Ethical Procurement Case from Fuji Xerox: Toward a sustainable supply chain

Ethical Procurement Case from Fuji Xerox: Toward a sustainable supply chain 25 June 2012 Katherine Lau General Manager, Corporate Quality & Sustainability Fuji Xerox (Hong Kong) Limited 2012 Fuji Xerox Co., Ltd. All rights reserved. Company Background Fuji Xerox Co Ltd a Joint Venture between FUJIFILM and XEROX Established in 1962 (HK: 1964) Headquarter at Tokyo, Japan with 13 overseas operating companies 42,000 regionally (HK: 800) From Copier to Document Consultancy 2

Fuji Xerox Business Produce more than 70% in China (Shenzhen & Shanghai factories) Distribute globally 2012 Fuji Xerox Co., Ltd. All rights reserved. 3 Fuji Xerox Initiatives for Stakeholders Needs Supply Chain Manufacturing Customers Office Products after use Stakeholders Suppliers Employees Local environment Customers Environment Environment Local communities FX Activities Ethical Procurement Employee Assistance Program Zero emission at production sites Environmental fi friendly products Customer awareness Integrated Resource Recycling (Reuse parts, material) 2011 Fuji Xerox Co., Ltd. All rights reserved. 4

Fuji Xerox Ethical Procurement To understand suppliers process on managing its environment, human resources and ethics other than focusing on Quality, Cost, and Delivery Implement since 2005 in view of increasing customer requirements on CSR management and unclear CSR activities in our suppliers Value sharing Share with suppliers the importance of CSR management System establishment Establish tools and rules with suppliers Employee education Employee capacity building and mental care of employees Mind Hard Soft Share the value and targets for CSR Achieve through partnership: Learn together, grow together concept Win-win result Obtain trust form the society & Improve QCD 2012 Fuji Xerox Co., Ltd. All rights reserved. 5 Supplier Engagement Cycle 1.Communicate Fuji Xerox s requirements - Supplier Engagement Management Guideline - Self-Check List 4.Improvement -Suppliers improve their issues - Fuji Xerox improves its operations as well as the Selfcheck list Learn together, th Grow together 2. Self-check by suppliers - Suppliers check their operations with Self-Check List 3. Visit, check and advise - Fuji Xerox team* visit and check suppliers, based on the improvement plans suppliers submitted *Fuji Xerox team is comprised of representatives from HR, Legal and Environmental Departments. 2012 Fuji Xerox Co., Ltd. All rights reserved. 6

Management Guideline & Self Check Explain all Self-Checklist items 1. International movement on why companies must Management manage the listed items (international laws, etc.) Guideline 2. Fuji Xerox s request to suppliers Supplier Engagement Fuji Xerox 3. Detailed description (term definition, example of bad cases and suggested improvement methods) Supplier Engagement Self Checklist Fuji Xerox Incorporated all Electronic Industry Code of Conduct (EICC) questions s Why Fuji Xerox original checklist? 1) Asia/Japan perspective: capacity building, information security 2) Priority of actions: : compliance issues 3) Future actions: bio-diversity, 2nd tier suppliers 2012 Fuji Xerox Co., Ltd. All rights reserved. 7 Visit and Check Focus: Workplace Safety Focus: Dormitory Fuji Safety j Xerox Shenzhen team visit local suppliers 2012 Fuji Xerox Co., Ltd. All rights reserved. 8

Improvement Supplier Executive Comments I appreciate Fuji Xerox gave us the opportunity to think about this together. We will need to make an all-out effort regarding QCD and the CSR activities. Let s work together so we can all enhance our corporate value. (Representative Director of a supplier in Japan) Improvements on communications with employees through Opinion Box to the president of the company Make sure their improvement The on-site check was a valuable experience. The FXSZ staff, who are specialists in human resources and environment, gave precise answers as to what the problems were and how we could resolve them. (Managing Director of a Supplier in Shenzhen) Brand new flow monitor 2012 Fuji Xerox Co., Ltd. All rights reserved. 9 Ethical Procurement Employee Relation benchmark Ecological Workplace Zero Landfill 10

o 360 of Sustainability Equipment in use Industry leading energy efficiency: i Energy reductions up to 71% when replacing old equipment with new for the latest model released Award for energy efficiency: Constantly having products that won the Nikkei Global Environmental Technology Awards Innovations in sustainable toner: EA-ECO toner with 40% power consumption reduced during printing Costs & environmental impacts: Greater visibility into print use patterns and reduce cost Responsible paper: Assurance paper from responsibly managed forests and plantations 11 o 360 of Sustainability End of life disposal Take responsibility of all end-of-life products and remanufacture, reuse or recycle them to achieve >99.9% recycling rate (>5,000 tons of used products) while no specific local legal requirements in Hong Kong Four purpose-built remanufacturing, reuse and recycling facilities: Japan, Thailand, China and Australia Collection Collection Used Used at at Customer Customer site site Disassembly and Disassembly cleaning at the and cleaning at the plant plant Fuji Xerox Fuji Xerox Closed Closed Loop Loop System System Screening the component Decomposing into raw materials Inspection Completion/ delivery Quality inspection / Repair assurance Feedback to design for reuse/recycling Integrated production line Integrated production line Base material/compound Base material/compound 12

Zero Landfill through Local Recycling System Stock Classification Capital: HK$20M Area: >21,000 m 2 Arrive at Fuji Xerox Eco-Manufactory Collect from customer Packaging to Fuji Xerox Eco-Manufactory in Thailand Arrive at Laem-Chabang Port Container Loading Shipping 13 Low Carbon Operations in our Hong Kong Offices Energy Audit Light Off @Lunch 100% Recycle Paper T5 + LED 14

Sustainability Reporting Table of Contents: 1. Looking Backward and Forward 2. Report Scope and Approach 3. About Fuji Xerox Hong Kong 4. Corporate Governance 5. Customer Satisfaction 6. Environmental Responsibility 7. Social Responsibility 8. Data summary 9. GRI Content Index (v3.1) 10. Report Verification 17 Sustainable Future Cherishing our Earth, Caring for our Children 2011 Fuji Xerox Co., Ltd. All rights reserved. 18