With Suppliers

Goals and Achievements of Major Initiatives

Objective of initiatives Goals for fiscal year 2016 Achievements in fiscal year 2016 Evaluation Goals for fiscal year 2017
Promote CSR procurement. • Continue to work with suppliers to reduce risks in key businesses associated with CSR procurement.
• Promote the sharing of CSR procurement assessment results and challenges for suppliers used by both DIC and Sun Chemical.
• As part of an effort to promote awareness of CSR procurement among executives in charge of purchasing in Greater China, joint CSR procurement audits were conducted for six key manufacturers of pigment intermediates and guidance was provided to impart know-how regarding the practical implementation of such audits.
• DIC began sharing information on the CSR procurement status of manufacturers of raw materials purchased jointly with Sun Chemical in the PRC.
★★ • For raw materials used in core businesses, work with suppliers to minimize CSR procurement–related risks.
• Based on CSR procurement questionnaire responses, request corrective measures from suppliers in Japan with low selfassessment scores. Conduct more detailed CSR procurement assessments of suppliers in the PRC with the goal of uncovering issues in the supply chain and implementing corrective measures together. Share information pertaining to common suppliers with the Sun Chemical Group.
★★
• Continue to conduct CSR procurement assessments for new suppliers and existing suppliers for whom assessments have not yet been completed.
• Promote CSR procurement assessments for DIC Group company suppliers in Greater China and the Asia–Pacific region.
• CSR procurement surveys were completed for 116 suppliers, bringing the cumulative number of suppliers for which such surveys have been conducted to 682.
• Using efforts elsewhere as a reference, key raw materials in core businesses in the Asia–Pacific region were selected, suppliers identified and CSR procurement assessments began.
★★★ • For companies overseen by DIC Asia Pacific and DIC (China), use version 2 of the DIC Group Supply-chain CSR Deployment Guidebook to advance awareness of CSR procurement, prioritizing key raw materials in core businesses.
  • Evaluations are based on self-evaluations of current progress. Key: ★★★ = Excellent; ★★ = Satisfactory; ★ = Still needs work

Basic Approach to Sustainable Procurement

Having recognized the increasing importance of addressing global issues related to human rights, climate change and water risk, among others, as social imperatives, the DIC Group promotes socially responsible procurement practices. To ensure its extended supply chain functions in a socially responsible manner, the DIC Group established the DIC Group Universal Purchasing Policy, based on which it also formulated purchasing management regulations, in 2008 and the DIC Group CSR Procurement Guidelines, which clarify issues it expects suppliers to address, in 2009. Using the policy and guidelines, the Group promotes CSR procurement across its supply chain by ensuring that all suppliers implement improvements and initiatives necessary to ensure the sustainability of Group procurement. Group companies in Japan, the Americas and Europe, Greater China and the Asia–Pacific region collaborate to ensure sustainable procurement on a global basis.

DICグループのCSR調達に向けた取り組み

The DIC Group Universal Purchasing Policy

Guided by an action policy established to realize the DIC Group’s basic sustainable procurement principles, the Purchasing Department adheres to the following guidelines in dealing with suppliers:

  1. Fair and transparent business practices
    The DIC Group will implement fair and open purchasing activities with suppliers based on global perspectives, without the constraints of conventional commercial customs.
  2. An appropriate purchasing process and building of relationships of mutual trust
    The DIC Group, as a good partner for suppliers, will build long-lasting, mutually trusted relationships with suppliers and work together with them for mutual harmony and benefit, while complying with relevant regulations/social norms, domestic and overseas, and pursuing adequate quality and prices.
  3. Satisfying environmental/safety needs
    The DIC Group will take responsibility as an exemplary corporate citizen for environmental affairs, occupational safety, human health and product quality, always take into account changes in society and implement environment-friendly purchasing activities
  4. Challenging to the creation of a new value
    In order to respond at a high level to a new value sought by society, the DIC Group will proactively challenge the creation of such value together with suppliers, with whom the same goal can be shared, and strive to grow together with them in a sustainable manner.

The DIC Group CSR Procurement Guidelines

  1. Compliance with laws and social norms
  2. Respect for human rights and consideration for work environments
  3. Safety and hygiene
  4. Promotion of sound business management
  5. Consideration for the environment
  6. Information security
  7. Appropriate quality and safety and improved technologies
  8. Flexible attitude to ensure stable supplies and respond to change
  9. Contribution to local communities and society
  10. Promoting CSR and deploying it in the supply chain

Promoting CSR Procurement

Based on the DIC Group Universal Purchasing Policy, and incorporating requirements contained in guidebooks put out by external organizations including the Japan Electronics and Information Technology Industries Association (JEITA), DIC has formulated the DIC Group CSR Procurement Guidelines, a series of requirements pertaining to ESG-related imperatives, including the management of chemical substances in and reduction of the environmental impact of raw materials, as well as respect for human rights across its entire supply chain. With the aim of compelling suppliers to observe these guidelines, the Group conducts assessments and on-site inquiries in accordance with the DIC Group Supply-chain CSR Deployment Guidebook. (Version 2 of the guidebook was published in July 2013.) These efforts have proven effective in enabling the Group to reinforce relations with its suppliers.

Supplier Self-Evaluations

In accordance with version 2* of the DIC Group Supply-chain CSR Deployment Guidebook, the DIC Group asks suppliers to complete questionnaires, which it uses to ascertain the status of suppliers’ CSR procurement practices. The questionnaire further segments the Group’s 10 procurement guidelines into 46 issues, including consideration for human rights and the work environment.

  • *Version 1 of the DIC Group Supply-chain CSR Deployment Guidebook was published in 2009 in Japanese, English and Chinese. Version 2, published in July 2013, includes new sections on conflict minerals and biodiversity, added in response to changing social imperatives.

Analyzing the Results of Questionnaires

Feedback sheet
Feedback sheet

Assessment Distribution Chart (682 Suppliers)
Assessment Distribution Chart (682 Suppliers)

From November 2013 through December 2016, the DIC Group conducted assessments for 682 suppliers using version 2 of the DIC Group Supply-chain CSR Deployment Guidebook, accounting for 90%-plus of its procurement spending. The Group analyzed and assessed questionnaire responses, providing feedback to all 682 suppliers and requesting corrective measures for significant issues through on-site inquiries or written comments.

Conducting On-Site Inquiries to Advance CSR

From fiscal year 2011 through fiscal year 2016, the DIC Group conducted on-site inquiries for 55 suppliers. The objective of these inquiries is to help suppliers further their understanding of CSR. In an on-site inquiry, the Group and the supplier confirm the responses provided by the supplier in the assessment questionnaire. Other efforts include introducing examples of Group initiatives designed to advance CSR procurement and realize sustainability.

Global Procurement Initiatives

On-site inquiry for supplier in Greater China
On-site inquiry for supplier in Greater China

In fiscal year 2016, procurement departments in Japan, Greater China and the Asia–Pacific region collaborated to conduct CSR procurement assessments for and provide feedback to materials suppliers in core businesses. DIC also conducted on-site inquiries for six suppliers in Greater China, working with these suppliers to fortify their understanding of issues related to local environmental regulations, and of environmental issues in the supply chain related to local legal and regulatory compliance, as well as to implement corrective actions.

Green Procurement

With the aim of contributing to a sustainable society across its entire supply chain, the DIC Group formulated the DIC Group Green Procurement Guidelines, which compels suppliers to ensure the stringent management of chemical substances. The Group is also working to develop and release products that have less of a negative impact on the environment and to promote green procurement by manufacturers, as well as to lower the negative environmental impact of materials it procures, and of the packaging, transport, production and engineering thereof, by trimming resources and energy used in, decreasing the weight and extending the useful life span of, and reducing CO2 emissions from such materials.

Conflict Minerals

In compliance with the U.S. Dodd–Frank Wall Street Reform and Consumer Protection Act, which contains a provision requiring companies to report on their use of conflict minerals, the DIC Group published its Basic Policy concerning Conflict Minerals on its global website. This policy outlines the Group’s pledge to refrain from using gold, tantalum, tungsten and tin, which are classified as conflict minerals, that is, minerals mined in conditions of armed conflict and abuse in the Democratic Republic of the Congo and its neighboring countries. The policy also states that should any raw materials purchased from third-party suppliers be found to contain conflict minerals, the DIC Group will immediately terminate the procurement thereof. The DIC Group continues to use the Conflict Mineral Reporting Template, created by the Electronic Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI), to conduct conflict minerals audits across its entire supply chain. As of December 2016, responses had been received for more than 90% of the items currently procured by Group purchasing departments.

VOICE

DIC’s efforts to build win–win relationships with suppliers has enabled it to realize sustainable procurement.

My job is in the purchasing of materials for DIC Group companies in Greater China. I have gained extensive know-how in the area of CSR through in-house training, among others, and have been actively involved in promoting CSR among suppliers. One of the biggest challenges has been finding an easy-to-understand way to explain the need for CSR to suppliers, because it is not easy to fully grasp actual initiatives based on responses to supplier self-evaluation questionnaires. In fiscal year 2016, we conducted on-sight inquires for six suppliers in Greater China. While the standards for these inquiries centered on traditional concerns, namely, quality, cost and delivery, we explained to suppliers the need to give consideration to ESG in advance and secured their understanding. We also exchanged opinions with suppliers regarding CSR initiatives. When we discovered particularly outstanding initiatives being implemented by suppliers, as well as when we felt suppliers’ understanding of CSR fell short, we introduced DIC initiatives as case studies. This has allowed us to build win–win relationships with suppliers that I am confident will underpin sustainable growth for all concerned going forward.

Group Purchasing, DIC (Shanghai) Co., Ltd.   Kevin Ke

Group Purchasing,
DIC (Shanghai) Co., Ltd.
Kevin Ke

VOICE

We are promoting CSR procurement by conducting on-site inquiries for major suppliers.

I currently work in the Purchasing Department in the area of raw materials procurement. With the aim of realizing sustainable procurement, we periodically conduct on-site inquiries for suppliers of principal raw materials. Actually going to the supplier gives one a much clearer idea of the supplier’s initiatives than can be gained simply by reading questionnaire responses. One company I visited was taking steps to illuminate legal and regulatory risks and had established study groups to explore issues related to compliance and the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors, allowing me to see firsthandthe importance the company placed on compliance initiatives. I also inspected the company’s production facilities, giving me the opportunity to observe its stringent process control systems and BCP measures, including dividing production among multiple facilities. This process enabled us to deepen our relationship with this particular supplier.

Assistant Manager, Purchasing Department Miho Hayashi

Assistant Manager,
Purchasing Department
Miho Hayashi

VOICE

On-site inquiries help build trust and understanding.

I accompanied off cials when they conducted on-site CSR inquiries at the importers that I am in charge of and verif ed the results of CSR procurement assessments submitted by those companies. I initially had no idea what sort of CSR initiatives I might f nd—after all, trading houses are not manufacturers. In fact, all of the importers I visited maintain CSR programs as a key component of their corporate policy. Exchanging opinions with suppliers on assessment results helped enhance mutual understanding and I found the opportunity to see different perspectives on CSR, particularly in areas such as quality control and supply stability for imported materials, especially useful.

Manager, Purchasing and Logistics Division Toshio Yamagami

Manager, Purchasing and Logistics Division
Toshio Yamagami

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