The SUBARU Group has established the Six Priority Areas for CSR and is promoting various initiatives for the realization of a sustainable society. Amid this, we believe that in order to resolve various environmental and social problems facing today’s global society, such as global warming and human rights violations, it is essential to take action not only on our own but across the entire supply chain, including at our suppliers.
At the SUBARU Group, we establish relationships with our business partners based on equality, trust, mutual benefit, and dedication to continuous improvement, seeking the realization of a sustainable society.
Fundamental Procurement Policy
The SUBARU Group has been promoting activities for sustainable procurement under the following basic policy.
- CSR Procurement
We engage in procurement activities in a way to harmonize people, society and the environment, and carry out our corporate social responsibilities in such ways as conducting transactions paying due care to observe legal and social rules and to protect human rights and the environment.
- Establish Best Partnership
We establish “WIN-WIN” relationships with suppliers through transactions based on mutual trust under the doctrine of good faith.
- Fair and Open Way of Selecting Suppliers
In selecting suppliers, the door is wide-open to all firms, in Japan and overseas, for fair and equitable business to procure goods and services most excellent from seven perspectives: quality, cost, delivery, technical development, management, environment and society (QCDDMES).
At SUBARU, the procurement departments of the Automotive Business and Aerospace Company participate in the Purchasing Committee, which promotes SUBARU’s CSR procurement initiatives.
The action policy of the Purchasing Committee is to facilitate fair procurement practices and encourage CSR at suppliers. The committee oversees efforts to address environmental, social, and governance (ESG) issues in procurement and shares the latest relevant information. By integrating any management issues identified into our action plans and implementing a plan-do-check-act (PDCA) cycle, we help to ensure fair trade between SUBARU and its business partners as well as cooperative CSR procurement throughout the supply chain. We have also been promoting CSR procurement on a global scale in collaboration with Subaru of Indiana Automotive, Inc. (SIA), our local production plant in the U.S.
CSR Procurement System
Promoting Fair Trade
SUBARU maintains compliance with laws and regulations such as the Antimonopoly Act and the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors. SUBARU also carries out fair trade promotion initiatives based on Automobile Industry Fair Trade Guidelines. As part of these efforts, SUBARU has set up a consultation service targeting suppliers in its supply chain. In 2020, we took the Partnership Formation Oath for the purpose of coexistence and prosperity of both large companies and SMEs.
The Aerospace Company conducts a survey for its business partners regarding satisfaction with its Purchasing Department. This allows better understanding of the current status of fair and proper transactions, including human rights considerations such as the conduct of those in charge of procurement at SUBARU, from the standpoint of its business partners.
For employees, we provide legal and regulatory training and other programs for those in charge of procurement to elevate their understanding of proper business practices.
Employee Training on Fair Trade in FYE March 2023
Automotive Business Purchasing Division
- Training for new recruits (12 employees)
- Training for transferees (54 employees)
- Comprehension tests for compliance (239 employees)
- CSR education (283 employees)
- External training
United Nations Development Programme (UNDP)’s “Business + Human Rights Academy” (1 employee)
Aerospace Company Procurement Department
- Training for new recruits (0 employees; no new graduates)
- Training for transferees (5 employees)
- CSR education (84 employees)
SUBARU Supplier CSR Guidelines
To promote SUBARU’s CSR procurement and help our suppliers conduct CSR activities, we created, and in FYE March 2012 began application of, the SUBARU Supplier CSR Guidelines. They are based on the CSR Guidelines for Suppliers of Japan Automobile Manufacturers Association, Inc. (JAMA), and incorporate our CSR policy.
In FYE March 2014, these guidelines were made company-wide and global, including for all suppliers of the Aerospace Company, and in FYE March 2016, SUBARU revised the content to incorporate the non-use of raw materials that engender social problems, such as conflict minerals. In FYE March 2016, we also revised the guidelines in the form of a joint edition with SIA, confirming the integration of our procurement policy. We incorporated the SUBARU Global Sustainability Policy, Human Rights Policy, and Fundamental Procurement Policy (revised edition) in FYE March 2021. In FYE March 2023, we also established and published the Responsible Mineral Procurement Policy.
At SUBARU, compliance to these guidelines is one of the criteria of our supplier selection. SUBARU asks not only our suppliers but also their suppliers as well to develop and promote CSR.
Five Topics in the SUBARU Supplier CSR Guidelines
SUBARU promotes our procurement activities based on the following basic approach.
(1) Safety and Quality
- Providing products and services that meet consumer and customer needs
- Providing appropriate information concerning products and services
- Ensuring safety of products and services
- Ensuring quality of products and services
(2) Human Rights and Labor Issues
- Striving to avoid discrimination
- Respecting human rights
- Prohibiting child labor
- Prohibiting forced labor
- Non-use of raw materials that engender social problems
- Compliance with the law on remuneration
- Compliance with the law on working hours
- Practicing dialogue and consultation with employees
- Ensuring a safe and healthy working environment
- Providing human resource training
- Implementing environmental management
- Reducing greenhouse gas emissions
- Preventing air, water, and soil pollution
- Conservation of the ecosystem
- Saving resources and reducing waste
- Managing chemical substances
- Compliance with laws
- Compliance with competition laws
- Preventing corruption
- Managing and protecting confidential information
- Managing export trading
- Protecting intellectual property
(5) Information Disclosure
- Disclosing information to stakeholders
Business Partner CSR Briefing and CSR Survey
At the Business Partner CSR Briefing, we present corporate policies such as the SUBARU Supplier CSR Guidelines in keeping with the OECD Due Diligence Guidance for Responsible Business Conduct. In our annual Business Partner CSR Survey, we assess negative impact on our business partners and work with them to correct any issues discovered. We initiated this supply chain CSR due diligence in FYE March 2016 and have been conducting it annually since FYE March 2018.
In FYE March 2023, we targeted 619 automobile-related business partners (including 396 in parts and raw materials, and 223 in equipment and jig tools) to attend the briefing. Of which, 98.4% of participants, or 609 business partners, provided responses to the survey. We also conducted a briefing and survey for our business partners focused on climate change. The details and results of our actions are as follows.
Business Partner CSR Briefing
We held the Business Partner CSR Briefing online via video distribution to help prevent the spread of COVID-19. In this briefing, we presented the importance of promoting CSR in addition to human rights and environmental preservation, details about the SUBARU Group’s CSR Policy and activities, and made specific requests to business partners such as compliance with the SUBARU Supplier CSR Guidelines.
Business Partner CSR Survey
- SUBARU supplier CSR check sheet
We investigated business partners’ CSR systems, CSR initiatives for their suppliers, and compliance with the SUBARU Supplier CSR Guidelines covering human rights, labor, and the environment, identifying one business partner with potential issues with compliance in their initiatives. Follow-up investigations were conducted with the company through interviews. The company promised to make improvements before the continuation of the investigation in the next fiscal year. Furthermore, we continued to conduct investigative interviews with the two business partners who faced issues in FYE March 2022. Through the interviews, we confirmed improvements in their initiatives, such as the establishment and dissemination of CSR policy and the appointment of CSR officers. The above results were referenced in our supplier selection process.
- Survey on employment of non-Japanese skilled workers in Japan
We conducted a survey regarding the employment of non-Japanese personnel by our business partners, examining wage levels, payment methods, working hours, Article 36 Agreement on overtime work and working on holidays (Labour Standards Act), insurance, pensions, health checkups, living conditions, passport possession, Japanese language education, daily life guidance, and industrial accidents. Nine business partners were identified as having potential issues. Follow-up investigations were conducted with the nine companies through interviews. In all cases, the conclusion was that there were no issues with treatment regarding non-Japanese worker human rights and labor.
- Survey on human rights initiatives
We conducted a survey on the implementation of human rights due diligence by our business partners and within the supply chain, information on the origin of high-risk raw materials in case risk has been identified through due diligence, including country, region, ethnicity, company name, other specific details, and the results of addressing these risks. We identified one business partner with potential issues. Follow-up investigations were conducted with the company through interviews and no issues were found.
In FYE March 2023, we expanded the Business Partner CSR Survey initiative to include business partners of the Aerospace Company.
We will continue to conduct these initiatives in FYE March 2024 and beyond, potentially conducting on-site audits of our business partners while taking into consideration the reclassification of COVID-19 as a Class 5 infectious disease.
Climate Change Initiatives
As a new initiative, in FYE March 2023 we conducted on-demand briefings targeting 320 business partners with the aim of realizing decarbonization in the supply chain. During these briefings, we shared SUBARU’s CO2 emissions reduction targets with the business partners. Furthermore, we received CO2 emissions reports from 287 business partners (representing 90% of the total and 99% in terms of transaction value), allowing us to visualize the CO2 emissions for each of our business partners. We also conducted a trial calculation of CO2 emissions at the component level for selected business partners.
Consultation Service for Non-Japanese Workers
In addition to our existing consultation service for promoting fair trade, in FYE March 2023 we endorsed and cooperated with the supply chain human rights initiative, Japan Platform for Migrant Workers towards Responsive and Inclusive Society (JP-MIRAI), on the establishment of a consultation service for foreign workers in the supply chain in Japan. As background to this, employees of the Purchasing Division, including the general manager in charge, took part in JP-MIRAI’s “Consultation and Relief Pilot Project for Foreign Workers.”
We continued our participation with the “Collaborative Program for Companies Responsibly Hosting Foreign Migrant Workers,” which marked the full-fledged implementation of the program in FYE March 2024, targeting local business partners.
We provide support in nine languages* for the consultation service, the area of the program that SUBARU is involved in. This service is available not only for non-Japanese but also Japanese workers employed by business partners.
The consultation service covers a wide range of topics, from gathering information about daily life in Japan to addressing concerns related to human rights and labor issues. For matters that cannot be resolved through the consultation service, we provide accompanying support through consultations with specialists such as lawyers, or utilize the Tokyo Bar Association’s Alternative Dispute Resolution (ADR) for added assistance. This ensures a fair and transparent approach through third-party involvement.
We held a briefing for relevant business partners on the procedures for using the consultation service and requested that they disseminate the information among their employees.
The overall program, including the consultation service, has been developed by taking into account the feedback and input from companies and stakeholders, including suppliers, that participated in the pilot project.
Responsible Mineral Procurement
The SUBARU Group has no intention of colluding in the infringement of human rights and environmental destruction by procuring and using conflict minerals. As a member of the Japan Automobile Manufacturers Association (JAMA), we have been actively participating in collaborative efforts addressing conflict minerals since FYE March 2015. In FYE March 2023, we expanded the scope of our conflict mineral survey from our traditional 361 suppliers of automotive components and materials to include business partners specializing in repair parts, bringing the total number of surveyed companies to 394. We also conducted a cobalt survey for certain business partners in FYE March 2023 following similar efforts in the previous year. We will work to roll out surveys regarding minerals other than these conflict minerals (tin, tantalum, tungsten, and gold). Going forward, SUBARU’s policy is to work toward “No use of materials engendering social problems” in partnership with our customers and suppliers as our social responsibility in procurement activities. As one of our initiatives, we codified our Responsible Mineral Procurement Policy in May 2022 as follows.
Responsible Mineral Procurement Policy
- The SUBARU Group aims for non-use of raw materials that engender social problems, such as infringement of human rights and environmental destruction.
- We will clearly state this approach in the SUBARU Supplier CSR Guidelines and request that those in our supply chain comply with these.
- As one of our initiatives, we will conduct an annual conflict minerals survey targeting the direct material supply chain.
- In this survey, we referenced the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, using the Conflict Minerals Reporting Template (CMRT), a questionnaire provided by the Responsible Minerals Initiative (RMI), and other information. We used this to trace through the supply chain and identify smelters, working to avoid procuring raw materials from smelters that are linked to the infringement of human rights or sources of funding for armed groups in conflict and high-risk areas, such as countries around the Democratic Republic of the Congo.
- In addition, for minerals other than conflict minerals (tin, tantalum, tungsten, and gold) such as cobalt, for which child labor is a concern in some mining, we will use the Extended Minerals Reporting Template (EMRT) questionnaire provided by the RMI, as well as other tools, to conduct due diligence. If any problems are found, we will take necessary corrective measures.
- In our activities, we will cooperate with our customers, business partners, industry bodies, and other stakeholders, and strive to disclose information.
Green Procurement Guidelines
The SUBARU environmental policies state that “Our purchasing activities reflect consideration for biodiversity and other aspects of environmental protection.” We promote the procurement of parts, materials, and services from business partners who implement business activities that consider the environment. In addition, SUBARU has expressed in the SUBARU Green Procurement Guidelines its expectations for business partners regarding environmental initiatives. The guidelines primarily request cooperation in the following 10 areas:
Requirements for Suppliers
Requirements concerning Suppliers’ Environmental Management
- Compliance with environmental laws and regulations
- Establishment of environmental management system (EMS)
- Submission of Environment Manager registration forms
- Improved environmental performance
Requirements for Activities Considering the Entire Life Cycle
- Reduction of greenhouse gases
- Utilization of recycled resource materials
- Appropriate management of water resources
- Addressing biodiversity
Requirements for Parts, Materials, and Services Supplied to SUBARU
- Management of substances of concern
- Reduction of CO2 emissions and packaging and wrapping materials in logistics
Compliance to these guidelines is considered a necessary criterion for selecting business partners, and we recommend new business partners to formulate an EMS with the acquisition of ISO 14001*2 third-party certification at its base. Currently, all of our Tier 1*3 business partners have already acquired ISO 14001 certification. In case our new business partners have difficulty acquiring ISO 14001, we review their compliance status by having them submit voluntary assessment reports based on our EMS, while supporting them with the acquisition of Eco Action 21*4.
To those business partners who have passed our voluntary examination, SUBARU makes inquiries or performs audits as necessary and requests them to continue efforts toward early acquisition of third-party certification for environmental management.
Management and Reduction of Environmentally Hazardous Substances Contained in Parts
SUBARU complies with laws and regulations concerning substances of concern in each country, including the REACH regulation*6 and ELV Directive*7. We perform usage surveys regarding chemical substances contained in parts to our business partners as necessary and continue to perform management of those substances. In addition, we are sequentially switching from materials that are prohibited by laws, regulations, or self-regulations such as industrial norms to alternative materials, and are working to reduce environmentally hazardous substances.
In addressing the REACH regulation, we disclose information about substances of very high concern (candidate substances for regulation) on our homepage for users of SUBARU vehicles in Europe.
Procurement with Consideration for Biodiversity
SUBARU surveys the use of biological resources, including cowhide and plant-derived materials, to ensure no negative impact on the ecosystem during procurement of raw materials. In FYE March 2023, we conducted due diligence through online interviews with one cowhide fabric manufacturer and one rubber parts manufacturer.
SUBARU also uses copy paper made from 100% recycled paper pulp that is not from new plant resources. Furthermore, as part of our efforts to go paperless, we aim to provide payment guides for our business partners solely online by the end of FYE March 2024. In January 2023, we succeeded in going completely paperless for the standard forms used in office procedures related to maintenance parts and vehicle accessories.
Communication with Suppliers
In our Automotive Business, we had been hosting Policy Briefings every spring to share policies on development, quality, procurement, and production with our business partners. These briefings were held online in FYE March 2022 and 2023, however, due to COVID-19. For subsequent events involving our business partners, we switched to in-person meetings in line with changes in the environmental landscape, being sure to prioritize the safety of all participants. Going forward, we will continue to exchange information with our business partners in collaboration with a cooperative association involving business partners.
The Aerospace Company held the SUBARU Status Report Meeting for our business partners in May and November 2022, and a New Year’s business briefing for 178 business partners in January 2023.