At Sanyo Chemical Industries, Ltd., we believe that it is important to improve CSR in procurement while collaborating and cooperating with our business partners throughout the supply chain. Sanyo Chemical Industries, Ltd. signed the UN Global Compact (UNGC), a global framework for achieving the Sustainable Development Goals, on March 5, 2021, to further promote sustainability as a group. In addition, we used this opportunity to review our previously established “purchasing policy” and to formulate a “sustainable purchasing policy” in January 2022. Under this policy, we aim to promote procurement activities that contribute toward realizing a sustainable society.
Sustainable Purchasing Policy
- We conduct procurement activities based on social common sense and corporate ethics in addition to ensuring compliance, and strive to cooperate with our business partners, and build relationships based on trust.
- We provide fair business opportunities to both domestic and overseas companies and conduct procurement activities from a global perspective.
- We consider various conditions such as the quality, price, and stable supply of materials and raw materials in procurement activities. Moreover, we make efforts to set appropriate prices and maintain and improve quality in cooperation with our business partners. Simultaneously, we promote green procurement in terms of environmental conservation and chemical substance control.
- We aim to create a sustainable society throughout the supply chain in conjunction with our business partners to fulfill the corporate social responsibility, including considerations related to the global environment and protection of human rights and the working environment.
Sustainable Procurement Guideline
As a tool for collaborating with our business partners to create a sustainable society, we have summarized in our Sustainable Procurement Guidelines not only what we should do, but also what we would like our business partners to do. The guidelines present specific actions based on the Ten Principles of the United Nations Global Compact from seven perspectives: sound corporate management, fair corporate activities, the environment, human rights, labor, quality & safety, and coexistence with local communities. We post our purchasing policy and these guidelines on our website and attach them to CSR questionnaires to our business partners to ensure that they are widely known and understood.
At the start of a business transaction
We ask our business partners to submit the following documents before starting a transaction. Based on the contents of these documents, we understand, evaluate, and share the status of CSR activities, sustainable procurement, and green procurement promotion with our business partners, aiming to improve the level of sustainable procurement together.
Documents necessary for raw material adoption
CSR questionnaire
The CSR questionnaire uses the Global Compact Network Japan’s Self-Assessment Questionnaire (SAQ) to quantify the extent to which our business partners meet the requirements of the United Nations Global Compact. For items that do not meet the requirements, a message will be sent to them to urge improvement.
In FY2022, we asked suppliers of our key raw materials to complete a questionnaire and received responses from all of them. As a result, it was found that many of our key raw material suppliers were large global companies and generally obtained high evaluation points. Although there were some responses that scored below 80 points when viewed by item, it was confirmed that although the relevant suppliers had a CSR policy and management system in place, they just lacked a system for checking and correcting the situation.
SAQ response results for our key raw material suppliers
| Evaluation | Average point out of 100 |
|---|---|
| Corporate governance | 98 |
| Human rights | 98 |
| Labor | 98 |
| Environment | 98 |
| Fair corporate activities | 100 |
| Quality & Safety | 100 |
| Information security | 98 |
| Supply chains | 97 |
| Community | 98 |
- The results of all 114 questions (out of 5 points) were averaged for each evaluation item and displayed on a 100-point scale.
In FY2023, we will conduct a questionnaire survey mainly of suppliers of oils and fats who may pose risks in terms of labor and human rights, and evaluate them to improve the level of sustainable procurement.
RSPO certification
For palm oil, problems have been pointed out in terms of ecosystem collapse, labor, and human rights violations during cultivation and production. To resolve these problems, the Roundtable on Sustainable Palm Oil (RSPO) has established a palm oil certification system. From a sustainability perspective, it has become necessary to procure and use palm oil (derivatives) that is properly managed in the supply chain. Accordingly, we joined the RSPO in 2013 and obtained an RSPO certification for our Head Office, the Tokyo branch office, and domestic factories (Nagoya, Kashima, Kyoto, and Kinuura Factories) under the mass balance method* in January 2023. As part of our supply chain management, the Group will also require its suppliers to procure and use properly managed palm oil, expand the use of certified palm oil, and promote the establishment of a system for sustainable procurement and supply of raw materials.
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Mass balance method: RSPO has three certification models (Identity Preserved, Segregation, and Mass Balance) and one credit model (Book & Claim).
The mass balance method is a certification model in which certified oil is mixed with non-certified oil in the processing and distribution process. Although the physical product includes non-certified oil, the quantity of certified palm oil supplied from certified plantations and oil mills is guaranteed.
ISCC certification
The ISCC (International Sustainability and Carbon Certification) PLUS certification ensures that biomass-derived raw materials are properly managed in the sustainable, traceable, deforestation-free supply chain. Regarding polyethylene glycol (PEG) derived from biomass, we obtained ISCC PLUS certification under the mass balance method for our Head Office, the Tokyo branch office, and a domestic factory (Nagoya Factory) in May 2023. PEG is a polymer obtained by adding ethylene oxide to ethylene glycol and water and used in a wide range of industrial applications such as cosmetics, toiletries, and resins, as well as pharmaceuticals. We will continue to contribute to the realization of carbon neutrality through the use of biomass resources.
Conflict minerals
Minerals (conflict minerals: particularly gold, tantalum, tungsten, and tin) mined in the Democratic Republic of the Congo and surrounding countries in Africa, which are conflict zones, have been a source of funds for the activities of local armed groups. The armed groups are said to be forcing local residents to work in mines in inhumane conditions.
Companies are required to carefully examine their supply chains, and avoid and mitigate risks in order not to contribute to human rights violations and conflicts by armed groups through their corporate activities.
Our Sustainable Procurement Guidelines state that “we ensure supply chain transparency and are not involved in conflict mineral procurement, crime, etc.” We investigate whether the raw materials that we procure contain conflict minerals and confirm their country of origin, and require our suppliers to do the same. Based on these investigation results, we respond to customer requests regarding conflict minerals.
Implementation of a BCP for raw materials
To ensure business continuity in the event of a disaster (natural disaster, large fire, terrorist attack, etc.), we work with our business partners to implement a BCP(Business Continuity Plan) for raw materials. We work on purchasing raw materials from multiple sources, consolidating similar raw materials, and securing multiple bases on the supplier side.