Toray Group's Socially Responsible Procurement, Purchasing and Distribution

Materiality Focus

As a manufacturer of advanced materials that supplies a wide range of materials and products, the Toray Group must engage in upstream management that reflects the needs of end users, including production facilities and the procurement of raw materials and products. Accordingly, the Group has established its Basic Purchasing Policies to emphasize this approach and ensure fair purchasing practices.

The Group also operates under Basic Distribution Policies that require fair and equitable transactions and take environmental considerations into account. The Group is committed to continually improving the quality of distribution and reducing its environmental impact.

CSR Procurement GuidelinesAdopted December 2004

  1. Establish an internal CSR organization and be committed to CSR
  2. Work to enhance corporate ethics and comply fully with all laws and regulations
  3. Position safety, accident prevention, and environmental preservation as a management priority and practice green procurement and purchasing whenever and wherever possible
  4. Put crisis management systems into place, including capabilities for responding swiftly in unexpected situations, and disclose accurate information
  5. Encourage dialogue and cooperation among all stakeholders
  6. Ensure product safety as a precondition for supplying products
  7. Respect human rights, eliminate discrimination, and improve workplace environments; prohibit forced labor, slave labor, child labor, and unfair low-wage labor
  8. Maintain the confidentiality of information and respect others' intellectual property rights

Basic Purchasing Policies Revised December 2004

  1. Toray does its utmost to select suppliers and determine actual purchases fairly and on the basis of economic rationality, with consideration for price, quality, capability to provide stable supplies, technological capabilities, reliability, and other factors.
  2. In selecting suppliers, Toray opens its doors to a wide range of companies inside and outside Japan. Toray does not rely solely on vendors it has existing or past relationships with, or on members of its corporate group.
  3. In making purchases, Toray complies with relevant laws and regulations while taking environmental preservation and fulfilling corporate social responsibility (CSR) issues into account. Toray actively pursues green procurement and purchasing as part of its environmental efforts.
  4. Toray works to maintain and improve the quality of purchased products through cooperation with its suppliers.
  5. Toray works to uphold its corporate social responsibilities on a company-wide basis.

Basic Distribution PoliciesAdopted December 2004

  1. We shall select our transport and warehousing providers and determine individual agreements impartially and based on factors such as economic rationality with consideration given to price, quality, supply stability, technological capabilities, reliability, and efforts to reduce environmental impact.
  2. We shall be open in selecting our transport and warehousing providers, rather than relying exclusively on companies with which we have done business in the past or companies affiliated with Toray Group.
  3. We shall comply with relevant laws and regulations, consider environmental preservation, and fulfil our corporate social responsibilities in outsourcing our transport and warehousing operations.
  4. We shall cooperate with our transport and warehousing providers in gauging and reducing the environmental impact of our transport and warehousing operations.

Implementing CSR Procurement

Percentage of responses to CSR procurement survey requests from corporate customers

Reporting scope: Toray

Fiscal 2016 target:
100%

Result:
100%

Percentage of major suppliers and business partners practicing CSR procurement

Reporting scope: Toray

Fiscal 2016 target:
N.A.

Result:
90% or higher

Toray operates corporate rules for socially responsible procurement and has a framework in place to rapidly and precisely respond to customer inquiries on Toray's materials and CSR practices. Information on customers and suppliers is centrally managed in a shared database.

Toray conducts regular questionnaire surveys to monitor socially responsible practices at suppliers, as part of a plan-do-check-action (PDCA) cycle to encourage socially responsible practices in supply chains.

 

PDCA Cycle for Supply Chain Management

PDCA Cycle for Supply Chain Management

Surveying Suppliers about CSR

Toray asks its main suppliers and subcontractors to practice CSR procurement, targeting 90% compliance among business partners. Toray conducts a biannual survey on socially responsible practices, targeting major suppliers, manufacturing subcontractors, and sales agents who represent 90% of Toray's procurement by value. In fiscal 2016, Toray asked to survey 526 companies. The survey provides a comprehensive picture of socially responsible practices and includes questions specifically related to Toray Group's CSR Procurement Guidelines. The survey also gauges attitudes on areas of increased concern, such as biodiversity conservation and conflict minerals.

CSR Survey Results Analysis and Feedback

The survey conducted in fiscal 2016 found that 94% of companies surveyed were rated "excellent," "very good" or "good" for CSR practices, thus meeting the Group's standards for business partners. Six percent of the companies surveyed rated only "fair" or "needs improvement," requiring further investigation of their CSR practices.

The percentage of companies rating "excellent," "very good" or "good" was up six percentage points from the previous survey conducted in fiscal 2013. This confirms that business partners are making progress in implementing CSR practices. However, the average rating for implementing CSR in the supply chain was low.

Ten companies rated "fair" or "needs improvement" in the previous survey, necessitating visits to discuss improvements. Consequently, all 10 companies rated "good" or higher in the fiscal 2016 survey, showing measurable progress in implementing CSR practices. The Group provided the survey results and its analysis to business partners as a form of feedback.

 

  • CSR Status of Suppliers CSR Status of Suppliers
  • Analysis of Survey Results Analysis of Survey Results

Socially Responsible Procurement Initiatives throughout the Supply Chain

In fiscal 2010, Toray included conditions regarding social responsibility in its basic supplier agreement for the first time. Then, in fiscal 2016, seeking to keep adding new suppliers, Toray again updated its policy, making it mandatory to include CSR clauses in contracts with distribution companies. These clauses are now included in all new and renewed contracts.

Human Rights and Supply Chains

Toray Group's CSR Procurement Guidelines mandate a commitment to respect human rights in procurement. Toray also works with suppliers to promote human rights in supply chains.

Addressing Conflict Minerals

The U.S. Securities and Exchange Commission (SEC) has issued rules requiring companies to disclose their use of conflict minerals. To comply with the rules, Toray investigates the use of conflict minerals in all products offered by the Toray Group, as part of its supply chain management. If conflict minerals are used, Toray investigates the suppliers to determine the mining operations and geographic source of the minerals.

International Cooperation in the Textiles and Apparel Industry

The Toray Group is a member of the Sustainable Apparel Coalition, together with other apparel manufacturers and retailers from around the globe. The coalition is dedicated to reducing the environmental impact of apparel and footwear products, and improving human rights for workers.

Highlight
Follow-up Visits to Companies, Based on the Results of CSR Survey for Suppliers

Meeting to discuss a supplier's results on the CSR survey Meeting to discuss a supplier's results on the CSR survey

Companies that score "fair" or "needs improvement" necessitate a visit to discuss changes and improvements. The Group also engages stakeholders in dialogue such as interviewing members of the community. For example, companies that operate manufacturing or production facilities in residential areas are encouraged to enhance their community relations by inviting residents to visit their facilities and implementing local cleanup activities.

CSR Procurement at Group Companies in Japan

Percentage of group companies that have implemented the CSR procurement framework


Reporting scope:Toray Group (Japan)

Fiscal 2016 target:
100%

Result:
100%

In fiscal 2014, the Toray Group achieved its target of ensuring that all group companies in Japan have a CSR procurement framework in place. A full 100% of group companies in Japan conducted CSR surveys of suppliers in fiscal 2015. The Group will continue to work to raise awareness of social responsible procurement and enhance these initiatives.

CSR Procurement at Group Companies Outside Japan

Group companies outside of Japan in the fibers & textiles business began surveying their subcontract manufacturers in fiscal 2016, to prioritize socially responsible procurement. Group companies outside Japan in other industries will also begin surveying their subcontractors in the future, aiming to support the practice of socially responsible procurement that reflects local circumstances and conditions.

Highlight
Penfabric Sdn. Berhad Introduces CSR Procurement Guidelines

Penfabric Sdn. Berhad has introduced a Supplier Code of Conduct outlining 27 guidelines that suppliers are expected to adhere to. The guidelines range in topic from prohibiting child labor and slavery to protecting freedom of association and prohibiting anti-competitive practices.