly procure minerals to avoid involvement in conflicts, environmental destruction, and human rights violations in conflict-affected and high-risk areas.
- 6Appropriate management of information
We understand the importance of confidential information obtained through procurement activities, and striving to use, manage, and protect it appropriately.
- 7Open purchasing attitude and partnership
We look for business partners from a global perspective, striving to ensure fair, impartial, and transparent business opportunities, and build partnerships with our suppliers through dialogue to realize mutual development and a sustainable society.
Sustainable Procurement Guidelines
2. Supplier surveys
To monitor the implementation status of suppliers’ sustainability initiatives and identify risks, we implement surveys based on the common self-assessment questionnaire (SAQ) provided by GCNJ on a regular basis. The purchasing departments for raw materials, materials, and logistics select those suppliers that account for over 80% of procurement value and suppliers that are felt to have a high risk of human rights related issues, etc.
In FY2024, SAQs were delivered by the relevant departments to a total of 140 suppliers, of which 134 returned a completed SAQ. With regard to the six non-responding suppliers, we checked the sustainability-related information on each company’s website, and confirmed that no major risks were apparent at the present time.
3. Identifying and analyzing risks based on survey results
Based on the above survey results, we analyzed the risks with each supplier and clearly identified points requiring improvements.
4. Feedback
We provide a feedback sheet based on the analysis results referred to in 3. above to all suppliers that completed the common SAQ. The feedback sheet includes the score for each assessment item, including human rights, labor affairs, environmental protection, as well as the overall average score, a comparison with the previous survey, and an overall evaluation.
Suppliers can objectively understand their own progress, enabling them to continuously improve their CSR activities.
We also hold feedback interviews for those suppliers that have a relatively low score on the common SAQ, and those suppliers handling raw materials that are deemed to be particularly high-risk from a CSR perspective. In the interviews, besides explaining the importance of sustainable procurement,
we also confirm the status of initiatives based on the common SAQ, and request improvements where necessary. The average score for the five companies subject to feedback interviews in FY2022 was 283 points (out of 900 points), but in FY2024, it had risen substantially to 488 points.
In FY2024, we also conducted feedback interviews with 11 companies. Through the dialogues outlined in the table below, we are advancing initiatives toward continuous improvement.
| CSR-related issues | Dialogue for improving CSR activities, and content of advice to suppliers |
|---|---|
| Enhancement of transparency |
|
| Formulation of a human rights policy | Introduction of the UN Global Compact and the formulation guidelines issued by the Ministry of Economy, Trade and Industry |
| Conflict minerals | Review of risk management status and sharing of issues related to conflict minerals |
Monitoring of suppliers
While conducting the due diligence described above, we will monitor overall changes in the common SAQ percentage score and the improvement status of companies with low percentage scores, and, as necessary, engage in dialogue for improvement through additional interviews. Through these and other efforts, we will advance risk mitigation initiatives and work to strengthen our sustainable supply chain.
Collaboration with outside parties
We participate in the GCNJ’s supply chain subcommittee every year and gain diverse insights through it. We also actively engage in the preparation and publication of the subcommittee’s deliverables, incorporating them into our initiatives.