Supply Chain Management

With a focus on keeping supply chains moving even in the event of an emergency, DNP has been working to hedge risks through a range of supply chain enhancement initiatives, including the facilitation of transparency and multi-sourcing in the supply chain and the securing of alternative products, while simultaneously keeping in mind the need to have tier 1 to tier 3 suppliers regarding the raw materials of mainstay products.

Given the progress in the legislation on human rights due diligence, mainly in Europe and the United States, and the growing awareness of the need to respect human rights in Japan and abroad, companies are required to increase their efforts to manage risks and mitigate negative impacts throughout their supply chains. Especially regarding mineral resources, it is important to stay aware of the various types of risks, for example, human rights abuses including child labor in high-risk areas such as conflict zones, the financing of terrorists, complicity in conflicts, money laundering, illicit trade and environmental destruction.

DNP specified the Responsible Minerals Procurement policy in the DNP Group Sustainable Procurement Guidelines to ensure that we are not complicit in such human rights abuses. Under this policy, we have been working on the establishment of a management system and implementation of a range of measures^*1 in line with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.

In FY2021, we conducted a Survey of Suppliers on Human Rights Issues and Conflict Mineral Issues targeting major suppliers and conducted a survey on the origin of raw materials. By using the RMAP^*2 conformity verification programs of the RMI^*3, an organization that spearheads the responsible procurement of minerals, we identified smelters and mines for the five minerals (tin, tantalum, tungsten, gold, and cobalt) contained in raw materials and conducted risk assessments.

In FY2024, we conducted risk assessments using the RMI reporting template for six minerals, including mica, in addition to the above. In addition, from 2023, we will conduct on-site inspections of relevant suppliers, including checking record documents, to promote efforts throughout the supply chain.

In 2012, DNP established the Printing and Converting Paper Procurement Guidelines to contribute to the sustainable use of forest resources, outlining the matters that must be observed when procuring printing and converting paper, the main raw material for printed materials. Furthermore, we are strengthening cooperation with suppliers, including paper manufacturers and sales companies, and are working to procure wood whose legality has been confirmed in accordance with these guidelines, ensure traceability, and increase the purchasing ratio of paper sourced from responsibly managed forests. A survey conducted in fiscal 2024 showed that the procurement rate for products that comply with these guidelines was 99.5%, maintaining a level that is very close to the target of 100%.

In 2004, we formulated the DNP Group Chemical Substance Management Standards and have been promoting green purchasing with the aim of minimizing the environmental impact. Furthermore, in 2013, in response to strengthened regulations both in Japan and overseas, we redefined the nature of chemical substances and revised our guidelines to the DNP Group Green Procurement Guidelines for Chemical Substances in order to reduce the risks that chemical substances pose to human health and the environment.

We also hold supplier information sessions to inform relevant parties about the risks of chemical substances and the importance of responding throughout the supply chain. We have been working to continuously strengthen our management, including expanding the range of controlled substances in November 2021. In May 2025, we revised our guidelines to expand the range of target chemical substances and amend some of our management methods, managing chemical substances contained in products in line with global trends.

Through engagement with client companies, DNP strives to ensure that the entire supply chain practices socially and environmentally responsible procurement. In particular, for our core businesses of lithium-ion battery pouches and semiconductor photomasks, we promote initiatives based on the international standards* required by our client companies. Furthermore, we request that our primary and secondary suppliers also take part in these initiatives. To confirm the effectiveness of these initiatives, we undergo third-party audits once a year. By identifying issues together with client companies and making improvements, we work to further strengthen our management.

In other business areas as well, we exchange opinions with multiple client companies on issues such as responsible procurement, human rights, and the environment, striving to further strengthen management on both sides.

Since 2006, DNP has been working with suppliers to promote socially and environmentally responsible procurement. In order to meet society's expectations at a higher level, we revised the name and content of our guidelines from the DNP Group CSR Procurement Guidelines to the DNP Group Sustainable Procurement Guidelines in 2024, with the aim of strengthening sustainable procurement efforts throughout the supply chain. In November 2024, we held an explanatory meeting for major suppliers regarding the revised guidelines to ensure their understanding and awareness.

DNP is strengthening due diligence regarding aluminum, a raw material used in battery pouches for lithium-ion batteries, one of its main products. We are increasing supply chain transparency through ongoing engagement with our suppliers. We conduct risk assessments of stakeholders in the supply chain, and for any risks of concern, we conduct additional investigations and work to correct or mitigate them. In fiscal 2024, we conducted a total of 12 regular engagements, one of which involved a site inspection of a manufacturing facility.

DNP informs its subcontractors of the DNP Group Sustainable Procurement Guidelines and its own policies, and regularly surveys and evaluates the status of their efforts. In fiscal 2024, a DNP Group Sustainable Procurement Guidelines Implementation Status Survey was conducted on 220 partner companies. Based on the survey results, on-site interviews were also conducted with three subcontractors to confirm the employment status of foreign workers, working environment, consideration for female and elderly workers, notification to authorities regarding environmental laws and regulations, and the status of manager selection.

DNP will continue to promote sustainable supply chain management together with stakeholders and fulfill its social responsibilities.