Sustainability / Social ReportSustainable Procurement

Daicel Group Basic Purchasing Policy

To conduct its purchasing activities responsibly, the Daicel Group carefully evaluates quality, pricing, and delivery dates, while also considering social impact in such areas as human rights and the labor force, and environmental impact such as renewable energy promotion and biodiversity conservation. In addition, we have established our views on purchasing in the Daicel Group Basic Purchasing Policy and the Daicel Group Procurement Guidelines, and we seek compliance from our suppliers as we work together toward realizing a sustainable society in an effort that extends across the entire supply chain.

The Daicel Group’s Basic Purchasing Policy, and the Procurement Guidelines that we ask our suppliers to comply with, are as outlined below.

Daicel Group Basic Purchasing Policy

To achieve the goals of its basic philosophy in its purchasing activities, the Daicel Group adheres to the following basic purchasing policies and practices in conformity with its Sustainable Management Policy, Code of Conduct, and Ethical Standards.

  1. 1Fairness and Rationality of Transactions
    • We shall be fair in providing prospective suppliers with opportunities for participating in business transactions. Also, we shall conduct our purchasing activities in an open manner with no regard for previous dealings and with no preference for companies domiciled in Japan.
    • Our overall considerations shall be limited to matters of quality, price, stability of supply, state of technological development, environmental considerations, and the assurance of safety. We shall consider these aspects in a comprehensive manner.
  2. 2Legal Compliance and Confidentiality
    • We shall comply with laws and corporate ethics in our business operations.
    • We shall strictly protect confidential information obtained through business activities and shall never infringe on the intellectual property rights of third parties.
  3. 3Establishing Relationships of Trust
    • We shall strive to establish better partnerships with our suppliers in consideration of mutual benefit, trust, and good faith.
  4. 4Adherence to CSR Initiatives
    • We shall promote sustainable development with our suppliers through our activities for corporate social responsibility and value improvement.

Revised February 29, 2024

Daicel Group Procurement Guidelines

The Daicel Group established the Daicel Group CSR Procurement Guidelines in FY2019/3 based on its Basic Purchasing Policy. We have worked to realize a sustainable society by gaining the understanding and sympathy of our suppliers and promoting these guidelines throughout the supply chain.

In February 2024, these guidelines were updated to form the Daicel Group Procurement Guidelines in line with revisions to the Daicel Group Code of Conduct and Ethical Standards. The content was reviewed and revised in order to proactively respond to the demands of a changing society. The new guidelines will be reflected in the Daicel Group’s sustainable procurement initiatives, and we will continue to work to achieve a sustainable society throughout the supply chain.

By FY2023/3, the Daicel Group had distributed Certificates of Confirmation to 768 of Daicel’s major suppliers (accounting for over 85% of total procurement) for the understanding and penetration of the Daicel Group CSR Procurement Guidelines (Established in June 2018, and revised to the Daicel Group Procurement Guidelines in February 2024), and we received signatures from 678 companies (response rate of 88%).
Since FY2021/3, when we create a contract with new suppliers, we make it a rule to ask that they sign the Certificate of Confirmation as well, and 100% of them have done so.
In FY2025/3, we plan to distribute Certificates of Confirmation for the revised Daicel Group Procurement Guidelines and start requesting signatures.

Daicel Group Procurement Guidelines

  1. 1Compliance with laws, regulations, and social norms
    • In the course of business activities, we shall comply with laws, regulations, and social norms with regard to such matters as business transactions, labor management, environmental preservation, safe operations, and intellectual property, thereby living up to higher standards of corporate ethics and fair business conduct.
    • In addition to complying with the laws and regulations of the countries and regions in which we operate, we shall also respect the local culture and customs.
    • We shall not provide or receive entertainment or gifts that could be deemed to exceed the scope of sound commercial practice and social norms.
    • We shall comply with the competition laws of each country and region in which we operate and shall not in any way impede fair, transparent, and free competition.
    • In order to prevent fraudulent activities and detect them at an early stage, we shall institute effective internal and external whistleblowing systems.
  2. 2Respect for human rights and the working environment
    • We shall comply with the standards of the International Labour Organization, hire employees who apply of their own free will, and never engage in forced labor, child labor, or other inhumane labor practices, such as payment of wages that do not meet statutory minimums and unfair wage reductions.
    • We shall comply with the standards of the International Labour Organization and all applicable laws and regulations in the countries in which we operate, manage working hours as required, and never subject employees to excessively long working hours.
    • We shall respect the diversity of all employees in recruitment and employment, eliminate discrimination, and strive to provide equal opportunity and fair treatment.
    • We shall eliminate all harassment and violence in the workplace.
    • In accordance with the laws and regulations of the countries and regions in which we operate, we shall support and respect freedom of association, the right to collective bargaining, and all other employee rights.
    • We shall practice appropriate human rights due diligence throughout the supply chain in consideration of the risk of adverse human rights impact.
    • When using raw materials containing conflict minerals (tin, tantalum, tungsten, gold), cobalt, mica, etc., which may cause social issues such as human rights and environmental problems, we investigate and confirm that there is no child labor or dangerous working conditions at the mining site and endeavor not to use them as raw materials for products.
  3. 3Occupational health and safety and health management
    • We shall assess workplace risks and promote safety through appropriate design, technology, and management measures.
    • We shall identify work that places an undue physical burden on employees, manage work in a manner that avoids accidents and illnesses, and continue to introduce improvements intended to reduce employee workloads.
    • We shall adopt safety measures to prevent accidents and health problems that could occur as a result of work with the machinery and equipment adopted by our company.
    • We shall identify work situations involving risks to workers from potentially harmful organisms and chemical substances as well as noise and foul odors in the workplace and implement the necessary countermeasures.
    • We shall take steps to improve or maintain the physical and mental health of all employees working in our Group while instituting all necessary health and safety measures for the dormitories, cafeterias, toilets and other facilities provided for the daily use of our employees. We shall respect the privacy of all individual employees and encourage their pursuit of an appropriate balance between their personal and professional lives.
    • We shall monitor the occurrence of occupational accidents and illnesses and institute necessary countermeasures when indicated.
    • In anticipation of earthquakes, typhoons, fires, accidents and other disasters, we shall establish and maintain a disaster response system that includes emergency evacuation; we shall also strengthen the system through regular training and education.
    • We shall provide employees with training and education with respect to workplace health, safety, and maintenance in a language they can understand.
  4. 4Environmental considerations
    • In addition to complying with the pollution control laws and regulations of each country and region in which we operate with respect to the air, water, and soil, we shall conserve resources in manufacturing, packaging, and logistics; promote energy efficiency and the use of renewable energy; reduce waste and GHG emissions; conserve water resources by using water efficiently, reducing water consumption, and preventing water pollution; and manage rainwater by preventing contaminated runoff from entering storm sewers and public water supplies. We shall take steps to reduce our environmental impact by controlling emissions of pollutants and practicing environment-friendly green procurement.
    • In order to protect the environment and conserve biodiversity, which encompasses the management of forests and water resources, we shall focus on production innovations offering the benefits of energy efficiency and lower environmental impact while contributing to the emergence of a circular economy.
    • In compliance with the laws and regulations of the countries and regions in which we operate, we shall seek government approval when necessary and shall submit management reports to the government as required.
    • We shall identify all industrial waste that is harmful to human health and the environment and shall classify, label, store, manage, move, and dispose of this waste in compliance with the laws and regulations of the countries and regions in which we operate.
  5. 5Sound business management
    • We shall strive to engage in sound and transparent business management and appropriately disclose corporate information to stakeholders with the aim of establishing sincere relationships based on a spirit of mutual interest, respect, and trust.
    • We shall not engage in behavior that benefits anti-social forces, engage in insider trading, abuse a position of power, or engage in behavior that disadvantages our stakeholders. Moreover, we shall continuously and fairly disclose information to our stakeholders.
    • We shall maintain appropriate and transparent relationships with political entities in compliance with the laws and regulations of the countries and regions in which we operate and shall not engage in bribery or illegal political donations.
  6. 6Product quality, product safety, and value co-creation
    • We shall strive to meet customer requirements with regard to product quality and safety in addition to disclosing accurate information about our products and services.
    • Regarding product safety, we shall ensure product safety from the design stage to meet the safety standards stipulated by the laws and regulations of the countries and regions in which we operate.
    • Regarding prohibitions and restrictions on the use of chemical substances in our products, we shall comply with the laws and regulations of the countries and regions in which we operate and shall meet the delivery requirements of our customers. In addition, we shall disclose all required information about the raw materials, parts, and substances contained in the products produced by our manufacturing processes.
    • We shall work to improve quality, promote the development of innovative products and technologies, and focus on creating value.
    • We shall ensure traceability of raw materials and parts from their arrival to the shipment of the products incorporating them, which provides useful data for rapid problem-solving.
  7. 7Maintaining stable supplies and the flexibility to remain responsive to changes
    • We shall deliver our products on time and strive to maintain stable supplies.
    • In anticipation of events such as natural disasters and operational accidents, we shall establish a business continuity plan (BCP) that supports purchasing from multiple sources and strives to maintain stability of supplies.
  8. 8Information security
    • We shall put in place security measures to combat network threats with the aim of ensuring that none of our systems or those of others are damaged by such threats.
    • We shall safeguard all personal information we handle whether it pertains to our customers, employees, or other third parties.
    • We shall safeguard all confidential information we receive from our customers or other third parties and shall strive to prevent the unauthorized release of such information.
  9. 9Contribution to communities and society
    • We shall respect local cultures and customs, maintain good relationships with local residents through dialogue and appropriate information disclosure, and contribute to the development of communities and society.
  10. 10Promotion of CSR initiatives in which all supply chain constituents play their roles
    • We shall proactively push ahead with CSR initiatives while also disclosing the status of such initiatives.
    • In order to promote CSR initiatives throughout the supply chain, we shall encourage our suppliers to adhere to our guidelines in their procurement activities.

Revised February 29, 2024

Our Structure for Promoting Sustainable Procurement

In FY2021/3, the Daicel Group launched a Procurement Subcommittee under the Sustainable Management Committee chaired by the President and CEO, and is promoting sustainable procurement within the Group under the responsibility of the subcommittee's executive officer. The subcommittee comprises individuals charged with supervising procurement from the Raw Materials Purchasing Division and major Group companies, Corporate Sustainability, Investor Relations and Corporate Communications, each SBU and quality assurance department, and it meets periodically to engage in discussions encompassing the entire Group with regard to procurement operations that have been conducted by each business site or Group company in the past. The subcommittee met 17 times from FY2021/3 to FY2024/3.

During these meetings, the discussions are reported to the Sustainable Management Committee, which provides feedback on its own deliberations and debates and then reflects the results of the activities of the subcommittee.

  • Setting targets related to sustainable procurement to be addressed by the Group as a whole, in addition to verifying progress on issues and exchanging information
  • Discussing action on conflict minerals, palm oil, and human rights issues, and establishing targets and implementation plans, etc.

Sustainable Management System

Initiatives for Sustainable Procurement

Selection Process for New Suppliers

The Group has been conducting CSR procurement assessments since FY2021/3 when adopting new suppliers for the purchase of major raw materials and fuels.
In conducting the CSR assessment, we make use of a CSR assessment sheet which is a self-assessment questionnaire (SAQ) that we have created with reference to the questionnaire produced by the United Nations Global Compact Network, Japan. The questions include items concerned with supplier’s activities across a wide range of areas related to quality assurance and stable supply, corporate governance, human rights, health and safety, environmental measures, information security, and so on. We evaluate suppliers’ results comprehensively in line with the Group’s standards and make decisions about the possibility of doing business with them.

Communication with Current Suppliers

When purchasing raw materials, fuel, parts, and equipment, the Daicel Group conducts quality audits of our current suppliers according to the content of the transaction. We work to make improvements for any supplier that falls short of our standards or that is deemed to be a high risk.

Addition of CSR Clauses to Basic Purchasing and Sales Contracts for Raw Materials, Fuel, Parts, and Equipment

Beginning in FY2023/3, the organization within the Daicel Group that procures raw materials, fuel, parts, and equipment produced a CSR clause for basic purchasing and sales contracts. It asks suppliers to abide by the Daicel Group Procurement Guidelines. This CSR clause includes a wide range of items, including adherence to laws and social norms. The Raw Materials Purchasing Division is working to incorporate the CSR clause into all newly concluded purchasing and sales contracts and all such contracts that come up for renewal.

Self-Assessment-Questionnaire (SAQ) on CSR Procurement

To assess the sustainability initiatives of suppliers, the Daicel Group periodically conducts assessment using SAQ (CSR procurement assessment sheet). By providing assessments and offering feedback on their responses, we seek to raise awareness among suppliers and reduce environmental and social risks.
As for items concerning environmental measures, we check and evaluate suppliers’ progress on developing targets for reducing greenhouse gases.
Also, we conduct interviews with suppliers who did not meet the Daicel Group’s standards as a result of assessment, and we share the issues and work on initiatives for improvements. If there is no improvement over a certain period or if there are significant deficiencies, we consider reviewing transactions with those suppliers.

Self-Assessment Questionnaire on CSR Procurement: Main Assessment Items

Self-Assessment Questionnaire on CSR Procurement: Main Assessment Items

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Assessment Item Details
  • (1)Compliance with laws, regulations and social norms
 Establishment of management policies, legal compliance, establishment of whistleblowing system, and restrictions on offering gifts and entertainment
  • (2)Respect for human rights and the working environment
 Prohibitions of discrimination, forced labor, child labor and inhumane treatment, while ensuring adequate pay and appropriate management of working hours
  • (3)Occupational health and safety
 Occupational health and safety and management of workplace hygiene and responses to occupational injuries, illnesses and emergencies
  • (4)Environmental considerations
 Prevention of environmental pollution, effective use of energy, reduction of greenhouse gases, reduction of waste, and initiatives on preserving biodiversity
  • (5)Sound business management
 Information disclosure, elimination of inappropriate profit-taking, respect for intellectual property, and elimination of antisocial forces
  • (6)The pursuit of product quality and safety as well as improvements in technologies
 Provision of information on products and services, quality assurance for products and services, and management of chemical substances
  • (7)Stable supplies and the flexibility to remain responsive to changes
 Stable supplies, and BCP management
  • (8)Information security
 Defensive measures against network threats and measures for preventing leakage of personal information and confidential information we receive from customers and third parties
  • (9)Contributions to the community and society
 Contributing to the global community and local communities
  • (10)Promotion of CSR initiatives in which all supply chain constituents play their roles
 Sustainable procurement of minerals and promotion of CSR initiatives

Survey Results and Initiatives for Improvement

In the end of FY2023/3, we conducted an SAQ targeting 768 major suppliers of the Daicel Group, accounting for over 85% of total procurement, and received responses from 678 companies, a response rate of 88%.
Based on the SAQ results, we conducted interviews with 73 of the 189 companies that we deemed to be in need of improvement and identified 161 issues. We identified a relatively large number of issues in the areas of stable supply and promotion of CSR initiatives, and worked with the relevant suppliers in FY2023/3 to make improvements in 82 cases, and in FY2024/3 in 79 cases, resolving all issues.
In FY2025/3, we will ask suppliers to respond to the new CSR Procurement Assessment Sheet SAQ (which adds freedom of association, conservation of water resources, etc.) and implement further improvement initiatives.

Survey Issues of Major Raw Materials and Fuel, Parts, and Equipment Suppliers

Survey Issues of Major Raw Materials and Fuel, Parts, and Equipment Suppliers

*It shows the average scores for each issue.

Human Rights Due Diligence

Based on the “human rights due diligence” concept, we prepared a risk map and identified the priority areas to be addressed. Taking this into account, we have conducted an assessment of 63 suppliers in Japan and overseas and we identified 50 issues by FY2024/3. Specifically, we found many issues in occupational health and safety and employment, and we worked together with the relevant suppliers to improve all 50 issues by the end of FY2024/3.

In FY2025/3, we will expand the scope of suppliers to conduct assessments and implement further improvement initiatives.

Efforts to Instill Respect for Human Rights into Practices

Responsible Sourcing of Minerals

Under Section 1502 of the Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) enacted in January 2013, companies listed on U.S. stock exchanges are required to investigate and report on procurement status, particularly for tin, tantalum, tungsten, and gold (commonly known as 3TG), which are known as conflict minerals that can cause social problems such as human rights and environmental problems. The Daicel Group is not listed on the U.S. stock exchange and is not required to report its activities, but throughout its supply chain, the Daicel Group will not, by any means, tolerate the procurement of the minerals which results in human rights violations or environmental destruction.
The Daicel Group considers such minerals to be an important issue, and in addition to the SAQ, we have conducted a conflict minerals reporting template (CMRT) survey that focuses on these minerals.
Daicel will investigate the residual status of conflict minerals (tin, tantalum, tungsten, and gold) as defined in the Dodd-Frank Act, or cobalt and mica, which are also of concern for human rights violations, if they are used in the manufacturing process itself or in the course of the manufacturing process. Additionally, we will regularly request conflict mineral surveys from raw material suppliers, confirm the obtained survey results, and make efforts not to use them as raw materials for products.
In addition, based on the results of surveys regularly obtained from raw material suppliers, we update and provide our CMRT*1 and EMRT*2 information.

  • *1Conflict Minerals Reporting Template. An international format for smooth collection of information on conflict minerals used throughout the supply chain.
  • *2Extended Minerals Reporting Template. A format that extends the target minerals from the CMRT. Includes cobalt and natural mica.

Sustainable Procurement of Palm Oil Products

Progressive development of large-scale plantations of oil palms from which palm oil is extracted in Southeast Asia has led to the destruction of rain forests with a serious impact on the ecosystem and has therefore raised public concern. Recognizing the responsibility of a company that uses chemical products derived from palm oil as a raw material, the Daicel Group joined the RSPO* in August 2018 and is seeking to switch to palm oil-derived raw materials certified by the RSPO. In 2019, we began selling RSPO-certified products as raw materials for use in cosmetics, and we are gradually expanding this product line. As of the end of FY2024/3, about 12% of our chemical products derived from palm oil are RSPO certified. We will continue to play our role in realizing a sustainable society through our supply chain.

*Roundtable on Sustainable Palm Oil: An international certification system aimed at the sustainable production and use of palm oil.

Efforts to Regulate Chemicals

The Daicel Group uses domestic and overseas searchable databases of laws and regulations concerning chemicals not only in Japan but also Europe, the U.S., and the Asia-Pacific region, to acquire information about regulatory trends and revisions and to act in an appropriate and legal manner.
In particular, Europe is the world leader in the area of laws and regulations, and our response to their REACH regulations* includes not only appropriate legal registration of our products but also appropriate management of our supply chain.

*Registration, Evaluation, Authorization and Restriction of Chemicals: Regulations established by the European Union and required for producers and importers of chemicals, regarding the registration, safety evaluation, limits on use, and permissions for use of these products.

Chemical and Product Safety

BCP Procurement

In view of the procurement risks and impact on the supply chain, the Daicel Group implements measures with regard to BCP for our main raw materials and fuel by gradually adopting multi-sourcing and accumulating safety stock, on a priority basis. As of the end of FY2024/3, measures were complete for 70% of our main raw materials, and we will continue to implement measures for the remaining 30% of our main raw materials.

Procurement Help Line

To promote fair transactions in line with our Basic Purchasing Policy, the Daicel Group has set up a help line to receive reports from suppliers. We ask our suppliers to report on legal violations and deviations from the Basic Purchasing Policy that occur within the Daicel Group during the course of business with the Group so that we can resolve any issues. This help line is operated in accordance with the Corporate Compliance Help Line Operation Regulations, and these regulations prohibit retaliation for having reported or sought consultation.

Internal Education and Training

In FY2024/3, we held study groups for purchasing staff handling raw materials, fuel, parts, and equipment ten times on topics such as the long-term outlook for global energy supply and demand, inappropriate cases such as falsification and Subcontract Act violations, management of greenhouse gas emissions, and responding to external evaluation agencies. A total of 95 staff participated in the study groups. We also held study groups during meetings of the Procurement Subcommittee, comprising staff from each SBU as well as divisions handling the purchasing of raw materials, fuel, and materials at Group companies. Study group topics included the TCFD, the CDP, and initiatives to reduce Scope 3 GHG emissions. A total of 138 staff participated in these study groups. We have also incorporated personal goals for sustainable procurement initiatives in the evaluation of all purchasing staff to encourage everyone to exercise initiative.

Participation in Initiatives

Participation in Global Compact Network Japan's Supply Chain Subcommittee

In support of the United Nations Global Compact (UNGC), the Company joined Global Compact Network Japan (GCNJ), an UNGC local network in Japan, in FY2022/3 and has participated in several GCNJ subcommittees. In the Supply Chain subcommittee, we promote initiatives to improve sustainable procurement in the supply chain in cooperation with other participating companies.

Declaration of Partnership Building

We endorse the structure of the Declaration of Partnership Building, which was established by the Partnership Building Promotion Council for the Future, comprising the Chairman of Keidanren, the Chairman of the Japan Chamber of Commerce and Industry (JCCI), the President of the Japanese Trade Union Confederation (Rengo), and related ministers, and have posted our declaration on the Declaration of Partnership Building portal site. In the Declaration of Partnership Building, we declare the co-existence and co-prosperity of the entire supply chain, new cooperation beyond scale and affiliation, and compliance with desirable business practices with subcontractors.

Declaration of Partnership Building (Only in Japanese) [PDF:157KB]