Sustainable Procurement - Management System

Basic ideas and policies

We are currently facing a range of social issues, including environmental problems such as the depletion of resources and energy issues as well as problems related to human rights, corporate ethics and compliance.

Through its business activities and the provision of products and services, the Resonac has been striving to contribute to the solution of these social problems and to the creation of a global sustainable society.

The mission of our procurement organizations is to work with suppliers and all stakeholders to help bring about sustainable societies as we strive together to realize Resonac's goal of becoming a "co-creation chemical company”. To achieve this, it is essential that we build long-term relationships of trust with our suppliers, meaning that we must maintain high ethical standards in our procurement operations, establish a fair and open procurement system, and practice sustainable procurement as a responsible procurement activity.

Based on this recognition, we established the Resonac Group Sustainable Procurement Guidelines, which we share with our business suppliers so that we can contribute to the creation of a sustainable society.

Promotion system

Sustainable procurement at Resonac is supervised and pursued by the Procurement & SCM Department, with the executive in charge of the Procurement DIvision overseeing these operations and the following three items constituting the basic guidelines for the Department’s activities.

• Corporate social responsibility (CSR): Better fulfill our social responsibilities in all our business activities from development/manufacturing to final consumption
• Fair procurement activities: Select optimal suppliers and conduct fair procurement after comprehensively considering not only quality, safety, and economy, but also CSR
• Partnerships: Build equitable collaborative relationships with suppliers based on mutual understanding and trust

To make these activities more robust, we have established a dedicated team within our Procurement Division to conduct internal monitoring of procurement, subcontracting, and legal/regulatory compliance, provide compliance-related education in-house, and conduct CSR surveys and provide feedback to suppliers, thereby playing a leading role in sustainable procurement.

Strategies

We pursue sustainable business activities throughout our supply chain, from raw materials procurement to manufacturing, sale, and logistics, and have made available Sustainable Procurement Guidelines detailing the efforts that we want suppliers to make alongside us. By jointly adhering to these guidelines, both Resonac and its suppliers are taking action to enhance their value as enterprises. Procurement departments will be designing and implementing effective measures with the following objectives in mind

• Ensure penetration of the Sustainable Procurement Guidelines by distributing them to suppliers and obtaining from the suppliers written confirmation that they have received them

We require all suppliers to comply with our Sustainable Procurement Guidelines and, upon being provided with copies of these Guidelines, suppliers are asked to submit written confirmation of their agreement with the Guidelines’ provisions.

• Build a foundation for high-quality communication by improving methodologies for CSR questionnaire surveys and CSR visits, and help strengthen the businesses of both Resonac and its suppliers through open exchanges of opinions with suppliers

We ask new suppliers to fill out a CSR questionnaire when they start doing business with us and major existing suppliers to fill out a CSR questionnaire once every three years in order to raise awareness. We also conduct "CSR visits" to about 40 suppliers each year to communicate with them about their efforts with regard to the environment, human rights, compliance, and other issues.

After the CSR questionnaire surveys and CSR visits have been completed, we send feedback reports to all suppliers who have undergone assessment that offer a clear comparison of individual suppliers’ initiatives with the overall average and the industry average and that provide advice on making improvements. These supplier risk assessments are conducted on a three-year cycle and in principle cover all purchased goods and services.

For further details, please refer to Promotion of Sustainable Procurement

Targets

We are working in 2023 to further disseminate the Sustainable Procurement Guidelines and make the CSR questionnaire survey standard practice.

Training of Procurement personnel

In practicing sustainable procurement, we believe it is important to improve the skills of those in charge of procurement through continuous education and awareness-raising activities and to encourage a sense of professionalism, and we conduct educational activities through various training and study sessions.

The wide range of topics covered include the concept of compliance, laws and regulations such as the Anti-Monopoly Act, the Subcontract Act, the Customs Act, the Foreign Exchange and Foreign Trade Act, and the Civil Code, as well as internal regulations such as procurement procedures and approval authority, with the aim being to improve the knowledge of procurement personnel at business units and plants. In 2022, a total of 2,048 Group employees participated in procurement-related training.