Supply Chain Management
<CSR Procurement Policy>
“Our Commitment” states the principles of our conduct which we should adhere to in our business activities. The “Kuraray Group Code of Conduct” serves as guidelines to implement the commitment in performing day-to-day work, and we strive to fulfill our responsibility as a good corporate citizen. In 2005, Kuraray established the “CSR Procurement Policy” in accordance with the 10 principles of the “United Nations Global Compact,” which are internationally accepted universal principles. However, changes in social conditions regarding supply chain management rendered the existing CSR Procurement Policy insufficient in some respects, and accordingly, it was revamped in 2019. While it goes without saying that the Kuraray Group itself will observe and practice the Policy, we will share it with our suppliers and ask for their cooperation in working on it together in our purchasing transactions.
Kuraray is a signatory of the United Nations Global Compact.
CSR Procurement Policy
<Evaluating Suppliers Partners>
1. CSR procurement questionnaire
The Kuraray Group has identified “Improving supply chain management” as one of its material issues (materiality) Materiality of the Kuraray Group. Observing and practicing the “CSR Procurement Policy” along the supply chain will be one of the main targets. In order to ensure these efforts, we conduct a CSR Procurement Questionnaire to confirm the status of our suppliers’ efforts. Specifically, we will build and operate a system where we follow a cycle involving our suppliers of (1) spreading the Policy among them, (2) conducting a CSR procurement questionnaire, (3) analyzing and evaluating the survey results, and (4) giving feedback and supporting improvement as necessary. Through the process, Kuraray will regularly monitor suppliers to mitigate risks and ensure sustainable procurement. We will provide education and guidance on improvement through close communication with suppliers found to be especially in need of active support in improvement in the course of these activities. Furthermore, Kuraray plans to verify if and how often audits on suppliers will be necessary based on suppliers’ activities and status of improvement.
As the first step for this initiative, we conducted the CSR Procurement Questionnaire targeting major suppliers 1) of the Kuraray Group in Japan controlled by the Purchasing and Logistics Division in 2020. In 2022, we are expanding the scope of our survey to include suppliers from whom each business division and affiliate in Japan purchases directly. Furthermore, in order to conduct this survey, we held guidance sessions about supply chain management for Japanese business divisions and affiliates in advance. We reconfirmed within the Group the importance of risk management and the trends in social demands for companies with regard to their supply chains, which are changing on a daily.
- 1)Suppliers covering 80% of total purchasing amount(90% of purchase value in raw materials, etc.)
The questionnaire reflects the Kuraray Group Code of Conduct and the 10 principles of the United Nations Global Compact. It covers 51 items in nine areas including respect for human rights, abolition of discrimination based on gender, nationality, etc., abolition of child labor, water resource issues, global warming countermeasures, environment pollution countermeasures, fair corporate activities such as preventing bribery and corruption, ensuring quality, information security, consideration for the supply chain, and harmony with local communities, among others.
CSR Procurement Questionnaire
Suppliers were asked to answer multiple choice questions on whether they have a system in place, and the status of improvement and confirmation for each item. We score each survey question on a scale of 3, 2, 1 or 0.
Results of the 2022 CSR Procurement Questionnaire
Questionnaire response rate
| Number of target suppliers | Response rate |
| 335 companies | 98.5% |
Evaluation levels
| Evaluation | Score |
| A | 80% or above |
| B | 66%～80% |
| C | 50%～66% |
| D | Less than 50% |
We evaluate responses from suppliers based on the criteria in the table above and provide feedback to each company. In particular, we conducted web interviews and additional written questions with a total of 14 suppliers (about 4% of all suppliers) to confirm the status of their initiatives and share the purpose and importance of the Sustainability Procurement Program. The survey included D-rated suppliers and suppliers whose initiatives were deemed necessary to confirm. We asked suppliers whose efforts were found to be insufficient to make improvements. We received positive responses from all of them. We will provide support as needed to continue to promote improvements. In a questionnaire conducted in 2020, some suppliers did not properly understand the purpose of the survey questions and gave low self-evaluations despite already having sufficient measures in place. In 2022, we will work to make the questionnaire easier to answer by reviewing the content and added supplementary explanations to the questions and prepared CSR Procurement Guidelines as specific action items for each item set out in the CSR Procurement Policy, which we presented to our suppliers together with the questionnaire. We will continue to improve the content and quality of the questionnaire.
Future plans
In our Medium-Term Management Plan “PASSION 2026,” we set a target for the questionnaire scope to cover 80% of the procurement amount for our Group, including overseas business (90% of the procurement amount for raw materials, etc.).
>Sustainability Procurement
In 2022, we established the structure to conduct procurement questionnaires at overseas. Specifically, we conducted a survey on the actual status of transactions at overseas, from which we selected suppliers representing 80% of all Kuraray Group purchases. Then, we obtained the support of each overseas sites for the implementation of this survey and established a structure to conduct the questionnaire. Based on this structure, we are preparing to start a survey on the status of compliance with the CSR Procurement Policy among major overseas suppliers from 2023.
2. Other surveys
The Kuraray Group conducts some evaluation per industry other than the above. For example, we have compiled a Warehousing Company Qualification Evaluation List covering criteria for newly selecting and continuing to evaluate third-party commercial warehousing companies in Japan. Based on the list, we audit warehousing companies in terms of location and facility, warehousing work environment, status of internal education, and other matters when newly appointing them and periodically after that. Initiatives are ongoing to give guidance on improvement when audit results do not satisfy criteria.
