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Human Rights Initiatives

Human Rights Due Diligence

Based on the United Nations Guiding Principles on Business and Human Rights (UNGPs), National Action Plans (NAPs) have been formulated in various countries, mainly in the EU, and many NAPs include a statement on human rights due diligence.

In 2020, we established a human rights due diligence process to promptly identify, prevent and mitigate potential human rights issues.

The human rights due diligence process begins with a human rights risk assessment to assess and identify human rights risks for all stakeholders. Next, improvement activities are promoted to stop, prevent or mitigate the negative impacts of the identified human rights risks. The promotion of these activities is checked and activities to further reduce human rights risks are continued, as well as progress reporting and disclosure.

In addition to the visible human rights risks, potential negative impacts on human rights are regularly identified and risk mitigation measures are taken to prevent serious damage. Progress and findings are reported to the Sustainability Committee, a management meeting focused on the deliberation of sustainability and human rights-related issues. Significant achievements and concerns related to human rights are reported and proposed to the Board of Directors each year.
The scope of the risk identification process in Shiseido’s human rights due diligence not only includes our operations but is also extensively expanded into those of our suppliers. In any new business relationship, such as mergers and acquisitions, respect for human rights (compliance with personnel and labor issues, employee and customer safety, etc.) is part of the due diligence process for all investment decisions. Our human rights risk assessment focuses on issues such as forced labor and child labor, clearly regarding employees of suppliers as those in a vulnerable group. The risk mapping of both potential and visible impact on human rights is reviewed on a regular basis.

In 2023, we conducted a human rights risk assessment as part of our periodic review of our risk map regarding potential human rights issues. Two of our factories were surveyed by a human rights NGO to assess the working environment, which included interviews with migrant workers. Although the survey did not find any significant human rights risks, we have taken corrective measures for the cases that were identified as human rights risks. We will continue to conduct investigations to identify potential human rights risks and continuously improve our working conditions.

Human Rights Due Diligence

Human Rights Risk Assessment

Step 1: Identification of human rights issues

In cooperation with external human rights experts and by referencing international codes on human rights, standards on non-financial disclosures, and the Corporate Human Rights Benchmark (CHRB), we have developed a list of human rights issues to address including modern slavery issues and other wider-ranging issues. Throughout the value chain, we have identified the risks of targets relevant to the Company and organized the areas and targets of our due diligence in this field.

  • - Affected parties: business partners, employees, consumers, and members of society. Specifically, contractors, suppliers’ employees, our own employees (employed both directly and indirectly), women, children, indigenous peoples, local residents, and immigrants.
  • - Human rights issues to be considered: 25 listed items including respect for human rights and non-compliance with abuses, harassment and abuse, child labor (right to education), discriminatory actions and expressions, forced labor (including human trafficking), restrictions on the right to association and collective bargaining, and disadvantages on the basis of gender (including gender equality and equal pay for equal work), etc.
  • - The state of the cosmetics and personal products industry.
  • - International norms on human rights and corporate human rights benchmarks: The Ten Principles of the UN Global Compact, the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, the ILO Core Labor Standards, the Universal Declaration of Human Rights, the Global Reporting Initiative (GRI), the CHRB, the Dow Jones Sustainability Indices (DJSI), and the FTSE4Good Index Series (FTSE).

Step 2: Assessment of human rights risks

We assessed the status of our activities against the human rights issues identified above. This was done by interviewing stakeholders in Japan and overseas, and investigating internal documents such as surveys and reports — while also referring to external documents for any potential impact on human rights. Based on our findings, we determined the severity and likelihood of both potential and visible risks to human rights, as well as the status of our preventive and corrective measures.

  • - Third-party evaluations: A third-party organization specializing in human rights risk assessment was commissioned to conduct the assessment. Based on various materials and records related to Shiseido's human rights activities as well as information obtained through interviews with Shiseido Group employees in Japan and overseas, the assessment sought to determine the existence or absence of human rights risks (potential and visible risks) in the entire value chain. The organization evaluated Shiseido's human rights risk management system, including the status of our preventive and corrective measures.
  • - Human rights risk assessment requires a combination of methods at the information gathering stage, and interviews were conducted with migrant workers (temporary employees) as a means of communicating with rights holders* who may actually be affected.
  • *People who are subject to human rights and who are affected by human rights in the course of our business activities.
  • - Investigation of impact on human rights: Country-specific human rights risks were extracted from materials such as the International Labor Organization’s (ILO) survey on discrimination, World Bank surveys on training and education and consumer rights, WIN World Survey research materials on gender equality, and UNICEF surveys on child labor.
  • - Status of preventive and corrective measures: We created a checklist of preventive and corrective measures related to human rights from items that international organizations, such as the CHRB, DJSI, FTSE, and GRI, require to be addressed and disclosed. We evaluated whether or not Shiseido has taken these preventive and corrective measures.

Step 3: Human rights risk map and periodic review

Human rights risk assessment scores are mapped on two axes, severity and likelihood of occurrence, to determine the priority of responses. For severity, we assess actual risks and risks by country and region to understand their severity. For likelihood, we assign scores based on latent risks, industry-specific risks, and the existence of effective preventive and corrective processes to reduce risks. We conducted the first human rights risk assessment for the entire Shiseido Group in 2020 and the second in 2023 to confirm human rights risks. In the 2023 assessment, we received third party advice from Deloitte Touche Tohmatsu LLC, a limited liability auditing firm in the Deloitte Tohmatsu Group, as an organization with expertise in the fields of business and human rights. The risk map was reviewed regularly during the assessment, which was conducted once every two years. We identified important human rights risks of a particular priority level that needed to be addressed, and reported them to management.

Human rights risk map

Component of the score

Periodic human rights risk assessments


Human Rights Risk Assessment 2020 Human Rights Risk Assessment 2023
Scope* 3 Regions (Japan/GHQ, China, Americas) Regional headquarters of all regions
Affected parties Business partners, employees, consumers, and members of society. Specifically, contractors, suppliers’ employees, our own employees (employed both directly and indirectly), women, children, indigenous peoples, local residents, and immigrants.
Human rights issues to be considered 25 listed items including respect for human rights and non-compliance with abuses, harassment and abuse, child labor (right to education), discriminatory actions and expressions, forced labor (including human trafficking), restrictions on the right to association and collective bargaining, and disadvantages on the basis of gender (including gender equality and equal pay for equal work), etc.
  • * Including new business relationships such as M&As and joint ventures.

Important Areas of Human Rights Identified through Risk Assessment

Our human rights risk assessment identified the areas that are assumed to be relatively at high risk in Shiseido’s value chain as follows: “discriminatory actions/expressions”, “violation of compliance/fair competition”, “personal/confidential information leakages”, “employees’ personal data and privacy”, “incomplete supplier management”, “occupational safety and health issues (work-related accidents)", “breach of working hours, breaks, and rest period (overtime-work)”, and “harassment and abuse”.*

On the other hand, forced labor and child labor, which are closely related to modern slavery and human trafficking, were assessed as low human rights risks compared to other areas. Going forward, we will prioritize the human rights issues and risks discovered in our activities in 2020. We will take measures to reduce both manifest and latent risks, and strive to further enhance preventive and corrective measures and promote improvement efforts.

  • *In no particular order

Measures for Mitigating and Correcting Human Rights Risks

The eight areas identified through the human rights risk assessment have been consolidated into six categories and assigned as an area of responsibility to an executive officer. In no particular order, the six categories are:

  • - Violation of compliance/fair competition
  • - Harassment and discrimination
  • - Breach of working hours, breaks, and rest periods (overtime work)
  • - Privacy invasion and personal/confidential information leaks
  • - Occupational safety and health issues (work-related accidents)
  • - Incomplete supplier management

Risk Mitigation Measures for Each Human Rights Issue

Human Rights Impact Assessment

We conducted human rights impact assessments at eight business sites in Japan and overseas (six regional headquarters in all regions and two factories in Japan).

Occupational Health and Safety (OH & S)
Number of factories with ISO 45001 certification: 8 sites

A safety culture audit was conducted at 22 Shiseido Group companies in Japan to evaluate and analyze the level of safety culture at each company in the areas of education and training, reporting obligations, performance, resources and the environment, and organization and corporate culture. The results of the audit are reported back to the Shiseido Group Occupational Health and Safety Management System Committee, which meets four times a year. The committee analyzes trends in work-related accidents at each business site and gives instructions for improvement, especially for the improvement of dangerous locations and dangerous actions to ensure that they do not recur.

Harassment

In 2022, a workplace harassment fact-finding survey was conducted in 309 departments of the Shiseido Group in Japan. The results of the survey were provided to each department as feedback, and each department was requested to take measures to resolve harassment issues. In response, each department took corrective measures individually. In 2023, a harassment fact-finding survey was conducted at departments deemed to be at high risk of harassment to ascertain the status of subsequent improvements. The survey results were provided to all responsible persons in the departments subject to the survey as feedback, and for departments that were not making sufficient improvements, corrective measures were requested again based on the survey results.

In 2023, six disciplinary actions were taken at the Shiseido Group in Japan regarding harassment. In each case, employees involved in misconduct were punished in accordance with work rules and internal regulations, and corrective measures and measures to prevent recurrence were promptly taken in cooperation with the relevant departments.

Promoting Sustainable and Responsible Procurement

We were able to achieve the goal of using 100% sustainable paper for product packaging by 2023.*
As for raw materials derived from palm oil, we have replaced 51% of palm oil-derived raw materials (palm oil equivalent, on a weight basis) with certified palm oil based on the RSPO’s physical supply chain model.

  • *Such as certified paper and recycled paper, paper weight basis

Supplier Assessment Program
Tier 1 Suppliers Assessment

In 2023, we conducted the Supplier Assessment Program globally for all 860 Tier 1 suppliers (categories: direct materials, OEM products, contract manufacturing goods, and sales support tools). It was since 2020 that we conducted the program covering all Tier 1 Suppliers. As a result, we completed the self-assessment of all 860 suppliers*1.
Furthermore, 12 suppliers were identified as high-risk suppliers in the self-assessment.

  • We provided feedback on the result and advised on corrective action plans to all 12 suppliers.
  • We conducted third-party audits to all high-risk suppliers and asked suppliers to take corrective actions. As a result, we reduced the number of High-Risk Suppliers to 3.

We will continue working with the 3 high-risk suppliers for corrective actions, aiming to complete the corrections by the end of 2024. In addition, we will expand the categories of the Supplier Assessment Program and plan to start an assessment of Tier 1 suppliers of indirect materials*2 in 2024.

  1. *1:1 supplier completed the self-assessment in February 2024.
  2. *2:Scope of the assessment is based on priorities derived by using IQ Plus, a screening tool from EcoVadis, which screens suppliers based on county, industry sector, spend and others.

Grievance mechanisms

  • *The hotlines in Japan accept whistleblowing and consultations from all persons working for Shiseido Group companies in Japan (directors, auditors, executive officers, employees, contract employees, temporary employees, former employees within one (1) year of their retirement, and other protected parties as stipulated in the Whistleblower Protection Act).

Living Wages

Shiseido considers wages to be the amount of monetary compensation necessary for our employees and their families to be able to lead fruitful lives. We have established an internal project to develop an approach to living wages throughout the value chain. In 2023, we collaborated with the Fair Wage Network to evaluate the living wages of employees across the entire Shiseido Group using the Living Wage Methodology. We have also begun evaluating the living wages of suppliers using the same method.
In addition, for employees with children in the Shiseido Group in Japan, we provide monthly allowances to cover childcare and education in addition to base salary. (Subsidies for childcare and education expenses are available through the Cafeteria Plan.)
In 2022, in the case of employees of Shiseido Co., Ltd. and Shiseido Japan Co., Ltd. a self-assessment confirms that the basic salary is designed to exceed the living wage in comparison with the 2021 RENGO Living Wage Report issued by the Japanese Trade Union Confederation.
Furthermore, the Shiseido Group Supplier Code of Conduct stipulates that suppliers need to take into consideration their wage levels to ensure that wages paid are at a level necessary for their employees and their family members to live with human dignity.

In 2023, through the EcoVadis* questionnaire, we checked if some of our suppliers made the commitment to paying a living wage or have conducted an assessment as to whether their employees were being paid a living wage. As a result, we confirmed that 15 of them made the commitment or conducted an assessment.
In addition, we plan to conduct living wage assessment of our strategic suppliers from 2024, with the Fair Wage Network.

  1. *Measure the quality of a company’s ESG management system through its policies, actions and results.
    The assessment focuses on sustainability criteria that are grouped into four themes: Environment, Labor & Human Rights, Ethics and Sustainable Procurement.

Dialogues with stakeholders

In order to ensure sustainable and responsible procurement and respect for human rights in the course of our business activities, Shiseido works with various stakeholders to discuss both the environment and society and share and resolve issues. In dialogues with human rights experts, we received advice on how to proceed with human rights due diligence and reflect it in our activities.
In 2023, we held a dialogue with human rights experts to report on the results of our human rights risk assessment and discuss the progress of our response to each human rights risk, disclosure of human rights due diligence, and response to human rights risks in the supply chain.

Date October 16, 2023
Agenda Building grievance mechanisms, supplier management in human rights
Experts Human rights experts from the World Benchmarking Alliance and the United Nations Development Programme Asia Pacific
Key comments Human rights experts advise that it is important to build a relationship of trust with rights holders and to promote engagement with suppliers in order to build a grievance mechanism.

In 2022, dialogues with ten human rights bodies and experts were set up under the following themes.

  • Forced labor or human trafficking in supply chains
  • Privacy protection
  • Water risks and human rights
  • Gender gap

Important matters of concerns and improvements gained through the dialogues with stakeholders are reported in the Sustainability Committee held annually.

Responding to and learning from human rights issues identified through the dialogue with stakeholders

In 2023, we conducted a human rights risk assessment as part of our periodic review of our risk map regarding potential human rights issues. Two of our factories were surveyed by a human rights NGO to assess the working environment, which included interviews with migrant workers. Although the survey did not find any significant human rights risks, we have taken corrective measures for the cases that were identified as human rights risks.

Date September 21-22, 2023
Venue Shiseido Kakegawa Factory and Shiseido Osaka Ibaraki Factory
Agenda
  • - Human rights due diligence and engagement
  • - Working environment research, including interviews with migrant workers(temporary workers)
Survey and interviewer The Global Alliance for Sustainable Supply Chain(ASSC), a human rights NGO
Contents of the survey
  • - Interviews with 20 foreign workers on working conditions, wages, working hours, and safety and health.
  • - Management interviews with the management departments of the factories, checking records on working conditions, wages, working hours, safety and health, and disciplinary measures, as well as checking the actual working environment.
  • Case 1: Time spent changing clothes regarded as paid working hours
    The human rights NGO that conducted the survey pointed out that the fact that the time to change into uniforms at the time of going to work and leaving work is not treated as working hours is a human rights risk. At the time of the survey, the Company was in the process of making arrangements to pay wages for time spent changing into uniforms. In 2024, all our factories in Japan began paying for the time spent changing into uniforms.
  • Case 2: Multilingualization of employment contracts for foreign workers in our factories
    When the human rights NGO interviewed migrant workers (temporary workers) working at our factories, some of them commented favorably that the increased use of English in the notice boards and documents at the factories made them easier to understand than before. However, some pointed out that the employment contracts and other documents prepared by the temporary staffing companies were written only in Japanese. We understood the necessity of providing employment contracts in multiple languages and changed the language for preparing employment contracts so that foreign workers can understand them regardless of whether they are hired directly or indirectly.

Report/Disclosure Concerning Human Rights

 

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