Procurement

Basic Stance

Policy on Sustainable Procurement

The Sumitomo Chemical Group is committed to building mutually beneficial and sound relationships with business partners. In addition to ensuring fairness, equitability, and transparency in our transactions with business partners, we are promoting sustainable procurement activities throughout the supply chain with an emphasis on compliance and respecting human rights, which will encourage our partners to also engage in sustainability initiatives. Furthermore, Sumitomo Chemical’s stance toward and policy on sustainable procurement is clarified in the Basic Procurement Principles and the Group Business Standards of Procurement, which provide guidelines for procurement operations for Group companies in Japan and overseas.

Basic Procurement Principles (Outline)

  1. The Procurement Section shall strive to conduct procurement transactions on the basis of fair, equitable, transparent and free competition without involving personal interests or arbitrary considerations.
  2. The Procurement Section shall strive to select suppliers to transact with in accordance with the most appropriate and economically rational methods and shall pursue the maintenance of sound business relationships with suppliers, aiming for mutual growth and development.
  3. The Procurement Section shall strive to provide corporate services globally throughout the entire Group.
  4. In its procurement, the Procurement Section shall give preference to those suppliers that are active in sustainability initiatives, with the aim of fulfilling its corporate social responsibilities and building sound relationships with suppliers.
  5. The Procurement Section shall strive always to meet the quality requirements of Sumitomo Chemical’s internal sections that request purchases of Goods and Services.
  6. In performing Procurement Operations, the highest priority shall be given to safe and stable operations in order to realize zero-accident and zero-injury operations.
  7. In performing Procurement Operations, the highest consideration shall be given to customer satisfaction.
  8. The Procurement Section shall ensure the transparency of Procurement Operations.

Sumitomo Chemical Group Policy for Responsible Procurement of Minerals / Raw Material

Recognizing the principles set out in our Sumitomo Chemical Group Human Rights Policy, Sumitomo Chemical Group (Sumitomo Chemical Co., Ltd. and its group companies, hereafter “Sumitomo Chemical Group”) defines those raw materials that involve a high risk of having a negative impact on human rights in the supply chain (including but not limited to Tentorium, Tin, Gold, Tungsten, Cobalt, Mica, Graphite, Pulps etc.) as high-risk raw materials (“HRRM”).Sumitomo Chemical Group recognizes the adverse impact against human rights which may be associated with mining, extracting, refining, manufacturing, trading, handling and/or importing/exporting HRRM, and sets out the following Policy for Responsible Procurement of Minerals / Raw Materials. Sumitomo Chemical Group will comply with this policy, and requests all of its suppliers to acknowledge the contents of this policy and comply with it.

Management System

In line with the policy on sustainable procurement, we formulate and implement plans related to sustainable procurement, share these plans with Group companies, and carry out these plans in cooperation with Business Sectors. Furthermore, Sumitomo Chemical’s stance toward and policy on sustainable procurement is clarified in the Group Business Standards of Procurement, which provide guidelines for procurement operations for Group companies in Japan and overseas. We are promoting relevant initiatives across the entire Group.

Goals and Results

FY2019 Group-wide Initiatives

Main InitiativesDetails
Group purchasing information exchange meetings 1 time Participating companies: 20
  • Shared information and held discussions regarding the importance of sustainability measures, including those related to human rights and the environment; our stance toward and policy on sustainable procurement; and specific initiatives
Company-wide procurement liaison meetings  2 times Participants: Representatives responsible for procurement of Business Sectors
  • Discussed the importance of sustainability measures, including those related to human rights and the environment; our stance toward and policy on sustainable procurement; and specific initiatives
Procurement staff education Participants: All procurement staff (including new employees and transferees)
  • Learned about the importance of sustainability measures, including those related to human rights and the environment; our stance toward and policy on sustainable procurement; and specific initiatives

FY2019 Initiative for Suppliers

Main InitiativesDetails
Supplier Briefings 1 time Participating companies: 201
  • Gave introductions on the Sumitomo Chemical Group’s sustainability initiatives
Suppliers Dialogues 8 times Participating companies: 40
  • Gave introductions on sustainability initiatives and shared information regarding human rights (child labor, etc.) and occupational safety
Supplier Engagement on SBTs*1 2 times Participating companies: 22
  • GRegarding Scope 3*2 GHG emissions, we engaged with our major suppliers*3 so they would set science-based GHG emission reduction targets by FY2024.
  • At the same time, we presented introductions to Sumitomo Chemical’s sustainability initiatives.
Evaluation of Established Suppliers (Sustainable Procurement Rate Survey) Targeted companies: All established Suppliers, who together account for the top 90% of the raw materials purchased in the previous fiscal year
Sustainable procurement rate*4: 49% (As of May 31, 2020)
Evaluation of New Suppliers Due diligence rate for new Suppliers: 100%
Suppliers who were rated “good” and with whom business began: 100%
Onsite Audits Number times monitoring was conducted in conjunction with quality audits: 3
Initiatives Related to High-Risk Raw Materials Targeted companies: All suppliers of raw materials, including gold, tantalum, tungsten, and tin.*5
CMRT*6 collection rate: 100%
Suppliers who have been determined to have a problem: 0%
(We plan to include other high-risk raw materials besides the four mentioned above from fiscal 2020 onward.)
  1. Science Based Targets: Greenhouse gas emission reduction targets set by companies for the next five to 15 years in line with levels sought by the Paris Agreement
  2. Scope 3: Emissions from the manufacturing and transportation of purchased raw materials
  3. Covers suppliers accounting for 90% of greenhouse gas emissions from procured raw materials and other items based on weight.
  4. Sustainable procurement rate: The percentage of Sumitomo Chemical Group Sustainable Procurement Check Sheets that were returned
  5. Conflict minerals rules: From August 2012 onward
  6. Conflict Minerals Reporting Template: A reporting template published by the Responsible Minerals Initiative (RMI)

Examples of Initiatives

Sustainable Procurement Activities

Sumitomo Chemical has added a webpage about sustainable procurement to its Procurement Information page on its official website to inform more stakeholders of its sustainable procurement initiatives. The webpage features the Sumitomo Chemical Group Sustainable Procurement Guidebook, which is a code of conduct for our suppliers. Moreover, Sumitomo Chemical has formulated the Sumitomo Chemical Group Sustainable Procurement Check Sheets to enable suppliers to conduct self-evaluations regarding all items. Suppliers can now download the guidebook and check sheets and report the results of their self-evaluations.

Sumitomo Chemical Group Sustainable Procurement Check Sheets

0 Overall Promotion of Sustainable Procurement
The questionnaire begins with a confirmation of the company’s performance regarding: clearly declaring the importance of sustainability as a business policy; designating an organization and manager responsible for sustainability promotion; publicly announcing the status of its sustainability promotion efforts; and deploying its own program regarding sustainability to suppliers.

Ⅰ Compliance with Laws and Ethics
Questions in this chapter focus on whether the company properly: ensures compliance with various business laws (including laws and regulations in Japan and overseas, such as REACH); prohibits impediments to free competition; prohibits abuse of a superior position; prohibits corruption and bribery; prohibits the offering and receiving of inappropriate profits and advantages; ensures respect for intellectual property; detects and prevents injustice promptly; and prevents the leakage of personal informa­tion as well as customer and third-party confidential information.

Ⅱ Human Rights and Labor
Questions in this chapter focus on whether the company properly: ensures respect for human rights; prohibits discrimination; regulates working hours; respects the rights to freedom of association; prohibits forced labor; prohibits child labor; and pays appropriate wages.

Ⅲ Accident Prevention and Occupational Health and Safety
Questions in this chapter focus on whether the company properly: ensures proper disaster and accident management; applies safety measures for equipment and instruments; promotes safety in the workplace; promotes hygiene in the workplace; and promotes health maintenance programs for employees.

Ⅳ Environmental Conservation
Questions in this chapter focus on whether the company properly: establishes and implements an environmental management system; controls hazardous chemicals in manufacturing; obtains environmental and government permits; minimizes environ­mental pollution (water, soil, air); promotes waste reduction; and promotes resource and energy saving by reducing, reusing, and recycling (3Rs).

Ⅴ Product Quality and Safety
Questions in this chapter focus on whether the company properly: establishes and implements a quality management system; controls hazardous chemicals in products; provides accurate information on products and services; and furnishes prior consulta­tion on manufacturing process change and compliance with standards and specifications.

Procurement Information, “Sumitomo Chemical Group Sustainable Procurement Guidebook”

Procurement Information, “Sumitomo Chemical Group Sustainable Procurement Check Sheets”

Promoting Sustainable Procurement throughout the Supply Chain

We have every new supplier gain a better understanding of Sumitomo Chemical’s policies and stances through the Sumitomo Chemical Group Sustainable Procurement Guidebook. We also have them fill out and submit the Sumitomo Chemical Group Sustainable Procurement Check Sheets. This enables us to do our due diligence regarding their compliance status, and, upon confirmation of satisfactory evaluation results, we begin doing business with them. Following that, we regularly monitor their compliance status and strive to prioritize procurement from those suppliers who are working hard to ensure sustainable procurement. We manage the data from the monitoring and periodically assess the content. For suppliers who need to follow-up on problems revealed by the monitoring, we furnish feedback to raise awareness of and cooperation in ensuring sustainable procurement.

In addition, we send out and collect the guidebook and check sheets from our main suppliers* of raw materials. The collection status is managed as our sustainable procurement rate.

  • Suppliers, who together account for the top 90% of the raw materials purchased in the previous fiscal year

System for Promoting Sustainable Procurement throughout the Supply Chain

Initiatives Related to High-Risk Raw Materials

Regarding conflict minerals that have been identified as possibly funding inhumane armed groups in the Democratic Republic of the Congo (DRC) and its neighboring countries, as usual, under the Conflict-Free Procurement Policy, we confirm the minerals in the raw materials we procure, including gold, tantalum, tungsten, and tin, are not contributing to conflict (i.e. are conflict-free). We do this by finding the raw materials containing these substances from an internal database and periodically distributing and collecting CMRTs* to all suppliers of these raw materials.

If we determine there is a problem after confirming the results with the supplier, we take appropriate measures, which could be a request for improvement or the suspension of procurement of conflict minerals.

In addition, going a step further in our efforts to avoid procuring conflict minerals, we have defined not only conflict minerals but also raw materials that pose a high risk of causing a negative impact on human rights as high-risk raw materials, and formulated the Sumitomo Chemical Group Policy for Responsible Procurement of Minerals/Raw Materials. Going forward, we will plan and implement specific measures for sustainable procurement in accordance with this policy.

  • Conflict Minerals Reporting Template: A reporting template published by the Responsible Minerals Initiative (RMI)

Promoting Sustainable Procurement throughout the Group

We periodically hold Group purchasing information exchange meetings that gather together responsible purchasing representatives from each Group company in Japan and overseas to discuss promoting sustainable procurement throughout the Group. In addition, to ensure smooth communication, we set up a website with the Group companies to reciprocally share information as we strive to promote and encourage sustainable procurement as a unified Group.

Information exchange meeting at Group companies in Japan and overseas

For Suppliers

Sumitomo Chemical believes that suppliers are important business partners and that it is only able to promote sustainability throughout the entire supply chain with the understanding and cooperation of suppliers. In connection with sustainability efforts for all suppliers, Sumitomo Chemical has compiled five categories in the Sumitomo Chemical Group Sustainable Procurement Guidebook. In this regard, Sumitomo Chemical would like to ask all of its suppliers to cooperate in fully understanding its Basic Procurement Principles, as well as to comply with this Guidebook.

Looking Ahead

In line with the Basic Principles for Promoting Sustainability, the Sumitomo Chemical Group will continue to strengthen cooperation with business partners and promote sustainability in the spirit of respecting human rights and ensuring compliance.

Requesting Information

We would like to request information on, machinery/equipment, and raw materials for chemical products, as well as packaging materials, offered for purchase.
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