Supply Chain Management
Governance [Supply Chain Management]
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Communications with Suppliers
- The Sumitomo Rubber Group
Since the announcement of the Long-Term Sustainability Policy: “Driving Our Future Challenge 2050” in August 2021, the Sumitomo Rubber Group’s Procurement Department has promoted sustainable procurement. Specifically, we have prepared and enforced Procurement Guidelines that promote fair and transparent corporate activities in order to build sound partnerships with suppliers. We also update these guidelines and make other amendments in step with the revision of laws and regulations as well as changes in the external environment. Furthermore, we proactively accommodate proposals for improvements offered by suppliers, including value analysis (VA) proposals as well as value engineering (VE) proposals, which seek to upgrade the manufacturing approach from the design stage.
Procurement Guidelines
- The Sumitomo Rubber Group
In January 2021, the Sumitomo Rubber Group updated the Procurement Guidelines as part of efforts to realize a sustainable society. We intend to periodically update these guidelines in light of changes in the environment while asking suppliers to observe them.
The updated version of the guidelines incorporates our Corporate Code of Conduct, which encompasses such matters as compliance, human rights, labor practices, occupational safety and hygiene, community contribution and environmental conservation.
Aiming to build robust mutual partnerships with our suppliers, we work with them to ensure that our guidelines are fully understood and practiced by their own suppliers.
Sustainable Procurement
- The Sumitomo Rubber Group
In the course of purchasing raw materials and other goods, the Sumitomo Rubber Group prioritizes suppliers certified under the ISO14001 standard. At the same time, we are striving to reduce the level of hazardous content in raw materials and otherwise strengthen our environmental load substance management structure. In addition, we are conducting an assessment of procurement risks associated with environmental regulations enforced in China.
We have commissioned EcoVadis, an international third-party assessment firm, to efficiently monitor and assess the performance of supply chain constituents with regard to human rights, governance and the environment, from January 2022 onward. EcoVadis operates a platform for sustainability assessments that it uses to evaluate our suppliers in accordance with standards focused on sustainability.
Furthermore, the Sumitomo Rubber Group aims not only to achieve carbon neutrality in terms of Scope 1 and 2 emissions arising from its operations but to reduce greenhouse gas (GHG) emissions, including Scope 3 emissions, from its entire supply chain. Going forward, we will ask our suppliers to cooperate with our initiatives to reduce CO2 emissions and adopt sustainable materials.
1. Handling of Chemical Substance
Handling of Chemical Substance
*Global Automotive Declarable Substance List
Global Automotive Declarable Substance List: A list of environmental load substances compiled by major automobile, machinery parts and chemical manufacturers in Japan, Europe and the United States to establish the industry standards.
2. Assessment of Procurement Risks, Including Environmental Regulatory Risks in China
Our business units in charge of procurement are engaged in the comprehensive assessment of tire raw material suppliers who operate factories in China. Specifically, this assessment encompasses ISO14001 certification acquired by these factories and suppliers’ corporate status as well as legal compliance, on-site management and environmental protection initiatives being undertaken. These activities allow us to closely analyze changes in the regulatory environment in China and procurement risks arising from such changes and update our procurement strategies accordingly.
The initiative described above was initiated in March 2018. Premised on paying visits to suppliers to confirm and evaluate their on-site status, we completed environmental impact assessments for 50 suppliers as of December 31, 2022. Following these assessments, we provided them with proposals for improvement, such as those aimed at securing legal compliance (e.g., clarifying persons responsible and properly storing records and documents) and managing worksites (e.g., implementing the 4Ss and maintaining facilities) in accordance with requirements under ISO14001.
3. Utilization of EcoVadis
The Sumitomo Rubber Group commissions EcoVadis to confirm and evaluate various sustainability initiatives undertaken by suppliers, including those aimed at protecting the environment, advocating for human rights, preventing corruption and promoting fair transactions. For suppliers with whom we open new transactions, we conduct similar due diligence and evaluate their status.
As part of targets under the Long-Term Sustainability Policy, we have also identified a target of procuring 95% of tire raw materials on a purchase value basis from suppliers who earn scores of 45 or higher by 2030. In this regard, in fiscal 2022, we procured 82% of tire raw materials from suppliers who satisfied this standard.
In addition, we ask suppliers who are shown through due diligence and assessments to have failed to meet the above standard to make improvements. We expect that assessments undertaken by EcoVadis will help us unify our standards for supplier evaluations. Furthermore, we anticipate that assessment results offered by this firm, along with proposals for improvement, will enable us to efficiently promote sustainability activities among suppliers.
Enhancing Our Supplier Evaluation System
- The Sumitomo Rubber Group
In line with our Long-Term Sustainability Policy, we are working out the details of our procurement activity plan. With regard to supplier evaluations, we decided to update our conventional evaluation system focused on assessing the product quality, cost and delivery (QCD) aspects of suppliers by employing a new system informed by the constant monitoring of their management status, business policies and medium- to long-term business plans. We will formulate our procurement strategies based on these inputs.
Sumitomo Rubber Group Sustainable Natural Rubber (SNR) Policy
Aiming to become a company capable of contributing to the realization of a sustainable society, in October 2016, Sumitomo Rubber Industries joined the SNR-i*1 advocated by the IRSG.*2 In September 2018, we also became a participant in the GPSNR.*3 As such, we have engaged in various activities on a Groupwide basis to promote the sustainable use of natural rubber, the most important resource of our business operations.
In August 2021, we updated our SNR Policy to reflect a policy framework approved by the GPSNR, with the aim of gearing up efforts to resolve issues in regions where natural rubber is produced, such as environmental problems caused by the destruction of forests and human rights problems in the working environment.
In line with our updated SNR Policy, we will proactively promote collaborative initiatives with companies in our supply chain to realize a society in which natural rubber is procured in a sustainable manner.
*1Sustainable Natural Rubber Initiative
*2International Rubber Study Group
*3Global Platform for Sustainable Natural Rubber
Resuming the Pilot Project in Indonesia (since September 2022)
SUMITOMO RUBBER SINGAPORE has been undertaking the Pilot Project in Jambi Province, Indonesia. Although the project had been temporarily suspended in the face of the COVID-19 pandemic, the subsidiary has now resumed it, once again launching such activities as surveys to assess the status of natural rubber farms and their raw material distribution routes, the provision of training to farmers and the free-of-charge provision of fertilizers. Acting in collaboration with Halcyon Agri, a natural rubber supplier in Singapore, the subsidiary strives to support smallholders in a way that takes heed of their real-life circumstances and needs while assessing the status of natural rubber distribution routes as well as risks associated with natural rubber supply. In this way, we are pushing ahead with improving the traceability and transparency of our natural rubber procurement.
Initiating Procurement through the Agridence Rubber Platform (since November 2022)
We initiated natural rubber procurement employing the Agridence Rubber Platform provided by Singapore-based Agridence Rubber to trace natural rubber distribution routes, which are often complex. This platform not only keeps us well-informed about the status of natural rubber processors, it also enables us to trace upstream processes that take place in locations where natural rubber is produced.
Furnishing Financial Assistance to the Capacity Building Project in Thailand
We are providing financial assistance to the Capacity Building Project undertaken by the GPSNR in Thailand to support smallholders. The objectives of this project include helping farmers achieve higher incomes and promoting Good Agricultural Practices (GAP).
Providing Training to Neighboring Farmers in Thailand
We support farmers operating in the neighborhood of Sumirubber Thai Eastern Corporation Co., Ltd., one of the Sumitomo Rubber Group’s natural rubber processing bases. Specifically, we offer them seedlings and share our knowledge of fertilization and other farming practices, with the ultimate goal of improving their standard of living.