Basic Concept
The Nisshinbo Group's Business Conduct Guidelines, which includes "Thorough-Going Compliance" and "Fair and Transparent Business Practices," stipulates that the Group will always act fairly and with integrity in a wide range of social rules and corporate ethics, and that the Group will respect its suppliers as equal partners through sound business relationships, aiming for sustainable transactions throughout the supply chain.
To address sustainability throughout the Group's supply chain, we established the "Nisshinbo Group Sustainable Procurement Basic Policy" in 2015, under aspects such as legal compliance, fair trade, information security, environment protection, human rights, safety & health, and quality & safety. The basic policy was revised in 2024 after a review in response to recent social demands. At the same time, we established the "Nisshinbo Group Sustainable Procurement Guidelines."
The Nisshinbo Group promotes sustainable procurement initiatives while ensuring that all suppliers understand the Group's basic policies and guideline.
Nisshinbo Group Sustainable Procurement Basic Policy
- ① To strictly observe all legal obligations and social norms
- ② To ensure a safe and comfortable work environment where human rights are respected
- ③ To strive for a secure and healthy living and working environment
- ④ To give due consideration to protection of the environment
- ⑤ To always pursue business in a sound and fair manner
- ⑥ To procure raw materials responsibly
- ⑦ To aim to ensure the quality and safety of all products and service
- ⑧ To properly manage all information
- ⑨ To have a business continuity plan in place
Promotion System
Nisshinbo Holdings Inc. reorganized its organizational structure in April 2025 to establish a Managing Officer system for each functional division with the aim of building and overseeing a structure that would lead to urgent change. The Nisshinbo Group's procurement is governed by a governance system headed by the Senior Manager of the Risk Management Department of Nisshinbo Holdings Inc. In addition, the Company has established a procurement manager meeting to promote sustainable procurement and are working to implement activities.
The president of the Nisshinbo Group, who is the chief executive officer of the Group, conducts management reviews at the annual Board of Management* and receives progress reports from the Managing Officers in charge of the Risk Management Department with regard to the group's initiatives. Based on these reports, the president issues instructions on the matters necessary for management. Special items are reported to the Board of Directors as appropriate.
* The Board of Management: Executive conference consisting of Directors, Executive officers, etc.
Please refer to "Promotion System for Sustainability Activity" for details regarding the organizational structure for promoting sustainability.
Specific Initiatives of the Nisshinbo Group
5th Sustainability Promotion Plan (to be achieved by FY2024)
In the 5th Sustainability Promotion Plan with FY2024 as the target year, the Nisshinbo Group set the following three items as targets and KPIs to promote sustainable procurement as a priority activity and achieve the goals of improving sustainable procurement in collaboration with suppliers, implementation of global response, and expanding internal awareness-raising activities.
- ① Evaluation of improvement efforts based on the results of the sustainable survey to major suppliers (more than 80% of transaction amount), 100%.
- ② Consideration and implementation of deployment methods to the supply chain at overseas business connection and critical overseas locations.
- ③ Implementation rate of training for purchasing staff (annual theme), 100%
In FY2024, we will convene procurement manager meetings in July and December, targeting production plants with domestic and overseas Procurement Division as target sites for the rollout of the supply chain at the overseas bases mentioned in ② above. In addition, we reviewed the sustainable procurement questionnaire mentioned in ① based on the Nisshinbo Group Sustainable Procurement Guidelines for both domestic and overseas sites.
6th Sustainability Promotion Plan (to be achieved by FY2027)
In the 6th Sustainability Promotion Plan, which targets FY2027, the Nisshinbo Group will continue to focus on promotion of sustainable procurement as a priority activity and will set the following two goals to achieve improving sustainable procurement in collaboration with suppliers.
Feedback of questionnaire results based on procurement guidelines to major suppliers (over 80% of transaction value) 100%.
At the procurement manager meeting, it was decided that activities for the 6th term would continue to focus on supplier surveys. Additionally, from FY2025, KOKUSAI DENKI Electric Inc. would join the procurement manager meeting.
Please refer to "Sustainability Promotion Plan and KPIs" for details regarding of the "Sustainability Promotion Plan and KPIs."
Implementation of Sustainable Procurement Survey and Improvement Activities
In order to confirm the status of our sustainable procurement initiatives, Nisshinbo Group companies in Japan have been conducting a questionnaire survey of major suppliers in Japan and providing feedback on the results since 2017. The results of the survey are fed back to suppliers for their use in improvement activities toward sustainable procurement. Through these activities, the Nisshinbo Group Basic Policy for Sustainable Procurement has been disseminated to suppliers.
The scope of the FY2024 survey covers suppliers that account for 80% of the transaction amount of each core company. Many suppliers who participated in multiple surveys and provided feedback in the past saw an increase in their evaluation scores. However, for group companies that conducted the survey with the new questionnaire, direct comparisons were not possible, and because of the increase in the number of questions, scores showed a trend toward equivalence or a slight decline. Going forward, Nisshinbo will continue to share survey results with suppliers and utilize them for improvement, thereby advancing sustainable procurement initiatives.
In FY2025, Nisshinbo plans to implement activities in accordance with the new questionnaire content based on the Nisshinbo Group Sustainable Procurement Guidelines, including overseas offices and suppliers.
Implementation of Training for Purchasing Managers
In FY2024, Nisshinbo conducted internal training on responsible mineral procurement in July for purchasing personnel at Group companies in Japan. There are many minerals that fall under the scope of responsible mineral sourcing, and Nisshinbo considers it necessary to thoroughly examine the methods for conducting investigations within the supply chain. However, Nisshinbo plans to conduct investigations while deepening the understanding of its purchasing staff and taking steps forward.
Declaration to Build Partnerships and Compliance with the Subcontract Act
The Declaration to Build Partnerships mechanism was established in May 2020 at the Council for Promoting Partnership Building for the Future, whose members include relevant cabinet ministers (Cabinet Office, METI, MHLW, MAFF, MLIT, and the Deputy Chief Cabinet Secretary), Keidanren chairman, JCCI president, and the RENGO chairman. This "Declaration to Build Partnerships" is a declaration of efforts for cooperation, coexistence and co-prosperity with business partners in the supply chain and compliance with desirable business practices between parent companies and subcontractors (the Promotion Standards based on the Law for the Promotion of Small and Medium-sized Subcontractors): the prevention of unfair assignment on trade terms and conditions to subcontractors.
At the end of December 2024, Nisshinbo Holdings Inc., Nisshinbo Micro Devices Inc., and Nisshinbo Brake Inc. announced a partnership agreement.
"Declaration to Build Partnerships" portal site
https://www.biz-partnership.jp/index.html
Specific Activities of the Group Companies
Sustainable Procurement and Green Procurement Initiatives
Japan Radio Co., Ltd. aims to fulfill its social responsibilities in the supply chain and achieve sustainable procurement together with its suppliers while promoting understanding and awareness both within and outside the company.
Specifically, the company revised its Green Procurement Guidelines (9th edition) in February 2020 and has been promoting environmental conservation by prioritizing lead-free and RoHS Directive* compliance when purchasing parts, materials, and units used in its products in accordance with the Environmental Considerations and Product Design Guidelines.
The Japan Radio Group Sustainable Procurement Basic Policy has also been formulated on the basis of the Nisshinbo Group Sustainable Procurement Basic Policy and is posted on the company's website.
In addition, four companies in the Japan Radio Group (Japan Radio Co., Ltd., Nagano Japan Radio Co., Ltd., Ueda Japan Radio Co., Ltd., and JRC Tokki Co., Ltd.) conducted a sustainable procurement survey of suppliers that accounted for 80% or more of their transaction volume and evaluated improvements from the previous results.
* RoHS Directive: European Union (EU) legislation restricting the use of certain hazardous substances in electrical and electronic equipment.
Training on the Protection of Subcontractors
JRC System Service Co., Ltd. is engaged in the construction industry and is required to maintain and promote appropriate business relationships with subcontractors in the course of its operations. To comply with the Subcontract Act (Act on Prevention of Delay in Payment of Subcontract Prices) and the Construction Industry Act, as well as to ensure that subcontractors are not disadvantaged, the company conducts annual training sessions on fundamental matters regarding the obligations and prohibitions of principal contractors (prime contractors).
With regard to the Subcontract Act, the company provides lectures primarily on the purpose of the law and the obligations of parent companies, such as prohibitions on late payment and reduction of subcontractor fees, as well as prohibitions on unfair returns and bargain-basement purchases. In addition, the JRC System Service Co., Ltd. explains past recommendations made by the Fair Trade Commission to deepen the understanding of those responsible and to ensure compliance.
With regard to the Construction Industry Act, the company provides training that focuses on understanding the entire process from estimation to contract conclusion and payment with particular emphasis on written contract conclusion and strict adherence to payment deadlines in order to protect subcontractors.
In FY2024, 89 employees from around the country participated in online training. Employees who were unable to participate because of work commitments study subcontractor protection on their own using training materials posted on an internal server that can be accessed by all employees nationwide.
Implementation of Subcontracting Law Education
JRC Tokki Co., Ltd. implemented training for all employees responsible for outsourcing to external parties to avoid damage to the company's image and minimize compliance risks from violations of the Subcontract Act. The training covers the following topics using the latest booklet issued by the Japan Fair Trade Commission : "Scope of application of the Subcontract Act," "Obligations of principal contractors," "Prohibited acts of principal contractors," "Procedures for handling incidents," "Overview of superiority and special provisions," and "Provisions of the Subcontract Act."
The company systematically studied the fundamental concepts of the Subcontract Act and organized important points to keep in mind when conducting business. After the course, the company evaluated the effectiveness of the training through a question-and-answer session.
JRC Tokki Co., Ltd. will continue to provide ongoing training according to a plan and strive to reduce compliance risks.
Efforts to Protect Subcontractors
HYS Engineering Service Inc. is promoting sustainable procurement throughout its supply chain as part of its sustainable procurement initiatives, based on the Nisshinbo Group Sustainable Procurement Basic Policy. Starting in FY2025, the company will administer a Sustainable Procurement Questionnaire for major business partners (approximately 80 companies) to promote the sharing and implementation of the Nisshinbo policy.
As part of its efforts to optimize subcontracting relationships, HYS Engineering Service Inc. is reviewing the prices of purchased goods in light of rising prices for raw materials and labor costs. The company has revised the transaction prices with subcontractors for lead-acid batteries and work unit prices as appropriate.
In addition, based on advice from the Fair Trade Promotion Division of the Ministry of Economy, Trade and Industry, HYS Engineering Service Inc. clearly indicates the work location and other details when making arrangements and issues easy-to-understand order forms to their business partners.
Regarding this initiative, in February 2024, the company held a regular department manager meeting attended by members of its dispatch department, where it conducted training on the proper implementation of the Subcontract Act to ensure that all participants were fully informed.
Realization of Fair and Transparent Transactions Through Implementation of Subcontracting Law Education
At the Nisshinbo Micro Devices Group (domestic production sites), all employees involved in purchasing transactions, including purchasing managers, undergo regular subcontracting law training once a year to ensure understanding and strict compliance with the law, thereby realizing fair and transparent transactions. In July 2024, subcontracting law training was conducted with 822 employees from Nisshinbo Micro Devices Inc., 157 employees from Nisshinbo Micro Devices AT Co., Ltd., and 12 employees from Nisshinbo Micro Devices Fukuoka Co., Ltd. for a total of 991 employees. In education, the employees watched videos on the fundamental concepts of the Subcontract Act provided by the Fair Trade Commission and conducted confirmation exercises.
In addition, Nisshinbo Micro Devices Inc. issued a Partnership Building Declaration in March 2024 with the aim of building new partnerships by promoting cooperation and coexistence with suppliers in the supply chain and businesses that seek to create value.
The company's partnership declaration is posted on the Partnership Declaration portal site.
https://www.biz-partnership.jp/declaration/55983-05-20-tokyo.pdf
Sustainable Procurement Guidelines and Anti-Fraud Initiatives
Nisshinbo Automotive Manufacturing Inc. in the United States is promoting sustainable procurement in accordance with the Nisshinbo Brake Sustainable Procurement Guidelines.
In addition, the company complies with the Federal Trade Commission Act (FTC Act), Section 5 (15 USC 45), which prohibits unfair or deceptive acts or practices in commerce or affecting commerce. In December 2024, fraud prevention training was conducted at the Georgia and Michigan facilities of the company with 286 employees participating.
The company's corporate philosophy forms the foundation of its partnerships in the supply chain for its business activities in North America. In September 2024, the company conducted corporate philosophy training, which was attended by 320 employees. The training not only reaffirmed the company's corporate philosophy but also communicated the values that the company cherishes toward the global environment, society, customers, shareholders, investors, and employees.
Negotiations with Suppliers
Nisshinbo Chemical Inc. places top priority on the stable supply of high-quality products to its customers and is engaged in discussions with its suppliers.
For example, when a supplier requests changes to production sites or raw materials because of changes in their business environment, Nisshinbo Chemical Inc. thoroughly investigates the impact on the quality of its products and gives top priority to meeting delivery deadlines and ensuring stable supply to its customers before proceeding with negotiations. Although there may be instances where an agreement cannot be reached during negotiations, the company will continue to negotiate persistently until a mutually acceptable solution that allows both parties to coexist and prosper can be found.
As part of its efforts to promote responsible supply chains, the company requests their suppliers to investigate and confirm their status regarding the nonuse of conflict minerals, import restrictions, and regulated substances and then issues nonuse certificates as necessary. Some customers may request the submission of a declaration of nonuse, and Nisshinbo Chemical Inc. responds to such requests in good faith.
Nisshinbo Chemical Inc. will continue to build good relationships with suppliers and work to make supply chain management more reliable.