Toray Group Supply Chain

Toray Group’s supply chain extends to diverse countries and regions around the world. In fiscal 2021, the Group’s purchasing by region was 43% in Japan, 41% in the rest of Asia, 11% in the Americas, and 5% in Europe. Purchasing by business segment was 31% for Fibers & Textiles, 26% for Plastics & Chemicals, 16% for Films, 11% for Carbon Fibers Composite Materials, and 16% for others.

Fiscal 2021 Purchasing Breakdowns by Region and Business Segment (Based on Transaction Value)

Socially Responsible Procurement Initiatives at Toray Group

With its global supply chain, Toray Group places top priority on ascertaining suppliers' CSR activities and requesting them to implement the necessary initiatives. Toray Group is facilitating CSR initiatives across its supply chains, including at group companies around the world. These efforts include developing a socially responsible procurement system, responding to customers’ requests for CSR practices, ascertaining and providing education on supplier CSR initiatives, carrying out CSR surveys of suppliers, requesting CSR initiatives through signed agreements and commitments, and requesting compliance with the Toray Group CSR Procurement Guidelines.
In fiscal 2021, the number of group companies requesting their suppliers to practice CSR was 139 (87%) out of the 159 applicable companies (group companies whose production activities include purchasing and/or outsourcing production). Group companies that have not yet completed such requests will do so.
In addition, Toray Group uses its own questionnaire survey system to conduct CSR surveys of suppliers. The Group has established a plan-do-check-action (PDCA) cycle by regularly monitoring suppliers’ CSR initiatives, assessing suppliers based on uniform group standards, providing feedback on the results to suppliers, and following up on poor-performing suppliers. In this way, the Group endeavors to raise suppliers’ awareness and efficiently and effectively lower CSR risks across the supply chain.
Through these initiatives, in fiscal 2021, of major suppliers that Toray Group identified as in need of confirmation of their CSR practices, 87% were confirmed to be meeting Toray Group’s standards in their work on CSR.

Every two years, in principle, Toray Industries carries out a CSR survey of major suppliers, business partners and distribution companies which together are responsible for 90% of the Company’s total procurement value. Questions are established based on the Toray Group CSR Procurement Policies and the Toray Group CSR Procurement Guidelines. The surveys exhaustively confirm the extent to which suppliers are addressing CSR, requesting actions on a variety of social issues such as respect for human rights, reduction of greenhouse gas emissions, consideration for water resources and biodiversity, and implementation of environmental assessments.
In fiscal 2020, Toray Industries carried out CSR surveys of 483 major suppliers. The results indicated that about 99% of companies surveyed were rated S, A or B¹ for CSR practices, thus meeting the Company’s standards for business partners. The companies surveyed rated C or D, requiring further investigation of their CSR practices, accounted for just 1%.
The assessment results have been fed back to each company along with the contents of the analysis. In fiscal 2021, the Company individually visited all seven suppliers that were rated C or D to confirm actual conditions and discuss measures for improvement. In fiscal 2022, the Company will again survey its major suppliers, including those that received C or D evaluations in the previous survey, to confirm the progress situation at each business partner. Toray Industries is aiming to facilitate awareness of CSR throughout the supply chain and to promote CSR initiatives.
In parallel with those efforts, Toray Industries is asking its suppliers to understand and comply with the Toray Group CSR Procurement Guidelines, as part of efforts to further enhance CSR activities throughout the entire supply chain. These guidelines outline specific and detailed requirements for areas such as ethics, compliance, safety, accident prevention, risk management, environmental preservation, product quality and safety, and human rights promotion.
In addition, rules for responses to CSR surveys from customers are set and a system is in place to facilitate prompt and accurate responses.

1. 1 Survey responses are assessed on a 10-point scale for each of the nine survey items. Taking the average score for the nine items as the overall score, 8 or more points is rated as S, 6 or more points but less than 8 is rated as A, 5 or more points but less than 6 is rated as B, 3 or more points but less than 5 is rated as C, and less than 3 points is rated as D.

Toray Group Companies in and outside Japan have also established their own internal systems and rules, and are conducting CSR procurement surveys of their suppliers. They also ask suppliers to comply with the Toray Group CSR Procurement Guidelines, while conducting audits and other measures to continually ascertain the status of supplier CSR initiatives and to request improvements.
Group companies outside Japan ask their suppliers to implement CSR initiatives. For suppliers that have not received such requests, Toray Industries conducts CSR procurement surveys and other measures to support CSR procurement at overseas group companies.
In fiscal 2021, Toray Industries conducted a questionnaire survey of 111 suppliers of overseas group companies. Group companies in Japan also pursue CSR procurement with their suppliers. In fiscal 2021, a CSR procurement survey was sent to 1,042 suppliers of domestic group companies.
In addition to checking the CSR promotion situation at each supplier using the questionnaire, the relevant evaluation results were shared with each supplier as feedback. The suppliers requiring further investigation of their CSR practices were subject to such investigation, and Toray Group companies in Japan requested that suppliers requiring further investigation of their CSR practices make improvements.
Moreover, the questionnaire survey system used by Toray Industries is being expanded to group companies worldwide. By standardizing evaluation criteria and sharing the CSR promotion situations at suppliers, CSR risks across the Group's entire supply chain are being reduced efficiently and effectively.

Toray Group believes that respect for human rights and environmental preservation are especially crucial elements in ensuring that the supply chain is stable and sustainable. The Toray Group CSR Procurement Policies state that Toray will work to build a supply chain that promotes human rights and preserves the environment. Toray requests that suppliers comply with the Toray Group CSR Procurement Guidelines by taking measures to protect the environment and by respecting human rights, while prohibiting forced labor, slave labor, child labor, and unfair low-wage labor.
With the CSR procurement questionnaire, the Company strives to understand and evaluate suppliers' initiatives related to human rights, labor practices, and environmental preservation. It also ascertains and prevents issues from arising in the supply chain.

Results of Fiscal 2020 CSR Survey of Suppliers Regarding Respect for Human Rights

The survey conducted by Toray Industries in fiscal 2020 confirmed a high rate of implementation of initiatives on 10 survey items, excluding those related to requests to secondary suppliers, out of 11 items related to human rights and labor. In fiscal 2021, the Company conducted individual status checks and requested responses from those suppliers who answered “Will address in one year” ([1] in the table below) and “Not addressed” ([0] in the table below).
In addition, in an effort to ascertain and prevent potential human rights issues within the supply chain, the fiscal 2020 survey included new questions to determine whether suppliers have been giving due consideration to and have been taking appropriate measures to address various human rights issues such as employment and labor issues that could have arisen due to the COVID-19 pandemic. In fiscal 2021, the Company checked the status of suppliers who indicated that they had not yet done so and asked them to take measures.

Results of Fiscal 2020 CSR Survey of Suppliers Regarding Environmental Preservation

Toray Group considers the reduction of greenhouse gas emissions and biodiversity conservation to be important issues for preserving the global environment and checks progress at suppliers through a CSR procurement survey. The survey conducted by Toray Industries in fiscal 2020 confirmed a high rate of implementation of initiatives on 11 survey items, excluding those related to requests to secondary suppliers, out of 12 items related to environmental preservation. In fiscal 2021, the Company analyzed and evaluated the environmental initiatives of each respondent based on the questionnaire results, and provided feedback to each one. Toray requested that suppliers who had not taken sufficient measures take the appropriate steps. The Company will continue to promote environmental preservation efforts throughout its supply chain and procure environmentally friendly raw materials.

As part of efforts to promote human rights protections and environmental conservation in the supply chain, the Company enables individuals to report relevant issues at any time via the Toray website. Out of a total of 276 inquiries and consultations received in fiscal 2021 via the CSR inquiry form on the Toray website, none were related to human rights in the supply chain.

Toray Group outsources security services to companies specialized in that field, depending on the situation in the area where a business site is located.
In addition to training on the guard services required, the Group also provides training on human rights as necessary when contracting services.

In recent years, the public has become more concerned about responsible procurement of minerals. In particular, the four minerals of gold, tin, tantalum and tungsten often mined in the Democratic Republic of Congo and surrounding countries have sometimes been a source of funding for armed groups. For this reason, under Section 1502 of the Dodd Frank Act in the United States, publicly traded companies have obligations for reporting and disclosing use of these minerals.
To comply with the rules, Toray Industries investigates whether conflict minerals are used in any of the raw materials and production equipment used for its products. If conflict minerals are used, the Company investigates the suppliers to determine the locations of smelters and mines.
In fiscal 2021, the Company also investigated products made using any of four raw materials: tin, tantalum, tungsten, and gold. It confirmed that none of the raw materials used were from conflict areas. Toray Industries has also set up an internal system for surveys and responses so that it can respond promptly and appropriately to requests from customers in regard to surveys on conflict minerals.