CSR Activity Report (CSR Guideline Activity Reports) - Facilitating CSR Initiatives Throughout the Supply Chain

Socially Responsible Procurement Initiatives at Toray Group

Toray Group's Socially Responsible Procurement

Group companies requesting their suppliers to practice CSR (%)

■Reporting scope
Toray Group
■Target in fiscal 2020
At least 80%

Result in fiscal 2020

85%

Suppliers confirming the status of CSR initiatives as requested by Toray Group (%)

■Reporting scope
Toray Group
■Target in fiscal 2020
At least 70%

Result in fiscal 2020

86%

Toray Group Supply Chain

Toray Group’s supply chain extends to diverse countries and regions around the world. In fiscal 2020, the Group’s purchasing by region was 47% in Japan, 39% in the rest of Asia, 10% in the Americas, and 4% in Europe. Purchasing by business segment was 30% for Fibers & Textiles, 22% for Plastics & Chemicals, 15% for Films, 10% for Carbon Fibers Composite Materials, and 23% for others.

Fiscal 2020 Purchasing Breakdowns by Region and Business Segment (Based on Transaction Value)

Purchasing Breakdown by Region
Purchasing Breakdown by Region
Purchasing Breakdown by Business Segment
Purchasing Breakdown by Business Segment

Socially Responsible Procurement Initiatives at Toray Group

Toray Group is facilitating CSR initiatives across its supply chains, including at group companies around the world. These efforts include developing a socially responsible procurement system, responding to customers’ requests for CSR practices, ascertaining the CSR initiatives of suppliers and educating them, carrying out CSR surveys of suppliers, and obtaining signed commitments on CSR from suppliers.
In fiscal 2020, the number of group companies requesting their suppliers to practice CSR was 136 (85%) out of the 160 applicable companies (group companies whose production activities include purchasing and/or outsourcing production). Group companies that have not yet completed such requests will do so.
In addition, Toray Group uses its own questionnaire survey system to conduct CSR surveys of suppliers. The Group has established a plan-do-check-action (PDCA) cycle by regularly monitoring suppliers’ CSR initiatives, assessing suppliers based on uniform group standards, providing feedback on the results to suppliers, and following up on poor-performing suppliers. In this way, the Group endeavors to raise suppliers’ awareness and efficiently and effectively lower CSR risks across the supply chain.
Through these initiatives, in fiscal 2020, of major suppliers that Toray Group identified as in need of confirmation of their CSR practices, 86% were confirmed to be meeting Toray Group’s standards in their work on CSR.

PDCA Cycle for Supply Chain Management
PDCA Cycle for Supply Chain Management
Main Items of CSR Surveys of Suppliers
Main Items of CSR Surveys of Suppliers

Socially Responsible Procurement Initiatives at Toray Industries

In principle, every two years in principle, Toray Industries carries out a CSR survey of major suppliers, business partners and distribution companies which together are responsible for 90% of the Company’s total procurement value. Questions are established based on Toray Group’s CSR Procurement Guidelines. The surveys exhaustively confirm the extent to which suppliers are addressing CSR, requesting actions on a variety of social issues such as respect for human rights, reduction of greenhouse gas emissions, consideration for water resources and biodiversity, and implementation of environmental assessments.
In fiscal 2020, Toray Industries carried out CSR surveys of 483 major suppliers. The results indicated that about 99% of companies surveyed were rated S, A or B1 for CSR practices, thus meeting the Company’s standards for business partners. This is 3% higher than the previous survey (fiscal 2018). The companies surveyed rated C or D, requiring further investigation of their CSR practices, decreased from 4% last time to 1%. Looking at the specific item of “CSR initiatives in supplier’s own supply chain,” the average rating for the 483 companies was up 0.6 points out of 10 (+12%) from last time. Thus, the Company reconfirmed that each supplier is carrying out CSR initiatives.
In addition, the Company visited and interviewed suppliers who were rated C or D in the previous survey to investigate conditions and request improvements. of those, 94% were confirmed to have made an improvement to a rating of B or higher in the 2020 survey.
The assessment results have been fed back to each company along with the contents of the analysis. In fiscal 2021, the Company will confirm conditions at and discuss measures for improvement with suppliers who were rated C or D, aiming to facilitate awareness of CSR throughout the supply chain and to promote CSR initiatives.
In parallel with those efforts, Toray Industries has been adding a CSR clause into basic supplier agreements. The clause stipulates that both the Company and the supplier will pursue CSR initiatives in areas such as legal compliance, environmental conservation, respect for human rights, and product safety. When a new contract is signed or when a contract is renewed, this clause is added to the new agreement. In addition, rules for responses to CSR surveys from customers are set and a system is in place to facilitate prompt and accurate responses.

  1. 1 Survey responses are assessed on a 10-point scale for each of the nine survey items. Taking the average score for the nine items as the overall score, 8 or more points is rated as S, 6 or more points but less than 8 is rated as A, 5 or more points but less than 6 is rated as B, 3 or more points but less than 5 is rated as C, and less than 3 points is rated as D.
Percentage of suppliers with the level of efforts required by the Company (Rated as S, A, or B)
99%
Fiscal 2020 CSR Status of Suppliers (Toray Industries, Inc.)
Fiscal 2020 CSR Status of Suppliers (Toray Industries, Inc.)
Fiscal 2020 Analysis of CSR Survey of Suppliers (Toray Industries, Inc.)
Fiscal 2020 Analysis of CSR Survey of Suppliers (Toray Industries, Inc.)

Socially Responsible Procurement Initiatives at Toray Group Companies in and outside Japan

Assessing socially responsible procurement conditions across Toray Group is a key issue for the Group as it builds a global supply chain. Determining the extent to which suppliers outside Japan are addressing CSR issues is a priority issue for the Group. Accordingly, Toray Industries conducted a CSR survey of those major suppliers of group companies outside Japan that had not been requested to take CSR initiatives.
After analyzing responses obtained in fiscal 2020 from 98 suppliers, it was determined that 96% of them (94 companies) were rated S, A or B for the CSR initiatives required by Toray Group. Meanwhile the remaining 4% (four companies) were rated C or D, which means they will receive further inspection. In addition to providing feedback on the results to suppliers, the group companies will continue conducting inspections of suppliers who were rated C or D, and requesting improvements as necessary.

CSR Survey Results of Suppliers of Toray Group Companies outside Japan
CSR Survey Results of Suppliers of Toray Group Companies outside Japan
Analysis of CSR Survey of Suppliers of Toray Group Companies outside Japan
Analysis of CSR Survey of Suppliers of Toray Group Companies outside Japan

To date, Toray Group companies in Japan have set up internal systems and rules and carried out CSR surveys on an ongoing basis. In fiscal 2020, they carried out CSR surveys of 498 suppliers to confirm their CSR initiatives and provided feedback on the resulting ratings to suppliers while following up with suppliers whose efforts are inadequate. In addition, Toray Industries has also deployed the survey system at Toray Group companies in Japan to standardize evaluation criteria, and the CSR status of suppliers is shared group-wide to mitigate CSR risk across the supply chain efficiently and effectively.

Human Rights in the Supply Chain

Toray Group believes that respect for human rights is a crucial element in ensuring that the supply chain is stable and sustainable. Toray Group’s CSR Procurement Guidelines state that the Company is dedicated to respecting human rights, eliminating discrimination, and improving workplace environments, as well as prohibiting forced labor, slave labor, child labor, and unfair low-wage labor. The Group requests all suppliers to comply with these guidelines.
In the CSR survey of suppliers that Toray Industries carries out regularly, the Company identifies and assesses the extent to which suppliers are addressing issues related to human rights and labor practices. The survey conducted in fiscal 2020 confirmed a high rate of implementation of initiatives on 10 survey items, excluding those related to requests to secondary suppliers, out of 11 items related to human rights and labor. In addition, in an effort to ascertain and prevent potential human rights issues within the supply chain, the fiscal 2020 survey included new questions to determine whether suppliers have been giving due consideration to and have been taking appropriate measures to address various human rights issues such as employment and labor issues that could have arisen due to the COVID-19 pandemic.
In fiscal 2021, the Company will confirm the progress of suppliers who answered “Will address in one year” ([1] in the table below) and “Not addressed” ([0] in the table below) and request that they enhance their human right initiatives, working to improve the overall implementation rate. The Company will continue to encourage the promotion of respect for human rights and higher awareness across the supply chain.

Results of Fiscal 2020 CSR Survey of Suppliers
Results of Fiscal 2020 CSR Survey of Suppliers

As part of efforts to promote human rights protections and environmental conservation in the supply chain, the Company enables individuals to report supplier human rights and environmental issues at any time via the Toray website.
Out of a total of 297 inquiries and consultations received in fiscal 2020 via the CSR inquiry form on the Toray website, two were related to human rights in the supply chain, and Company dealt with them appropriately.

Human Rights Training for Contracted Security Companies

Toray Group outsources security services to companies specialized in that field, depending on the situation in the area where a business site is located. In addition to training on the guard services required, the Group also provides training on human rights as necessary when contracting services.

Addressing Conflict Minerals

In recent years, the public has become more concerned about responsible procurement of minerals. In particular, the four minerals of gold, tin, tantalum and tungsten often mined in the Democratic Republic of Congo and surrounding countries have sometimes been a source of funding for armed groups. For this reason, under Section 1502 of the Dodd Frank Act in the United States, publicly traded companies have obligations for reporting and disclosing use of these minerals.
To comply with the rules, Toray Industries investigates whether conflict minerals are used in any of the raw materials and production equipment used for its products. If conflict minerals are used, the Company investigates the suppliers to determine the locations of smelters and mines.
In fiscal 2020, the Company also investigated products made using any of four raw materials: tin, tantalum, tungsten, and gold. It confirmed that none of the raw materials used were from conflict areas. Toray Industries has also set up an internal system for surveys and responses so that it can respond promptly and appropriately to requests from customers in regard to surveys on conflict minerals.

International Cooperation in the Textiles and Apparel Industry

Toray Group is a member of the Sustainable Apparel Coalition, a group of apparel manufacturers and retailers from around the globe. The coalition has created the Higg Index as a tool to evaluate and measure the impacts of apparel and footwear products on the environment, societies and workers. The aim is to mitigate these impacts and resolve issues. Toray Group participates in the coalition as a material supplier that plays an important role in the supply chain and collaborates with other coalition members to reduce negative impact of products on the environment and society. In addition, the Group promotes visualization of sustainability performance by conducting self-assessments using the Higg Index at Toray Group’s textile-related plants.

Click here for the main initiatives for CSR Guideline 9, “Facilitating CSR Initiatives Throughout the Supply Chain” in CSR Roadmap 2022.