Supply Chain Management

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 ensured 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 the "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, we are determined to contribute to value creation and business development through our "Basic Policy on Purchasing," diligently conducting work, and coexisting with business partners, thereby attempting to be better people and maintain the trust of society. We established the Basic Policy on Purchasing with this idea as the basis of our purchasing activities. Under this policy, we conduct various surveys on corporate overviews and CSR 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 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 the "Kyocera Group Responsible Business Conduct Guidelines" to appropriately address important CSR issues throughout our supply chain, including responsible mineral procurement, respect for human rights, and the formulation of a BCP for the prompt restoration and continuation of business operations in the event of a disaster. Based on these guidelines, we conduct surveys of our suppliers' CSR activities. Each year, we conduct surveys on human rights and labor, the environment, health and safety, fair trade and ethics, quality and safety, business continuity planning (BCP), information security, and other items, including those of our overseas suppliers. In order to develop in a sustainable manner alongside society, the Kyocera Group pursues a form of management that has screened for priority issues for sustainability, identifying supply chain management as one such priority issue (materiality). In addition, the Group reviews and assesses sustainability activities across the supply chain and carries out CSR evaluations in pursuit of remedial action. The Group pays particular attention to due diligence concerning human rights in an effort to establish an understanding of where activities are in addressing human rights across the supply chain in accordance with the Kyocera Group Human Rights Policy.

Kyocera Group Responsible Business Conduct Guidelines
Kyocera Group Responsible Business Conduct Guidelines

Designation of Key Suppliers

The Kyocera Group identifies the top 80% of suppliers in terms of purchase amount in the previous fiscal year as important 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.

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 CSR assessments from an ESG perspective

Kyocera Group ESG Key Performance Indicators

The Kyocera Group examines the responses we receive, and if we determine that improvements have not progressed, we visit the supplier to discuss countermeasures and continue the dialogue. We use a variety of communication methods to engage in dialogue with our suppliers, but if we are unable to gain a sufficient understanding or if there is no clear intention to improve, we conduct an audit by visiting them once a year. We visited two companies in FY2023.

Our company's key ESG priorities include the following:

(1) Labor, (2) Health and Safety, (3) Environment, (4) Ethics, and (5) Conflict Minerals

In particular, transactions are suspended if there is a serious violation in relation to the following 3 items.

  Description of ESG objective
Key ESG Objective 1 (E)
Key ESG Objective 2 (S)
Key ESG Objective 3 (G)

Confirmation of Compliance

We send the "Kyocera Group Responsible Business Conduct Guidelines" to our suppliers to check their compliance with the required items of the "Kyocera Group Guidelines for Responsible Corporate Behavior in the Supply Chain."

Companies Surveyed

The survey covers key suppliers, which are defined as suppliers who accounted for approximately the top 80% of the Kyocera Group's purchasing transactions in the previous fiscal year.

Evaluation Items / Evaluation Criteria / Evaluation Results

The survey includes the following categories: human rights and labor, the environment, health and safety, fair trade and ethics, quality and safety, business continuity plans (BCP), and information security. The evaluation results are as follows.

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
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

Where activities with an overall score of 20% or less are considered "inadequate," field audits are performed to request improvements and the results of which are confirmed until an overall score of at least 20% is reached. Where activities with a score in the 20% to 60% range are considered "slightly inadequate," 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.

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.

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%

Kyocera has confirmed that the counterparty rate is zero for all of the following items that Kyocera has selected as important items.

  • Percentage of high-risk suppliers on the Human Rights and Labor section of the survey
  • Percentage of high-risk suppliers on the Ethics section of the survey

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%

Percentage of Supply Chain Purchases by Region

The Kyocera Group conducts procurement activities around the world. We calculated the percentage of the value of raw materials purchased by Kyocera each year by region. As part of human rights due diligence efforts in 2022, we conducted a risk analysis by country and region, referring to materials on potential human rights risks provided by international organizations. The results of such analysis will be applied to improving procurement activities across the entire Kyocera Group in coordination with local suppliers, while also accounting for geopolitical risks.


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 reduce risks and make the supply chain transparent by examining the supply chain for the presence of conflict, human rights violations and other risks associated with minerals such as gold, tin, tantalum, tungsten, cobalt and Natural mica, assessing risks, and taking corrective measures. We are working to make our supply chain more transparent.

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. Activities and disclosed information are reported to top management through the Sustainability Committee. 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 RMAP*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. We have established and are managing the following KPIs so that we can report these activities in a more quantifiable manner.

1 Responsible Minerals Assurance Process

2 Responsible Mineral Initiative

  FY2021 FY2022 FY2023
Percentage of materials that have been evaluated regarding conflict-affected and high-risk areas (CAHRAs) and certified as risk-free (No smelters have been identified as presenting risk): 78.70% 69.62% 65.01%

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

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. We have been actively cooperating with the "Responsible Mineral Procurement Study Group" to identify and address issues in the study and conduct study briefing sessions.

Actions for Business Partners and Survey Results

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. In FY2019, the Due Diligence based on Annex II of the OECD Guidance was conducted. 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 to acquire Conformant certification. We will continue to request said activities until our goal of conflict-free minerals procurement is achieved.

Actions for Business Partners and Survey Results
Actions for Business Partners and Survey Results

We checked the smelters/refineries listed in the CMRT provided by our suppliers against the list disclosed in the RMI, with the following results.

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

We are 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, we hold consultation meetings to respond to issues and questions that our business partners have regarding investigations and conduct investigations related to new mineral procurement, which is increasingly requested by our customers. Surveys have been conducted for cobalt every year since 2019. From FY2022, we will be surveying using the new Extended Material Reporting Template (EMRT) published by RMI, further expanding the target minerals and target suppliers. We received a response to EMRT and CMRT surveys from almost all business partners, indicating a high degree of understanding and interest in the supply chain. Conversely, the rate of smelters acquiring an RMAP Conformant certification has been trending downwards in recent years for the 3TG minerals (tantalum, tin, tungsten, and gold), with no signs of the trend reversing. As the reason for this is expected to lie in progress delays of RMI audits, 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.

Customer Cobalt Survey Results for FY2023

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

Promoting CSR in the Supply Chain

The Kyocera Group works together with suppliers to promote CSR activities in order to fulfill our social responsibilities in areas such as human rights, labor, and environmental protection. Kyocera also participates in JEITA's CSR Committee with the aim of strengthening CSR activities in 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 CSR surveys and responsible minerals procurement surveys.

Ensure supply chain transparency and reporting

Kyocera conducts surveys and evaluations in a sincere and fair manner and reports the results of sincere efforts with suppliers. In addition, Kyocera has established KPIs for the following three items to enable quantitative reporting of our efforts and tracks their progress based on annual survey results.

Supply chainindicator Target and target year FY2021
Compliance rate of smelters in conflict minerals survey Target: 80% Target year: FY2023 78.70% 69.62% 65.01%
Ratio of high-risk suppliers to human rights & labor in CSR surveys Target: 0% Target year: FY2023 0% 0% 0%
Ratio of high-risk suppliers to the ethical in CSR surveys Target: 0% Target year: FY2023 0% 0% 0%

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.

The Kyocera Group's Future Initiatives

The Kyocera Group will continue to conduct investigations and seek understanding and cooperation for this initiative through educational activities for the supply chain. We will continue to work with our suppliers to build a strong supply chain, for example, by asking them to contact us as soon as they discover that the smelter is involved in a dispute. We will continue to investigate risks and encourage improvements in order to raise awareness of human rights among our suppliers even more than before by launching a new human rights due diligence initiative in the supply chain to delve deeper into these issues.