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CSR Procurement and
Responsible Mineral Procurement Initiatives

The CITIZEN Group advances CSR procurement to fulfill its social responsibilities throughout the supply chain. Based on the United Nations Global Compact and the CITIZEN Group Code of Conduct, we ask all suppliers in Japan and worldwide to comply with the CITIZEN Group’s CSR Procurement Guidelines , which specify requirements in such areas as respect for human rights, environmental conservation , occupational health and safety, and fair transactions, as well as auditing the state of CSR-procurement efforts broadly in line with these guidelines with regard to quality and environmental auditing conducted at plants in China. Since FY 2019, we have also begun implementing SAQ and supplier on-site fact-finding surveys * for suppliers in Japan. In FY 2020, we held online briefings on the above Group CSR Procurement Guidelines and other topics for suppliers in Japan and China to deep their understanding of the CITIZEN Group's CSR procurement. We also collected SAQs from 355 companies. At the same time, since COVID-19 made it difficult to conduct supplier fact-finding surveys on-site, we conducted them remotely. We also plan to share information with suppliers on outstanding examples of related efforts by putting to further use the awards system that has been conducted as a part of the above quality and environmental auditing.
*A term used in the CITIZEN Group to refer to on-site auditing and monitoring of suppliers

FY 2020 Results and FY 2021 Targets

(No. of companies)
CSR procurement briefings for suppliers No. of suppliers to which Self Asessment Questionaire(SAQ) is sent No. of on-site fact-finding conducted
FY2020 FY2021 FY2020 FY2021 FY2020 FY2021
Target Result Target Target Result Target Target Result Target
CITIZEN WATCH 6 5 45 3 0 1
CITIZEN MACHINARY - 14 14 35 1 1 1
CITIZEN ELECTRONICS - 9 11 60 2 1 4
CITIZEN FINEDEVICE 50 78 180 3 1 3
CITIZEN SYSTEMS 94 222 180 10 0 12
CITIZEN WATCH MANUFACTURING 20 13 32 2 3 2
CITIZEN T.I.C. - 4 4 4 1 2 2
TOKYO BIJUTSU - 8 8 8 - 0 1

*The failure to achieve targets for supplier on-site fact-finding surveys was due to the COVID-19 pandemic.

Responsible mineral procurement

Updated: January 15, 2021

The CITIZEN Group (Citizen Watch Co., Ltd. and its group companies) is aware that it is an important international issue that certain minerals originating in conflict areas and high-risk areas (CAHRAs)*1, such as the Democratic Republic of the Congo and surrounding countries, are providing a source of funds for armed groups and promoting conflicts, human rights abuses and environmental destruction. In addition, the Citizen Group supports the concept of "OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas". In response to the application of the EU Conflict Minerals Regulation in 2021, we reviewed the Citizen Group Conflict Minerals Response Policy and updated it to the Citizen Group Responsible Minerals Procurement Policy" in January 2021.

*1. Target minerals: 3TG (tantalum, tin, tungsten, gold) and cobalt

Group Sustainable Procurement Committee organizational chart

Photo

Under the Sustainability Committee, the Citizen Group has established the Citizen Group Sustainable Procurement Committee, in which the procurement division and the CSR division of group companies participate as members, with the director in charge of CSR of Citizen Watch as chairman. At the committee meetings, held twice a year, the group companies share the Citizen Group's goals and KPIs regarding responsible minerals procurement, and at the end of the fiscal year, the Sustainability Committee reports and reviews the status of the initiatives taken and continuously improve them.

Progress on the Roadmap and Future Outlook

Goals Achievement status Details of results
Due diligence on responsible mineral procurement will be started in accordance with the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas from the Organization for Economic Cooperation and Development (OECD). Achieved Due diligence on responsible mineral procurement was started in accordance with the OECD Guidance. For details, see "State of Responsible Mineral Procurement Initiatives" below.
The Citizen Group Sustainable Procurement Committee will hold a study session on due diligence related to responsible minerals procurement. Achieved In the meeting of the Citizen Group Sustainable Procurement Committee held in January 2021, which was attended by representatives of Group companies, an outside speaker lectured on topics, including the risks of involvement in human-rights violations through the use of conflict minerals, issues that companies need to address, and operation of due diligence on conflict minerals. The lecture included questions and answers and the exchange of opinions on matters, such as the state of CITIZEN Group initiatives to address conflict minerals and points of concern, and issues and courses of action for the future were shared as a group.

State of Responsible Mineral Procurement Initiatives 

The Group carries out initiatives and reviews in accordance with the framework specified in the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas from the Organization for Economic Cooperation and Development (OECD).

Framework for initiatives under the OECD Guidance (Steps 1-4)

Step 1: Establish strong company management systems

We address the risk of conflict minerals throughout the Group based on the CITIZEN Group Procurement Policy and the Citizen Group Responsible Minerals Procurement Policy. At Group companies at risk of involvement with conflict minerals, employees in the sections in charge are educated on conflict minerals, the CITIZEN Group Procurement Policy and the Citizen Group Responsible Minerals Procurement Policy are shared with suppliers, and suppliers are asked to ensure that they understand the CITIZEN Group Code of Conduct and the CITIZEN Group’s CSR Procurement Guidelines.
The CITIZEN Group's initiatives to address conflict minerals are implemented chiefly by the CITIZEN Group Sustainable Procurement Committee, and the state of such initiatives is shared with the Board of Directors as well, through reporting to the Sustainability Committee.

Step 2: Identify and assess risk in the supply chain

The 3TG surveys are conducted using the Conflict Minerals Reporting Template (CMRT), a tool provided by the Responsible Minerals Initiative (RMI), to check for the presence of conflict minerals, identify refiners in the supply chain, and confirm and assess the state of conformity to RMAP *2 and the state of suppliers' initiatives to address subject minerals.
For cobalt, in light of the properties of the CITIZEN Group's businesses we conduct surveys using the Cobalt Reporting Template (CRT).

Step 3: Design and implement a strategy to respond to identified risks

For suppliers identified from survey results to involve the risk of inability to ensure transparency regarding subject minerals, such as those with refiners not conforming to RMAP, the risks identified are communicated and efforts are made to improve the situation through negotiation and support.
Requests from CITIZEN Group customers to provide supply-chain information are responded to by providing information using the above CMRT and CRT templates, along with additional questioning of suppliers, requests for resubmittal of the CMRT or CRT, and surveying.

Step 4: Carry out independent third-party audits of supply chain due diligence at identified

points in the supply chain Through means of asking suppliers to procure minerals from refiners conforming to RMAP or from refiners conforming to the compliance standards of CITIZEN Group customers, we encourage RMAP conformity by refiners through our suppliers.

RMAP(Responsible Minerals Assurance Process)

Other Responsible Mineral Procurement Initiatives

In the same manner as with the above conflict minerals, the CITIZEN Group endeavors to procure diamonds, which also may involve the risk of involvement in conflict, responsibly.
CITIZEN WATCH, which uses diamonds in its products, has begun use of lab-grown diamonds, synthetic diamonds that are similar in quality to natural diamonds, for some products.
Lab-grown diamonds, which do not require mining and processing of rough diamonds, not only are free from the risk of involvement in conflict minerals but also are ethical diamonds that have only very minor environmental impacts.