JSR Group positions the “supply chain” as part of its materiality (priority issues) in terms of “Management Foundation.” An important role of JSR Group is to offer innovative materials and excellent products that meet customer needs and contribute to the making of a better society. Towards that purpose, we are working to build a sustainable supply chain and ensure that we can sustain stable procurement from sound suppliers.

JSR Group conducts all purchasing activities in accordance with the JSR Group Purchasing Guidelines. The guidelines clearly state that purchasing will duly consider safety, human rights, legal compliance, resource conservation, environmental protection, biodiversity, and other factors.

Based on the belief that the development of supply chain management will lead to mutual prosperity between our business partners and JSR Group, we have established the JSR Group CSR/Sustainable Procurement Policy and ask our suppliers to comply with 36 items representing six areas.

Furthermore, in FY2021, in order to further share the needs of society and JSR Group's philosophy, we began collecting acknowledgement of receipt from suppliers with regard to the JSR Group's CSR/Sustainable Procurement Policy and Human Rights Policy. We hold briefings for purchasing managers at each of our business sites, including overseas Group companies, and work Groupwide to achieve a 100% collection rate. As of the end of FY2022, the collection rate was 90%. Going forward, we will focus efforts on encouraging responses from overseas Group companies, which have relatively low collection rates.

• JSR Group CSR/Sustainable Procurement Policy

JSR Group supports society by supplying materials to various industries. Our ability to deliver products of discernible quality to our customers reliably is very important for JSR Group.

As part of activities supporting this, we have practiced CSR/sustainable procurement since FY2010. Based on the JSR Group Purchasing Guidelines, we conduct surveys of suppliers’ social and environmental initiatives with a questionnaire. If we find issues that need to be addressed, employees in charge of procurement visit suppliers in person to find the best solution. By FY2013, we were able to survey the suppliers that represent 99% of the value of our materials purchases. We will continue to conduct the same process as we establish new suppliers in the future.

In addition, due to the increasing risks of forced labor, child labor, environmental destruction, and corruption in supply chains due to globalization in recent years, we significantly revamped and expanded the survey items used in surveys in FY2017. We also conducted a second round of surveys using this revised questionnaire.

JSR Group regularly confirms that our business partners conform to our procurement assessment standards. This happens when starting business with a new partner as well as during ongoing business with existing partners. When assessing potential new business partners, we evaluate their financial status and quality control and conduct onsite audits of safety, environmental, and quality concerns before starting trade. We also reassess as needed business partners with whom we have a continuing business relationship following the same criteria as when starting new trade.

Some raw materials are difficult to procure in an emergency due to poor availability or scarcity. For them, we conduct regular audits, making onsite checks of matters having a bearing on supply continuity, and offering suggestions and guidance for quality reliability.

Our stance based on the JSR Group Purchasing Guidelines is to never permit the use of conflict minerals posing a high risk of having negative impacts on human rights in the supply chain (tin, tantalum, tungsten, and gold), either directly or indirectly. We work to continuously verify that we use no conflict minerals.

In FY2015, we conducted an investigation concerning the use of conflict minerals and confirmed that none of the targeted suppliers used them. Since then, we have investigated the use of conflict minerals when adopting new raw materials and when commencing a business relationship with a new supplier and have maintained a system that guarantees we do not use conflict minerals.

On the other hand, in recent years, there has been growing concern about human rights violations associated with cobalt and mica mining in regards to child labor. In light of this, we decided to conduct a survey covering the entire Group to exhaustively investigate whether any problems exist with respect to cobalt and mica (in addition to the conventional conflict minerals) in our operations. This investigation made use of global standard templates provided by the Responsible Minerals Initiative (RMI)―namely, the Conflict Minerals Reporting Template (CMRT) and Extended Minerals Reporting Template (EMRT). In FY2022, we first held briefings for Group companies in Japan and abroad, and then identified any raw materials that potentially use the minerals of interest. Next, we distributed the templates to suppliers of such materials and collected their responses.

With a target of a 100% collection rate, we received templates from 88% of suppliers in FY2022 and confirmed that they do not use these minerals or if they do, they procure them from refiners that have no problems.

We will continue to encourage suppliers who have not cooperated with the survey to understand the purpose of this initiative and provide their response.

JSR Group educates and trains employees in charge of procurement on the subject of CSR/sustainable procurement and conflict minerals initiatives to make sure we are practicing sound supply chain management.

This includes introductory education to personnel newly assigned to purchasing departments to ensure that they fully understand the JSR Group Purchasing Guidelines.For employees in charge of procurement, we also recommend that they acquire the Japan Management Association-accredited Certified Procurement Professional certification (CPP; a qualification certifying expertise in the purchasing and procurement field) to promote their acquiring of more advanced knowledge. We support them in this endeavor by paying the costs of workshops and examination fees.

JSR Group participates in Global Compact Network Japan’s Supply Chain Working Group, where we utilize knowledge obtained through dialogue with stakeholders to strengthen our CSR/sustainable procurement activities. Recently, we have applied this knowledge when formulating the JSR Group CSR/Sustainable Procurement Policy and revising the questions on the questionnaire used to survey business partners.

JSR aims to manage chemicals throughout the supply chain in order to minimize risks posed to people’s health and the environment^*1. From the perspective of procuring raw materials, we established green procurement guidelines in 2000 and has practiced green procurement, which is to say, preferentially purchasing goods with minimal environmental impact. In response to the growing industry trend of managing chemicals in the supply chain, JSR Group joined the Joint Article Management Promotion-consortium (JAMP)^*2 in 2008. We support JAMP MSDSplus and manage chemicals under control. From 2018, we revised our guidelines to comply with chemSHERPA, a new chemical information transfer format established under the leadership of the Ministry of Economy, Trade and Industry. We currently practice green procurement based on the latest list of hazardous substances. We will continue to actively pursue green procurement with an emphasis on information transfer to ensure that there is effective chemical risk management in the supply chain.

• *1 Please refer to “2. Voluntary Initiatives to Systematically Reduce Hazardous Chemicals” for more details about our management of chemicals.
• *2 The Joint Article Management Promotion-consortium (JAMP): JAMP was established as an inter-industry organization in September 2006 to support activities that aim to create and expand specific systems for the proper management of information on chemicals in articles (components, molded goods, and so on) and to facilitate the disclosure and dissemination of information within supply chains. JSR conducts activities that contribute to the practice of these principles through its participation in JAMP.

JSR defines green purchasing as the purchasing of environmentally friendly office equipment and supplies not directly related to its products or manufacturing. Green purchasing is distinguished from the green procurement of raw materials for products, packaging materials, and manufacturing facilities.

In Japan, the Law Concerning the Promotion of Procurement of Eco-Friendly Goods and Services by the State and Other Entities (commonly referred to as the Green Purchasing Law) was enacted in 2000. Japan's basic policy on the law was announced in 2001, when the law came into effect, and has been revised multiple times since then. Based on the most recent version of this policy, JSR strives to preferentially purchase equipment and supplies with energy-saving features and high recycled content. In FY2022, green purchasing represented 151,856,000 yen out of a total of 161,349,000 yen in purchases at all business sites. This is equivalent to a green purchasing rate of 94%.