Sojitz Corporation

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Supply Chain Management

Overview of the Supply Chain Management

As a general trading company developing business around the world, Sojitz is involved in a wide variety of supply chains. This means that one of the biggest challenges for Sojitz Group is figuring out how work together with suppliers to reduce environmental and social (human rights) risk within our supply chains.

As shown in the diagram below, we aim to achieve more sophisticated risk management within our supply chains and gradually expand the scope of this risk management through joint efforts with Group companies and suppliers.

Policy

We created the Sojitz Group CSR Action Guidelines for Supply Chains based on the ten principles of the United Nations Global Compact. We share these guidelines with our suppliers and require them to develop climate change countermeasures; initives for effective use of water, waste materials, an other resources; measrsues to protect biodiversity; and respondse to human rights violations. Additionally, we revised the Action Guidelines to further honor the Key Sustainability Issue of "respect the human rights of people involved in our business."

Furthermore, in September 2015, we established a Sojitz Wood Procurement Policy which embodies our CSR Action Guidelines for Supply CHains within the context of our wood-related businesses. In order to promote wood procurement which is legal and environmentally/socially-conscious, we conduct due dilligence of suppliers using surveys or on-site visits to confirm actual conditions under the supervision of WWF Japan, assessing environmental/human rights risk and asking suppliers to take remedial actions.

Sojitz Group CSR Action Guidelines for Supply Chains

The Sojitz Group’s business activities are underpinned by collaboration with business partners in diverse countries and regions as well as within various industries. The Sojitz Group strives to promote CSR initiatives in the supply chain as we conduct our business in this diverse context.

Our Expectations: In order to conduct responsible business, incorporating respect for the human rights of stakeholders and protection of the environment, the Sojitz Group requires suppliers to understand implement the following items as it strives, with them, to do business in harmony with society and the environment.

  1. 1.Respect for the human rights of employees, and treatment of employees in a humane manner.
  2. 2.Prevention of forced labor, child labor, and the observance of appropriate labor hours and minimum wage.
  3. 3.Non-discrimination in hiring and employment.
  4. 4.Respect for employees’ freedom of association and the right to collective bargaining to ensure constructive negotiations between labor and management.
  5. 5.Provision of a safe, sanitary and healthy work environment for employees.
  6. 6.Observance of all relevant laws and regulations, ensuring fair transactions and prevention of corruption.
  7. 7.Ensuring the quality and safety of products and services.
  8. 8.Consideration for ecosystems, the environment, and environmental conservation within our business activities, as well as efforts to prevent environmental pollution.
  9. 9.Timely and appropriate disclosure of information regarding the above items.

 

<Cases of Material Breach>
In the event of a material breach of the Action Guidelines, the Sojitz Group shall, upon verifying the facts, request that the supplier or other business partner improve the situation. If no improvement has been made after a specified period, we will take measures which may include a reconsideration of the contract with the supplier or partner.
If necessary, the Sojitz Group shall, along with experts designated by the Group, visit the site concerned for investigation.

Established in April 2010
Amended in June 2017

Related PoliciesSojitz Group Human Rights Policy  Sojitz Group Environmental Policy

Sharing the Policy

In working with Sojitz Group companies and suppliers to reduce evironmental and social (human rights) risk, we not only share Sojitz Group's policies and the demands placed on us by international norms like the Guiding Principles on Business and Human Rights; we believe it is important to link these risks to actual business by presenting case studies as well.

Activities

(1) Human Rights Risk Seminar
In order to share the newly established Human Rights Policy, we held a Human Rights Risk Seminar in October 2017, focusing on human rights due dilligence. A total 78 people attended, comprising Sojitz Corporation COOs/General Maangers and the presidents of 14 Sojitz Group companies.

The seminar aimed to foster awareness of human rights issues, to inspire greater efforts to address human rights in the future. We shared information on global trends, such as how human rights due dilligence has become more and more of a factor in determining business competitiveness around the world following the advent of the U.N.'s Guiding Principles on Business and Human Rights, as well as explained how alongisde the growth of ESG investment, a company's deciision to conduct human rights due dilliegence has become another indicator by which investors assess corporate sustainability.

(2) e-learning
We regularly conduct e-learning on changes in social trends related to sustainbility and the response to environmental and human rights issues required of companies today, in order to foster understanding of sustainability within Sojitz Group. Around 5,000 Sojitz Group members* worldwide take these e-learnings each time they are made available.

* Employees and officers at Sojitz Corporation, the nine most important Sojitz Group comapnies, and Sojitz Corporation overseas subsidiaries

(3) Publishing the Supply Chain CSR Handbook
Provided mainly to Group companies and suppliers overseas, the handbook shares Sojitz's environmental and human rights policies, basic explanations of CSR, and concrete, real examples of environmental and social risks in bsuiness and how these risks were addressed. The book was designed specifically to teach Sojitz Group members the importance of cutting greenhouse gas emissions, conserving biodiversity, and other efforts to lessen the environmental impact of business acivities.Addtioiionally, it aims to depeend understanding of human rights due dilligence and efforts to improve working environments, as well as encourage readers to maek these efforts themselves.

As part of this handbook, we recommend suppliers use the CSR Survey as a way to inform us of negative environmental and human rights impacts and lessen the bureden placed on them by on-site visits and auditing.

■Handbook Distribution

Located in High-Risk Countries
Total
Distributed to
% received
Suppliers conducting business
directly with Sojitz Corporation
(※1)910
(※2)147
16%
Suppliers conducting business directly with 6 major Group companies (※3)
(※1)3,937
(※2)128
3%
Overseas consolidated subsidiaries/holdings
319
70
22%
Total
5,166
345
7%
  • *1:Number of suppliers from whom Sojitz Group made purchases in FY2016, regardless of country where the supplier is located
  • *2:Number of suppliers singled out from the total based on [(1) the supplier being located in a high-risk country], [(2) the transaction amount with the supplier meeting or exceeding a certain level], [(3) the supplier not being a Sojitz Group company or overseas subsidiary of Sojitz Corporation]
  • *3:Sojitz Machinery Corporation, Sojitz Marine & Engineering Corporation, Sojitz Pla-Net Corporation, Sojitz Foods Corporation, Sojitz Building Materials Corporation, and Sojitz Kyushu Corporation
    (Nissho Electronics Corporation, Sojitz Aerospace Corporation, and Sojitz New Urban Development Corporation have no business with suppliers in high-risk countries, excluding them as of this fiscal year.)

 

Risk Assessment

Sojitz Group operates a wide variety of businesses which come with many latent environmental and social (human rights) risks. For this reason, we believe we must do what we can to mitigate these risks, analyzing high-risk business areas before assigning priority and assessing risk. The process for selecting businesses and evaluating their risk is as follows.

(1) Objectively analyze right-risk business areas
We use Business & Human Rights Resource Centre's database to collect examples of manifest environmental and human rights risks in countries worldwide, starting from the year 2000. In this way, we analyze which business areas generally carry high risk.

(2) Select Sojitz business for risk assessment
We decide priority for each Sojitz Group company and supply chain (for trading-based businesses) based on our understanding of high-risk business areas. We then select businesses for Risk Assessment.

■Sojitz Group companies (consolidated subsidiaries/affiliates)
As the primary business operator, Sojitz Group assess risk at all project companies, regardless of country. High-risk businesses are prioritized for assessment.

■Suppliers (Trading-based businesses)
We assume that even those trading businesses where transactions comprise small amounts or which carry a small profit margin can belong to supply chains where upstream development/production carries a significant impact on the environment and human rights. For this reason, we must assess risk throughout the supply chain, to ensure that Sojitz is not indirectly implicated in any environmental or human rights violations.

We prioritize assessment for suppliers in high-risk segments regardless of the scale of the transactions or profit margins.

(3) Risk assessment method
For businesses that are expected to have environmental or social (human rights) risks, we conduct risk assessments by using CSR questionnaires.

In FY2017, we conducted a CSR survey of 38 consolidated subsidiaries comprising the six focus areas named in the Sojitz Group CSR Action Guidelines for Supply Chains, to confirm whether there are any issues which must be fixed immediately, such as human rights breaches, labor issues, violations of environmental law, or otherwise negative impact on ecology.

In addition to our wood procurement-related initiatives, we will continue to gradually expand the scope of risk assessment to Sojtiz Group companies and suppliers according to priority.

* Main categories for each focus area

Focus Area Main Categories
General -Policies, parties responsible, dedicated organizations, monitoring systems, trainings/education
-Status of due dilligence
Human Rights -Child labor, forced labor, discrimination, wages, working hours
-Right to organize, bargaining rights, agreements between workers and management
Safety and Sanitation in the Workplace -Response to workplace accidents and natural disasters
-Safety and sanitation management in factories and related facilities
Environmental Conservation -Policies for managing and curtailing energy and water usage
-Efforts to mitigate impact on the local environment
Anti-Corruption Measures and Fair Trade -Systems for reporting violators
Quality and Safety Control for Products and Services -Goal setting and management
-Systems for handling claims and complaints
Disclosure of Information -Systems for timely disclosure, IT security policies

Improvements/Remedial Action

At Sojitz Group, to grasp the concrete measures in place for reducing risk in work environments and to deepen communication with suppliers with regards to further improvements, we conduct on-site inspections.

In fiscal 2018, we audited one wood supplier together with a third-party organization. Although we were able to confirm that the supplier’s procurement activities comply with the Sojitz Wood Procurement Policy, the third-party organization pointed out minor inadequacies in the documents submitted to the government and the supplier’s fuel storage methods. Sojitz requested the supplier work to improve these issues.

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