Goals and Achievements of Major Initiatives
Promote sustainable procurement.
|Goals for fiscal year 2019||For Greater China–based suppliers of materials (including primary raw materials) for which the DIC Group depends heavily on suppliers in the PRC, reduce procurement-related risks by closely inspecting sustainability efforts, including responses to environmental regulations, and implementing countermeasures to address issues.|
|Achievements in fiscal year 2019||The sustainability efforts—including responses to environmental regulations—of 21 suppliers of key materials based in the PRC were inspected and measures to reduce risks were formulated that included expanding procurement from suppliers in other countries and increasing inventories.|
|Goals for fiscal year 2020||Reduce procurement-related risks by closely inspecting the sustainability efforts—including responses to environment alregulations—of suppliers of key materials for which the DIC Group is heavily dependent on the PRC and India.|
|Goals for fiscal year 2019||Reduce procurement-related risks by seeking out supply sources other than Greater China from the perspective of ESG, among others, to diver sify supply sources.|
|Achievements in fiscal year 2019||Various options were explored with the aim of ensuring stable supplies. These included procuring from Japanese suppliers and cultivating new suppliers in India.|
|Goals for fiscal year 2020||Continue to seek out new suppliers and conduct on-site inquiries using the newly revised DIC Sustainability Procurement Guidebook.|
- 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, in 2008 the DIC Group established the DIC Group Universal Purchasing Policy, based on which it later formulated purchasing management regulations, while in 2010 it developed the DIC Group CSR Procurement Guidelines, which clarify issues it expects suppliers to address (modified and renamed the DIC Group Sustainable Procurement Guidelines in February 2020). Using the policy and guidelines, the Group promotes sustainable 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.
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:
- 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.
- An appropriate purchasing process and the 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.
- 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.
- Challenge the creation of 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 Sustainable Procurement Guidelines
- Compliance with laws/social norms
- Human rights and work environments
- Safety and health
- Consideration for the environment
- Information security
- Appropriate quality and safety and technological improvements
- Stable supplies and flexible responses to change
- Promotion of sustainability and sustainable procurement initiatives
Encouraging Sustainable 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 Association (JEITA), in 2010 DIC formulated the DIC Group CSR Procurement Guidelines. To address increasingly urgent and evolving expectations regarding the sustainability of companies’ procurement practices, these guidelines were recently modified and renamed the DIC Group Sustainable Procurement Guidelines. Notable revisions were made to sections on the formulation of a human rights policy, the management of chemical substances, minimization of impact on the environment, the efficient use of water resources and energy, the establishment of medium-term targets for reducing greenhouse gas emissions, and the formulation of BCPs to guarantee stable supplies. With the aim of compelling suppliers to observe these guidelines, the Group has prepared the DIC Group Sustainable Procurement Guidebook (previously titled the DIC Group Supply-chain CSR Deployment Guidebook), version 3 of which was published in February 2020.
The Group uses the guidebook to conduct assessments and on-site inquiries and promote awareness among suppliers worldwide. A separate mechanism exists for taking the results of sustainability assessments into account when selecting new suppliers. The Group has also formulated the DIC Group Green Procurement Guidelines, in line with which it obliges suppliers to ensure the stringent management of chemical substances. In addition, the Group entreats suppliers to develop and release products that have less of an impact on the environment, promote green procurement and lower the environmental impact of the materials they procure—and the packaging and transport, production and engineering thereof—by reducing resources and energy used, decreasing the weight and expanding the useful lifespan of, and reducing CO2 emissions from such materials.
The DIC Group Green Procurement Guidelines
In line with the DIC Group Universal Purchasing Policy, DIC formulated the DIC Group Green Procurement Guidelines, which prohibit the procurement of materials containing hazardous substances in seven categories*1. The guidelines mandate the submission of a DIC Raw Materials Survey, an SDS and a chemSHERPA*2, as well as a DIC Group Green Procurement Guidelines Survey, when purchasing raw materials, thereby creating a system for eliminating substances of concern. Submission of a Conflict Minerals Survey is also required.
- (1) Substances the production of which is prohibited, as outlined in Article 55 of Japan’s Industrial Health and Safety Act; (2) Substances designated as class 1 specified chemical substances in Japan’s Act on the Evaluation of Chemical Substances and Regulation of Their Manufacture, etc.; (3) Substances designated for monitoring under Japan’s Act on the Evaluation of Chemical Substances and Regulation of Their Manufacture, etc.; (4) Chemical substances the production of which is already prohibited, as detailed in Japan’s Act on the Protection of the Ozone Layer Through the Control of Specified Substances and Other Measures (ozone-depleting substances listed in the Montreal Protocol); (5) Specified particulates denoted in Japan’s Air Pollution Control Act; (6) Specified poisonous substances indicated in Japan’s Poisonous and Deleterious Substances Control Act; and (7) Specified substances detailed in the Stockholm Convention on Persistent Organic Pollutants.
- chemSHERPA is a scheme designed to facilitate the accurate and efficient sharing of information on chemical substances in products across the entire supply chain. DIC began using chemSHERPA in late fiscal year 2017.
Advance Assessment of New Suppliers
In addition to requiring submission of the four mandatory documents listed above, as well as a Conflict Minerals Survey, DIC conducts comprehensive advance assessments of major new suppliers, including from a Sustainability perspective.
In accordance with the DIC Group Sustainable Procurement Guidebook, the DIC Group asks suppliers to evaluate themselves by completing a questionnaire, which it uses to ascertain the status of suppliers’ sustainable procurement practices. The questionnaire further segments the Group’s eight procurement guidelines into 45 issues.
Analyzing the Results of Questionnaires
In fiscal year 2019, the DIC Group conducted assessments for 11 new and continuing suppliers using version 2 of the DIC Group Supplychain CSR Deployment Guidebook (as it was then called), which was published in July 2013. This brought the total number of suppliers assessed between November 2013 and December 2019 to 764, accounting for 90%-plus of its procurement spending. In addition to analyzing and assessing questionnaire responses, the Group provided feedback and where necessary requested corrective measures for significant issues through on-site inquiries or written comments. In fiscal year 2020, the Group will begin conducting assessments using version 3 of the guidebook.
Conducting On-Site Inquiries
From fiscal year 2011 through fiscal year 2019, the DIC Group provided feedback through on-site inquiries or written comments to 102 suppliers. In an onsite inquiry, the Group and the supplier confirm the self-evaluation provided via the questionnaire and discuss corrective measures. Other efforts include introducing examples of Group ESG initiatives to assist the efforts of suppliers to realize sustainability.
Global Procurement Initiatives
In fiscal year 2019, procurement officers in Japan and Greater China cooperated to conduct on-site inquiries for suppliers in key businesses in the PRC based on suppliers’ questionnaire responses. DIC also worked with these suppliers to fortify understanding of environmental issues in the supply chain related to local legal and regulatory compliance, as well as to formulate corrective measures. In addition, DIC and Sun Chemical exchanged views on future sustainable procurement initiatives at a meeting of the Sustainability Committee. In fiscal year 2020, DIC Group companies in Greater China and the Asia–Pacific region plans to conduct on–site inquiries for suppliers using other newly revised Group Sustainable Procurement Guidebook.
Ensuring the Sustainable Procurement and Use of Raw Materials
The DIC Group promotes the sustainable use of raw materials from a medium- to long-term perspective. This includes giving consideration to a wide range of factors, including climate change and resource conservation, when using recyclable materials. Looking ahead, the Group will expand the global application of its sustainable raw materials initiatives.
Promoting Awareness In-House
The DIC Group regularly provides regular training for in-house purchasing personnel, including at point of hire, when transferred and prior to meetings with suppliers.
We promote sustainable procurement by implementing continuous improvement.
I work for at DIC Synthetic Resins (Zhongshan), where I am in charge of procuring raw materials for metal carboxylates used in tires. The supply chain for these metal carboxylates depends on leading global brand owners and supplies of raw materials from a limited number of suppliers. Accordingly, we view each supplier as an indispensable business partner and work to build relationships based
on mutual trust while striving to ensure sustainable procurement.
To improve quality and promote sustainability across the supply chain, we regularly survey suppliers using questionnaires, while purchasing, quality assurance and production staff conduct audits to deepen mutual understanding of the status of efforts to comply with laws and regulations, ensure occupational safety and health, and protect the environment. We provide feedback to suppliers on audit results and request corrective actions when standards are not met while at the same time providing related information to support improvements. As part of our efforts to ensure responsible procurement of minerals, we collaborate with corporate headquarters to conduct surveys of companies supplying processed cobalt products jointly and share information.
In August 2019, DIC Synthetic Resins (Zhongshan) was awarded a silver medal by EcoVadis for its ESG initiatives. Rather than being satisfied with where we are now, however, I look forward to working actively with suppliers to further advance the sustainability of our procurement practices.
Officer, Procurement Department, DIC Synthetic Resins (Zhongshan) Co., Ltd. Yu Fang Zhou
We are pursuing continuous improvements with the aim of ensuring sustainable procurement.
I have worked in the Purchasing Department of Siam Chemical Industry for roughly 24 years.
Today, companies worldwide face an ever-more diverse array of challenges, including rising awareness of the need to achieve sustainability. The role of Siam Chemical Industry’s Purchasing Department has been changed so as to move forward activities with an accurate understanding of social requirements based on the DIC Group’s basic sustainability policy, which emphasizes CSR. Accordingly, the department now has the added responsibility of reducing social and environmental impacts through cooperation with partners and customers across our supply chain. The department will work diligently in this regard, and will also convey information in a timely manner as stakeholders today are as interested in environmental and social governance as they are in quality, cost and delivery (QCD).
Siam Chemical Industry was awarded a silver medal for its CSR performance by EcoVadis on February, 2019. We hope to eventually earn a gold medal by strengthening our supply chain through ongoing improvement activities, rather than being satisfied with where we are now. This will not be easy. As the requirements of customers and society change constantly, it is necessary to realize sustainable procurement corresponding to that change.
I will continue to learn more about sustainable procurement and will work to further promote the exchange of information with both suppliers and the DIC Group, thereby increasing understanding as well as support to ensure we meet our goals. I would also like to see the DIC Group as a whole realize more advanced sustainable procurement.
Purchasing Department, Siam Chemical Industry Co., Ltd. Wantanee Prodpran
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
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
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