Goals and Achievements of Major Initiatives
Promote sustainable procurement.
|Goals for fiscal year 2021||Reduce procurement-related risks by closely inspecting the impact of the tightening of regulations and consolidation of chemical industrial parks in the PRC and India on manufacturers of key raw materials, as well as the status of such manufacturers’ sustainability efforts.|
|Achievements in fiscal year 2021||A written sustainability survey was conducted of approximately 50 manufacturers of key raw materials in the PRC and India and confirmed the status of efforts by such manufacturers in the PRC to acquire new permits and licenses from relevant administrative authorities to accommodate increasingly stringent regulations.|
|Goals for fiscal year 2022||Promote initiatives aimed at expanding the use of sustainable raw materials over the medium to long term (calculate the carbon footprint of raw materials and continue to search for bioderived and recycled raw materials).|
|Goals for fiscal year 2021||Use the revised DIC Group Sustainable Procurement Guidebook (DIC) and the EcoVadis* tool (Sun Chemical) to conduct assessments for suppliers and ensure a grasp of their overall ESG initiatives.|
|Achievements in fiscal year 2021||
Assessments using the revised DIC Group Sustainable Procurement Guidebook were conducted by DIC at approximately 150 suppliers, which together account for more than 70% of its procurement spending.
|Goals for fiscal year 2022||Continue conducting assessments to better ascertain the sustainability of DIC and Sun Chemical suppliers and ensure a grasp of their overall ESG initiatives.|
- 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 Group established the DIC Group Universal Purchasing Policy, based on which it later formulated purchasing management regulations and clarified issues it expects suppliers to address. Using the DIC Group Sustainable Procurement Guidebook, revised in February 2020, the Group promotes sustainable procurement across its supply chain by ensuring that all suppliers implement improvements and initiatives as necessary. 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, as well as to comply with social imperatives outlined by the Responsible Business Alliance (RBA) and the TCFD, the Group has also prepared the DIC Group
Sustainable Procurement Guidebook, version 3 of which was published in February 2020.
The Group uses the guidebook to conduct assessments and on-site inquiries, as well as to promote awareness among suppliers worldwide and encourage improvements. 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 Safety and Health 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 Reporting Template (CMRT) and an Extended Minerals Reporting Template (EMRT), DIC conducts comprehensive advance assessments of major new suppliers, including from the perspective of sustainability.
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, including consideration for human rights and work environments, acquisition of certification under ISO 14001, implementation of green procurement and promotion of sustainable procurement to secondary suppliers.
Analyzing the Results of Questionnaires
Between June 2020 and February 2022, the DIC Group used version 3 of the DIC Group Sustainable Procurement Guidebook, which was published in February 2020, to conduct assessments for 348 suppliers, accounting for more than 70% of its procurement spending. In addition to analyzing and assessing questionnaire responses, the Group provided feedback and where necessary requested corrective measures, using written comments or remote interviews because of COVID-19.
Note:Between November 2013 and December 2019, assessments were conducted using version 1 and then version 2 of this guidebook for a cumulative total of 764 companies.
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 on-site inquiry, the Group and the supplier confirm the self-evaluation provided via the questionnaire and discuss corrective measures. Other efforts include introducing examples of DIC Group ESG initiatives to assist the efforts of suppliers to promote sustainability. In fiscal years 2020 and 2021, on-site inquiries were not conducted due to COVID-19. Separately, the Group did conduct an independent survey of suppliers of key raw materials in the PRC and India regarding the tightening of local environmental regulations.
Global Procurement Initiatives
In fiscal year 2021, the DIC Group continued working to disseminate and fortify understanding among certain Group companies using version 3 of the DIC Group Sustainable Procurement Guidebook, published in February 2020, and to conduct assessments for key suppliers. Sun Chemical continued to use the EcoVadis tool, completing assessments for suppliers that represent approximately 90% of its procurement spending. Going forward, DIC and Sun Chemical will continue to exchange views on addressing evolving social imperatives related to sustainable procurement at meetings of the Sustainability Committee, among others.
On another front, Group company Siam Chemical Industry achieved a silver medal in the EcoVadis assessment for the third consecutive year.
Ensuring the Sustainable Procurement and Use of Raw Materials
The DIC Group promotes the sustainable procurement and 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, as well as calculating the carbon footprint of raw materials—including associated Scope 3 emissions—and continuing to search for bioderived and recycled raw materials. Looking ahead, the Group will expand the global application of its sustainable raw materials procurement initiatives.
Promoting Awareness In-House
The DIC Group provides regular training for in-house purchasing personnel, including at point of hire, when transferred and prior to meeting with customers. The Group has also posted the revised version of the DIC Group Sustainable Procurement Guidebook on the DIC intranet to promote awareness and organizes related presentations at overseas Group companies.
Sojitz and DIC are working together to promote sustainable development.
Sojitz Corporation has supplied DIC with raw materials for resins for some time. We have established Sustainability Challenge, a long-term sustainability vision that will guide our efforts until 2050, and declared our commitment to contributing to the realization of a decarbonized society and expanding step-by-step initiatives to respect human rights, including within our supply chains.
Improving respect for human rights in one’s own supply chains requires the understanding and cooperation of our business partners, so DIC, which has been working to do just that since 2008, is an encouraging presence. While an increasing number of companies have established sustainable procurement guidebooks and are conducting supply chain inquiries on an ongoing basis, not many go so far as to provide feedback to their business partners.
With social imperatives that impact companies’ entire supply chain expected to continue gathering steam, we look forward to collaborating further with DIC to create shared value and promote sustainable development.
We are working to build partnerships with suppliers through sustainable procurement.
In addition to manufacturing and selling inks, DIC Graphics provides solutions that encompass the proposal and sale of products sourced from other manufacturers. My department is in charge of procuring such products, which are diverse in nature and include solvents used in inks, printing plates and chemical cleaning agents used on printing floors, as well as equipment that helps customers reduce labor requirements. We currently work with approximately 300 suppliers. Sustainable procurement initiatives are essential to building effective partnerships with these companies. Supplier inquiries have traditionally focused on considerations such as quality, price and stable supply capabilities, but we recognize the increasing importance of sustainable procurement, which incorporates ESG perspectives, to our efforts to finding and building partnerships with promising suppliers.
Manager, Raw Materials Management, Supply Chain Management Group, DIC Graphics Corporation Kazunori Karasawa
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