Social Sustainable Procurement

Policy and Basic Mindset

Purchasing (Supply Chain Management)

The UBE Group strives to establish mutually beneficial, fair and equitable trade relations with our business partners. Our Basic Purchasing Policy outlines the Group’s compliance activities in the areas of fair and equitable transactions, objective assessment in the selection of business partners, legal compliance and confidentiality, green procurement, and sustainable procurement. To encourage our business partners to proceed with sustainability initiatives, we also promote sustainable procurement throughout the entire supply chain.

Basic Purchasing Policy

The UBE Group conducts purchasing operations in accordance with the following basic policy.

Fair and Equitable Transactions

Based on fair, equitable, and free competition, we engage in business transactions that are free of personal interest and that are not arbitrary, and we always seek to create business opportunities with new business partners. We also strive to establish equal and fair collaborative relationships with business partners and to enhance mutual understanding and trust from a long-term perspective.

Objective Assessment in Selection of Business Partners

In the selection of business partners, we make decisions based on economic rationality, after taking comprehensive account of such matters as quality, price, and delivery time.

Legal Compliance and Confidentiality

We comply with all relevant laws and social norms in our procurement operations, and we preserve confidentiality of information obtained in the course of conducting transactions.

Green Procurement

In the selection of items to purchase, we give consideration to environmental protection.

Sustainable Procurement

To raise our social credibility, we promote sustainable procurement throughout the supply chain, including among our business partners.

We seek to give priority to procurement from business partners who fulfill the following commitments.

  • Have established an internal structure for practicing sustainability
  • Ensure stable supply and emphasize quality
  • Practice fair transactions in compliance with corporate ethics, the law, and social norms
  • Place importance on environmental friendliness
  • Work to address respect for human rights as well as safety and health management
  • Value social contribution and communication with society, and practice information management and disclosure

UBE Group Sustainable Procurement Guidelines

The UBE Group engages in a variety of sustainability initiatives in order to earn the confidence of diverse stakeholders, including shareholders, customers, business partners, employees, and communities. To enhance the social credibility of the Group, we practice sustainable procurement throughout the entire supply chain, which includes all of our business partners.

1. Internal structure for practicing sustainability

  1. Maintain corporate philosophy, basic management policy, and action guidelines, etc., for practicing sustainability within the organization.
  2. Establish an organizational framework for practicing sustainability within the organization.
  3. Produce and publish a report related to sustainability and the environment.

2. Ensuring stable supply and quality

  1. To prepare for such contingencies as disasters and accidents, establish and maintain a risk management framework on a regular basis and inform all employees about it.
  2. Establish a business continuity plan (BCP) that stipulates in advance the plan for securing business continuity in an emergency situation due to a disaster like an earthquake or influenza outbreak, and inform all employees about it.
  3. Conduct assessments and tests to ensure product safety, and enable traceability. Also, put in place a certified quality management system such as ISO 9000.

3. Corporate ethics, compliance with the law and social norms, and fair transactions

  1. Comply with the various laws, regulations, government directives, and rules applicable to business operations (Japan’s Companies Act, Antitrust Act, and Subcontractors Act, and similar laws in other countries, labor-related laws and regulations, environment-related laws and regulations, etc.).
  2. Develop an internal whistleblowing system for reporting illegal activities.
  3. Prohibit the offering and acceptance of inappropriate benefits.
  4. Prohibit transactions with organized crime and other antisocial forces (individuals or groups).
  5. Practice fair transactions with business partners.

4. Consideration for the environment

  1. Obtain external certifications for environmental management systems (systems for the overall management of environmental initiatives* encompassing an organizational framework, systematic initiatives, and assignment of responsibilities), such as ISO 14001 certification. Establish, operate, and continuously improve environmental management systems.
    *Environmental initiatives include establishing environmental policies, implementing measures according to those policies, and executing plan-do-check-action (PDCA) cycles for environmental conservation initiatives.
  2. Suitably manage and dispose of industrial waste according to the laws and regulations of the country in which the business operates. Practice the three Rs (reduce, reuse, and recycle) in all business activities. Additionally, establish voluntary targets for reducing landfill waste, such as by practicing resource recycling, and continually reduce landfill waste.
  3. Establish voluntary targets for resource conservation and energy reduction, and continually ensure that resources and energy are effectively used.
  4. Establish voluntary targets for reducing greenhouse gas (GHG) emissions, including carbon dioxide, methane, and nitrous oxide, and continuously reduce GHG emissions.
  5. Continuously reduce water consumption through the optimal and effective use of water resources. Additionally, strive for water circulation that suitably preserves the function of water in human activities and for conservation of the environment.
  6. Strive to exist in harmony with nature through consideration for biodiversity.
  7. Secure compliance with laws and regulations relating to environmental conservation such as those concerning air emissions, water quality, and chemical substance emissions in the country in which the business operates and, if necessary, set voluntary standards to further raise compliance.

5. Respect for human rights, safety, and health

  1. Prohibit all behavior that is inhumane. Prohibit all behavior that is inhumane including any form of abuse, corporal punishment or harassment. Practice respect for human rights.
  2. Prohibit child labor. Prohibit the employment of children who are below the minimum working age and ensure that legally employed young people are not assigned work that would hinder their development.
  3. Prohibit forced labor. Ensure that all employees are employed of their own free will and are never subjected to forced labor.
  4. Prohibit overwork. Suitably manage employees’ working hours, holidays, and vacations to ensure that they do not work more hours than legally permitted.
  5. Pay suitable wages. Ensure that employees are paid at least the legally mandated minimum wage and prohibit the unjust reduction of wages.
  6. Prohibit all forms of discrimination. Eliminate any discrimination in the recruitment and employment of human resources, and treat human resources fairly such as by providing equal opportunities.
  7. Respect the fundamental rights of workers. Respect fundamental labor rights, including freedom of association and the right to collective bargaining, and build good relations with employees through close dialogue.
  8. Suitably manage occupational safety. Ensure a safe work environment by identifying and managing the risk of accidents and human exposure to harmful chemical substances, noise, odors, etc., in the workplace.
  9. Suitably manage the physical and mental wellbeing of employees. Secure compliance with relevant laws and regulations in the country in which the business operates and obtain health management certifications as recommended at the national and state/provincial levels.

6. Social contribution, communication with society, and information management and disclosure

  1. Actively engage in social contribution activities.
  2. Accurately report information needed by shareholders, such as financial information, outside the company.
  3. Disclose in a timely and appropriate manner information related to quality and product safety.
  4. Develop internal rules regarding the prevention of leaks of confidential information, and implement relevant system measures. Also, establish regulations regarding the protection of confidential information obtained through business transactions as well as personal and customer information, and manage it appropriately.
  5. Implement measures to protect against such threats to computers and networks as computer viruses.

Policy on Conflict Minerals

The UBE Group practices the responsible procurement of raw materials in order to meet its social responsibilities as a corporation. We strive to trace the origins of six types of minerals, consisting of four identified as being of special concern (tin, tantalum, tungsten and gold) as well as cobalt and mica, which have recently been subject to rising social demand for traceability. We thus determine the presence of such minerals in purchased raw materials and verify details regarding procurement sources when the incorporation of any of these raw minerals is considered unavoidable in light of their characteristics.

If inspections show that conflict minerals (minerals that are mined and sold under the control of armed groups in the Democratic Republic of the Congo and surrounding regions) are used in purchased raw materials, the Group will immediately stop procurement of said raw materials or pressure business partners to change their procurement sources.

Support for Declaration on Partnership Building

April 1, 2022 — UBE Corporation announces its endorsement of the intent of the Declaration on Partnership Building [Japanese]established by the Council on Promoting Partnership Building for Cultivating the Future, whose members include the Chairman of Keidanren, the Chairman of the Japan Chamber of Commerce and Industry, the President of the Japanese Trade Union Confederation (RENGO), and relevant ministers (Minister of State for Economic and Fiscal Policy, Minister of Economy, Trade and Industry, Minister of Health, Labour and Welfare, Minister of Agriculture, Forestry and Fisheries, and Minister of Land, Infrastructure, Transport and Tourism). In accordance with this endorsement, the Company has issued its Declaration on Partnership Building.

Based on its founding spirit of coexistence and mutual prosperity, UBE will continue to enhance collaboration with suppliers with the goal of adding value throughout the supply chain.

Declaration on Partnership Building

1. Coexistence and mutual prosperity throughout the supply chain, and new collaborations across all corporate sizes and affiliations

  • We will strive to work together with our business partners to realize a sustainable society that is conscious of human rights, labor standards, the environment and our other social responsibilities.

2. Compliance with the “Promotion Standards”

  1. (1) Pricing method
    • We will not demand unreasonable price reductions. We will give full consideration to requests from subcontractors for discussions on compensating transactions.
  2. (2) Cost burdens such as mold management
    • We conduct mold transactions based on contracts with subcontractors, promote the disposal of unneeded molds, and will not request subcontractors to store the molds without compensation.
  3. (3) Terms of payment by bill, etc.
    • We will pay subcontracting fees in cash as much as practicable. Should we pay those fees by promissory notes, we will never have subcontractors pay discounts or other fees. We will also endeavor to pay invoices within 60 days.
  4. (4) Intellectual property and knowhow
    • We will not urge subcontractors to enter into any one-sided non-disclosure agreement or take advantage of our trading position to demand that they disclose their know-how.
  5. (5) Consideration for work-style reforms, etc.
    • We will not require subcontractors, without proper compensation of the increased costs, to complete subcontract work within an unreasonably short term, nor will we direct sudden changes to the specifications of subcontract work, so that subcontractors can also pursue work-style reforms.

3. Other

  • We have published guidelines to enhance UBE’s social credibility throughout the supply chain, including among business partners.
  • In order to end the use of promissory notes, we will work to promote a shift to cash payments and electronic record receivables, including transactions between large corporations.

Management System

Supply Chain Management Committee

To further enhance the promotion of sustainable procurement across the supply chain, we established the Supply Chain Management Committee in April 2024, which is chaired by the officer in charge of the Purchasing and Logistics Dept. This Committee deliberates and reports on matters to our Strategic Management Meetings (Sustainability Committee), which are chaired by our CEO.

The Supply Chain Management Committee is an interdepartmental organization that identifies risks to the UBE Group related to sustainable procurement and deliberates and decides on response policies while setting goals to manage and promote proper sustainable procurement.

Targets and Performance

Sustainable Procurement

The UBE Group has established a Socially Responsible Procurement Policy and the UBE Group Sustainable Procurement Guidelines. These encompass respect for human rights, compliance with laws and social norms such as the exclusion of organized criminal groups and other anti-social forces, and commitment to the environment. Under the policy and guidelines, the Group aims to enhance sustainable practices throughout its supply chain. The latest edition of the guidelines, which are regularly revised to align with the latest societal demands, was published on the UBE Group website in June 2024. The Group informs new business partners of its basic purchasing policy and the UBE Group Sustainable Procurement Guidelines [Japanese] and refers them to the Group’s website, and we request their cooperation with the Group so that we may promote sustainable procurement as a unified body.

Results from the Fourth Sustainability Survey of Business Partners

Since fiscal 2012, the Group has conducted surveys of business partners, and in fiscal 2021 we received responses from 271 major customers and business partners who collectively account for 90% of the purchase value of materials, construction, packaging materials, and fuel oils. The survey responses were aggregated and analyzed to provide feedback for all Group companies. The UBE Group also met with business partners with lower ratings to help them improve their efforts in this regard.

Using ratings from 1 to 5, the survey asked business partners to self-evaluate their CSR initiatives in six thematic areas (34 questions in total): (1) internal structure for practicing sustainability; (2) ensuring stable supply and quality; (3) corporate ethics, compliance with the law and social norms, and fair transactions; (4) consideration for the environment; (5) respect for human rights, safety, and health; and (6) social contribution, communication with society, and information management and disclosure. The survey found an overall average rate of 3.8, indicating that business partners are engaging in a decent level of effort on their initiatives. Large companies showed a high level of effort, at 4.5, while small and medium-sized companies were relatively low, at 3.5. Levels were effectively unchanged from the Third Survey.

A breakdown by topic revealed a high level of effort, at 4.3, on “respect for human rights, safety, and health,” while “consideration for the environment” and “internal structures for practicing sustainability” were relatively low, at 3.3. Questions regarding human rights grew to include nine questions, and all responses to these questions indicated that more than 80% of respondents are engaging in a decent level of effort on measures and initiatives. Of special note, all 88 large companies were verified as not having registered any criminal reports of prohibited inhumane actions, forced labor, overwork or child labor. Learn more by visiting Results of the Fourth Sustainability Survey of Business Partners.

In fiscal 2024, we will conduct the Fifth Sustainability Survey of Business Partners. This survey will utilize the standard survey tool (Common SAQ) formulated by Global Compact Network Japan (GCNJ), which we are a member of. Because this survey is based on the Common SAQ from GCNJ, which boasts a membership of more than 600 companies and organizations, we believe we can simplify the act of responding to these surveys for our business partners as we conduct inspections, evaluations and verifications in line with global standards.

FTSE Blossom Japan Index: Supply Chain Evaluation by FTSE Russell

The FTSE Blossom Japan Index of stocks was created by FTSE Russell. Its constituents include Japanese companies with outstanding environmental, social, and governance (ESG) initiatives. UBE has been selected as a constituent of this index. UBE’s inclusion is based on its Group-wide efforts to promote sustainable procurement, including the implementation of its Sustainable Procurement Policy and the UBE Group Sustainable Procurement Guidelines. This policy and these guidelines encompass respect for human rights, compliance with laws and social norms such as the exclusion of organized criminal groups and other anti-social forces, and commitment to the environment. In the area of supply chain efforts, the Group received a high score of four out of five from the index managers.

Status of Progress on Major KPIs

We have established major Key Performance Indicators (KPI) that are in line with targets related to sustainable procurement, and are managing their progress. Progress on each of these major KPIs is as follows.

Subject KPI Targets Performance
Raw Materials Equipment FY2024 FY2022 FY2023
○ ○ Proportion of value-based procurement purchased from suppliers that align with our minimum requirements for registered business partners 100% 100% 100%
○ Proportion of value-based procurement purchased from suppliers that consent to the UBE Group Sustainable Procurement Guidelines 100% - 93.8%
○ Proportion of value-based procurement purchased from suppliers who are able to confirm zero human rights risks in individual evaluations 100% 100% 100%
○ Proportion of value-based procurement purchased from suppliers who are able to confirm zero conflict mineral risks in individual evaluations 100% 100% 100%
○ ○ Proportion of value-based procurement purchased from suppliers who have completed SAQ sustainability surveys 90% 90% (2021 survey)
  • Note:For domestic and overseas Group companies that are currently working on setting their KPIs, please refer to the home pages of each company.

Initiatives (Procurement)

Sustainable Procurement Policy: UBE Group Sustainable Procurement Guidelines

In addition to standards for product quality, prices and delivery times, the UBE Group promotes responsible procurement activities from a social perspective, with a focus on human rights and labor, and from an environmental perspective, through the promotion of renewable energy and biodiversity conservation. Our mindset toward procurement has been codified in our Basic Procurement Policy and the UBE Group Sustainable Procurement Guidelines, which we ask our business partners to respect and uphold as we work together across the entire supply chain to realize a sustainable society.

Specifically, once new business partners have gained an understanding of our policies and mindset through the UBE Group Sustainable Procurement Guidelines, they must conduct internal due diligence before commencing transactions. We begin our transactions with them only after verifying that the results of this evaluation are satisfactory. Once transactions with them commence, we regularly monitor their understanding of our guidelines.

Basic Purchasing Terms and Conditions

We have established Basic Purchasing Terms and Conditions to govern the procurement of equipment as well as construction, fuel oil and packaging materials, and we ensure fair business operations by requiring our business partners to comply. When necessary and appropriate, we reappraise the Basic Purchasing Terms and Conditions, such as when societal demand increases or changes, and ensure the content aligns with the Group’s Basic Purchasing Policies and other similar policies.

The contents of our Basic Purchasing Terms and Conditions of our major Group companies are in alignment, and matters related to sustainability are as follows.

  • Basic Purchasing Terms and Conditions (excerpt)
  • Article 33 (Sustainable procurement)
  • Article 35 (Eliminating antisocial elements)

Please view our Basic Purchasing Terms and Conditions at the following site (Japanese).

https://www.ube.com/ube/corporate/profile/koubai/yakkan/

Relationships with Suppliers

We conduct Sustainability Surveys of Business Partners regularly.

1. Survey Question Contents (Fourth Survey)

Question Subject (number of questions) Main inquiries
1. Internal structure (4) Maintenance of a corporate philosophy and policy, establishment of an organizational structure, generation of reports, etc.
2. Ensuring stable supply and quality (3) Establishment of risk management systems, creation of business continuity plans (BCPs), etc.
3. Legal compliance and fair transactions (6) Compliance with legal systems, presence of internal reporting systems, prohibition of relations with antisocial elements, practice of responsible mineral procurement, etc.
4. Consideration for the environment (7) Acquisition of third-party certifications, practice of industrial waste management, introduction of energy-saving initiatives, etc.
5. Respect for human rights, safety, and health (9) Prohibition of inhumane treatment, child and forced labor, etc.
6. Social contribution, other (5) Engagement in social contribution activities, enforcement of measures to prevent confidential information leaks, etc.

2. Survey Results and Scores

  • Results of the Survey on Business Partners
    Results of the Survey on Business Partners
  • Comparison of Answers in 4th and Past Surveys (Radar Chart by Category)
    Comparison of Answers in 4th and Past Surveys (Radar Chart by Category)

3. Audits and Educational Activities

In the previous (fourth) survey, in addition to individual reviews for responding companies (showing company score as well as average score and rankings), we held discussions with the ten companies with the least amount of improvement regarding low scoring items.

4. Future Initiatives

In our next (fifth) survey, we will reevaluate the breadth of questions posed utilizing the standard survey tool (Common SAQ) created by GCNJ. Regarding feedback, the Sustainability Promotion Dept., which leads activities related to sustainability, will take the lead on conducting unified improvement activities from various perspectives, including human rights, environmental and legal compliance, with business partners determined to require assistance via individual discussions and other such activities.

5. Reporting Hotlines for Suppliers, etc.

To maintain and promote compliance, the UBE Group upholds a policy of “obeying laws and regulations at home and abroad, as well as in-house regulations, social norms and other rules in the course of business execution and other aspects of corporate activities.” In this way, we strive to live up to society’s trust in the UBE Group via sincere business conduct. If you recognize any compliance violation, including potential or alleged cases of such violations, in connection with the UBE Group’s business activities, please report this via a hotline.

For more information, please click here.

BCP System

The Business Continuity Plan (BCP) for our procurement division has been designated as necessary to ensure our ability to maintain operations. This division has created a separate BCP for the aftermath of a large-scale earthquake with an epicenter in the Tokyo metropolitan area in light of the particularly large impact such a disaster would have, and is striving to maintain and improve the efficacy of this BCP through regular reassessments and continuing educational activities. Furthermore, we independently monitor information on supplier locations and the sources of the raw materials used in our products, so that when a natural disaster such as a large-scale earthquake occurs or a supplier has an accident, we are prepared to quickly assess the degree of impact and are able to respond to relevant inquiries.

Employee Education

We recognize the importance of educational activities for employees regarding maintaining and improving sustainable procurement, and we conduct regular educational activities where related internal divisions cooperatively utilize e-Learning systems.

(Fiscal 2023, Company-wide e-Learning examples)

Sustainability (including sustainable procurement), compliance, human rights, cybersecurity, DE&I, health and productivity management, global environmental issues (biodiversity conservation)

(Fiscal 2023, procurement division activity examples)

  • Group procurement liaison meetings (annual)
  • Liaison meetings regarding the Act against the Delay in Payment of Subcontract Proceeds, etc., to Subcontractors (annual)
  • Internal education within the procurement division (twice annually: spreading knowledge about the results of the Survey of Business Partners and a summary of sustainable procurement)

Initiatives (Logistics)

Transport Safety

To ensure the safe transport of chemical substances, the UBE Group provides transport companies and drivers with safety information to use in case of an accident during transport. This is only part of the Group’s commitment to preventing logistics accidents and enhancing logistics quality.

Sustainable Logistics

UBE Corporation endorses the Sustainable Logistics Movement and implements voluntary measures to realize the aims of the initiative.

1. Sustainable Logistics Movement

The Sustainable Logistics Movement, which was started by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), Ministry of Economy, Trade and Industry (METI) and Ministry of Agriculture, Forestry and Fisheries (MAFF), is an initiative aimed at ensuring stable logistics functions necessary for people’s lives and for industrial activities while also contributing to economic growth in response to the worsening shortage of truck drivers. It aims to improve the productivity of truck transportation and raise logistical efficiency, while looking to realize a labor environment that makes it easier for women and drivers over the age of 60 to work. This initiative thus involves cooperation among shippers, logistics operators, and other entities through which they contribute their ideas to help one another improve.

2. Ube Industries Declaration to Take Voluntary Action

Action Description
Use of Pallets

Increase pallet use with the acknowledgement of customers and business partners, reduce the burden of loading and unloading tasks on logistics companies, and reduce the time spent on loading and unloading.
Joint Collection and Delivery Destinations

In order to reduce the working hours of drivers, UBE Corporation will cooperate with Group companies to implement joint collection and joint delivery of cargo. We will give serious consideration to any suggestions from logistics companies to modify the cargo collection and delivery methods.
Improvement of Shipping Facilities

Expand and modify the layout of logistics facilities including warehouses, and reduce long distance transport.
Safety Measures for On-Site Transport, Loading, and Unloading

Identify the risk factors for on-site transport, loading, and unloading work, prepare work procedure manuals, and conduct safety education for business partners in order to enhance safety.
Cancellation or Suspension of Operations in Case of Weather Irregularity

Do not make unreasonable transport requests if a weather irregularity such as a typhoon, torrential rain or heavy snowfall is observed and/or forecast. Additionally, respect the decisions of transport companies if they deem it necessary to cancel or suspend operations for reasons of driver safety.

3. Actions Already Taken by UBE Group

The UBE Group launched a Logistics Re-Engineering Project in 2007 aimed at improving logistics efficiency, and has implemented a number of enhancements including implementing joint transport of freight and modal shifts to more efficient means of transport. For rubber product transportation, our Elastomer Business and the logistics company Kanko kisen Co., Ltd. were accredited as leading companies in the Fiscal 2011 Eco-Ship Modal Shift project of the Maritime Bureau of the Ministry of Land, Infrastructure, Transport and Tourism. The UBE Group established a Group Logistics Efficiency Liaison Group in 2016, which is working to increase the level of cooperation with customers and business partners, and improve transportation efficiency.

The Group considers the logistics crisis in Japan to be an issue affecting all of Japanese industry, and is working with customers and business partners to further streamline its logistics as part of the Group’s efforts to reduce environmental impacts through supply chains.

Promoting a Modal Shift, Receiving the “Eco Rail Mark”

We are promoting a modal shift through the transport of goods on rails with the goal of caring for the global environment and diversifying our transportation methods. In November 2023, we were recognized as an “Eco Rail Mark Initiative Company” through the Eco Rail Mark project sponsored by the public interest incorporated association Railway Freight Association. The Eco Rail Mark can be granted to products or companies which are deemed to satisfy standards for the use of railway freight transport that is easy on the environment. The goal of this mark is to be an index of such practices by showing how a product has been transported so that consumers are informed when choosing it.

Eco Rail Mark