Management System Supplier Evaluation and Guidance for Improvement Participating in Initiatives

Supplier Evaluation and Guidance for Improvement

When commencing transactions with new suppliers, as well as periodically with our current suppliers depending on transaction details, the Mitsui Chemicals Group verifies their efforts towards realizing a sustainable society. This involves confirming a wide range of specific items that include environmental protection, occupational safety, quality assurance, corporate governance, fair transactions, human rights, and information security. In addition, we evaluate supplier companies based on the results of these surveys and offer guidance on making improvements, as needed. When such surveys and audits identify any significant discrepancies, a penalty, such as suspension of transactions, is imposed according to the penalty criteria. Please note that the contract terms for raw materials and equipment have been revised with the amendment of the Civil Code of Japan in April 2020.

Transaction Procedures

Transaction Procedures
Transaction Procedures

Sustainable Procurement Survey

The Group has adopted the CSR/Sustainable Procurement Self-assessment Questionnaire (SAQ) * drafted by the UN Global Compact Network Japan supply chain subcommittee meeting as the Sustainable Procurement SAQ format used to request responses from suppliers. This SAQ was drafted to conform with the UN Global Compact’s 10 principles and international regulations such as ISO 26000 and GRI. Although the Group already requests that our suppliers meet the requirements of the Sustainable Procurement Guidelines , it is the SAQ that specifically defines the details of these requirements.
Mitsui Chemicals requires that suppliers complete the SAQ, and provides feedback and improvement assistance to suppliers based on the response results. In addition, the SAQ completion rate (Group-wide transaction value basis) has been included as one of the KPI within the 2025 Long-term Business Plan as the sustainable procurement ratio.

*Partial excerpt from the CSR/ Sustainable Procurement SAQ tool set of the helpful series aimed at realizing global sustainable development published by Global Compact Network Japan.

An SAQ survey of Purchasing Division suppliers* was conducted from fiscal 2017 to fiscal 2019. Responses were received from 307 companies that account for roughly 90% of our transaction value.
In fiscal 2018, we created a guidebook for the sustainable procurement SAQ. This guidebook is submitted to suppliers whose SAQ score was less than 70% in order to help them deepen their understanding of the aims of the questionnaire. In our guidance visits to suppliers whose score was less than 40%, we used this guidebook to take account of the differing situations of each company in their SAQ responses. As a result, their understanding on reflecting the efforts made into the SAQ response and the scores of all the companies that received guidance visits have improved to 40% or more. We requested these suppliers to continue their efforts for further improvement.

*Purchasing Division suppliers:
510 suppliers of raw materials; 3,028 suppliers of equipment and indirect materials (as of May 2020)

In fiscal 2019, an SAQ survey covering suppliers to our business divisions and domestic affiliates (subsidiaries) was started following briefings on sustainable procurement conducted for our business divisions and affiliates. This survey is a preliminary study for a survey that was originally planned for 2021 aimed at accelerating sustainable procurement and equalizing workloads.

Sustainable procurement SAQ results (Fiscal 2017–19)

SAQ score levels No. of Companies Actions for improvement
Level 3
(Score 70% or higher)
223 Feed back comments along with information about average score of all companies, industry average, and chart of company scores.
Level 2
(Score 40% or higher to less than 70%)
70 Submit a guidebook for the SAQ and request corrections by the next survey (2021).
Level 1
(Less than 40%)
14 Visit company premises and exchange opinions towards improvement, as well as explain the intention of SAQ using a guidebook for the SAQ. Also, request resubmission of questionnaire answers.
Total no. of responses 307 (Response rate: 90%)

Sustainable procurement ratio

  Fiscal 2017 Fiscal 2018 Fiscal 2019 Fiscal 2025
(Goals)
Purchasing Division transaction value basis 73% 84% 84%
Mitsui Chemicals, Inc. transaction value basis 39% 44% 44%
Mitsui Chemicals Group transaction value basis 70%

Sending Reminders to Our Suppliers

In fiscal 2016, Mitsui Chemicals sent reminder letters to around 2,600 Purchasing Division suppliers containing the following items. Then, in fiscal 2018, we held briefings in companies affiliated to our works on these items, as well as distributing reminder letters. We also submitted letters rejecting any gifts to all suppliers of the Purchasing Division.

  • Examples of previous discrepancies
  • Request items for each supplier
    Compliance with laws and social norms from a sustainable standpoint
    Avoid engaging in direct price negotiations with requesting divisions regarding transactions overseen by the Purchasing Division
    Formulate BCPs (business continuity plans)
  • The Mitsui Chemicals Group Purchasing Policy details and Risk Hotline reminder

Policy on Conflict Minerals

We are fully aware of the essential need to address so-called conflict minerals here at the Mitsui Chemicals Group. In fiscal 2015, the Purchasing Division conducted an investigation covering all raw materials except fuels and packaging materials transactions taken in fiscal 2014. As a result, we have confirmed that we do not purchase or use any conflict minerals associated with inhumane acts committed by armed groups on the ground in the Democratic Republic of Congo or any of its neighboring countries. That includes gold (Au), tantalum (Ta), tungsten (W) and tin (Sn). If it comes to light that we have used any conflict minerals in the future, we will immediately halt procurement of the relevant minerals.
In addition, the Purchasing Division and RC & Quality Assurance Division are working together every year to conduct conflict mineral surveys of our suppliers by identifying tin catalysts, etc., within those Group product compositions that are registered in the chemical product safety information system. The surveys confirmed that there are no issues with the minerals we use.
The sustainable procurement SAQ includes a category for confirming conflict mineral-related activities.

Internal Training

In fiscal 2016, Mitsui Chemicals conducted sustainable procurement training targeting all of its Purchasing Division employees. Since this time, this training has been included as one of the required elements of procurement training for all newly appointed members. In fiscal 2018, we provided a training program on the items covered in the sustainable procurement SAQ to all Purchasing Division employees to ensure their understanding of the aims of the SAQ. In fiscal 2019, we explained the sustainable procurement SAQ to purchasing personnel in our business divisions and domestic affiliates (subsidiaries). ‘Quality audits’ was added to the study items in the Purchasing Division’s e-learning program for fiscal 2020 aimed at building a system capable of auditing suppliers with greater accuracy and from a more advanced perspective.
We have also made it mandatory for purchasing staff members working outside the Purchasing Division to take an e-learning course on procurement rules, and conduct regular group training every year. In fiscal 2020, we revised the content of the e-learning course on procurement rules.

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