CSR Guidelines & Activity Reports - Facilitating CSR Initiatives Throughout the Supply Chain
Socially Responsible Procurement Initiatives at Toray Group
Toray Group's Socially Responsible Procurement
Number of group companies that have requested their suppliers to practice CSR
- ■Reporting scope
- Toray Group
- ■Target in fiscal 2019
- 40 or more
Result through end of fiscal 2018
(Head Office:1, Japan:55, Outside Japan:94)
(Result in fiscal 2018: Japan: 17, Outside Japan: 6)
Number of business partners that Toray Group companies have requested to practice CSR (cumulative)
- ■Reporting scope
- Toray Group
Result (Cumulative fiscal 2013-2018)
(Result in fiscal 2018: 2,124)
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 the CSR practices of suppliers and educating them, and requesting that they take action on CSR.
In addition, Toray Industries, Inc. has built a plan-do-check-action (PDCA) cycle using its own survey system. By regularly monitoring the status of CSR compliance at suppliers, assessing the overall Group using consistent standards, giving feedback on the results to suppliers, and following up on poor-performing suppliers, the Company endeavors to raise suppliers’ awareness and efficiently and effectively lower CSR risks across the supply chain.
In fiscal 2018, Toray Industries carried out CSR surveys of suppliers at 475 major business partners. Also, given that risks related to socially responsible procurement have heightened outside Japan, as have human rights issues along the supply chain, the Company checked the status of social responsible procurement at group companies outside Japan. In this check, the Company confirmed 1,384 out of 2,569 suppliers from which group companies outside Japan procure and purchase products have been requested to practice CSR (via a survey on CSR, audit, signing of commitment, etc.) by Toray Group companies. The Company also checked this status at group companies in Japan for their 291 business partners.
Socially Responsible Procurement Initiatives at Toray Industries
In principle, Toray Industries carries out a biannual CSR survey of major suppliers, business partners and distribution companies which together are responsible for 90% of the Company’s total procurement value. In addition to questions based on Toray Group’s CSR Procurement Guidelines, the surveys exhaustively confirm the extent to which suppliers are addressing CSR, including their actions on human rights and environmental conservation—areas that have received greater social attention in recent years.
In fiscal 2018, Toray Industries carried out CSR surveys of suppliers at 475 companies and received responses from 449. The results indicated that about 96% of companies surveyed were rated “excellent,” “very good” or “good” for CSR practices, thus meeting the Company's standards for business partners. Four percent of the companies surveyed rated only “fair” or “needs improvement,” requiring further investigation of their CSR practices. Compared to the previous survey year (fiscal 2016), the percentage of companies rated “excellent,” “very good” or “good” increased by two percentage points, demonstrating that suppliers are increasingly addressing CSR. The level of progress was high in the three items of “ethics and compliance,” “human rights,” and “quality,” which are currently risks that must be addressed in the supply chain. This indicated that risk has been mitigated overall. In addition, 79% of the suppliers that had received “fair” or “needs improvement” assessments in the previous survey and had been visited, interviewed and asked to make improvements were rated “good” or better this year, confirming that they are addressing problem areas.
All companies were given feedback on these survey results, together with the analysis. In fiscal 2019, the Company will verify the conditions at suppliers who were rated “fair” or “needs improvement” in the fiscal 2018 survey and discuss the steps they need to take to improve. The Company will continue to facilitate awareness of CSR throughout the supply chain and to promote CSR activities.
In parallel with those efforts, Toray Industries has been adding a CSR clause into basic supplier agreements. The clause stipulates that both the Company and the supplier will pursue CSR initiatives in areas such as legal compliance, environmental conservation, respect for human rights and product safety. When a new contract is signed or when a contract is renewed, this clause is added to the new agreement. In addition, rules for responses to CSR surveys from customers are set and a system is in place to facilitate prompt and accurate responses.
- Percentage of suppliers with the level of efforts required by the Company
(Rated as S, A or B)
Socially Responsible Procurement Initiatives at Toray Group Companies
Assessing socially responsible procurement conditions across Toray Group is a key issue for the Group as it builds a global supply chain. Determining the extent to which suppliers outside Japan are addressing CSR issues is a priority issue for the Group.
In fiscal 2017, Toray Group companies carried out surveys of 88 processing suppliers outside Japan that had not previously been requested to practice CSR. The survey questions are based on the Group’s CSR Procurement Guidelines, thereby confirming the status of CSR practice. Suppliers who received ratings of “fair” or “needs improvement” were visited and interviewed to assess conditions and request improvements.
In fiscal 2018, Toray Group companies carried out a similar survey of suppliers other than the processing suppliers from which group companies outside Japan purchase and procure products. Prior to this, Toray Industries checked how many of those suppliers (accounting for 90% of the total procurement value of the 77 directly managed companies outside Japan and their subsidiaries) had been requested to practice CSR by Toray Group companies. The results showed that of the 2,569 major suppliers, 886 had not been yet requested to introduce CSR measures by Toray Group companies. Following this, the Group companies carried out a CSR survey of those 886 suppliers. Currently, responses from the suppliers are being collected and compiled. Once the results are in, Toray Industries and the Group companies will confirm and analyze the response of each supplier and provide feedback on the results. Suppliers who need an on-site assessment (suppliers who received ratings of “fair” or “needs improvement”) will be visited and interviewed to assess conditions and request improvements.
To date, Toray Group companies in Japan have set up internal systems and rules and carried out CSR surveys on an ongoing basis, but to reduce risks for the Group overall, Toray Industries will now identify conditions at group companies and regularly monitor companies as well as provide feedback on ratings to suppliers in order to reduce CSR risk across the supply chain.
Human Rights in the Supply Chain
Toray Group believes that respect for human rights is a crucial element in ensuring that the supply chain is stable and sustainable. Toray Group’s CSR Procurement Guidelines state that the Company is dedicated to respecting human rights, eliminating discrimination, and improving workplace environments, as well as prohibiting forced labor, slave labor, child labor, and unfair low-wage labor. The Group requests all suppliers to comply with these guidelines.
In the CSR survey of suppliers that Toray Industries carries out regularly, the Company identifies and assesses the extent to which suppliers are addressing issues related to human rights and labor practices.
The survey carried out in fiscal 2018 confirmed that the implementation rate was high for nine of the ten survey questions, other than the question asking whether the Company’s suppliers request their suppliers to address human rights issues.
In addition to continuing to provide suppliers with feedback on results, the Company will encourage the promotion of respect for human rights and higher awareness across the supply chain by distributing guidebooks and visiting and interviewing companies that have not yet addressed human right issues.
Addressing Conflict Minerals
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.
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.
International Cooperation in the Textiles and Apparel Industry
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.
- Participating in the Sustainable Apparel Coalition