At Shiseido, we utilize the world’s natural resources to develop products and operate our business. We understand these resources are limited, and as such, we place the utmost importance on the sustainable and responsible procurement of raw materials at every stage of the supply chain. This includes the reduction and reuse of resources from the perspective of environmental protection, biodiversity, and in support of a circular economy. In all our activities, we also work to address and strengthen our response to issues such as human rights.
The production of raw materials may lead to environmental destruction and human rights violations. Raw materials such as palm oil and paper have a large impact on biodiversity, therefore it is important for companies to procure materials that are produced under sustainable conditions.
In 2020, we published our medium-term targets for the sustainable procurement of palm oil and paper, and we are in the process of switching to more sustainable raw materials. We are also strengthening our efforts to solve issues related to the mining of mica. As for mica, by clarifying our own procurement policy and building a support system in collaboration with other companies, we aim to make a positive change.
While palm oil is a highly versatile raw material used in a variety of products from food to cosmetics, its production has caused deforestation and human rights issues. Therefore, sustainable and responsible procurement is essential.
As part of our efforts in this area, in 2010, we joined the Roundtable on Sustainable Palm Oil (RSPO), an international NPO and began purchasing RSPO certificates (credits) equivalent to 100% of palm-derived raw materials in 2018*1. And in 2020, we disclosed our medium-term target of reaching 100% sustainable palm oil by 2026*2. The relevant teams in our global and regional headquarters have been working together to promote initiatives aimed at achieving this target. In addition, we have been promoting the acquisition of RSPO Supply Chain Certification at all Shiseido factories.
Since 2019, we have been part of the Japan Sustainable Palm Oil Network (JaSPON) and the palm oil working group of the Consumer Goods Forum (CGF), an international industry group consisting of food and consumer goods manufacturers and retailers, in order to solve issues related to palm oil by strengthening collaboration with other companies.
To understand human rights issues in palm oil procurement, we participated in the Stakeholder Engagement Program in 2019. This program was held in Indonesia and hosted by Caux Round Table Japan. Through conversations with NGOs, NPOs and palm oil smallholder farmers, we deepened our understanding of the human rights risks, abuses, and labor issues involved in palm oil production.
The Shiseido Camellia Fund supports the activities of the World Wide Fund for Nature Japan (WWF Japan), such as training smallholders in Indonesia who produce sustainable certified palm oil to protect the environment.
Through these activities, we will contribute to the promotion of sustainable palm oil procurement and consumption, and to the resolution of environmental and social issues related to palm oil.
Aiming to responsibly use resources and reduce single-use plastics, we actively promote the use of paper for secondary packaging such as folding cartons. However, there are environmental issues associated with the production of raw materials for paper, such as deforestation and loss of biodiversity, as well as human right issues. Therefore, sustainable and responsible procurement is essential.
We aim to be using 100% sustainable paper by 2023, and in 2021, we promoted the switch to sustainable paper*1, achieving a 72% weight shift*2.
Cosmetics packaging must satisfy various expectations. It must be strong, sustainable, and sophisticated in design. In collaboration with paper manufacturers, we are developing innovative paper packaging solutions that meet such expectations and even go beyond. We are also promoting the switch to sustainable paper for promotional materials such as product displays, bags, and leaflets, as well as copier paper in our offices.
Mica is used not only in beauty, but across a wide range of industries due to its light-reflecting properties and excellent heat resistance.
In 2017, we joined the Responsible Mica Initiative (RMI), which aims to eliminate child labor and forced labor at Indian mica mining sites to establish Indian mica as a sustainably produced raw material. In collaboration with NGOs, the Indian Government and participating companies, RMI contributes to the stable employment of mica miners, aiming to improve working conditions from a health and safety perspective. Activities also support the development of local economies and provide educational, medical and nutritional aid to children in mica-dependent communities.
We rely on natural resources for the production of cosmetics, and we recognize that the activities of the Shiseido Group have a considerable impact on the biodiversity of our planet — from the procurement of raw materials, through sales and distribution, to the disposal of our products.
In recent years, environmental destruction has led to a rapid loss of biodiversity. We recognize this as an issue that must be addressed throughout the entire value chain. We support zero deforestation and are working to conserve and restore biodiversity.
Preserving the Earth’s biodiversity is critical. Rainforests are a treasure trove of biodiversity and must be protected from unsustainable wood pulp and palm oil procurement. We are pursuing initiatives to ensure the future of ecosystems and are working to mitigate climate change by minimizing the release of carbon accumulated in forest soil into the atmosphere. We are also actively engaged in the conservation and restoration of activities for biodiversity through our brands and regional businesses.
We promoted camellia planting and conservation activities at the abandoned farmlands of the Goto Islands in Nagasaki Prefecture.
Over nine years, 352 Shiseido employees have joined this activity and planted 738 seedlings of camellia japonica across 0.194 hectares of land.
At Shiseido, we strive to grow our business as well as stimulate the growth of the societies in which we work. But we want this growth to be sustainable and responsible. In all our activities, we seek ways to prevent human rights problems and preserve the environment.
In recent years, as social and environmental issues have become more serious, companies are strongly urged to not only comply with the laws and regulations of each country, but also respect international treaties and conventions and work toward the realization of a sustainable society and world throughout their supply chains. To this end, Shiseido has established standards and policies for procurement.
We have issued the Shiseido Group Supplier Code of Conduct and the Shiseido Group Procurement Policy and conduct supplier assessments and monitoring on a regular basis to ensure an ethical supply chain. In addition, the Shiseido Group Sustainable Raw Materials Procurement Guidelines have been enforced across the Group to ensure the procurement of sustainable raw materials (e.g., palm oil and paper) on a global scale.
We strive to share and resolve issues with our stakeholders and liaise with wide-ranging experts such as international human rights experts and people working in raw material producing regions to make sure our actions always rely on expert knowledge.
We joined The United Nations Global Compact and took this opportunity to establish the Shiseido Group Supplier Code of Conduct. This code of conduct articulates norms related to human rights, compliance with laws and regulations, labor practices, protection of intellectual properties, protection of confidentiality, protection of the environment and fair transactions. We request all suppliers who have transactions with us to comply with these standards.
To ensure sustainable procurement together with our suppliers, we regularly conduct supplier assessment and the supplier assessment program, which includes corrective actions after the assessment.
In the event that any supplier is identified to have violated the code of conduct, they are requested to implement corrective actions, and we support and educate them.
Our procurement policy is to respect all our suppliers as well as ensure sustainable procurement taking society and the environment into account. This is because we aim to provide safe products with high quality which satisfy our customers.
We state a policy to create social value with suppliers in addition to economic one such as cost and quality. We define social value as fair transactions, compliance with laws and regulations, respecting different cultures and set of values, respecting human rights and protection of the environment.
To actively promote more sustainable and responsible procurement together with our suppliers, we revised the policy and announced it in February 2022. In the new Procurement Policy, we formulated requirements for our suppliers regarding the environment and human rights as well as introducing a strict, objective risk identification and correction process through third-party audits, clearly stating that we will evaluate our suppliers from the perspective of sustainability.
We take actions to resolve issues of raw materials that are determined to have a high probability of serious environmental and human rights issues in the country of origin, such as switching to materials with third party certification of zero involvement and joining international initiatives.
In particular, palm oil-derived raw materials, paper and mica cause deforestation and labor issues which have been frequently revisited. Therefore, we announced targets and measures to resolve the issues and set out a guideline to ensure sustainable procurement.
Items to be purchased include direct materials such as raw materials and packaging for our products, sales support tools, OEM products and contract manufacturing goods.
Our relationship with our suppliers is based on the following philosophies stated in the Shiseido Group Procurement Policy: “Building a Good Partnership,” “Fair Purchasing Transactions,” “Performance of contract”, “Promoting sustainable procurement”, and “Respecting diverse values”.
We purchase materials for our products from over 800 suppliers*1,*2 spanning countries and regions.
We identify strategic suppliers once a year by the following process
Our aim is to create a sustainable supply chain built on responsible procurement and to minimize risk across the entire supply chain. To do so, we are promoting the implementation of a supplier assessment program.
At Shiseido, we implement the program based on the Shiseido Group Procurement Policy which was revised in 2022. We don’t work with suppliers, if they are categorized as high-risk by the assessment and don’t correct non-conformances identified by audits.
For new suppliers, we conduct a self-assessment* from the perspective of sustainability (human rights, occupational health and safety, environment, and business ethics) using either Sedex (Supplier Ethical Data Exchange), EcoVadis, or our original Self-Assessment Questionnaire (SAQ). We start business with new suppliers after conducting supplier assessment, confirming that they are not high-risk and then agree to the Shiseido Group Supplier Code of Conduct.
For existing suppliers, we continuously confirm compliance with the Shiseido Group Supplier Code of Conduct using the above assessments. We categorize suppliers into three groups according to the degree of risk: low-risk, medium-risk, and high-risk. If a supplier is categorized as high-risk, we conduct third-party audits.
During third-party audits, employee interviews and verification of required documentation are conducted. High-risk suppliers are then requested to implement corrective action plans, and in the event of critical non-conformance, we conduct further third-party audits to confirm correction status. If issues are not corrected within a set period, we consider suspension of business.
* About self-assessment tool
|Tool||Explanation (main criteria etc.)|
|Sedex||Evaluate suppliers by the questionnaires based on labor standards, health and safety and business ethics. The number of questions vary depending on industries.|
|EcoVadis||Measure the quality of a company’s sustainability 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.
|Shiseido SAQ（Self-Assessment Questionnaire）||Based on the Shiseido Group Supplier Code of Conduct. Evaluate suppliers from four perspective: human rights and labor, occupational health and safety, the environment and business ethics.|
Since 2018, we have strengthened our supplier assessment program and expanded the scope gradually from a category, country, and Tier (a measure of the distance of a supplier from companies).
From a category perspective, we assess suppliers which provide direct materials, limited sales support tools, OEM suppliers, contract manufactuiring suppliers, and from a geographical perspective, we conduct the assessment globally.
From a Tier perspective, we cover suppliers not only in Tier1 but also strategic Tier2 suppliers.
Our activities in 2021
We set the correction of high-risk suppliers identified in 2020 as our top global priority and implemented corrective actions globally for the applicable 132 suppliers.
Specifically, we provided feedback to all suppliers and requested corrective actions. For certain suppliers, we also conducted online verification of corrective status, reassessment by self-assessment, and third-party audits (2 suppliers). As a result of these corrective actions, the number of high-risk suppliers decreased from 132 to 40.
In 2021, we assessed suppliers in Japan and Europe, considering the magnitude of risk and the importance of the supplier. In total, we assessed 279 Tier 1 suppliers and 5 Tier 2 strategic suppliers. As a result, 17 Tier 1 suppliers were categorized as high-risk, while no Tier 2 strategic suppliers were categorized as high-risk.
In response, we provided feedback to the 17 high-risk suppliers, followed by a reassessment using self-assessment methods and third-party audits (3 suppliers). This resulted in 8 suppliers improving to medium-risk or low-risk.
Beginning 2022, we will conduct assessment program based on the new procurement policy for the remaining 44 high-risk suppliers* currently engaged in corrective actions.
Status of Remediation of High-Risk Suppliers
|Year of Assessment||High-Risk Suppliers||Corrective Action Result*1|
|Improved to Medium-Risk or Low-Risk||Ongoing|
|2020||132 companies||92 companies||40 companies*2|
|2021||17 companies||8 companies||9 companies*2|
2021 Supplier Assessment Results
|Tier 1 Suppliers||279 companies|
|Tier 2 Strategic Suppliers||5 companies|
(KPI1) % of suppliers assessed (number of Tier 1 suppliers)
|year||2019||2020||2021||2021 target||2023 target|
|% of suppliers assessed |
(number of suppliers assessed)*1
|72％（356）||94％ （791）||97％ （279）||70％||100％|
|Geographical scope||Global headquarter and EMEA Regional headquarter||All Regions||Global headquarter and EMEA Regional headquarter|
(KPI2) % of strategic suppliers assessed (number of Tier 1 suppliers)*1
|Year||2019||2020||2021||2021 target||2023 target|
|% of strategic suppliers assessed (number of suppliers assessed)||77％（131）||96％（239）||100％（17）*2||100％||100％|
Due to logistic difficulties arising from the spread of COVID-19, we were only able to conduct the third-party audits of 5 suppliers in 2021. In total, we identified 18 issues and requested that the relevant suppliers correct them. Furthermore, we conducted further third-party audits by which we confirmed 12 of the issues had been remedied. As for those which had not been corrected, we will continue to monitor the progress.
Issues identified by audits and corrective actions
|Area||Number||Examples of issues||Examples of corrective action plans|
|Human rights||7||Violation of 36 Employee-Employer Agreement||Restructured the management scheme of working hours and hired new employees|
|Representatives of employees were not selected properly||Changed the method of selection|
|Occupational health and safety||9||No sign for emergency exits||Placed the signs in the facility|
|Workplace patrols by industrial physicians were conducted only once every six months||Conducted the inspection in accordance with the laws and regulations|
|Employees were using machinery without required trainings||Conducted trainings|
|Environment||1||No measurement of Greenhouse gas||Established a measurement plan|
|Business ethics||1||No employee training of business ethics||Established a plan to conduct the trainings|
To keep pace with the changing times and respond to social requirements, Shiseido considers it important to communicate our concept of procurement with business partners in a timely and accurate manner.
Therefore, with the aim of widespread dissemination of the procurement policy, the procurement departments in the Global Headquarters and China Regional Headquarters hold an annual Supplier's Day to share purchasing activities and strategies with suppliers.
Taking this opportunity, our Global Headquarters procurement department promulgates Shiseido’s procurement policy, various tasks, and requests in the fields of raw materials, packaging, and indirect materials, and responds to questions and requests from business partners.
High-performing suppliers in conformity with our purchasing policy are invited to the annual Shiseido Suppliers’ Awards. In fiscal 2019, 43 suppliers participated in the event held at “S/PARK,” in the Minato-Mirai area, of Yokohama. The top five suppliers were awarded in fiscal 2019 based on QCDEST*1 evaluation. We expressed our gratitude to our suppliers, shared our view for the future, and reaffirmed our commitment to forge a strong partnership.
In 2021, we held our global online event, Shiseido Supplier’s Day for the first time. Top management of direct material and OEM suppliers participated in the event. We used this opportunity to share our medium-term management strategy, procurement policies, and expectations.
We also explained our mid-term sustainability targets and actions, as well as our expectations of suppliers in terms of human rights, environment, and society and asked for their understanding and cooperation.
We regularly host meetings with purchasing leaders from each of our global facilities. In the meetings, we discuss important policies such as sustainability and strategies and make efforts to collaborate closely at a global level.
In addition, once per year, we host the Shiseido International Procurement Meeting (SIPM) attended by purchasing leaders from each of our global facilities. We also promote the global implementation of sustainability activities through this meeting. In 2020 and 2021, we didn’t conduct the meeting due to COVID-19.
To ensure sustainable and responsible procurement throughout the company, we proactively provide education on relevant issues mainly to staff members of procurement departments.
|May, October 2020||Opportunities and challenges in sustainability (internal seminar)||EMEA Regional Headquarter: |
|November 2020||RSPO and RSPO certified products (internal seminar)||Global Headquarter: Buyers in charge of procurement of palm oil|
|December 2020||Trends in responsible procurement and supplier assessment (external lecturer)||Global Headquarter and China Regional Headquarter: Buyers in charge of supplier assessment|
|September 2021||Online seminar about management of sustainable supply chain||Global Headquarter: Staff in charge of Sustainability|
|November 2021||Online Seminar held by Sedex||Global Headquarter: Staff in charge of Sustainability|
|November 2021||Internal seminar about sustainability ratings||Global Headquarter: Procurement department|
|December 2021||E-learning about sustainability||Global Headquarter: Procurement department|
(KPI) % of employees in procurement departments who participated in ESG training
|Departmental ESG education participation rate||85％||86％||82％||90％|
Protecting human rights and complying with laws that protect people’s rights are critical to everyone. In 2013, we set up the Business Partner Hotline to deepen our understanding of human rights compliance at our suppliers; promote fair transactions; and nurture a culture of transparency. When we are made aware of a compliance violation, either by email or other documents, we deal with it appropriately and rapidly. In 2021, there were no reports of non-compliance.
We have been highly praised for our efforts in managing greenhouse gas (GHG) emissions and reducing risks throughout the supply chain by CDP, an international environmental NGO. In 2021, we were selected as the Supplier Engagement Leader for coming out on top of CDP’s Supplier Engagement Rating. Going forward, in collaboration with our suppliers, we will continue to promote activities that help reduce our environmental footprint.