Basic Stance on Supply Chain Management

The Daiwabo Group* has adopted the management philosophy of “creating a future that benefits society and the global environment.” The philosophy of putting the customer first is at the core of our management, and as a responsible member of the global supply chain, we recognize that efforts are needed to resolve human rights and environmental issues not just in the Daiwabo Group but across the supply chain. As such, we will endeavor to identify issues in relevant parts of the supply chain through our business activities, and ensure a stable supply of sustainable products and raw materials.

* The “Daiwabo Group” refers collectively to Daiwabo Holdings Co., Ltd. and our consolidated subsidiaries.

Basic Policy on Sustainability in the Supply Chain

The Daiwabo Group seeks the understanding and cooperation of suppliers and other business partners in the following areas, and will work with them to promote sustainability initiatives.
 

The Daiwabo Group CSR Procurement Guidelines were established in June 2023 as a tool for promoting responsible procurement activities that take sustainability into consideration. The Daiwabo Group CSR Procurement Guidelines will be published online in order to help suppliers understand our Group’s policies, and efforts will be made to disseminate them when requesting CSR procurement questionnaires.

Guiding Principles

Rectification

If it becomes clear that our business activities are facilitating environmental issues, human rights violations, or other issues in the supply chain, we will take appropriate steps to rectify the situation.

Information Disclosure

We will endeavor to disclose information related to the above in a timely and appropriate manner.

Promotion of supply chain management

Establishment of CSR Procurement Guidelines

The Daiwabo Group established the Daiwabo Group CSR Procurement Guidelines in June 2023 in order to understand supply chain issues related to our business activities and to ensure a stable supply of sustainable products and raw materials. In compiling these guidelines, we referred to the ten principles recommended by the United Nations Global Compact (UNGC) in the four areas of human rights, labour, environment, and anti-corruption, and considered the appropriate content for our business. Among them, supply chain management on “business and human rights” aims to reduce various human rights risks related to the group by preventing complicity or promotion (including indirect involvement) of human rights violations through business relationships.

Number of managed supply chain companies

The Daiwabo Group selected approximately 100 suppliers with top annual purchase amounts or above a certain percentage of purchases, according to the business characteristics of the IT Infrastructure Distribution Business and Industrial Machinery Business, as suppliers for initial management and requested the completion of a supply chain survey.

Supply chain survey

Survey Method

As part of our supply chain management activities, we used the Global Compact Network Japan’s (GCNJ) CSR Procurement Self-Assessment Questionnaire (SAQ) to conduct the first survey, which consisted of 114 questions on nine survey items: (1) Corporate governance related to CSR, (2) Human rights, (3) Labor, (4) Environment, (5) Fair corporate activities, (6) Quality and safety, (7) Information security, (8) Supply chain, and (9) Coexistence with local communities. Reference: CSR Procurement Self-Assessment Questionnaire (SAQ)

Identifying Key Suppliers

In addition to the top 90% of suppliers in terms of transaction amount in FY2022, we defined key suppliers as those that supply important commercial materials and raw materials to the Daiwabo Group, those that carry out inventory planning, and those that cannot be replaced, and they were surveyed in stages by setting priorities, such as from the highest transaction amounts.

FY2023 Survey Results

We selected and surveyed the highest annual transaction amounts and key suppliers based on the business characteristics of the IT Infrastructure Distribution Business, Fiber Business, and Industrial Machinery Business.

• We made survey requests from 89 companies, representing approximately 80% of the Daiwabo Group’s transaction amount

• CSR procurement questionnaire response rate: 100%

Results of the nine survey items (scoring rate) are as follows:

Survey Item No. of Questions Maximum Scoring Rate (%) Average Scoring Rate (%)
（1）Corporate governance related to CSR 20 100％ 86%
（2）Human Rights 9 100％ 81%
（3）Labor 23 100％ 91%
（4）Environment 15 100％ 84%
（5）Fair corporate activities 20 100％ 88%
（6）Quality and safety 7 100％ 90%
（7）Information security 9 100％ 89%
（8）Supply Chain 7 100％ 79%
（9）Coexistence with local communities 4 100％ 79%
Overall 114 100％ 85％

The overall average scoring rate for the nine survey items was 83%. Items with higher average scoring rates were labor, fair activities, quality and safety, and information security. Additionally, there were no items with extremely low average scoring rates.

Improvement Efforts

The results of the suppliers who responded to the CSR procurement survey were divided into groups based on their “scoring rate” are as follows:

Group Scoring Rate FY2023 Description
Group A Total: 80% or more 61 companies (68.5%) CSR initiatives are very good
Group B Total: 60% to less than 80% 15 companies (16.9%) A general effort has been made
Group C Total: Less than 60% 13 companies (14.6%) CSR initiatives are inadequate

For Group C suppliers, we will exchange opinions through various means of communication and work together to reduce risks to society and the environment throughout the supply chain, thereby enhancing sustainability. If understanding is not obtained or prompt improvement is not achieved after sufficient consultation, we will consider reviewing the business relationship. Additionally, if there is a serious violation of the Daiwabo Group’s CSR Procurement Guidelines, we will consider suspending business relations.