Structure
MC’s supply chain management measures are overseen by the Corporate Functional Officer (CSEO). The Sustainability Department plans and drafts related policies and measures. Following deliberations by the Sustainability Committee, which convenes approximately twice a year, items are put forward or reported to the Executive Committee and the Board of Directors.
Risk Management
Human rights and environmental due diligence of MC supply chain (Sustainable Supply Chain Survey)
With sustainable supply chain management in mind, MC has identified products with high environmental and social risk (“products to be monitored”) in FY2016 and FY2020, with advice from consultants and external advisors. MC conducts annual human rights and environmental due diligence on the supply chains (through the Sustainable Supply Chain Survey) of suppliers of these “products to be monitored” to assess their level of compliance with the Mitsubishi Corporation Policy for Sustainable Supply Chain Management.
In identifying the commodities to be surveyed, MC referred to various international supply chain management declarations and international norms such as the UN Guiding Principles on Business and Human Rights, and prioritized them in terms of the following regarding potential impact to stakeholders: 1. Severity (scale of risk, their scope, and how remediable they might be) and 2. Likelihood (situation in each country, industry, and region of procurement).
MC asks suppliers of these "products to be monitored" certain questions that take into account the specific issues and risks of the products handled by each supplier, with a focus on aspects including “existence of policies,” “compliance with laws and regulations,” “prevention of forced labor, child labor, and discrimination towards workers,” “respect of the rights of employees to organize,” “environmental protection,” and “information disclosure.”
In addition, we receive responses from suppliers subject to the human rights and environmental due diligence to ensure its effectiveness, and look to correct or improve any issues identified. MC employs a system to identify suppliers that may have issues or that require specific action based on the results of responses to the survey. Following this, MC considers and decides whether additional surveys or on-site inspections are necessary. Furthermore, in order to improve the convenience and accessibility of the survey for suppliers, MC has built a web-based system and conducts the surveys through this online system.
In April 2024, MC conducted its annual survey of 870 suppliers from around 50 countries and regions for FY2023 transactions, where we have taken steps to correct or improve any issues identified. MC also conducted interviews with management and employees of certain suppliers to gain an understanding of actual conditions and exchanged information to help improve those situations.
① Determine “Products to be monitored”
MC choose “products to be monitored” from all of its business products based on various international supply chain management declarations and international norms such as the UN Guiding Principles on Business and Human Rights and prioritizes them in terms of the following regarding potential impact to stakeholders: 1. Severity (scale of risk, their scope, and how remediable they might be) and 2. Likelihood (situation in each country, industry, and region of procurement). In addition, when significant environmental and social risks materialize through our business activities in the future, MC will consider investigating the target products without undergoing the above process.
② Determine target suppliers of prioritized products
③ Conduct questionnaire surveys for target suppliers
The number of suppliers and the details of the survey are as follows. MC also conducted visits to certain suppliers to confirm the status of their activities. As a result of the survey, suppliers to be visited are selected from those where certain questions on the four issues (based on the ILO Core Labor Standards, etc.), are determined to have been answered insufficiently, or where best practices have been implemented.
Flowchart of the survey
Please check the link below for data on number of target suppliers.
Results of the Sustainable Supply Chain Survey
The main of the countries of the target suppliers whose products and businesses are subject to the Sustainable Supply Chain Survey are as follows:
Please check the link below for data on number of survey Results.
Communication/Engagement with Suppliers
New Suppliers
For new suppliers, the Mitsubishi Corporation Policy for Sustainable Supply Chain Management is published and shared on our website. MC also ensures in our contracts with suppliers* that they comply with the Basic Policy. In cases such as when a supplier violates the Basic Policy, MC can request the supplier to take corrective measures, and if such measures are not taken, the contract can be terminated. In addition, MC conducts the Sustainable Supply Chain Survey in order to better understand the status of compliance with the Basic Policy.
-
*
The terms and conditions of purchasing contracts, consignment sales agreements, export consignment sales agreements, long-term purchasing contracts, etc.
Existing Suppliers
Together with periodically receiving confirmation of support for the Mitsubishi Corporation Policy for Sustainable Supply Chain Management, MC conducts regular surveys of its suppliers to continuously monitor the status of their compliance with this policy. Furthermore, MC visits suppliers to confirm the status of their activities when necessary. MC continuously monitors existing suppliers to identify those that pose a high degree of environmental and social risk in line with this policy, for the purpose of verifying the appropriateness of current initiatives. Going forward, MC will incorporate the results of this reevaluation process into its supply chain management, with the goal of ensuring more effective supplier surveys.
In FY2023, MC visited Mabroc Teas Pvt Ltd. (Mabroc), a tea supplier based in Sri Lanka to observe on-site operations. Mabroc supplies tea to our group company, MC FOODS Ltd. During the visit, MC conducted on-site interview at tea farms operated by Mabroc’s group company to assess and confirm Mabroc’s sustainability management system.
MC has visited Mabroc in 2016. Back then, MC confirmed that Mabroc and its group company positioned societal and environmental initiatives at the core of their management value. During this year’s visit, MC confirmed that the initiatives have further deepened since then.
One of the symbolic measures is the appointment of female field managers. For about 200 years, due to historical and cultural reasons, tea leaves were hand-picked by female workers supervised by male field managers. However, Mabroc has started to appoint female field managers. During the visit, MC had an opportunity to interview a female field manager expressing how honored she is to be a field manager and how her family who has been engaged in the business of tea plucking for a long time is also happy about her appointment.
The company also provides field workers residential accommodations, medical facilities, as well as nursery school where workers can leave their children while they harvest. MC has confirmed that Mabroc conducts business by taking various initiatives to coexist with the workers who live and work in the plantation.
- Interview
- Tea plucking
- Nursery school
MC will continue to ensure sustainable operations throughout its supply chains in cooperation with MC Group companies and suppliers.
In the event that MC confirms, through additional surveys or on-site inspections, points that should be corrected or improved in relation to the Basic Policy, in addition to requesting the relevant supplier to take corrective measures, MC also provides guidance and assistance as necessary. If MC determines that a resolution is unlikely, even after providing continuous guidance and assistance, MC will review its business relationship with the relevant supplier.
In September 2023, MC held a “Business and Human Rights” seminar for global suppliers who are subject to the Sustainable Supply Chain Survey in order to strengthen communication and engagement with suppliers. Details are described below.
“Business and Human Rights” Seminar for Suppliers and Group Companies
This webinar was held twice (once in English and once in Japanese) and was attended by a total of 150 participants from approximately 80 global suppliers.
During these webinars, an external lecturer was invited to explain the approach to human rights due diligence initiatives, taking into account the context of international trends, etc. Our company also explained the background behind the establishment of MC's Human Rights Policy, which was established in February 2024, and our company's efforts in this area. Our company’s business departments and suppliers also shared examples of good practice with the participants. Going forward, we will continue to strengthen our human rights and environmental due diligence practices on a consolidated basis.
④ Review of Initiatives for the Current Fiscal Year and Policy Planning for the Next Fiscal Year
After reviewing the results of human rights and environmental due diligence for the current fiscal year, MC discusses them with its internal and external stakeholders such as the Sustainability Advisory Committee, Group Chief Sustainability Officers, and Group Sustainability Managers in each Business Group. Based on these discussions, the Sustainability Committee will deliberate policy for the next fiscal year and put forward or report items to the Executive Committee and the Board of Directors.
In addition, MC considers reviewing its supply chain management policies as needed based on the status of dialogue with its stakeholders. Communication with suppliers about human rights and environmental due diligence in our supply chain has been an opportunity for suppliers to deepen their understanding of our sustainability approach, and MC will continue to actively and continuously work to improve its practices.
Response to Conflict Mineral Issues
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 are produced in the Democratic Republic of the Congo and/or neighboring countries where conflict-prone and reported inhumane acts are reported.
Although MC is not a U.S. listed company and is not directly subject to reporting and disclosure under the Act, MC has established policies and guidelines on the procurement of conflict minerals for our suppliers of tin, tantalum, tungsten, and gold to fulfill our social responsibilities in our corporate activities, and that the products supplied are not a source of funding for armed groups in the Democratic Republic of the Congo and/or its neighboring countries. MC also aims to take every measure not to be complicit in human rights violations and conflicts by armed groups.
Please check the link below for data on number of target suppliers.
Screening for Investment and Loan Proposals
In order to ensure the promotion of sustainability through our business, the General Manager of the Sustainability Department participates as a member of the Investment Committee, thereby ensuring a screening system that reflects potential environmental and social impacts in decision-making. In the screening of investment and loan proposals, MC screens based on not only economic aspects, but on ESG factors as well in our comprehensive deliberations and examinations. From the perspective of supply chain management, MC conducts due diligence and other screening on the status of human rights considerations not only subsidiaries and affiliates but also their business partners (supply chain), and utilizes the results of this for our deliberation and consideration.