Supply Chain Management: Structure

MC’s supply chain management initiatives are overseen by the Corporate Functional Officer (CSEO). The Sustainability Department plans and formulates related policies and initiatives, which are reported to the Executive Committee and the Board of Directors following deliberation by the Sustainability Committee.

MC has established thePolicy for Sustainable Supply Chain Managementto communicate our approach to sustainable supply chain practices to our suppliers. Each year, we conduct human rights and environmental due diligence through our Sustainable Supply Chain Survey, which examines the extent to which suppliers’ initiatives align with our policies. The survey process consists of four steps: ①identifying and reviewing target products and suppliers, ②conducting the annual survey, ③engaging with suppliers, and ④reviewing the survey results, making improvements, and disclosing outcomes.

When identifying the commodities to be surveyed, MC refers to various international supply chain management declarations and international norms such as the UN Guiding Principles on Business and Human Rights. We prioritize products based on their potential impact on stakeholders, considering two factors: 1. Severity (scale of risk, scope, and how remediable the issues may be) and 2. Likelihood (conditions in each country, industry, and procurement region). Using these criteria, we prioritize products from both human rights and environmental risk perspectives. We then identify products and suppliers to assess, taking into account the views of external experts.

We conduct an annual survey of the suppliers associated with the products identified in ①. The survey flow is illustrated in the diagram below.

During the survey, we confirm each supplier's efforts in line with the Policy for Sustainable Supply Chain Management.

Please refer to the ESG Data at link below for data on number of target suppliers.

For new suppliers, the Mitsubishi Corporation Policy for Sustainable Supply Chain Management is published and shared on our website. MC also ensures through our contracts with suppliers* that they comply with the initiatives outlined in the Basic Policy.

* Including the terms and conditions of purchasing contracts, consignment sales agreements, export consignment sales agreements, long-term purchasing contracts, etc.

MC periodically requests confirmation of support for the Mitsubishi Corporation Policy for Sustainable Supply Chain Management and shares the policy with suppliers through Business and Human Rights Seminars. We also conduct regular surveys to continuously monitor progress. If MC identifies issues that need correction or improvement in relation to the Basic Policy, we request corrective measures from the supplier and provide guidance and assistance as necessary. If MC determines that resolution is unlikely despite continuous support and guidance, we will review our business relationship with the supplier.

After reviewing the results of human rights and environmental due diligence for the fiscal year, MC engages in discussions with internal and external stakeholders, including third-party experts, MC's Group Chief Sustainability Officers, and Group Sustainability Managers from each business segment. Based on these discussions, the Sustainability Committee deliberates on the policy for the next fiscal year and submits or reports relevant items to the Executive Committee and the Board of Directors.
MC also considers reviewing its supply chain management policies as needed, based on the status of dialogue with stakeholders. We disclose the results of our human rights and environmental due diligence and work to ensure stakeholder understanding. Feedback is incorporated into future initiatives. Communication with suppliers regarding due diligence has helped deepen their understanding of MC’s sustainability approach, and MC will continue to actively and consistently improve its practices.

The U.S. Financial Regulatory Reform Act (Dodd-Frank Act), enacted in July 2010, requires U.S.-listed companies to disclose, based on reasonable investigations, whether conflict minerals* used in their products originate from the Democratic Republic of the Congo or neighboring countries where conflicts and inhumane acts have been reported.
Although MC is not a U.S.-listed company and is not directly subject to the Act’s reporting and disclosure requirements, MC has established policies and guidelines on the procurement of conflict minerals for suppliers of tin, tantalum, tungsten, and gold. These policies ensure that our corporate activities do not contribute to funding armed groups in the Democratic Republic of the Congo or surrounding countries. MC also aims to take all appropriate measures to avoid complicity in human rights violations or conflicts involving armed groups.

* "Conflict Minerals," as defined by law, refer to tin, tantalum, tungsten, and gold.

Please refer to the ESG data at the link below for data on the number of target suppliers.

To ensure the promotion of sustainability through our business, the General Manager of the Sustainability Department participates as a member of the Investment Committee. This structure ensures that potential environmental and social impacts are reflected in decision-making. When screening investment and financing proposals, MC evaluates not only economic aspects but also ESG factors in its comprehensive deliberations. From a supply chain management perspective, MC conducts due diligence and other assessments on human rights considerations not only at subsidiaries and affiliates but also among their business partners. The results of these assessments are reflected in deliberation and decision-making.

MC monitors the activities of selected suppliers through communication with management and employees, as well as through site visits. These suppliers are chosen based on survey responses and include both those presenting potential human rights or environment issues and those demonstrating best practices.
During site visits, we discuss issues with suppliers facing challenges and share our policies, systems, and measures. We also draw on examples from suppliers demonstrating best practices, which contribute to improvements in human rights practices within our operating companies and supply chains.

MC also holds annual business and human rights seminars for suppliers of its group companies. In these seminars, we share our approach to sustainable supply chains, introduce best practices related to the annual theme, and exchange opinions through Q&A sessions.