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Supply Chain Management

Japanese

The Kyocera Group has established a "Basic Policy on Purchasing" to ensure that transactions with our business associates are carried out fairly and transparently. We work together as a team with associates to implement fair business practices.

Policy Related to Purchasing Activities

The Management Rationale of the Kyocera Group is: "To provide opportunities for the material and intellectual growth of all our employees, and through our joint efforts, contribute to the advancement of society and humankind." We aim to realize this rationale by committing ourselves to the implementation of fair business activities in our supply chain. The Kyocera Group believes that the mutual prosperity can only be realized if all stakeholders in our supply chain, including development, production, sales, and service enterprises, work together to meet the demands of society. To this end, the Kyocera Group actively communicates with business partners and focuses on building partnerships based on mutual trust.
In December 2020, Kyocera announced our "Declaration of Partnership Building" in order to build new partnerships by promoting collaboration, coexistence, and co-prosperity with supply chain suppliers and value-creating businesses.

Basic Policy on Purchasing

At the Kyocera Group established the Basic Policy on Purchasing. Under this policy, we conduct various surveys on corporate overviews and sustainability to evaluate and select our business partners fairly.

Basic Policy on Purchasing

Significance and Purpose of the Procurement Department

Through our procurement operations, we will contribute to value creation and business development, pursue our work with sincerity, and by living in harmony with our suppliers, we will hone our character and earn the trust of society. We, the Procurement Department, aim to be a trusted the Procurement Department with value through constant gratitude, humble reflection, and further efforts.

Supplier Selection Policy

We select our suppliers based on the following policy.

  • To understand our basic philosophy.
  • Management's own thinking and management philosophy must be convincing.
  • The company must be appropriate and stable in terms of size and finances, aiming to improve its management, technical and manufacturing capabilities.
  • Overall excellence in quality, price, delivery time, and service responsiveness.
  • To be active in global environmental conservation activities.
  • Comply with the Kyocera Group Guidelines for Responsible Business Conduct in the Supply Chain.

Kyocera Group Responsible Business Conduct Guidelines

The Kyocera Group has established "Kyocera Group Responsible Business Conduct Guidelines" in accordance with the guidelines of Responsible Business Alliance (RBA) to appropriately address important sustainability issues throughout our supply chain. We ask our business partners to sign a basic transaction agreement that includes provisions for compliance with these guidelines.

Kyocera Group Responsible Business Conduct Guidelines
Kyocera Group Responsible Business Conduct Guidelines
Kyocera Group Responsible Business Conduct Guidelines（pdf/392KB）

Promoting Sustainability in the Supply Chain

The Kyocera Group works together with suppliers to promote sustainability activities in order to fulfill our social responsibilities in areas such as human rights, labor, and environmental protection.

Sustainable Procurement Initiatives

Designation of Key Suppliers

The Kyocera Group designates our top 80% of suppliers in terms of purchase amount in the previous fiscal year as key suppliers, focusing on suppliers who supply us with important raw materials, suppliers with large transaction amounts, and suppliers who cannot be replaced, including suppliers who attended the supplier reception. We ask these suppliers to respond to our supply chain survey.

Supplier Survey on Sustainability Activities

Based on the "Kyocera Group Responsible Business Conduct Guidelines", we conduct surveys of our suppliers' compliance status every year within the Supply Chain, including overseas suppliers.

Companies Surveyed

The survey covers suppliers identified as key suppliers.

Type of supplier Total number of suppliers Number of key suppliers Number of key suppliers assessed in the last three years Percentage of suppliers assessed in the last three years Target (FY2023) (Percentage of total business partners) Result
Critical supplier for direct delivery 5,960 351 370 80%(transaction amount)
5.9%(number of companies)		 Target：80％(transaction amount)
Target：6％(number of companies)		 351 companies

Evaluation Items

The survey includes the following key ESG-focus categories: human rights and labor, the environment, health and safety, fair trade and ethics, quality and safety, business continuity plans (BCP), information security and responsible mineral sourcing.

Evaluation Criteria

Activities with an overall score of 20% or less are considered "inadequate" and field audits are subsequently performed to request improvements until an overall score of at least 20% is reached. Activities with a score in the 20% to 60% range are considered "slightly inadequate" and feedback is provided to prompt improvements until a score of at least 60% is reached. Suppliers capable of responding to the surveys and addressing points raised and requests for remedial action are deemed to possess an ability development program.

Rank Score Status of Efforts
A 80% or more Very good
B 60% or more Good
C 40% or more Somewhat inadequate
D a score of less than 20% Insufficient

Evaluation Results

In FY2023, 351 suppliers responded to the survey form, of which 77% were rated A.

Graph

Risk Clarification

As a result of surveys conducted on human rights and labor, environment, health and safety, fair trade and ethics, quality and safety, business continuity plan (BCP), and information security, suppliers whose efforts are judged to be insufficient are considered high risk.
For those suppliers that are determined to be high-risk, we provide feedback on the survey results and request them to make improvements by explaining their requirements using our guidelines. If we determine that improvements have not progressed, we continue our dialogue by visiting them to discuss countermeasures. In FY2023, we visited two companies which were determined to be high-risk.

Type of supplier Total number of suppliers Number of key suppliers Number of suppliers classified as high risk Percentage of total suppliers classified as high-risk
Critical supplier for direct delivery 5,960 351 2 0.57%

In addition, Kyocera has confirmed that the rate of high-risk suppliers with respect to the items of "human rights and labor" and "ethics," which Kyocera has selected as important items, is zero in both cases.

KPI Targeted figures and year of achievement Result
FY2023
Percentage of high-risk suppliers on human rights and labor items Target value: 0%.
Target year for achievement: FY2023		 0％
Percentage of high-risk suppliers on ethics items Target value: 0%.
Target year: FY2023		 0％

Request for Cooperation in Ongoing Risk Reduction

Kyocera put out a request to all suppliers to implement improvements with the goal of eliminating risk. All suppliers responded that they were able to make improvements. The same survey, with the same goal, will be carried out again in FY2024. The list of suppliers participating in the survey is reviewed every year, and efforts are made to ensure equal application of judgment criteria.

Percentage of Suppliers with Improved Ratings

Measure Percentage
Percentage of suppliers with high sustainability risk (as defined in "Risk Exposure") that have corrective action plans: 100%
Percentage of suppliers with corrective action plans that have improved their ESG performance within 12 months of the plan's launch: 100％

Holding Supplier Gatherings

The Kyocera Group regularly holds supplier seminars and social gatherings with business associates to help them better understand the management and business policies of the Kyocera Group and to build further partnerships. The FY2023 event was held in February with an attendance of 232 people from 202 companies. We also recognized business partners who have exhibited particular excellence in quality, price, and delivery times in transactions during the year.

Supplier Gatherings
Supplier Gatherings

Supply Chain BCP Survey

The Kyocera Group's policy is to achieve prompt restoration and resumption of operations even if the supply of products and services is interrupted due to a disaster, etc. We survey our suppliers on the status of their Business Continuity Plan (BCP) and request them to promote BCP activities. We explain the importance of BCP to new suppliers of important raw materials and parts and ask them to strengthen their BCP measures. We also confirm the improvement status of suppliers whose efforts were insufficient in the previous year's survey.
We will continue our efforts to promote and disseminate the BCP so that our suppliers can promote their initiatives.

Commitment to Responsible Mineral Procurement

The Kyocera Group complies with laws and regulations such as the U.S. Financial Regulatory Reform Act (Dot Frank Act), which was enacted because mineral resources mined in the Democratic Republic of the Congo and adjacent countries are a source of funding for armed groups that are causing human rights abuses, and the EU Conflict Minerals Regulation.
In addition, the OECD requires all companies to "responsibly procure minerals" based on the "Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict and High-Risk Areas" (OECD Guidance). The Kyocera Group has established a "Responsible Minerals Procurement Policy" based on the OECD Guidance and is working to mitigate risks and make supply chains more transparent by examining supply chains for the presence of risks, such as conflicts and human rights violations, assessing risks, and taking corrective actions.

Kyocera Group Responsible Mineral Procurement Policy

The Kyocera Group has a policy of "not purchasing materials or products that use conflict minerals that fund armed groups or other metals that pose a risk of human rights abuses," including gold, tin, tantalum, tungsten, cobalt, Natural mica, and other minerals. (Revised in June 2022)
For example, Kyocera's ceramic packages and electronic components use gold plating for circuit formation and connection terminals and require tin for solder. Tantalum is used in capacitors to increase their storage capacity, and tungsten is used to strengthen the hardness of cutting tools. As described here, Kyocera's products rely on a broad range of minerals as raw materials. We consider it absolutely essential that requirements on responsible procurement go beyond the letter of the law to fully facilitate corporate sustainability efforts and global sustainability.

Responsible Mineral Procurement Response System

The Kyocera Group has established the "Kyocera Group Conflict Minerals Handling Regulations" to ensure responsible mineral procurement. Investigations to determine whether we are procuring minerals without risk are conducted in accordance with the system, and due diligence is conducted on the status and results. We also educate Kyocera Group companies on rules and policies related to conflict minerals and promote appropriate Group-wide initiatives regarding conflict minerals. Furthermore, in order to recognize risks in responsible mineral procurement at an early stage, we have established a system to promptly respond to complaints and reports on conflict minerals collected through the contact points with stakeholders, the contact point in the procurement department, and the internal reporting system.

Efforts in accordance with OECD Due Diligence Guidance

The Kyocera Group's investigations for responsible mineral procurement follow a system and procedures that comply with the five-step framework set forth in the OECD Due Diligence Guidance. Specifically, Kyocera conducts investigative practices based on the MAP*1 promoted by the RMI*2 and evaluates all risks, including human rights violations, as stipulated in Annex II of the guidance. In addition, to preparing for a wide variety of human rights violation risks and other broad-reaching ESG risks, we are working to collect information on human rights regulations in each country as well as requests from customers and NGOs. We are strengthening our monitoring of sustainability initiatives as well as laws, for example by responding to investigations on minerals with high human rights violation risks such as cobalt.

  • Responsible Minerals Assurance Process
  • Responsible Mineral Initiative

Actions for Business Partners and Survey Results

The Kyocera Group is strengthening our internal control system by holding due diligence training sessions for personnel in charge at each Kyocera Group company in the U.S., China, Vietnam, and Thailand. In addition, The Kyocera Group promotes collaboration and cooperation with industry associations as a means of cooperating with external parties regarding responsible mineral sourcing. Specifically, Kyocera has participated as a key member of the "Responsible Minerals Procurement Study Group" established within the Japan Electronics and Information Technology Industries Association (JEITA) since its inception in order to respond to regulations related to Section 1502 of the U.S. Financial Regulatory Reform Act and others. We have been taking the lead in cooperating with the "Responsible Mineral Procurement Study Group" in identifying and addressing issues in the study and in conducting the study briefing sessions.
Moreover, Kyocera conducted a survey of our business partners using the Conflict Minerals Reporting Template (CMRT) prepared by the Responsible Minerals Initiative (RMI), an international organization dealing with conflict mineral issues. From FY2019, the Due Diligence based on Annex II of the OECD Guidance has been conducted. We checked the smelters/refineries listed in the CMRT provided by our suppliers against the list disclosed in the RMI. As a result, we sent a Risky Smelter Report to business partners who had some problems that needed addressing in order to raise their attention, and we pressed supply chains for smelters/refineries to acquire Conformant certification and hold consultation meetings to respond to issues and questions that our business partners have. We will continue to request said activities until our goal of conflict-free minerals procurement is achieved.

Consultation meetings in JEITA
Consultation meetings in JEITA

Results that we checked the smelters/refineries listed in the CMRT provided by our suppliers against the list disclosed in the RMI.

  Gold Tantalum Tin Tungsten Total
Number of refineries/smelters 175 35 83 50 343
Number of refineries/smelters validated as CFS* 95 33 60 35 223
Number of refineries/smelters considered as non-CFS (including those with certification pending) 80 2 23 15 120

Smelters/refineries that have been certified by a third party as not involved in conflicts and not having human rights violations or other problems.

Customer EMART Survey

Kyocera Group conducts surveys for cobalt every year since 2019, which is increasingly requested by our customers. From FY2022, we surveyed using the new Extended Material Reporting Template (EMRT) published by RMI, further expanding the target minerals and target suppliers. The response rate was 94.0% for the EMRT survey and 96.4% for the CMRT survey, indicating a high degree of understanding and interest in the supply chain.

EMART Survey Results for FY2023

mineral registered facility conformant authentication Uncertified conformance rate
Cobalt 71 35 36 49.30%
Natural mica 16 0 16 0

No smelters/refineries were identified as at risk. Conversely, the rate of smelters/refineries acquiring an RMAP Conformant certification has been trending downwards in recent years for the 3TG minerals (tantalum, tin, tungsten, and gold), and proportionally, the usage rate of smelters/refineries certified as risk-free in Kyocera is also on a downward trend. We will look to requesting business partners to review the list of smelting plants while lobbying smelting plants to undergo audits through the efforts of the JEITA Responsible Mineral Trade Working Group. In addition, we have established and are managing the following KPIs so that we can report these activities in a more quantifiable manner.

Conformant smelter/refineries Ratio

Conformant smelter/refineries Ratio
KPI Targeted figures and year of achievement FY2023
Percentage of conformant smelter/refineries usage that has been evaluated for conflict-affected and high-risk areas (CAHRAs*) and certified as risk-free Target value: 70%.
Target year for achievement: FY2025		 65.01％

A high-risk area for conflict or human rights violations, etc., as defined in the OECD Due Diligence Guidance.

Human rights due diligence initiatives for the Kyocera supply chain

The Kyocera Group conducts "Human Rights Due Diligence" as outlined in the Kyocera Group Human Rights Policy (announced on November 2, 2020). In order to comply with the Kyocera Group Human Rights Policy, a human rights due diligence framework for the supply chain was developed and commenced operation in line with the UN's Guiding Principles on Business and Human Rights. In concrete terms, this framework is implemented in accordance with the following procedure.

Survey process and analysis results

Kyocera conducted a survey with 413 domestic suppliers, with a response rate of 81% (335 companies). Of the supplier respondents, 59% of domestic suppliers (197 companies) employed foreign workers.
Domestic suppliers are made up of materials suppliers, suppliers of other goods, and affiliates. This survey showed that over half of each type of supplier employed foreign workers, with 20% of these suppliers employing technical interns. Suppliers belonging to this industry tend to be at high risk of human rights-related violations.
In particular, due to the high rate of employment of foreign technical interns at the 57 Kyocera subcontractors, Kyocera representatives visited these companies individually to ask for their understanding of our human rights due diligence activities, meet with key personnel, and requested their continued participation and cooperation in this matter.

Of the responses received from the 197 companies domestic suppliers of Kyocera that employ foreign workers, no apparent human rights issues were found.
Despite this, several latent human rights issues and inherent risks were identified. With regard to latent human rights issues, we will look to conduct a survey on the potential for these issues to manifest, and implement required countermeasures.
Of the main latent human rights issues identified, common issues not related to residence status are as follows.

Common issues

  • Employment documents and health and safety training materials are only available in Japanese
  • Provisions on the prohibition of forced labor are not explicitly defined in employment documents (freedom to resign without interference, etc.)
  • There is the potential for discrimination to occur in the interview process
  • There is the potential for inappropriate salary deductions (paying for protective gear at one's own expense)
  • Excessive working hours and excessive number of consecutive working days
  • Failure to conduct evacuation and safety training
  • Consulting or whistleblowing services not provided, or only available in Japanese

Issues by residence status

(1) Issues facing suppliers that hire technical interns

  • Inconsistencies in the job application guidelines set by the dispatching agency, and the details of contracts concluded between the dispatching agency and the supervisory body, and the supervisory body and the company
  • Failure to conduct on-site audits or field inspections by the supervisory body or the Organization for Technical Intern Training
  • Indications raised in on-site audits or field inspections

(2) Issues facing suppliers that hire foreign workers holding an Engineer/Specialist in Humanities/International Services residence status

  • There are cases of young workers under the age of 18 being employed
  • Failure to enroll in social insurance (failure to confirm whether this constitutes a violation of laws and regulations)
  • Potential inconsistencies in residence status and working circumstances
  • Responses indicated that fields in which the residence status was certified were not understood

While no apparent human rights issues were found, we will continue to work with business partners to identify risks and response measures to latent human rights issues by meeting with them on a continual basis to conduct hearings and interviews.

Participation in JEITA

Kyocera also participates in JEITA's CSR Committee with the aim of strengthening sustainability activities throughout the supply chain. In addition, we encourage the participation of related business partners, Kyocera employees, and all other stakeholders at JEITA-held seminars, which serve as ESG training opportunities. The impact of these opportunities is quantitatively verified based on follow-up surveys and evaluations of the current state of affairs based on regular supply chain surveys and responsible minerals procurement surveys.

Membership in the RBA

In 2022, Kyocera joined the Responsible Business Alliance (RBA), a non-profit business alliance composed of electronics, retail, automotive, toy, and other related industries with the goal of supporting the rights and well-being of workers and communities affected by global supply chains. As a global business enterprise, Kyocera fully supports the vision and mission of the RBA and is committed to improving efforts to build more a sustainable supply chain.