Corporate Social Responsibility for Suppliers

Transcription

1 Corporate Social Responsibility for Suppliers July, 2016 Procurement & Logistics Group TDK Corporation

2 Agenda 1. What is CSR? 2. What is minimizing the negative impact on society? - Examples of negative impact on society 3. What is making a positive contribution to society? - Communication with stakeholders - Practice of CSR in the supply chain - What is CSR? Summary 4. What is CSR procurement? - The request that is demanded by CSR procurement 5. Non-conformance examples in CSR On-site Audit 6. Request to suppliers. 7. CSR purchasing policy of the TDK group Copyright 2016 TDK Corporation. All rights reserved. -1-

3 What is CSR? What is CSR? CSR is the abbreviation of Corporate Social Responsibility. Simply speaking, CSR consists of the following two aspects: 1 Minimizing the negative impact on society Not recognized from society. It is a matter of course. 2 Making a positive contribution to society Recognized from society. It enhances competitiveness. Copyright 2016 TDK Corporation. All rights reserved. -2-

4 What is minimizing the negative impact on society? 1 Minimizing the negative impact on society In its daily activities, even if not intentionally, a company may exert a bad impact on society. It is important to take preventive steps so as not to cause such negative impact. For example... Examples of negative impact on society Let s take a look at some specific cases in the following pages. Copyright 2016 TDK Corporation. All rights reserved. -3-

5 Examples of negative impact on society 1 Violation of human rights of workers There is a possibility that workers who support production around the world are being forced to work under harsh conditions. Forced labor in Malaysia s electronics industry Children engaged in mobile phone assembly Child labor at a Chinese supplier of household electric appliance maker A A worker protection group revealed that five children aged years, which is under the legal working age, were working at a plant of a Chinese supplier manufacturing cell phone parts for company A. The children were engaged in the assembly of smartphone parts and allegedly often worked for 11 hours at night. After conducting an investigation that raised suspicions of illegal child labor, company A announced a temporary suspension of business with that plant. In Malaysia, where there are many foreign workers from Nepal, Myanmar, and Indonesia, the problem of forced labor (also known as modern slavery) has been highlighted internationally. A survey of the situation in the electronics industry, conducted by an international NGO, revealed that 28% of workers were in a state of forced labor. These workers had to pay illegal fees to employment agencies. They were forced to work without freedom of choice in order to repay these debts, and in many cases their passports were taken away from them. The Electronics Industry Citizenship Coalition (EICC), to which leading makers are affiliated, is making efforts to tackle this problem in the electronics industry s supply chain. China Labor Watch, Another Supplier Exploiting Child Labor, July 10, 2014 Verité, Forced Labor in the Production of Electronic Goods in Malaysia, September 2014 Copyright 2016 TDK Corporation. All rights reserved. -4-

6 Examples of negative impact on society 2 Health and safety Substandard working environment in manufacturing contractor of apparel maker B An NGO in Hong Kong conducted an undercover investigation of two Chinese suppliers engaged in manufacturing for company B. According to the report of the investigation, workers at the two companies engaged in severe overwork. While the legal standard for overtime is 36 hours per month, at these plants the figures were over 134 hours and 112 hours, respectively. Moreover, the work environment was substandard too. Although the temperature rises to around 38 degrees Celsius in the summer, there was no air conditioner. One workers who was interviewed said that some people fainted because of the summer heat. Furthermore, the report mentioned, among other things, the use of harmful chemical substances, the lack of measures to prevent accidents, etc., and the adoption of heavy penalties in order to maintain product quality. Company B immediately conducted its own investigation, which confirmed the facts regarding several problems. Company B strongly requested the two companies to make prompt corrections and announced the implementation of an improvement program. Dusty workplace Students and Scholars Against Corporate Misbehavior (SACOM), Report on an Investigation of the Working Environment at Subcontracting Plants in China, January 2015 A worker is stripped to the waist because of the heat. Copyright 2016 TDK Corporation. All rights reserved. -5-

7 Examples of negative impact on society 3 Impact on environment and health Once an accident occurs, if management is mistaken, it can exert an enormous impact on local residents and the environment. Chinese textile industry: environmental pollution in the supply chain An international environmental protection organization pointed out that harmful chemical substances had been detected in wastewater discharged from a Chinese textile processing plant that did business with garment makers. The group criticized the ordering makers, saying that they should stipulate a comprehensive policy regarding chemical substances and strengthen supply chain management. It also instigated a series of boycott campaigns around the world. In response, six makers who were the targets of criticism announced that they would jointly study a roadmap for reducing the discharge of harmful chemical substance in the supply chain to zero by Greenpeace, Dirty Laundry, July 3, 2011 Chemical plant in Dalian closes after large-scale demonstrations by residents More than 10,000 local residents held large-scale demonstrations calling for the transfer of a chemical plant producing paraxylene, a chemical industry material, out of concern for environmental pollution and the possible health damage that could occur as a consequence. The authorities decided on the plant s immediate suspension of production and transfer. China Entrepreneur Club, August 2011 Copyright 2016 TDK Corporation. All rights reserved. -6-

8 Examples of negative impact on society 4 Conflicts and human rights violations Region Thought to Be Hotbed of Conflict Minerals Conflict Minerals Do you know the term conflict minerals? Among mineral resources extracted in conflict regions, conflict minerals are a general term for minerals that are a source of funds for armed groups engaging in inhumane behavior. There is a possibility that a company s supply chain provides funds to armed groups, which in turn encourages conflicts and human rights violations. Therefore, companies are required to ascertain where and how their resources are being extracted and to engage in responsible procurement activities. Minerals Weapons Money Controls In the United States, with the aim of cutting off the financial sources of armed groups, companies that use conflict minerals, such as tin, gold, tantalum, and tungsten, obtained from the Democratic Republic of the Congo or neighboring countries in their products or production processes are obligated to investigate every year whether such procurement leads to funding for armed groups and to disclose and report the information. Copyright 2016 TDK Corporation. All rights reserved. -7-

9 What is making a positive contribution to society? 2 Making a positive contribution to society On the other hand, companies can contribute to the sustained development of society through their business. Much hope is being placed in corporate technologies, organizational strength, human resource capabilities, etc. to help solve the problems facing society. Examples of positive contribution to society Copyright 2016 TDK Corporation. All rights reserved. -8-

10 Communication with stakeholders In promoting CSR, stakeholders are an important perspective. It is essential to listen to the opinions of stakeholders, understand their expectations and requests, and then engage in responsible corporate activities. Stakeholders are all of the people involved in and influenced by corporate activities. Shareholders (investors) Apt information disclosure Accountability Apt corporate management Increased dividends Company Government Compliance with laws and ordinances Customers Product liability Quality improvement Stable supply of products/services Private information protection Employees 圧力 Respect for human rights Fair hiring Work-life balance Stable jobs Respect for diversity Apt work Training opportunities environment Suppliers Fair and reasonable business Local residents Apt information disclosure Disaster prevention Prevention of pollution Exchange Contributions Copyright 2016 TDK Corporation. All rights reserved. -9-

11 Practice of CSR in the supply chain 1 Furthermore, CSR efforts are necessary not only within single companies but throughout the entire supply chain. Supply chain Are environmental measures being taken in mines? Mining of resources Are the human rights of workers being protected? Material processing Manufacturing Are environmental measures being taken in the production process? Are the rights of mine district residents being protected? Are any harmful substances being used? Is recycling taking place? Are products safe? Are transportation methods with little CO 2 emission being used? Distribution Is the work environment appropriate? Recycling/ disposal Use Sales What is the energy-saving performance during use? Copyright 2016 TDK Corporation. All rights reserved. -10-

12 Practice of CSR in the supply chain 2 CSR plant auditing in the electronics industry When companies engage in business, auditing is conducted to check CSR conditions at suppliers. Internationally, the Electronic Industry Citizenship Coalition (EICC) has compiled a code of conduct that related companies and their suppliers should obey. Most companies in the industry follow this code of conduct when carrying out CSR plant auditing. The EICC is an alliance of companies in the electronics industry that has compiled a code of conduct in order to fulfill CSR in the industry s supply chains. The code of conduct examines, for example, whether the supply chain work environment is safe, whether workers are being treated with respect and dignity, and whether consideration for the environment is being practiced in the manufacturing process. More than 100 companies are members, including Microsoft, Sony, Lenovo, and Apple. Example of the EICC code of conduct Copyright 2016 TDK Corporation. All rights reserved. -11-

13 What is CSR? Summary The environmental and social issues facing the world are becoming increasingly serious, and the influence of companies is expanding. In these circumstances, companies are being asked both to minimize their negative impact on society and to increase their positive contribution to society (problem solving). CSR is the positive response of companies to these expectations. Expanding influence of companies Environmental and social issues faced by the world Stakeholders increasingly request companies to... minimize their negative impact on society and make a positive contribution to society (problem solving) CSR Corporate Social Responsibility Copyright 2016 TDK Corporation. All rights reserved. -12-

14 What is CSR procurement? Company sets an index and a standard about CSR for a supplier and requests for the compliance and cooperation. CSR activity was not a problem only for the company and group companies, and the social request came to need the correspondence in the supply chain (supplier, subcontractors, temporary employment agency, etc.). CSR procurement means this, and the green procurement requests are included in a part of the CSR procurement, too. In the electronics industry, there are the present conditions carrying out this activity ahead of the world. In addition, as a social request, the purchasing at the CSR point of view (a social factor and environmental factor) is regarded as important more in addition to QCDE (Quality, Cost, Delivery, Environmental product, etc.) of the past purchasing standard. CSR procurement is the very important requirements to a customer in business. Importance of the CSR procurement in the global supply-chain is performed a close-up of more and more for a supplier. Approach to an environmental problem and human rights problem are particularly important. By this situation, led by an American global electronics company, Electronic Industry Citizenship Coalition(EICC) started in The corporate members of EICC increased year by year and were comprised of a Set-maker and EMS of 89 companies (at March, 2014) of Europe / America / Asia / Japan. And EICC Code of Conduct established here is becoming the global standards in the CSR procurement of this industry virtually. Copyright 2016 TDK Corporation. All rights reserved. -13-

15 The request that is demanded by CSR procurement Main item to confirm to a supplier in CSR Audit Classification No. Confirmation item 1 Prohibit forced labor 2 Prohibit inhuman treatments and infringements of human rights 3 Prohibit child labor Human Rights 4 Prohibit discrimination 5 Pay appropriate wages 6 Working hours and holiday 1 Ethic policy and Code of conduct Ethics 2 Help line (Internal reporting system) 3 Conflict minerals 1 Safety measures of equipment 2 Safety of workplace 3 Health of workplace Occupational 4 Workers' accident Health and Safety 5 Emergency correspondence 6 Be careful about physically demanding work 7 Safety and hygiene of institutions 8 Employee's health care administration 1 Industrial wastewater Environment 2 Atmospheric pollution 3 waste 4 Hazardous substance 1 Management systems in labor, ethics, safety and hygiene, and environment Management 2 PDCA cycle System 3 Education and Training Main international standard SA8000 OHSAS18000 ISO14001 IEC QC Other than the above, Information security (ISO/IEC27001:ISMS) and Quality (ISO9001/TS16949) may be included. Copyright 2016 TDK Corporation. All rights reserved. -14-

16 Non-conformance examples in CSR On-site Audit Child labor and young worker There is not a policy of Prohibited child labor, or Protection procedure after the discovery is not determined. Age verification procedure too weak heavily reliant on applicants honesty. The dangerous work that a young worker should avoid is not defined by the rule of the company. Young workers work at deep night shift and excessive overtime. Forced labor Company does not do an employment agreement with a worker. The details of working conditions are not conveyed beforehand, too. When an employee hopes for resignation, it is a rule to limit freedom of the resignation. When the employment of the foreign worker, company will request to submit the original ID card or a passport. Workers are not allowed to go back to dorm rooms during lunch break. Working hours Cleaning and exercises or a morning gathering before the opening hour are not included in working hours. The report of real working hours is a self-administration, and the restraint of the overtime depends on the unpaid overtime. The management of monthly working hours is only an overtime hour, and cannot inspect the EICC standard. (EICC standard : 60 hours labor / week). At least one day off not provided following six consecutive days of working. Copyright 2016 TDK Corporation. All rights reserved. -15-

17 Non-conformance examples in CSR On-site Audit Wage and Payment Workers charged for uniform and ID badge. Deductions from wages made for disciplinary purposes. Discrimination Date of birth, race, political affiliation and marital status required in the job application form. Pre-job pregnancy test or hepatitis-b or HIV test conducted. Safety of the workplace Approvals/licenses expired for safety equipment and/or operators. A protection tool (earplugs, gloves, mask, safety boots, protection glasses) is used by mistake. Emergency correspondence Insufficient number, unclear presence and/or distant access of first aid kits, eye washers, emergency exit signage, fire extinguishers/hydrants. The fire drill at the time of the night shift is not done. / For a fire drill non-participant without a follow-up. Ergonomics No systematic identification, evaluation or control of physically demanding work. Health and Safety The container of the subdivided chemical substance does not have label. And contents are unclear. The work place does not have SDS. It is written by other languages that a worker cannot understand. Copyright 2016 TDK Corporation. All rights reserved. -16-

18 Request to suppliers CSR activities are very important requirements in business continuation. CSR activities should enforce not only a company but also all supply chains. Example: The requirements of the supply chain management will accelerate by the trend of the international standard in future. CSR request the activity of across the company, and the activity in each factory are indispensable. Approach for labor, human rights, ethics, health and safely, environmental and those management systems are important points. When nonconformance was found, Company have to remove these problem at immediately. Like other management systems, risk management and preventive action are important in CSR. It is necessary to clarify a procedure or a standard before nonconformance is find or occur. When suppliers continue TDK group and business, please accept CSR procurement request. If it is not accepted, Including the possibility of "new business restrictions" or "a business stop". The TDK group demands an approach for the CSR activity by a supplier in our purchasing policy. Understand the purchasing activity of the TDK group, and please cooperate as a good partner. Copyright 2016 TDK Corporation. All rights reserved. -17-

19 Purchasing Policies The TDK group demands an approach for the CSR activity by a supplier in our purchasing policy. Compliance All applicable laws and regulations are followed in purchasing activities. Moreover, TDK strives not only to follow the letter of the law, but its spirit as well. Respect for Human Dignity TDK respects the human dignity of workers who are active in all stages of the supply chain. CSR The procurement divisions of the TDK Group implement CSR activities on a continuous basis, while performing evaluations of suppliers at regular intervals using the CSR Check Sheet, to promote understanding of our CSR concept and raise recognition of our initiatives. Green Procurement As one aspect of its company wide environmental protection activities and in the pursuit of harmony with the global environment, TDK engages in green procurement, i.e., the purchase of environment-conscious products. Fair and Open Business TDK conducts fair business regardless of company size or nationality. TDK bases its purchasing decisions on comprehensive evaluations of quality, price, delivery time, ability to provide a stable supply, and other factors. TDK does not accept gifts of any kind from business partners, including summer and winter gifts and complimentary presents. TDK does not accept dining or other forms of entertainment from business partners. Partnership TDK seeks to build mutually beneficial relationships with suppliers based on shared goals. VA * Activities TDK values suppliers that can lower costs and provide new materials and technologies through VA activities. IT Utilization Information exchanges with suppliers using IT and networks are essential for accelerating the pace of business and reinforcing ties. Quality, Delivery Time and Stable Supply TDK always considers quality, delivery time and stable supply by establishing solid partnerships with its suppliers. *VA:Abbreviation of "Value Analysis," often used in a similar meaning as "Value Engineering" (VE). Describes a new methodical approach to reducing costs, formulated in the U.S. in Product value is analyzed from various angles in order to obtain the desired functionality while minimizing the cost of materials and resources. Copyright 2016 TDK Corporation. All rights reserved. -18-

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