Responsible Procurement
In recent years, reflecting the expansion of global supply chains, the impacts of corporate activities on society and the environment that include social issues such as human rights and labor, bribery and corruption, and environmental issues such as climate change in particular, have become more significant than ever before. Against this background, it is becoming increasingly important to look at the entire supply chain, which includes raw materials procurement, production, usage, disposal and recycling, and strengthen management systems to ensure that issues are solved properly through the understanding and analysis of the possible risks.
At DNP, we seek to contribute to the realization of a sustainable society by accurately detecting risks throughout our supply chains, which are expanding globally, and solving a range of issues. With this in mind, we have been implementing our Responsible Procurement initiatives together with domestic and international suppliers and contractors (hereinafter our “business partners"). We will continue to fulfill our social responsibilities in our procurement activities.
Medium- to long-term vision
For creating excellent value and cultivating strong compliance awareness at the same time, we work jointly with our supply chain stakeholders and conduct procurement that gives due consideration to human rights, the environment and other factors.
Performance Indicators to Monitor the Progress in Achieving the Vision and Activity Results
| Performance indicators | Targets | FY2023 results |
|---|---|---|
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Structure to promote management
Internal structure and management
In a meeting of the Sustainability Committee chaired by the President, we confirmed our commitment to responsible procurement practices that take social and environmental issues such as human rights and climate change into account across the entire supply chain, and based on which, we have been formulating various types of guidelines and promoting a range of activities to raise the effectiveness of these guidelines. DNP has established the Basic Business Contracts with our business partners in accordance with the DNP Group Sustainable Procurement Guidelines. For particularly critical issues, we have developed specific guidelines, such as the DNP Group Guidelines for Procurement of Paper for Printing and Converting and the DNP Group Green Procurement Guidelines for Chemical Substances and provide guidance accordingly. We also continuously strengthen our supply chain management through regular surveys of business partners regarding their compliance with the Sustainable Procurement Guidelines, feedback sessions and various briefings. Internally, we provide specialized training and support for professional certification to procurement staff to enhance their understanding of procurement fundamentals and management techniques. This training ensures that our employees are well equipped to act appropriately in their roles.
- DNP Group Basic Procurement Policy
- DNP Group Human Rights Policy
- DNP Group Environmental Policy
- DNP Group Environmental Vision 2050
- DNP Group Anti-Bribery Policy
- DNP Group Sustainable Procurement Guidelines
- DNP Group Green Purchasing Policy
- DNP Group Guidelines for Procurement of Paper for Printing and Converting
- DNP Group Green Procurement Guidelines for Chemical Substances
- Compliance Hotline (Japanese site opens)(Open in a new window)
DNP’s main initiatives
Reinforcement of supply chain management
DNP has been continuously advancing responsible procurement initiatives that consider human rights and the environment. We established the DNP Group CSR Procurement Criteria in 2006 and since have been incrementally strengthening procurement management while considering international trends.
Key initiatives to the present
| 2006 | Formulated the DNP Group CSR Procurement Criteria *Started responsible procurement initiatives in collaboration with suppliers |
|---|---|
| 2009 | Established a Compliance Hotline |
| 2011 | Revised the DNP Group Green Purchasing Policy Revised Basic Business Contract *Requested that primary suppliers undertake procurement management in accordance with the DNP Group CSR Procurement Criteria |
| 2012 | Formulated the DNP Group Guidelines for Procurement of Paper for Printing and Converting |
| 2013 | Formulated the DNP Group Green Procurement Guidelines for Chemical Substances |
| 2017 | Revised the DNP Group CSR Procurement Criteria into the DNP Group CSR Procurement Guidelines *Revised from procurement criteria that consider domestic business activities into guidelines that reflect the requirements of the international community based on the Electronic Industry Citizenship Coalition (EICC) (currently Responsible Business Alliance (RBA)) EICC Code of Conduct and the Japan Electronics and Information Technology Industries Association (JEITA) Supply Chain CSR Promotion Guidebook. *Expanded scope of application to suppliers and agents at all overseas bases *Expanded the scope of application to Group companies with independent purchasing functions |
| 2018 | Formulated the DNP Group Anti-Bribery Policy |
| 2020 | Formulated the DNP Group Human Rights Policy Formulated the DNP Group Environmental Vision 2050 Revised the DNP Group CSR Procurement Guidelines Revised Basic Business Contract *Aiming for net zero GHG emissions to address climate change and other challenges. *Revised to include not only primary suppliers but also second-tier suppliers and beyond *Requested the undertaking of management in accordance with the CSR Procurement Guidelines from second-tier suppliers and beyond *Strengthened human rights due diligence efforts in the supply chain for the procurement of raw materials |
| 2021 | Partially revised the DNP Group Anti-Bribery Policy |
| 2022 | Revised the DNP Group Environmental Policy *Committed to reducing environmental impact throughout the supply chain |
| 2024 | Revised the DNP Group CSR Procurement Guidelines into the DNP Group Sustainable Procurement Guidelines *Called for enhanced risk management throughout the supply chain |
Initiatives based on the DNP Group Sustainable Procurement Guidelines
Feedback from fact-finding survey and results
DNP is implementing a range of specific measures to further enhance the effectiveness of the DNP Group Sustainable Procurement Guidelines. We ensure that our business partners are well informed regarding the Guidelines, as well as our policies on human rights and labor, the environment, and fair trade and ethics. We conduct regular surveys, assess their compliance and efforts, and provide feedback regarding the survey results.
DNP Group Sustainable Procurement Guidelines compliance survey / Survey questions
| Items | Survey questions | Details |
|---|---|---|
| Requests | Establishing a Management System | Management system, supply chain management |
| Matters to be complied with | Respecting the Laws and Internationally Recognized Standards | Compliance with laws and regulations |
| Human Rights and Labor | Forced labor, child labor, working hours, wages, discrimination, freedom of association, collective bargaining rights | |
| Health and Safety | Occupational safety, work-related injuries and illnesses, health and productivity management | |
| Environment | Greenhouse gas emissions reduction, biodiversity consideration, resource recycling, chemical substance management | |
| Fair Trading and Ethics | Anti-corruption, intellectual property, import-export management, responsible mineral procurement | |
| Quality and Safety | Quality management, provision of product and service information | |
| Information Security | Cyber attacks, personal information, confidential information management | |
| Business Continuity Planning | Business Continuity Plan Development | |
| Recommendations | Contribution to Society | Community and society |
Risk identification and assessment
DNP conducts surveys and risk assessments of its key suppliers annually based on the DNP Group Sustainable Procurement Guidelines. These key suppliers account for 90% of the value of our annual procurement and those critical to business continuity. Regarding the suppliers we identify as being exposed to risks, we request improvement plans, provide document-based guidance and conduct individual interviews to identify issues and improvement measures. These findings are reflected in the next year's activities through our continuous management approach.
Fact-Finding Survey / Interview Results for DNP Group Sustainable Procurement Guidelines
| Survey results | FY2021 | FY2022 | FY2023 |
|---|---|---|---|
| Number of suppliers evaluated | 164 | 180 | 274 |
| Response rate (as of September 2024) | 76% | 87% | 75% |
*The survey targets suppliers that account for 90% of the value of our annual procurement and those that are critical to business continuity.
*Based on the survey results, interviews and guidance for improvement are conducted in the following year.
DNP Group Sustainable Procurement Guidelines Initiative Survey / Evaluation FY2023
| Rank | Criteria | Ratio |
|---|---|---|
| A | Fully compliant with the guidelines | 56% |
| B | Generally compliant with some improvements required | 26% |
| C | Insufficient compliance or areas of concern identified | 18% |
| D | Risk identified | 34% |
*The FY2023 survey was conducted based on the DNP Group CSR Procurement Guidelines.
*The guidelines were revised into the DNP Group Sustainable Procurement Guidelines in July 2024.
Follow-up on evaluation results
| FY2022 | FY2023 | |
|---|---|---|
| Number of suppliers provided with document-based guidance based on the improvement plans | 44 | 92 |
| Number of suppliers who provided interview-based guidance among those suppliers who provided document-based guidance mentioned above | 20 | 42 |
| Number of suppliers where serious compliance violations were identified through surveys, document guidance, or interviews | 0 | 0 |
| Number of suppliers where transactions were temporarily suspended based on interview results | 0 | 0 |
| Number of suppliers where transactions were terminated based on interview results | 0 | 0 |
Average Score by Theme of Fact-Finding Survey of Initiatives of DNP Group CSR Procurement Guidelines (Out of 100 Points)
| Average score | Overall average Excluding the recommendations |
Requests | Matters to be complied with | Recommendations | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Establishing a management system | Legal compliance and respecting international norms |
Human rights and labor | Health and safety | Environment | Fair trade and ethics | Product safety and quality | Information security | Social contribution | ||
| FY2023 (FY2022) |
81 (82) |
75 (79) |
82 (85) |
87 (88) |
84 (86) |
74 (74) |
81 (82) |
82 (82) |
83 (84) |
78 (80) |
*The FY2023 survey was conducted based on the DNP Group CSR Procurement Guidelines.
Education and Permeation
DNP recognizes the importance of addressing human rights risks throughout its supply chain. To promote respect for human rights, we encourage our employees and business partners to understand and support the DNP Group’s Human Rights Policy, Environmental Policy and Sustainable Procurement Guidelines, and to put these principles into action.
We provide education both internally and externally to foster a deeper understanding of sustainability and translate that understanding into action. Internally for procurement staff, we conduct annual training programs on social and environmental issues, such as human rights and climate change, and the corporate responsibility to address these issues through sustainable procurement. Since FY2021, we have extended training on “business and human rights” to all employees. Externally, we organize study sessions for our key suppliers, with a total of 239 companies and 273 individuals attending since the CSR Procurement Guidelines were revised in FY2017. Through ongoing dialogue with our business partners, we have continued to address challenges related to the promotion of sustainability. Additionally, DNP has published and distributed explanatory materials on the DNP Group Sustainable Procurement Guidelines, which DNP places at the heart of its management of responsible procurement, in both Japanese and English, enhancing internal and external stakeholders’ understanding of the standards, terminology and context of the guidelines.
By continuing to enhance these efforts going forward, DNP will continue to promote the Responsible Procurement initiative.
Training record for specialized staff in the procurement department
| Details | FY2023 achievements |
|---|---|
| Business and Human Rights e-learning training course completion rate | 84% |
Initiatives for Building a Sustainable Supply Chain
DNP is undertaking the following various initiatives for building a sustainable supply chain.
Material Procurement BCP (Business Continuity Plan)
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.
Initiatives for Responsible Minerals Procurement
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 FY2022, we expanded the scope to include 23 minerals, such as mica, aluminum, lithium, nickel, and copper, and started conducting risk assessments using RMI’s Pilot Reporting Template (PRT). For aluminum, which is a key raw material in one of DNP's major products, battery pouches for lithium-ion batteries, we have worked to improve the transparency of the supply chain through ongoing engagement with our suppliers. We have carried out risk assessments for stakeholders in the supply chain, and for any concerns identified, we have initiated further investigations and worked on risk mitigation and remediation. In FY2023, we performed site inspections, including the examination of records and documents, together with the relevant suppliers to promote initatives throughout the supply chain.
- *1.DNP’s initiatives regarding the five steps of this guidance are presented in DNP’s Responsible Minerals Procurement Framework in the Description of DNP Group Sustainable Procurement Guidelines.
- *2.Responsible Minerals Assurance Process (RMAP): A program that verifies compliance with responsible minerals procurement in conjunction with the management system and procurement practices of smelters and refineries based on the evaluations of independent third parties.
- *3.Responsible Minerals Initiative (RMI): An organization that spearheads the responsible procurement of minerals. More than 400 companies / organizations from around the world are members.
Results of Minerals Survey
| FY2021 ＊Targets tin, tantalum, tungsten, gold, and cobalt |
FY2022 ＊Targets tin, tantalum, tungsten, gold, cobalt, and mica |
FY2023 ＊Targets tin, tantalum, tungsten, gold, cobalt, and mica |
|
|---|---|---|---|
| Number of companies surveyed | 186 | 171 | 253 |
| Number of smelters / refiners identified | 391 | 414 | 393 |
| Number of smelters / refiners with Conformant RMAP audit status |
261 | 260 | 255 |
DNP Group Guidelines for Procurement of Paper for Printing and Converting
To contribute to the sustainable use of forest resources, DNP established the Guidelines in 2012, whereby we stipulated the matters that must be complied with in the procurement of paper for printing and converting, which is one of our main raw materials for printed materials. Along with this, we have also been collaborating more closely with suppliers such as paper manufacturers and sales companies while also working to procure timber for which legality has been confirmed based on the Guidelines, ensure traceability, and increase the percentage of paper that is friendly to forest resources in the overall volume of our paper purchases. In FY2023 as well, we confirmed the legality of all paper suppliers.
DNP Group Green Procurement Guidelines for Chemical Substances
In conjunction with chemical substances, DNP established the DNP Group Chemical Substance Management Standards in 2004 and we have since been promoting green purchasing to minimize environmental load, etc. In addition, in response to the tightening of domestic and overseas regulations, which was carried out to reduce the risks that chemical substances bring to human health and the environment, we revised the Standards into the DNP Group Green Procurement Guidelines for Chemical Substances in 2013, in which we provided new definitions with respect to the ideal adoption of chemical substances. In conjunction, we hold Supplier Information Sessions to enlighten concerned parties on the risks of chemical substances and the importance of taking measures from the perspective of the entire supply chain. We continuously make efforts to strengthen the management of chemical substances, such as by expanding the scope of controlled substances in November 2021.
Participation in Initiatives
DNP empathizes with the initiatives of the United Nations Global Compact’s local organization (Global Compact Network Japan, hereinafter referred to as GCNJ), which was launched in Japan in 2003, and we have been participating in various subcommittees. Notably, we have been participating in the Supply Chain Subcommittee since its inception in FY2008. DNP was also involved in compiling “A Vision of Desirable CSR Activity in the Supply Chain” (issued in 2013) and “An Introduction to Sustainable Procurement-Promoting CSR in the Supply Chain” (issued in 2016) and the creation of Japanese-English versions of “CSR / Sustainable Procurement Training Toolkit (Lecture & Game)” (issued in 2020). In FY2023, we were involved in the creation of the Tools for Checking the Level of Understanding of An Introduction to Sustainable Procurement, thereby contributing to the promotion of sustainable procurement.