Purchasing and Procurement
As part of CSR in supply chain management, we clarify and put into practice our viewpoints and standards relating to CSR purchasing and procurement. Examples of this relate to improving the environmental performance of procured goods, encouraging environmental consideration, legal compliance and protection of human rights by suppliers, and also promoting fair trade practices with suppliers.
Code of Conduct
We act with integrity in compliance with laws and regulations, and show respect for human rights and local communities in which we operate.
Basic Policy for Purchasing and Procurement
The Teijin Group aims to engage in sustainable business activities and enhance its corporate value by exercising its social responsibilities and obtaining the confidence and trust of society (stakeholders). It is an important social responsibility to provide superior products in a sustainable and stable manner to satisfy customers. We believe that to fulfill this responsibility, it is vital to improve the quality of our purchasing and procurement of raw materials, components, and services, and we have therefore established this Basic Policy for Purchasing/Procurement with the aim of forging sound relationships with suppliers. We have also determined Basic Stance of Persons in Charge of Purchasing / Procurement that describes in specific terms how purchasing / procurement personnel should behave to ensure that they do not establish inappropriate relationships with suppliers, and to promote initiatives based on cooperation with the aim of sustainable purchasing and procurement.
Basic Policy for Purchasing and Procurement
Compliance with laws and regulations
The Teijin Group observes laws and regulations of respective countries and endeavors to understand and respect international norms and guidelines in conducting its procurement activities.
The Teijin Group endeavors to engage in highly transparent transactions that are just and fair, and does not participate in cartels or bid-rigging.
Basis of product and supplier assessment
The Teijin Group, in addition to quality, prices, delivery dates, and procurement periods, properly assesses the financial situation, technological capabilities, social responsibility initiatives, etc. of suppliers, and engages in transactions that are based on rational decision-making.
The Teijin Group promotes purchasing and procurement from suppliers that respect human rights and do not commit human rights infringements such as unjust discrimination, slave labor, forced labor, child labor, human trafficking, etc.
Safety and Health
The Teijin Group promotes purchasing and procurement from suppliers that properly manage health and safety risks and take action to improve occupational health and safety on an ongoing basis.
The Teijin Group promotes purchasing and procurement from suppliers that practice environmental management by, for example working to conserve the environment and protect natural resources.
Blocking of relationship with antisocial forces
The Teijin Group blocks relationships with antisocial forces such as crime organizations, refuses inappropriate requests, and does not provide them with money.
Relationship with stakeholders
The Teijin Group proactively communicates with stakeholders and promotes sustainable purchasing and procurement based on cooperation grounded in trust relationships. Furthermore, the Teijin Group collaborates with suppliers to promote initiatives based on the CSR Procurement Guidelines.
- (Established September 1, 2006; Revised November 1, 2017)
Basic Stance of Persons in Charge of Purchasing and Procurement
Compliance with laws and regulations
Purchasing/procurement personnel observe relevant country laws and regulations. In addition, they will constantly monitor international norms and guidelines, industry standards and their trends and strive to respect them in engaging in transactions.
1) Purchasing/procurement personnel do not participate in cartels or bid-rigging, and endeavor to maintain sound relationships with suppliers. They also do not abuse their status to demand inappropriate discounts, services, contributions, etc.2) Purchasing/procurement personnel do not have personal interests with any supplier, and do not accept personal benefits such as rewards or gifts.
Purchasing/procurement personnel carefully manage confidential information relating to transactions and safeguard intellectual property rights.
Basis of product and supplier assessment
Purchasing/procurement personnel rigorously assess goods and services, and engage in transactions where consideration is given to quality, prices, delivery dates, and procurement periods, as well as the financial situation, technological capabilities, corporate approach, and social responsibility initiatives of the suppliers.
Purchasing/procurement personnel do not force inappropriate transaction terms on suppliers nor force them to accept unreasonably low prices, etc. and promote purchasing and procurement from suppliers that respect human rights and do not support forced labor or long working hours.
Safety and Health
Purchasing/procurement personnel promote purchasing and procurement from suppliers that ensure occupational health and safety and take action to maintain and improve the health of their workers.
Purchasing/procurement personnel promote green purchasing and procurement and purchasing/procurement of environmentally-friendly products and services.
Blocking of relationship with antisocial forces
Purchasing/procurement personnel adopt a firm attitude toward criminal organizational and other antisocial forces, not allowing their involvement, and blocking any and all relationships with them.
Relationship with stakeholders
Purchasing/procurement personnel collaborate with suppliers to promote initiatives based on the CSR Procurement Guidelines. Furthermore, they endeavor to ensure suppliers' understanding of the Guidelines and collaborate with suppliers with regard to initiatives for improvement.
(Established September 1, 2006; Revised November 1, 2017)
Overall Consideration of Supply Chains Based on CSR Procurement Guidelines
To manufacture and distribute its products, the Teijin Group procures a large amount and wide variety of raw materials, equipment, components and services from many companies around the world. When selecting suppliers, we adhere to our purchasing guidelines based on fair and rational judgments.
Furthermore, to implement CSR throughout the supply chain, we established the CSR Procurement Guidelines (see below) and we require our suppliers to conduct activities in compliance with our guidelines.
The Teijin Group's CSR procurement activities are being promoted centering on the Machinery and Material Procurement & Logistics Management Department of Teijin Limited, and the Basic Purchasing and Procurement Policy and CSR Procurement Guidelines, which are published on the Teijin Group website in Japanese, English and Chinese.
CSR Procurement Guidelines
With regards to the Teijin Group's purchasing and procurement activities, we request that suppliers take the following action. In addition, we will promote to purchase and procure from suppliers that have been taking these actions.
Quality and safety
Products must meet safety and quality standards prescribed under laws and regulations in individual countries as well as industry standards.
Chemical additives must be properly managed, and by, for example, obtaining external certification such as ISO 9001.
Furthermore, a quality management system must be deployed and continuously maintained and improved to promote quality assurance.
Human rights and labor
(a) Forced labor
Slave labor, human trafficking, debt bondage, labor based on violence, threats, or political oppression, or any other form of forced labor is prohibited.(b) Child labor and young workers
Children under the age of 15 years must not be hired in any country in which you have activities. Furthermore, you must not allow young workers between the ages of 15 and 17 to work at night, work overtime, or perform work that puts their health or safety at risk. You must also pay young workers appropriate remuneration and respect their right to learn.(c) Foreign workers
Foreign workers must be provided with an employment contract and rules of employment in languages which employees can understand. Employers and temporary staffing agencies (including business cooperatives and nonprofit organizations) must not confiscate and prevent the use by workers of government-issued identity cards, passports, and work permits (unless holding work permits is required by law) as well as migrant applications. Furthermore, employers and temporary staffing agencies must not charge fees to workers.(d) Working hours and holidays
Working outside regular hours (overtime, working on holidays, etc.) is only permitted if the worker agrees to it. Except under special circumstances, workers cannot be required to work more than the maximum weekly working hours prescribed under local laws and workers must be given at least one contiguous 24-hour period off per week. Furthermore, paid holidays and statutory holidays must be provided in accordance with local laws.(e) Wages and welfare benefits
After explaining the components of wages and the method used for calculating them, you must pay workers at least minimum wage. You must also provide statutory welfare benefits. Wages for work performed outside regular hours must be calculated in accordance with applicable laws and must be higher by a reasonable percentage than wages for regular work.(f) Discrimination
Recruitment, remuneration, welfare benefits, training opportunities, work duties, promotions/wage increases, and discipline/dismissal must not be influenced by race, nationality, gender, religion, age, disability, marital status, family background, organizations joined, gender identity, sexual orientation, or political ideology. You must implement measure for preventing discrimination such as providing training to all workers.(g) Harassment
Workers must be treated with respect and dignity, and must not be exposed to any sort of harassment or pestering. You must implement measure for preventing harassment such as providing training to all workers.(h) Freedom of association
The right of workers to freely exercise the right to organize and the right to collective bargaining must be recognized. You must also make efforts to resolve labor disputes and engage in effective and periodic communication with workers and their representatives.
Safety and Health
(a) Permits relating to labor safety and health
You must apply for permits relating to labor safety and health for facilities and operations that require them and assign licensed personnel in accordance with laws, regulations, etc. in order to properly manage them.(b) Sanitary facilities
You must endeavor to maintain the health of employees in order to prevent diseases and occupational accidents. Workers must be provided with a safe and hygienic working environment, and access to sanitary facilities such as toilets and dining rooms must not be unjustly restricted. Furthermore, dormitories for workers must be equipped with proper sanitary facilities and kept clean.(c) Preparedness for emergencies
To prepare for emergencies, workers must be provided with training concerning notifications and evacuation procedures, and proper equipment such as fire extinguishers and fire alarms must be installed and maintained. In other words, efforts must be made to minimize damage in the event of an emergency.(d) Safety training
Proper training concerning workplace health and safety must be provided on an ongoing basis in languages which employees can understand. Furthermore, information relating to health and safety must be clearly displayed in the workplace.(e) Measures to ensure the safety of machinery
Machinery needs to be assessed for safety risks. If there is a risk of workers suffering injury due to machinery, physical protection measures must be implemented such as guard rails, interlocks, protective walls, etc. as required and the machinery concerned must be properly maintained and managed.(f) Occupational health
The risk which chemical, biological, and physical substances will influence workers must be identified, assessed, and managed. We also recommend that all workers receive a medical examination by the frequency pursuant to laws or at least once a year, whichever is more.(g) Occupational accidents
Classification and records of injuries resulting from occupational accidents and illnesses must be kept, the necessary treatment must be provided, the causes of occupational accidents must be investigated, corrective action must be taken to eliminate the causes of them, and a process must be followed for enabling workers to return to the workplace.(h) Occupational health and safety management system
A management system for occupational health and safety, such as one based on OHSAS 18001, must be deployed and internal audits must be performed in order to facilitate ongoing improvements in occupational health and safety. We also recommend the management of health and safety risks.
Formulation of business continuity plan
We recommend that a business continuity plan be formulated and strategically administered to allow business operations to continue or be promptly restarted in the event of a disaster or accident.
Fair trade and ethics
(a) Prohibition of bribery
The exchange or provision of entertainment, gifts, or money for the purpose of illicit gain in the course of engaging in transactions is prohibited. You must also formulate and implement a policy and measure for preventing corruption, bribery, and extortion.(b) Fair business
You must not engage in private monopoly, inappropriately restrict trading (through cartels, bid-rigging, etc.), employ unfair business methods, or abuse your status, and you must comply with competition laws in individual countries and territories. You must also confirm legal or regulatory developments that apply to your company and inform workers about them. We also recommend that you provide all workers with training on fair trading and ethics.(c) Intellectual property
You must endeavor to safeguard and utilize your company's intellectual property rights. Furthermore, you must not unjustly infringe the intellectual property rights of other companies.(d) Information disclosure and presentation
You must properly disclose or display information concerning labor, health/safety, and environmental initiatives, business activities, financial condition, products, and corporate structure and performance in accordance with applicable regulations, etc.(e) Information security
You must only obtain personal information and confidential information using appropriate methods. You must also strictly manage and protect it, and only use it within a reasonable scope.(f) Conflict minerals
You must take care that minerals that you procure or that are used in your products do not provide any sourcing of finance for armed groups or organizations involved in human rights violations, environmental disruption, corruption, etc. in conflict regions and high-risk areas. In particular, "conflict minerals" must not be used in principle.
(g) Blocking of relationships with antisocial forces
Conflict minerals: Designated metal ore (gold, tin, tantalum, and tungsten) mined in conflict regions and high-risk areas with the concern to provide sourcing of finance for armed groups or organizations involved in human rights violations, environmental disruption, corruption, etc.
You must adopt a firm attitude toward criminal organizations and other antisocial forces, not allowing their involvement, and blocking any and all relationships with them.
Export control Compliance
With regard to products or technologies subject to your national export control laws and/or regulations and other applicable export control-related laws and regulations of other countries, you must implement thorough measures to ensure that you comply with them and are not involved in illegal exports.
(a) Action on climate change
You must endeavor to devise methods for improving energy efficiency and minimizing the consumption of resources. You must also identify current emissions of greenhouse gases by each of your facilities and by your company as a whole and take action to reduce them.(b) Permits relating to environmental conservation (air, wastewater, noise, vibration, etc.)
You must apply for environmental-conservation-related permits for facilities and operations that require them and assign licensed personnel in accordance with laws, regulations, etc. in order to properly manage them.(c) Minimizing environmental impact (air, water, soil)
To prevent air, water, and soil pollution, you must manage and treat discharged substances.(d) Management of chemical substances
Chemical substances that could cause environmental pollution must be managed safely. Chemical substances that are prohibited under the laws and regulations of individual regions and territories must not be used. Furthermore, regarding the substances whose use has been limited by laws and regulations you must notify customers of whether those substances are contained in products. In addition, SDS must be issued and updated.(e) Waste reduction (3Rs)
You must pursue the 3Rs (reduce, reuse, and recycle) in order to reduce waste and byproducts.(f) Water usage control
You must manage water intake and water discharge and you must strive to optimize water usage.(g) Environmental management system
You must formulate an environmental policy, take action and develop products, raw materials, and technology for preventing pollution, and make efforts to conserve the environment. We also recommend that you conduct internal audits, obtain certification, such as ISO 14001, for your environmental management system, and perform environmental impact assessments.(h) Promotion of green purchasing and procurement
When purchasing or procuring products or services, you must give consideration to the environment, and promote to purchase and procure from suppliers that are endeavoring to reduce environmental impact such as by selecting products and services with the minimum environmental impact.
Consideration for local communities
When conducting business in local communities, we recommend that you engage in dialog with local residents (including indigenous peoples) in advance and adapt your business activities to suit the community.
Contact point for consultations and internal reporting
You must deploy and operate a system for seeking advice and internal reporting that ensures that its users need not fear retribution, such as by being forced into a disadvantageous position. We recommend that you install a neutral advice and internal reporting point operated by the third party to protect internal reporters and prevent retribution.
Responsible supply chain promotion
You must inform your suppliers about the contents of these guidelines and you must endeavor to ensure compliance. We also recommend that you monitor compliance and work together with suppliers to address inadequacies.
- (Established May 7, 2007; Revised November 1, 2017)
Surveys and Ratings of Suppliers
The Teijin Group has developed and launched an original system for surveying and rating the CSR of its suppliers (Tier 1 suppliers). The system utilizes an online questionnaire to confirm whether or not suppliers are complying with the Teijin Group CSR Procurement Guidelines, and the results are used to determine their place in a 5-level ranking system. Suppliers respond to 70 itemized questions, receive a score and are then ranked according to the score and their credit status as ongoing suppliers. Using a matrix of these two rankings, suppliers are ranked from I to V (Groups I - III equate to a CSR guidelines compliance ratio of 40% or more, and Groups IV and V to a ratio of under 40%).
Number of Suppliers Surveyed
Of the 150 suppliers who responded to the survey in FY2016, 87% were classified into Groups I-III, the groups designated as "Okay to continue business" (99% in FY2015) and the purchase value ratio was 99% (96% in FY2015). The percentage of suppliers in Groups I-III decreased due to broadening the scope of the survey to include 25 local Chinese suppliers associated with Teijin’s Chinese Group companies. These 25 suppliers had low rankings.
Moreover, the number of respondent suppliers was lower than most years because the 309 suppliers ranked Groups I-III as a result of the FY2015 survey had almost the same response results as previous years, and were therefore excluded from the survey for the sake of lightening our suppliers’ workload. We plan on conducting surveys every two years for those suppliers deemed as problem-free.
If the 309 suppliers excluded from the FY2016 survey are added to the 150 suppliers that were surveyed, approximately 80% of the Teijin Group’s Japan-based purchasing departments’ purchase value would be classified into Groups I-III.
Guidance/Support to Improve CSR Activities of Suppliers
Suppliers corresponding to Group IV and Group V in the results of the survey are the target of improvement guidance; that is, they receive individual guidance/support to enable them to continue as suppliers. This was one contributing factor to raising 5 of the 6 suppliers ranked as IV or V in FY2015 to Group I in FY2016.
Moreover, as a new initiative begun in FY2015, in FY2016 we conducted an audit visit of two suppliers classified as Group I and II respectively. By reconfirming the supplier's survey responses and actively presenting the Teijin Group's CSR initiatives, we are promoting even higher quality CSR activities.
Supporting the Expansion of CSR Procurement to Society as a Whole Through Our Supplier's CSR Management System
The Teijin Group developed and launched the Supplier's CSR Management System, an original system for rating the CSR of its suppliers in five levels. The system is managed by Fiberfrontier Co., Ltd., a company jointly established by chemical and synthetic fiber companies in Japan, and is supporting the expansion of CSR procurement to society as a whole.
Introduce/Expand CSR Procurement Activities with a Global Perspective
In line with its global expansion, to expand CSR procurement, beginning in FY2012 the Teijin Group started conducting surveys with suppliers in Europe, the USA and China using the same contents as the Japanese version.
In FY2016 we conducted surveys of 25 local suppliers of our Chinese Group companies. As a result of the survey, all companies were categorized as having a low ranking of Group III - V. We will make this a focus of improvement moving forward.
Care for Contractors and Work Contracts
The Teijin Group is focusing on maintaining proper work contracts based on mutual trust and cooperation with contractors. In FY2007 in Japan, in response to the social issue of regulation of temporary/contract work management, the procurement department and manufacturing department cooperated to implement a series of independent inspections of work contracts. By FY2008, we completed actions to voluntarily improve contracts which are legally correct but require revisions to more closely reflect the demands of society (applying to 32% of all work). This particularly applied to contracts for non-regular work*. Following this, in order to maintain this status, we have been conducting regular awareness-raising activities at various worksites.
Continuing on from FY2015, in FY2016, in an environment where order volumes were expected to decline primarily at contractors that are engaged in business with Teijin factories that will be shut down or downsized due to structural reforms, we implemented measures to increase the motivation of the Company and its contractors. These measures were aimed at drawing more attention to the need for even higher levels of safety as well as maintaining and enhancing quality in a challenging environment.
Notably, some contractors may expect to increase the number of new workers or to replace personnel frequently. In these and other cases, we show consideration for these contractors' needs by providing special training and revising various types of conditions.
Non-regular work: Maintenance, repair or other work that are not part of regular duties. The number of occupational accidents that occur during this kind of work is relatively high.
Supply Chain Seminar
Held a CSR Supply Chain Seminar in Vietnam to Strengthen CSR Procurement Initiatives
Since 2012, Teijin Frontier Co.,Ltd. has been promoting a companywide “CSR Procurement Project.” As one element of this, the company holds a CSR Supply Chain Seminar every year in Ho Chi Minh City, Vietnam for local sewing and embroidery factories, material manufacturers, etc. with the aim of enforcing legal compliance and the protection of human rights. As a company with an integrated value chain from material development/procurement to product realization operating on a global scale, Teijin Frontier Co.,Ltd. has many apparel-related production bases in Vietnam. For this reason, the company believes it is important to raise awareness of CSR procurement locally on an ongoing basis.
On August 24th, 2016, a total of 104 people, comprising of 84 employees from 42 supplier companies and other related persons including lecturers, took part in the CSR Supply Chain Seminar. For lectures, Teijin Frontier Co.,Ltd. received the cooperation of representatives from companies with rich insight into CSR procurement in the apparel world, Vietnam’s Ministry for Labor, the International Labour Organization (ILO), the Community Integration and Development Foundation (CIDEFO) and the International Organization for Migration (IOM)
Specific themes were as follows:
- TPP and the UK Modern Slavery Act 2015
- Vietnam’s Law on Occupational Safety and Health
- Vietnamese Labor Law
- Ethical hiring policy
- Initiatives to prevent forced labor in the supply chain of Vietnam’s textile industry
Another CSR Supply Chain Seminar is scheduled to be held in Vietnam in FY2017 and the scope may be broadened to include other industries. Teijin Frontier is currently examining holding the seminar in other countries also. We will continue to widen the circle of CSR procurement.