Taking seriously the recent social and environmental issues related to our supply chain, we are promoting responsible procurement activities that not only comply with various laws and regulations, such as the Proper Transactions Act (formerly the Subcontracting Act), but also give due consideration to human rights and the environment. By responding to expectations from society in cooperation with our diverse suppliers across the supply chain, we contribute to the realization of a sustainable society.
To meet societal expectations across the entire supply chain together with our suppliers and to promote responsible procurement with consideration for human rights and the environment, Our Group centrally controls and optimizes procurement across the group, led by the Business Strategy Department of the Global Strategy Headquarters and the Procurement Department of the Business Operations Headquarters.
We report the progress and issues of our procurement activities to the Management Committee, and escalate material matters to the Board of Directors.
The Business Strategy Department of the Global Strategy Headquarters leads the formulation of procurement strategies and common rules for the entire group, establishing a control system for risk management and compliance within Our Group's supply chain.
The Procurement Department of the Business Operations Headquarters optimizes procurement transactions and purchasing processes, including those of domestic and overseas group companies, executes risk management activities across the supply chain, and manages the procurement compliance system. Furthermore, the department is responsible for disseminating information on procurement-related laws and guidelines for suppliers, regularly monitoring the operational status of procurement transactions, correcting any deficiencies, and verifying cause analyses and recurrence prevention measures in the event of compliance violations in procurement operations.
Each division within the corporate headquarters, companies, headquarters, and domestic and overseas group companies ensures strict compliance with procurement rules and relevant laws, and establishes and operates appropriate business processes to prevent negligence and misconduct.
Procurement Promotion SystemWe carry out procurement activities on a global scale, and while utilizing the advantages of both centralized and decentralized purchasing, we also carry out local procurement for the purpose of optimal procurement at our overseas manufacturing plants.
Procurement amount composition ratio by country/regionOur procurement department mainly manages suppliers. We check and investigate not only quality, technology, price, and delivery, but also sustainability, such as the environment, social, governance, and attitude toward improvement, etc. as conditions for doing business with us.
In particular, we identify suppliers who deliver materials, processing and equipment related to our product manufacturing as significant suppliers and conduct annual evaluations of them based on the above-mentioned perspective of our supplier management. We rank them from A to D, and encourage continuous improvement based on this feedback.
In FY2025, we reached out to 87.8% of our suppliers rated B through D to encourage them to make improvements. We will continue to provide guidance and support going forward.
| Rank | Response Policy |
|---|---|
| A | Priority will be given to obtain quotations. Become a potential technical partner for joint development, etc. |
| B | Point out weaknesses and provide guidance to encourage improvement |
| C | Request for improvement based on the Improvement Request Form. Also, instruct them to aim for a rank of B or higher. |
| D | Confirm willingness to make improvements, follow up/confirm improvements periodically |
Purchasing ratio from important suppliers
Significant suppliers ratio by level（FY2025 annual evaluation results）In accordance with the "Guidelines Concerning Price Negotiations for Appropriate Shifting of Labor Costs" issued by the Japan Fair Trade Commission, our Group has established procurement guidelines to ensure fair transaction prices and has made these guidelines known to all employees. By making this a shared awareness throughout the company, we will continue to maintain fair transactions.
To foster sustainability measures across the supply chain, we issued our Sustainability Procurement Guidelines and have been distributing copies to suppliers.
When we revised this guideline in FY2025, we held briefing sessions to help our suppliers better understand it, and many of them participated.
The Sustainability Procurement Guidelines set the rules that our suppliers are requested to comply with concerning the environment, human rights and labor, business continuity planning (BCP), business ethics, information security, occupational health and safety, and product quality and safety. We distribute these guidelines to all our suppliers and make compliance with them a prerequisite for doing business. We incorporate clauses regarding compliance with these guidelines into our basic transaction agreements, and ask our suppliers to put them into practice together with Our Group.We also ask our suppliers to distribute copies of the Guidelines to their own suppliers.
To monitor the status of implementation by our suppliers, we conduct surveys every two years using a checklist. This checklist includes a confirmation section for agreeing to comply with these guidelines, allowing us to reconfirm their consent at the time of the survey. In the survey conducted in FY2025, we targeted approximately 920 suppliers with whom we have regular business transactions. We received responses from 71% of them (based on the number of companies, corresponding to 86% of our total purchase value), and obtained consent to comply with the guidelines from 67% of them (based on the number of companies, corresponding to 74% of our total purchase value). We score the results, and for suppliers identified with high risks or concerns, we conduct follow-ups, including interviews with management, and request improvements on identified issues. We will continue to engage in dialogue with suppliers who have not yet consented to the guidelines to foster their understanding.
Additionally, as an appendix to this guideline, we have also established the "Green Procurement Guidance" aimed at reducing environmental impact throughout the supply chain. We ask our suppliers to cooperate with our Group's green procurement initiatives.
FY2025 Survey Results on Our Suppliers' Sustainability Initiatives (Average Scores)
Our procurement department staff receive sustainability training for them to improve the sustainability knowledge.
In FY2025, more than 100 staff received that training.
To ensure strict adherence to procurement compliance, we annually conduct the Niterra Group Procurement Compliance Training and comprehension tests for Group employees.
To ensure respect for human rights of all people who are related to our suppliers and their suppliers, we have specified prohibited actions regarding human rights in the Sustainability Procurement Guidelines.
In addition, we periodically conduct supplier surveys to monitor their implementation status of human rights efforts and provide feedback to encourage suppliers to make improvements in areas with insufficient efforts.
There are concerns that some mineral resources mined in the Democratic Republic of the Congo and surrounding countries provide a source of funding to local armed forces, thereby promoting conflicts and infringements of human rights. Our Group also recognizes the issue of conflict minerals as one of the critical social issues in the procurement of resources and raw materials.
For this reason, in February 2025 we established the Niterra Group Responsible Mineral Procurement Guidelines, which outline our policy for responsible mineral sourcing.
The Niterra Group promotes responsible minerals sourcing that considers human rights, environmental impacts, and other relevant factors as part of its CSR and sustainability procurement efforts.
To avoid involvement in Annex II risks *1in the Democratic Republic of Congo (DRC) and its neighboring countries*2 and other conflict-affected and high-risk areas (CAHRAs)*3, we do not use conflict minerals in our products. If the use of conflict minerals is identified, we will take steps to eliminate their use. However, minerals that are legally sourced and traded from the DRC and its neighboring countries or CAHRAs may be used.
In order to promote carbon neutrality throughout our entire supply chain, including suppliers, we ask our suppliers for their cooperation in setting greenhouse gas reduction targets and answering surveys on CO2 emissions related to our products.
The Sustainability Procurement Guidelines, which have been distributed to all our suppliers, stipulate that suppliers should set greenhouse gas emission reduction targets and promote reduction efforts.
Approximately 60% of our suppliers have already set CO2 reduction targets, and we will continue to encourage those who have not yet done so to set their own targets. (As of the FY2025 survey)
In order to understand CO2 emissions related to our company at our suppliers, we have been conducting surveys of CO2 emissions related to products for our company since FY2022, and we will continue to conduct surveys in the future.
To achieve carbon neutrality by 2050, Niterra Group has set a target to reduce CO2 emissions across the entire supply chain (Scope 3), in addition to our own emissions, by 30% by fiscal 2030 (compared to fiscal 2018).
To achieve this goal, we provide support to all business partners by offering seminars and materials related to CO2 emission reduction. We also provide support tailored to their level of commitment and conduct on-site support upon request.
Furthermore, to resolve issues such as a lack of expertise and human resources among small and medium-sized business partners, we participate as a leading company in the "Supply Chain Team-Up Project" organized by the Ministry of Economy, Trade and Industry.
Through this project, we hold "Carbon Neutrality Awareness-Building Meetings" to share examples and conduct calculation exercises, and we support the formulation of individual roadmaps by utilizing a decarbonization planning system.
Our Group is committed to strengthening cooperation with our business partners and promoting decarbonization across the entire supply chain.
Our Group awards the "Carbon Neutral Award" to business partners who promote carbon neutrality initiatives that lead to CO2 emission reductions.
By conducting activities to help suppliers enhance their business foundation and engaging in follow-up activities after our regular evaluation of them, we make joint efforts for improvement with suppliers, thereby building greater trust.
Every year, we hold seminars tailored to manufacturing for our suppliers, covering topics such as reading technical drawings and 5-Why analysis. Meanwhile, our hands-on on-site support is an initiative where we visit suppliers' manufacturing sites to work directly on operational improvements. Based on 5S activities aimed at improving safety and efficiency at suppliers' production sites, we provide guidance on the placement and labeling of items, as well as the clear designation of safety zones, and verify progress on improvement items. In addition, we award certificates of completion following a six-month follow-up and conduct another follow-up check in the next fiscal year to ensure that these improvements take firm root. In FY2025, we provided support to a total of nine suppliers through both seminars and hands-on on-site support.
We annually conduct evaluation on some suppliers and inform them of the results. For suppliers that require follow-up activities, we visit them to provide targeted advice and inspect their sites in order to work with them in thinking about how to rectify any weak points. We also award suppliers who have been evaluated as excellent.
In FY2025, we awarded 11 suppliers for their excellence.
In support of the Declaration of Partnership Building established by the Council on Promoting Partnership Building for Cultivating the Future*, we have released our own declaration. We are committed to promoting the coexistence and co-prosperity of the entire supply chain, building new partnerships regardless of the size of business and beyond the boundaries of business affiliations, and ensuring compliance with the “promotion standards.” At the same time, we implement proper purchasing transactions in accordance with the Procurement Policy.
We have opened a Helpline as the contact point for suppliers to report any violation by managers or employees of the Niterra Group.
Details are provided in the pamphlet distributed to the suppliers.