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Promoting Sustainable Procurement

Basic Concept for Sustainable Procurement

The CITIZEN Group advocates the concept of “Sustainable factory” based on consideration for not only its own factories but also their manufacturing processes as one important pillar of sustainable management. This is intended to ensure that the entire value chain, including suppliers, is based on sustainable factories. Another pillar of sustainable management is that of delivering to society “Sustainable products” produced in these sustainable factories. To realize these goals, it is essential to practice sustainable procurement and maintain sustainable production structures in cooperation with suppliers who constitute vital upstream elements of the value chain with comprehensive consideration for compliance, human rights, labor practices, BCP, and productivity improvements.

Promoting Structure for Sustainable Procurement

In April 2020, we have revised our existing CITIZEN Group CSR Procurement Guidelines to establish, the second edition. Under these Guidelines, we reflect in the CITIZEN Group’s approaches changes that have occurred in social and economic conditions in recent years, international norms such as the UN Global Compact, and demands from stakeholders. In addition, to help achieve the SDGs we are incorporating elements in an even broader and more comprehensive manner to help resolve social issues, such as those in domains related to human rights and labor practices.
Together with updating these Guidelines, we have also maintained a promotion structure. The Group Sustainable Procurement Committee, for which the CITIZEN WATCH Product Planning Division, Environmental Management Office, and CSR Office serve as the secretariat, has been established under the Sustainability Committee. Chaired by the CITIZEN WATCH director responsible for CSR, this committee’s membership includes the procurement and CSR sections of Group companies. It meets twice a year to check on the state of development of effective partnerships with suppliers to realize sustainable procurement group wide and on the functional status of systems established for this purpose. In this way, we strive both to enhance cooperation among Group companies to swiftly ascertain the facts of supplier situations and request corrective measures and other necessary actions.

Group Sustainable Procurement Committee organizational chart

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Progress against the roadmap and outlook

Efforts to achieve sustainable procurement

The CITIZEN Group set up the Group Sustainable Procurement Committee, which supervises the supply chain of the whole Group, in April 2020 as a committee that comes under the Sustainability Committee, to practice sustainable procurement, a major pillar of sustainable management as the aim of the Group. In the same year, the CITIZEN Group CSR Procurement Guidelines were revised to the second edition. The revised guidelines reflect the CITIZEN Group’s attitude toward a wide range of social issues, including international norms of the UN Global Compact, requests from society and outside stakeholders, consideration of the environment, human rights, and labor practices, as well as the elements that had been implemented from before, such as green procurement and the handling of conflict minerals.
In FY 2020, a system and a guideline for promoting sustainable procurement were created, and e-learning was provided to all domestic employees in order to unify recognition within the group about sustainable procurement that the CITIZEN Group targets. The specific contents are social issues and the risks to be noted during procurement activities; connections among sustainable procurement, “sustainable factory”, and “sustainable products”; and the necessity of alliances throughout the entire supply chain with cooperation from suppliers. In addition, seminars and learning are provided to the employees in the department involved in procurement operations.
Because of the effect of the spread of COVID-19, a briefing was held for the suppliers by distributing a video to Chinese and Japanese partners. In the video, a message from the president of CITIZEN WATCH is given, the CITIZEN Group’s efforts to achieve SDGs are explained, its concept about sustainable procurement is described, and the partners’ cooperation is requested. In FY 2020, a briefing using the video was held for about 2,440 companies, which were about 67% of the major suppliers, and an SAQ in line with the CSR procurement guideline and a questionnaire concerning green procurement and conflict minerals were sent to them to confirm the situations of their efforts to fulfill their CSR in procurement.

Because risks concerning procurement and issues that an enterprise should address always change, outside experts are invited to hold a study meeting when a biannual Sustainable Committee meeting is held. In FY 2020, the CITIZEN Group conducted a study with the trend of conflict minerals in Europe and the US, where initiatives to create a supply chain is advancing most in the world, as a theme. What was learned is used for efforts by each company through the department of each company that participates in the Committee.

Promotion of sustainable procurement in close cooperation with suppliers

The CITIZEN Group conducts a fact-finding into the suppliers by preparing a fact-finding check sheet based on the SAQ etc. to examine suppliers’ efforts to fulfill the CSR and identify risks in the supply chain. In FY 2020, eight suppliers were chosen from those to which the SAQ was sent for remote fact-finding. As a result of the investigations, no serious risk or necessity of taking corrective action at the suppliers was found. Sending the SAQ and conducting the investigations were not done unilaterally. Assistance was provided to suppliers that had difficulty in answering the questionnaire in a bid to establish a relationship of mutual trust. The CITIZEN Group recognizes the importance of its overall efforts to fulfill CSR. It also recognizes funding armed groups and conflict minerals, which have a risk of leading to human rights violations, as important risks over procurement. Therefore, it revised the existing conflict mineral response policy to the “CITIZEN Group Responsible Mineral Procurement Policy” by referring to international guidelines in order to demonstrate the Group’s concept about conflict minerals and attitude toward their elimination. When revising the above policy, the expansion of minerals in question, areas from which they are to be procured, and action to be taken if a risk has been confirmed are made clear. Together with the suppliers that are procuring the minerals, the CITIZEN Group itself will make an effort to eliminate conflict minerals from the standpoint of a supplier.

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Remote fact-finding

Outlook

The CITIZEN Group started a fact-finding into the suppliers in FY 2019 and has summarized its results. Although visits to and fact-finding into overseas suppliers could not be carried out in FY 2020 because of the effect of COVID-19, the Group is coming up with methods for efficient investigations that are not choosy about places, as well as for fact-finding. While building trust and cooperative relations through positive communication with the suppliers, the CITIZEN Group will promote an efficient mechanism or a system for fact-finding that combines remote and in-person methods.