In order to continually provide better customer-centric products and services, NESIC Group Procurement Division("NESIC") is committed to procuring all goods and services from the global supply market at competitive quality, price and delivery conditions.
In any of its procurement negotiations, NESIC shall always respect fair business terms, while complying with all applicable laws and regulations. NESIC's procurement activities are based on both the NEC Charter of Corporate Behavior and the NEC Code of Conduct.
Furthermore, NESIC is a signatory of the United Nations Global Compact, which promotes sustainable management based on the ISO26000 standard.
Through its procurement activities, NESIC will contribute to progress human rights and promote compliance with labor, environment and anti-corruption requirements, as well as with other social responsibility related expectations. NESIC procurement activities shall respect the principles of the ISO20400 standard, and rely on the cooperation of supply-chain partners, in pursuit of sustainable and ethical procurement.
Basic Approach for Procurement Activities
NESIC will contribute to both increasing our corporate value and mutual growth with supply-chain partners through procurement activities.
NESIC shall disclose applicable procurement information in a timely and appropriate manner, to ensure fair business competition with all its current and potential domestic and overseas supply-chain partners.
Evaluating and selecting supply-chain partners transparently
NESIC evaluate and select its supply-chain partners after transparent, comprehensive and objective reviews. Criteria for evaluation and selection shall include but not be limited to, management reliability, price, quality, delivery, technological capability, responsible business conduct, business continuity, social value offering and company sustainability.
Rejecting human trafficking
NESIC shall not purchase items which may be associated with modern slavery and human trafficking concerns, involving potential or existing first tier supply-chain partners and/or second and upper-stream suppliers.
Cultivating Mutual Growth
NESIC shall highly value the collaboration of its supply-chain partners, as well as the co-creation of social values.
NESIC shall engage in business arrangements that are based on trust, as a necessary requirement to cultivate lasting mutual growth.
Protecting Confidential Information
NESIC is fully aware of the value of the information obtained from its supply-chain partners through its business deals and will protect it carefully.
NESIC is committed to conducting procurement activities that are based on the NEC Code of Conduct.
Fair Trading and Equal Relationship
NESIC shall trade honestly, observe relevant laws, regulations and ethics, under an equal and fair relationship with every supply-chain partner.
Prohibiting Abuse of a Superior Position
NESIC shall not abuse its superior position in its business relationships.
Sincere Trading Manner
NESIC shall not offer or receive bribes, nor introduce pressure or squeezes such as unfair profit and/or benefit, in relation with all private sector and public sector procurement activities.
Request to Supply-Chain Partners
Our goal for responsible business conduct is to contribute to the development of a sustainable society by engaging in business activities while fulfilling our social responsibilities. To that end, it is indispensable to work in cooperation with each other with the cooperation of our business partners. We request all business partners to take positive action on the following items. We also request companies located upstream in the supply chain from which our business partners procure materials to educate and supervise the following items.
Requirements for Responsible Procurement Activities
General Requirement of Responsible Business Conduct
- Proactive promotion of responsible business conduct
- Contribution to society and community
Adherence to Laws and Respect for International Codes of Conduct
Human Rights and Labour Practices
- Prohibition of forced labour
- Prohibition of child labour; considerations when employing young workers
- Considerations regarding working hours
- Appropriate pay and allowances
- Prohibition of inhumane treatment
- Prohibition of discrimination
- Freedom of association and right of collective bargaining
- Considerations regarding minorities
- Considerations regarding foreign workers
Health and Safety
- Work safety
- Emergency planning
- Occupational injury and illness
- Industrial hygiene
- Consideration of physically demanding work
- Machine safeguarding
- Health and safety of facilities
- Health and safety communication
- Health management for workers
- Creation of an environmental management system
- Appropriate management of environmental impact substances used in manufacturing process
- Responding to survey of chemical substances
- Implementation of the product environmental assessment
- Implementation of climate change measures
- Efforts and contributions to global environmental conservation
- Green procurement
- Public disclosure of environmental information
- Appropriate management of the environmental impact substances
- Product design to minimize resource and energy conservation
- Long lifetime design
- Use of recycled parts and materials
- Use of materials that are easy to recycle
- Labeling plastic type
- Responding to Green Procurement survey
Fair Trading and Ethics
- Prohibition of offering and accepting improper profit and advantage
- Appropriate disclosure of information
- Respect for intellectual property
- Fair business
- Prohibition of abuse of a superior position
- Protection of whistleblowers
- Responsible sourcing of minerals
Product Quality and Safety
- Ensuring product safety
- Quality management
- Providing accurate information on products and services
- Protection against cyber attacks
- Protecting personal information
- Preventing the leakage of confidential information
Establishing Management Systems
- Establishing management systems
- Management of Supplier
- Appropriate import/export controls
- Maintaining grievance mechanisms
- Disclosure on the status of initiatives
Guidelines for Responsible Business Conduct in Supply Chains
Basic Policy Concerning Sustainable Procurement
Companies are required to conduct procurement activities that strongly emphasize sustainability throughout the entire global supply chain.
NESIC endeavors to work not only within ourselves, but also through collaboration and co-creation with business partners to conduct business while giving full attention to its impacts on the environment and society as a whole. We believe this will make us worthy of the trust given by society and enable us to contribute to sustainable social value creation. Based on this belief, as we learn together about critical social issues and the impact of business on society, we will continually engage in initiatives toward building a better supply chain.
NESIC conducts internal rules regarding sustainable procurement in accordance with the NEC's concept of sustainable management and the “NEC Group Procurement Policy” based on the international guidance standards ISO26000 and ISO24000 fomulated social responsibility and sustainable procurement. and share them with buisness partners
We are developing the policy in internal control pertaining to Sustainable Procurement and among suppliers. NEC has established “Basic Rules for Procurement,” and ensures that all employees remain in compliance with these regulations. To strengthen this effort, NEC also devised concrete operational rules for its procurement processes, and ensures that the rules are disseminated among procurement-related personnel by conducting regular training.In terms of implementation among suppliers, the “NEC Group Procurement Policy” and the “Guidelines for Responsible Business Conduct in Supply Chains” require our suppliers, including upstream business partners, to implement responsible business conduct and identify the following six priority risks:
- Human rights
- Occupational health and safety
- Fair trade
- Information security
- Product quality and safety
With regard to human rights, the NEC Group Procurement Policy clearly rejects slavery and human trafficking, and the Guidelines for Responsible Business Conduct in Supply Chains prohibit forced labour and child labour, while respecting workers’ right to organize. The policy and guidelines also require appropriate wages and management of work hours.
With regard to the environment, we request business partners to realize environmental management in accordance with the "the Guidelines for Responsible Business Conduct in Supply Chains, Also we establishd “Environmental Specifications Pertaining to Procurement Restrictions for the Inclusion of Chemical Substances in Products,”in the world regarding product chemical substances and require compliance with these regulations.
With regard to information security, NESIC sets out security measures to be observed by outsourcers in “Basic Rules for Customer-Related Work” and has them make a pledge to observe them in order to ensure thorough implementation of countermeasures.
Based on this policy and guidelines, NESIC will work to deepen mutual understanding with suppliers and promote procurement activities in close collaboration with them, while evaluating them comprehensively in terms of QCD*1 and sustainability, and continuing in efforts to nurture partnerships from a long-term perspective.
*1Quality, Cost and Delivery
We implement various measures to counter the above six priority risks at each stage of basic contracts, dissemination, document check, and on-site assessment. Furthermore, in addition to these measures, we have also developed a mechanism for handling supplier complaints and carry out education and awareness-raising activities for NESIC employees.
Measures and Major Activities
NESIC ensures implementation and compliance with these initiatives by suppliers by entering into basic contracts and obtaining declarations that demonstrate their commitment to responsible business conduct in supply chains. These declarations were newly formulated in response to the Guidelines for Responsible Business Conduct in Supply Chains.
As of the end of fiscal 2022, NEC Group has received these declarations from approximately 11,000 suppliers in Japan and around the world (83% of the total procurement amount). We aim to keep this declaration ratio above 75% in the context of total procurement amounts.In addition, the NESIC Group has received these declarations from approximately 2,800 suppliers in Japan and around the world (92% of the total procurement amount).
NESIC presents the NEC Group Procurement Policy, the Guidelines for Responsible Business Conduct in Supply Chains, and various other guidelines to its suppliers. We also hold exchange meetings with priority partners and “Sustainability/Information Security Sessions,” where we explain our policies and guidelines directly to suppliers and ensure dissemination of the latest measures.
NESIC disseminated information to priority partners about its sustainable procurement policies and measures at the Sustainability/Information Security Sessions, held in June 2021 with 1,792 companies participating, and at exchange meetings with priority partners, held in October 2022 with 89 companies participating.
NESIC conducts self-assessments in order to assess the status of supplier compliance with requirements and initiatives relating ton the fields of human rights,occupational health and safety,the environment fair trade,and informatuin security.
Document checks are implemented through two inspections: sustainable procurement self-check sheets (human rights, OH&S, the environment, fair trade and ethics) and information security check sheets, which utilize a special system.
In the sustainable procurement self-check sheets, in addition to the inspection themes for human rights, OH&S, the environment, and fair trade, we newly added important inspection themes for foreign national technical intern programs and COVID-19 countermeasures. We received responses from 956 companies out of the 1,015 companies we queried, and evaluated the status of each supplier on a five-point scale of A, B, C, D, and Z for each theme in light of the following evaluation criteria: “score rate” and “critical points.”*2
Critical points are questions that NEC has identified as potential risks, in light of the Guidelines for Responsible Business Conduct in Supply Chains, issued by NEC in July 2020, and other regulations, if initiatives remain unaddressed.
We plan to issue feedback sheets to all of the suppliers that responded, indicating their score for each inspection theme and comparison to the average score for each product type, and share the evaluation results with them. Furthermore, in this survey 39 suppliers received Z ratings, which determined the existence of potential risks.
We will implement support for suppliers that received Z ratings aimed at correcting these issues during the first half of fiscal 2023 through supplier engagement, such as understanding the conditions and providing correctional guidance.
With regard to information security, NESIC visits business partners annually to conduct an on-site assessment.In on-site inspections, In the inspeciton, we will request to improvement business partners and follow up until improvement measures are taken.
Establishment of Complaonts Handling Mechaism
A Compliance Hotline, a point of contact for compliance consultation and reporting, has been made available also to suppliers. By providing an independent channel, we have established a mechanism for transaction-related complaints and consultation by suppliers that is considerate of the privacy of whistleblowers.
Education and Awareness-Raising Activities
In accordance with internal procurement regulations, NESIC Corporation and its subsidiaries conduct regular training for procurement personnel, as well as timely training on individual topics to address new laws and regulations and emerging risks, in order to maintain appropriate business operations.
Addressing the Issue of Conflict Mineral
NEC Group seeks the understanding and cooperation of its suppliers for dealing with the problem of conflict minerals based on its Responsible Mineral Procurement Policy. Using CMRT and CRT,*4 NEC Group conducts surveys of its suppliers to verify information about smelters and their use of tin• tantalum• tungsten• gold (3TG), and cobalt. In fiscal 2022, CMRT surveys were conducted at 80% of the top-ranked suppliers in terms of procurement value in 2021 (excluding transactions with affiliates).
*4 CMRT and CRT: Survey and report templates of the Responsible Materials Initiative
NEC Group aims to reduce the environmental footprint of its products throughout their life cycles. NEC asks its suppliers to behave responsibly as corporations by the NEC Group Procurement Policy and Guidelines for Responsible Business Conduct in Supply Chains. We are working in close collaboration with our suppliers to promote green procurement.
NEC Group Green Procurement Standards
To promote green procurement, NEC Group have established the NEC Green Procurement Standards.
Each of items (V-1) through (V-14) defined as an environmental code of conduct in “Guidelines for Responsible Business Conduct in Supply Chains” is the NEC Green Procurement Standards.
Details of appropriate management of chemical substances contained in products, one of the NEC Green Procurement Standards, are set forth in “Environmental Specifications Pertaining to Procurement Restrictions”.