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 overseas suppliers. 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.
SDGs Covered by the Vision
Performance Indicators to Monitor the Progress in Achieving the Vision and Activity Results
| Performance indicators | Targets | Results |
|---|---|---|
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For most-recent fiscal year results |
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 considering human rights, the environment and other aspects from the perspective of 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 all suppliers in accordance with the DNP Group CSR 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 supplier surveys, feedback sessions and supplier 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’s Main Initiatives
Reinforcement of CSR Procurement 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.
Initiatives to the Present
| 2006 | Formulated the DNP Group CSR Procurement Criteria *Started responsible procurement initiatives in collaboration with suppliers |
|---|---|
| 2011 | 2011 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 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 |
| 2018 | Expanded the scope of application to Group companies with independent purchasing functions |
| 2020 | Revised the DNP Group CSR Procurement Guidelines *Revised to include not only primary suppliers but also second-tier suppliers and beyond. Revised Basic Business Contract *Requested the undertaking of management in accordance with the CSR Procurement Guidelines from second-tier suppliers and beyond |
Initiatives Based on the DNP Group CSR Procurement Guidelines
Feedback from Fact-finding Survey and Results
In order to further enhance the effectiveness of the DNP Group CSR Procurement Guidelines, which were revised in 2020, DNP has been implementing a range of specific measures. For example, we have been promoting our major suppliers* and outsourcing contractors’ understanding of the Guidelines and our policies related to the matters stipulated in the Guidelines such as matters related to human rights and labor, the environment, fair trade and ethics, while also periodically conducting surveys on the status of these efforts and providing feedback regarding the results. In addition, DNP carries out continuous management for some suppliers, in which we identify issues and improvement measures through individual interviews based on the results of the previous year's survey and ensures that these improvements are reflected in activities in the next fiscal year. According to surveys conducted in FY2023, no serious compliance violations were identified.
*Major suppliers = suppliers that account for 90% of DNP’s total annual purchases in descending order of purchase amount
Fact-Finding Survey/Interview Results for DNP Group CSR Procurement Guidelines
| Survey results | FY2019 | FY2020 | FY2021 | FY2022 | FY2023 |
|---|---|---|---|---|---|
| Number of companies surveyed | 220 | 353 | 164 | 180 | 274 |
| Domestic average score | 87 | 86 | 87 | 82 | 81 |
| Overseas average score | ー | 84 | ー | ー | ー |
| Number of companies interviewed (instructed in writing) |
18 | 18(4) | 12(2) | 44(24) | 45 companies planned |
*Taking survey results into account, interviews are held in the following fiscal year, where instructions are provided for improvement.
*Survey items and their evaluation indicators were reviewed in FY2022.
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) |
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 CSR Procurement Guidelines, and to put these principles into action.
We also organize internal and external education programs to promote an understanding of and actions regarding sustainability. Internally, we hold annual training sessions for our procurement staff that cover trends in the environment and human rights issues, corporate responsibilities and the need to promote sustainability through procurement practices. Since FY2021, we have extended training on “business and human rights” to all employees. Externally, we organize study sessions for our key suppliers. Since the revision of the CSR Procurement Guidelines in FY2017, a total of 239 companies and 273 individuals have participated in these study sessions, and we have worked to strengthen engagement with 22 trading partners. Additionally, DNP has published and distributed explanatory materials on the DNP Group CSR 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.
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 CSR 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 commenced risk assessments by using the RMI’s PRT (Pilot Reporting Template) regarding 23 types of minerals including mica, aluminum, lithium, nickel and copper in addition to the above. Also, regarding minerals for DNP’s business whose importance is high, we moved forward with separate discussions with suppliers to conduct detailed assessments of risks throughout the supply chains, including at mines and smelters.
- *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 CSR 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.