Supply Chain Management

Policy

Corporations’ responsibilities to society in the global supply chain have become increasingly important as the globalization of the economy progresses and demand for the resources in developing countries increases.

In its procurement of raw materials, the Oji Group is expanding its sustainable procurement practices that consider the environment and society. The Oji Group Supply Chain Sustainability Action Guidelines and Wood Raw Materials Procurement Guidelines are shared with each procurement department. In addition, we ask new suppliers to understand this policy before doing business with us, and when the guidelines are revised, we ensure that all suppliers are thoroughly informed of the revisions, and we work to ensure our procurement activities are responsible and sustainable in line with these guidelines.
These guidelines are structured in accordance with the three internationally important principles below.

  1. Comply with laws and social norms, engage in fair trade and prevent corruption
  2. Consider the environment (address climate change, reduce environmental impact, preserve biodiversity, etc.)
  3. Care for society (respect human rights, ensuring appropriate working environments, etc.)

Furthermore, if significant violations of the sustainability action guidelines are confirmed through human rights and environmental assessments, we will engage in dialogue with the suppliers and request improvements. We will not procure from suppliers who do not make the necessary improvements.

Revised: February 26, 2024

Oji Group Sustainability Action Guidelines for Supply Chains

Oji Holdings Corporation

Basic Approach

The Oji Group has established Sustainability Action Guidelines for its supply chains. It communicates these guidelines to its suppliers and expects them to understand and comply with the guidelines.

Requests to Suppliers

The Oji Group requests its suppliers to fulfill each of the requests below. The Group will collaborate with them to fulfill the requests.
The Group expects suppliers to collaborate with their own suppliers to fulfill the requests.

(1) Compliance with laws, regulations, and social norms, fair trade, and anti-corruption measures
  1. Comply with relevant laws and regulations and international treaties.
  2. Thoroughly ensure fair trade practices and institute anti-corruption measures.
  3. Ensure that all products and services meet the required standards of quality.
(2) Consideration for the environment

Consider the impact of business activities on communities, biodiversity, pollution, and other environmental issues. Strive to reduce the usage of energy, water, and other resources, as well as greenhouse gas emissions and waste production. Promote sustainable CO2 fixation by conserving forests and implementing other means.

  1. Enhance the environmental management system.
  2. Reduce the amount of waste and use resources effectively.
  3. Address climate change.
    (Reduce greenhouse gas emissions mainly through energy conservation and promote the absorption of CO2 and sustainable CO2 fixation chiefly by conserving forests)
  4. Preserve biodiversity.
  5. Reduce environmental impact.
  6. Manage chemical substances.
  7. Manage water resources.
(3) Care about society
  1. Respect human rights. Prohibit discrimination, harassment in any form, and inhumane treatment, including corporal punishment and abuse.
  2. Prevent employees from being involved in forced labor or child labor. Prohibit the employment of children under the minimum employment age.
  3. Prohibit discrimination in employment based on gender, race, religion, or any other social attributes.
  4. Ensure that wages are above the legal minimum wage.
  5. Respect employees’ right to organize and bargain collectively.
  6. Make sure to follow the legal regulations on the maximum number of work hours and avoid excessive work hours.
  7. Make sure to provide a safe, hygienic, and healthy working environment for employees.
  8. Promote safety and health in the entire supply chain.
  9. Contribute to local communities and society
(4) Communication with society
  1. Communicate with stakeholders to build trust.
  2. Respect overseas culture and customs.
  3. Protect and disclose information appropriately.
  • * The Oji Group Partnership Procurement Policy has been renamed the Oji Group Sustainability Action Guidelines for Supply Chains.
  • * These action guidelines apply to all raw materials that the Oji Group procures. The Group has established Wood Raw Materials Procurement Guidelines separately.
  • * The Group effectively promotes sustainability procurement by monitoring its impact on the environment and society.

Translation of Oji Group Sustainability Action Guidelines for Supply Chains

Wood Raw Material Procurement Guidelines

The wood used for making paper is an excellent resource that can be renewably produced through sustainable forest management. When managed and used appropriately, forest resources can contribute to the prevention of global warming (through the absorption and storage of carbon dioxide), the conservation of water resources and the preservation of biodiversity.

We ensure that there is no deforestation or illegal logging in our management and use of forests. We maintain and enhance our forest-related environmental values, and at the same time we are aware that we must also fulfill our other responsibilities to society, such as our responsibility to respect human rights and protect labor and traditional rights in our forest operations. Understanding this, the Oji Group established its Wood Raw Material Procurement Guidelines, a part of the Oji Group Sustainability Action Guidelines for Supply Chains, to facilitate the responsible sourcing of wood raw materials from all wood chips and pulp suppliers who share our commitment to these guidelines.
Furthermore, amidst society’s growing concerns regarding human rights issues and deforestation, the Oji Group revised its Wood Raw Material Procurement Guidelines in March 2023 to respond to these social issues and it continues to review them as necessary.
We also communicate the content of revised guidelines to suppliers around the world by creating both Japanese and English language versions of the guidelines and disclosing them on our website.

Wood Raw Material Procurement Guidelines (Revised in 2024)

The Oji Group requires and verifies that all suppliers produce sustainable wood raw materials. We will responsibly procure materials by examining wood raw materials from all suppliers to ensure their traceability and purchasing materials only from properly managed forests. If the source or forest management status of the purchased wood is unknown or the wood does not conform to our requirements regarding the following, we will engage in a dialogue with the supplier and request improvements. We will not source from suppliers who do not make improvements.

  1. Raw materials production area (logging area, forest ownership form, differentiation between plantation wood and natural forests)
  2. Forest management method (applicable forestry laws, forest management regulations)
  3. Acquisition status for forest certification
  4. Avoidance of illegal logging (verification of forest certification, harvest permits, records of round logs received.)
  5. Avoidance of wood from natural forests being converted to wood from plantations or non-forest land use
  6. Avoidance of genetically modified (GMO) wood
  7. Avoidance of logging in High Conservation Value (HCV) Forests
  8. Avoidance of raw materials associated with major social conflicts
  9. Ensuring the protection of human rights and labor rights

We will also utilize the FSC™ or PEFC forest certification systems to verify the sustainability of procured raw materials. We will survey imported wood chips on a per-ship basis. Domestic woodchips and pulp, which have smaller purchase volumes, will be surveyed once a year.

Structure

Sustainability Promotion (Governance) Structure

Matters related to supply chain risks (environmental risks, human rights risks, etc.) and their countermeasures are deliberated by the Sustainability Promotion Committee and monitored and supervised by the Board of Directors. An executive in charge of Oji Green Resources, which oversees the procurement of key raw materials, participates in the Sustainability Promotion Committee. The committee's agenda includes '8. Matters related to supply chain risks and their countermeasures.'

Targets Conduct sustainability surveys for main suppliers
Results Conducted sustainability surveys of recovered paper, pulp, base paper, woodchips, chemicals, fuels (PKS, RPF, fossil fuels, etc.) and subsidiary materials (film substrates, inks, etc.)

Supplier Sustainability Surveys

As the globalization of the business and supply chain of the Oji Group continues, it is necessary to place greater importance than ever on sustainability factors such as environmental consideration, the labor environment and human rights, and to manage risks and to respond to improvement requests by understanding the actual situation on the ground, and to conduct procurement activities accordingly. In addition, in considerations of the current social situation, the Environmental Action Goal 2030 includes the following statement: “We will conduct procurement in consideration of legal compliance, the environment, and society through risk assessment of suppliers in order to maintain corporate sustainability and the trust of stakeholders. In addition, as part of this initiative, we have conducted sustainability surveys of major suppliers since 2020.”
If any compliance violations are confirmed through this survey or human rights assessments, etc., we will discuss the issues with the supplier and request improvements. If no modifications are made, we will stop procuring from that supplier.

Summary of Survey Results (FY2020-FY2023)

In fiscal 2023, the Oji Group conducted a sustainability survey targeting 203 companies, receiving responses from 150 of them. Looking at the four-year total from fiscal 2020 to 2023, the survey covered 955 companies in total, with 702 suppliers responding—an overall response rate of approximately 74%.The survey evaluated companies across eight ESG-related categories, with a maximum possible score of 800 points. The average total score was 475, translating to a score rate of about 59%. Among the categories, “Labor” received the highest average score at 67 points, while “Corporate Governance” had the lowest at 53 points.In the 2023 survey, 19 companies were rated D and 16 were rated E.

Score Rank Ratio
Score rating Criteria Number of suppliers
S 750 or more 25
A 650 or more but less than 750 53
B 500 or more but less than 650 294
C 250 or more but less than 500 224
D 100 or more but less than 250 57
E Less than 100 49
Total score Perfect score: 800 702

Rating based on the total score of eight items

Eight items from an ESG perspective

  1. Corporate governance
  2. Human rights
  3. Labor
  4. Environment
  5. Quality and safety
  6. Basic attitude toward the supply chain
  7. Harmonious coexistence with local communities
  8. Information security/protection and fair corporate activities

Follow-up and Future Initiatives

Using the results of the Supplier Sustainability Survey, the Oji Group provides guidance to suppliers (follows up with them) to encourage compliance and the implementation of measures regarding the items listed in the Oji Group Supply Chain Sustainability Action Guidelines, and it strives for continuous improvement.
Moving forward, we will continue to evaluate suppliers who significantly fall below the average score while working to improve the response rate. Additionally, for preferred and key suppliers, we plan to gradually implement human rights due diligence and environmental due diligence as a part of our assessment process.

Sustainability survey on wood pulp contained in purchased base paper (procured from base paper manufacturers) (FY2022-2024)

In FY2022, a survey of the wood pulp contained in purchased base paper (base paper manufacturers), which had not previously been included in surveys, was conducted to examine the legality of the paper (including wood-based paper) procured by the Japan Forestry Agency (JFW). Of the 531 brands (excluding customer-designated base paper), five brands contained wood where the origins of the materials were unknown.
As the origins of the materials were unknown, we began switching brands in FY2023, and by May 2024, all of the purchased base paper is base paper where 100% of the wood used has been verified as legal.

Survey Target Number of brands Ratio Notes
Base paper purchased 531 100% Excluding customer-specified base paper
Breakdown Base paper for which the legality of the wood used has been verified 531 100% Forest certification, etc. acquired
Base paper for which the origin of the wood used has not been identified 0 - Switching completed
Others 39 - Customer specified base paper

Human rights due diligence

The Oji Group requires its suppliers to respect human rights in their responsible supply chain activities, etc.
A risk assessment was conducted in accordance with the Practical Reference Materials On Human Rights Risks.
The evaluation was conducted from four perspectives.

  • Sector and business area risks
  • Risks associated with products and services
  • Regional risks
  • Company-specific risks

This assessment identified 62 suppliers identified as high risk, and we prioritized these companies in our human rights due diligence.
For more information about the Group’s implementation of its human rights due diligence activities, please visit the following public Oji Holdings website.

Conduct of responsible wood raw material procurement based on guidelines

Confirmation of Traceability

In addition, we obtain traceability reports for wood raw materials from all suppliers and use third-party audits to confirm that procurement is conducted in accordance with the wood raw material procurement guidelines.

In the guidelines for the procurement of raw materials, we have established items to be checked regarding the origin of raw materials, forest management methods, whether any illegal logging is occurring or materials are mixed with timber from high conservation value forests, whether there is any infringement of human rights, and other matters.

We procure only raw materials from properly managed forests, and it is required that we check raw materials using criteria regarding illegal logging, the infringement of human rights, and other criteria. Furthermore, we can trace the origin of wood materials throughout the entire process from the forest of origin to the chip mill, pulp and paper mill.

We monitor all suppliers of wood raw materials for compliance violations and disclose the results of our audits. In FY2023, we procured 4,453 thousand BDT (dry weight tons) of domestic and overseas chips and 146 thousand ADT (wet weight tons) of purchased pulp, and we have received traceability reports from all suppliers (a 100% response rate; 318 wood chip suppliers and 22 pulp suppliers inside and outside of Japan) to confirm that our procurement is in line with the procurement guidelines for wood raw materials using audits by third-party organizations.

We have representatives in the major countries from which we import wood chips. These representatives inspect shipments, advise suppliers regarding quality, and meet with them. When wood chips are loaded onto a ship, the origins of the raw materials, forest management methods, and other details are confirmed, and a traceability report is prepared. We verify that its suppliers maintain forest certifications, logging licenses and records of round wood received.

Regarding domestic wood chips, we have representatives in major cities across Japan who meet with suppliers. The origins of raw materials, forest management methods and other details are confirmed, and traceability reports are prepared regularly.

If we discover any issues of non-compliance with standards such as forest certification or wood raw material procurement guidelines, we will communicate with the supplier and request improvements. We will not source from suppliers who do not make improvements, and we will provide relevant information and examples of best practices to these suppliers so that suppliers are aware of the requirements they must meet and work to comply with certification standards and relevant laws and regulations.

Confirmation of traceability
Third-party audit (QPFL in Vietnam)
Traceability Report

Monitoring Our Suppliers

At Oji Group, we visit the mills and forests of our wood material suppliers every year. During these visits, we check the recording and storage of essential documents such as logging permits, which form the foundation of our traceability reports. We also monitor compliance with our wood raw material procurement guidelines, focusing on human rights including workers’ rights, safety and hygiene and environmental considerations. These evaluations involve on-site inspections and interviews.
In 2023, we visited 45 of our 318 domestic and international chip suppliers to conduct these reviews. If we identify any violations or risks, we promptly request corrective actions and work together with the suppliers to resolve the issues.

Meeting with a local supplier (Vietnam)
Inspection of a forest with a local supplier (Vietnam)

CENIBRA’s Forestry Development Program in Brazil

Since 1985, CENIBRA has supported small-scale local farmers through its Forestry Development Program. This initiative helps farmers practice sustainable forest management by providing seedlings, fertilizers and technical training. The program also guarantees the purchase of timber when it reaches maturity.
As of 2023, CENIBRA has ongoing contracts with 568 local farmers who have a total of 18,159 hectares of plantation forests. About 15% of the wood materials delivered to CENIBRA’s mill in 2023 came from these program participants. These long-term partnerships have created jobs, raised incomes, improved living standards and contributed to environmental conservation in the region.
CENIBRA has also implemented a satellite-based monitoring system to track the growth and management of contracted forests. This system ensures compliance with forest certification standards, including the prevention of illegal logging and the conversion of natural ecosystems. Alerts from the monitoring system enable CENIBRA staff to conduct timely field visits and engage with suppliers, fostering effective communication and sustainable practices.

CENIBRA Staff checking the monitoring system
Group photo from a regular technical meeting

Response to the Clean Wood Law

In March 2018, the Oji Group completed its registration as a Class-1 and Class-2 Registered Wood-Related Business Operator as defined in the Act on Promoting the Distribution and Use of Legally Harvested Wood (commonly known as the Clean Wood Law)*1 that came into force in May 2017. When we procure wood raw materials or biomass fuels, we have been verifying the legality of our procurement activities by working together with the Japan Paper Association and conducting due diligence to prove their legality.*2

  • *1 Aimed at encouraging the distribution and use of wood harvested in compliance with the laws and regulations of Japan or countries of origin and products made using such wood, this law stipulates measures to be taken by wood-related business operators and the government of Japan, as well as the scope of the wood, etc. and wood-related business operators subject to regulation, and the method of registration and other matters. The goal of this law is to control the illegal harvesting of wood, which is an international problem.
  • *2 Due diligence to prove their legality means activities to minimizing the legal risks involved in wood through the following three processes:
    • Collecting information about tree species, the country/region where the wood was harvested, and logging certifications in line with laws and regulations
    • Risk assessments using the information collected (initial and detailed risk assessments)
    • Measures to mitigate risks, including on-site investigations and changing suppliers

We Are Committed to Fostering Sustainable Supply Chains Through Active Participation in Key Initiatives.

The Oji Group aims to achieve a sustainable supply chain through the disclosure of information. To this end, we are participating in the CDP, a platform that increases companies’ awareness of sustainability, aiming to improve their activities, and CENIBRA in Brazil and KANZAN in Germany are also participating in Ecovadis, an organization that assesses the sustainability of supply chains.

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