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  4. Promoting Sustainable and Responsible Procurement

Promoting Sustainable and Responsible Procurement

At Shiseido, we strive to grow our business as well as stimulate the growth of the societies we work in. But we want this growth to be sustainable. In all our activities, we seek ways to prevent human rights problems and preserve the environment.

We have issued the Shiseido Group Supplier Code of Conduct 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 international human rights experts and people working in raw material producing regions to make sure our actions always rely on expert knowledge.

Ethical Supply Chain Policies and Standards

Following our participation in the United Nations Global Compact, we have been working closely with our business partners to define and update principles and policies on ethical business conduct. These are reflected in the Shiseido Group Supplier Code of Conduct, which we issued in 2006. This code stipulates the standards that govern and direct our behavior on human rights, legal compliance, labor practices, intellectual property protection, confidentiality, environmental protection, and fair trade.

In addition, we have defined and issued the following policies to ensure better supplier management:

●Shiseido Group Supplier Code of Conduct

The business partners that are subject to the Shiseido Group Supplier Code of Conduct have agreed to the standards. In this code, suppliers are required to accept periodic monitoring through surveys and audits. In the event that any supplier is identified to have violated it, they are requested to implement corrective actions by following guidance.

Shiseido Group Supplier Code of Conduct (Issued in Jun 2019)[ PDF : 876KB ]

●Shiseido Group Procurement Policy

We established this policy in 2018 based on positive collaboration with consumers, business partners, and society. Our procurement policy is based on a consumer-oriented perspective, including the following principles:

  • ・we carry out procurement activities to create better products, through co-creation with business partners
  • ・we comply with all relevant laws and regulations, prioritizing respect for human rights and protection of the global environment

“Shiseido Group Procurement Policy”[ PDF : 136KB ]

●Shiseido Group Sustainable Raw Materials Procurement Guidelines

we created guidelines for palm-derived materials and paper, which exacerbate environmental and human rights problems in the countries of origin.

“Shiseido Group Sustainable Raw Materials Procurement Guidelines”[ PDF : 95KB ]

Overview of our Suppliers and Purchasing Commodities

●Purchasing Commodities

Items to be purchased include packages for our products (cosmetics, toiletries, and pharmaceuticals), cosmetic tools, production materials such as raw materials, sales support tools, and OEM products.

  1. 1. Packaging, Cosmetics: Raw materials and processed products such as resin, glass, paper, metal
  2. 2. Sales support tools: POPs, premiums, etc.

●Overview of our suppliers

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,” “Toward Global Procurement,” and “Performance of Contract.”
We purchase materials for our products from about 900 suppliers*1 around the world—268 suppliers*2 used by the Global Headquarters purchasing department (in fiscal 2019), 225 (in used by EMEA Regional Headquarters purchasing department (in fiscal 2019), and other suppliers numbering about 400 used by purchasing departments in other regions (Americas Regional Headquarters, China Regional Headquarters, etc.).

  • *1:Companies belonging to the same corporate group are counted as one company. (Tier 1 suppliers only))
  • *2:Each company is counted only once even if it appears in more than one category.

●suppliers by region/category

 suppliers by purchasing category

suppliers by region (location of suppliers)

Critical Suppliers

●Identification of critical suppliers

We identify critical suppliers once a year by the following process

Critical Suppliers

●Number of critical suppliers in fiscal 2019*1


Suppliers
Tier 1 170 companies
Non-Tier 1 31 companies
Total 201 companies
  • *1:Suppliers of purchasing departments in Global Headquarters and EMEA Regional Headquarters.

Starting New Business with Shiseido

Below is the process to be followed when we start business with new suppliers.

Starting New Business with Shiseido

Supplier Assessment

In light of sustainability, we assess our suppliers regularly and continuously to build and maintain sustainable supply chains and ensure responsible procurement. Before entering into business with a new supplier, credibility, business policy and attitude, level of confidentiality, and other important factors are thoroughly reviewed. We then sign a purchase agreement only with those who consent to the Shiseido Group Supplier Code of Conduct. After starting business, we evaluate their efforts related to sustainability and risks once a year using one of the following methods: Shiseido SAQ*1, Sedex*2, or EcoVadis*3. Based on this assessment result, we rank the suppliers according to their level of risk. To those ranked as high risk, we provide feedback and request that they implement corrective action plans We also audit some suppliers using a third party.

  • *1:Self-Assessment Questionnaire
  • *2:Joined in August 2017
  • *3:SAQ is used to assess a supplier that is not a member of either Sedex or EcoVadis.

Shiseido's supplier assessment flow

Shiseido's supplier assessment flow

●Supplier assessment results

We expanded the scope of assessment since fiscal 2019 beyond the Global Headquarters purchasing department. In doing so, we have reexamined KPIs and updated targets. To perform global assessments, we will strengthen cooperation between regions and further expand scope.

In fiscal 2019, the Global Headquarters purchasing department conducted assessments of 271 suppliers that it had business with in the previous fiscal year and in fiscal 2019. Of these, 162 suppliers were assessed using SAQ, 86 using the Sedex platform, and 23 using the EcoVadis platform. All suppliers were successfully assessed. Additionally, the EMEA Regional Headquarters purchasing department assessed 85 suppliers using the EcoVadis platform.

(KPI1)% of suppliers assessed (Tier 1 suppliers, calculated by number of suppliers)*1

  2016 2018 2019 2021 (target)
Scope of assessment Global
Headquarters purchasing department
Global
Headquarters purchasing department
Global
Headquarters and EMEA Regional Headquarters purchasing departments
Purchasing
departments in all regions
% of suppliers assessed
(number of suppliers assessed)*2
90%
(224)
89%
(229)
72%
(356)
70%
  • *1:Not conducted in 2017
  • *2:% of suppliers assessed = number of suppliers assessed / total number of suppliers in scope of assessment.

(KPI2)% of critical suppliers assessed (Tier 1 suppliers, calculated by number of suppliers)

  2019 2021 (target)
Scope of assessment Global
Headquarters and EMEA Regional Headquarters purchasing departments
Purchasing
departments in all regions
% of critical suppliers assessed
(number of suppliers assessed)
77%
(131)
100%

●Identifying risk and implementing corrective actions

We categorize suppliers based on assessment results from SAQ, Sedex or EcoVadis into four groups: low risk, medium risk, high risk, and non-assessable due to insufficient response; and request those categorized as high risk to implement corrective action plans. In fiscal 2019, 49 suppliers were categorized as high risk. The Global Headquarters purchasing department directly provided their high-risk suppliers with an explanation of the identified risks and why they were placed in the high-risk category, and requested them to take corrective actions. Specific risks that were identified and required to be addressed included working hours and continuous working days exceeding those legally defined, and non-compliant management of chemical substances. Of Tier 2 critical suppliers, a total of 15 were also assessed, with none categorized as high risk.

Partnership with Suppliers

●Supplier’s Day

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 Japan and China hold an annual Supplier's Day to share purchasing activities and strategies with suppliers. Taking this opportunity, our procurement department in Japan 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.
209 suppliers participated in the session held in Global Headquarters in fiscal 2019; and 89 suppliers in China Regional Headquarters. We respect all our suppliers who share our credo and join us on the journey for sustainable growth.

Supplier’s Day

●Shiseido Suppliers’ Awards

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,” which was newly opened in the Minato-Mirai area, Yokohama in April. The top five suppliers were awarded in fiscal 2019 based on the QCDEST evaluation. We expressed our gratitude to our suppliers, shared our view for the future and reaffirmed our commitment to forge a strong partnership.

Shiseido Suppliers’ Awards

Shiseido Suppliers’ Awards

Global Purchasing Collaboration and Education for Buyers

●Global purchasing collaboration

Every year, we host the Shiseido International Procurement Meeting (SIPM), which all purchasing leaders from each of our global facilities attend. We share not only immediate issues but also mid-to-long-term goals, and discuss global purchasing strategies. We are also promoting the global implementation of sustainability activities through this meeting.

Global purchasing collaboration

●Education for buyers

To ensure responsible procurement for the company, we proactively provide education on relevant issues mainly to staff members of purchasing departments.

Education provided for members of purchasing departments in 2019

Time Theme Participants
September
2019
Responsible procurement and supplier assessment programs (internal seminar) EMEA Regional Headquarters: Buyers
October
2019
Business and Human Rights Conference (CRT Round Table Japan) Global Headquarters: Staff in charge of sustainability
November
2019
Labor/human rights audit to suppliers (external consultant and NPO) Global Headquarters: Category managers, Staff in charge of sustainability
December
2019
RSPO and palm oil (external lecturer) Global Headquarters: Buyers of raw materials
December
2019
Sustainability and responsible procurement (external lecturer) Global Headquarters: Buyers involved in supplier management

Education on sustainability and responsible procurement (December 2019)

Education on sustainability and responsible procurement (December 2019)

(KPI) % of employees in procurement department who attended training in ESG

  2019*1 2022 (target)
Departmental ESG education participation rate 85% 90%
  • *1:Total of actual participants from purchasing department of Global Headquarters and EMEA Regional Headquarters combined.

Sustainable Procurement of Palm oil and Mica

Palm Oil

Palm oil and mica production can be subject to cases of human rights abuses . By participating in international initiatives, we are strengthening our measures to prevent this.

Environmental protection in palm oil production areas and consideration of human rights of people working on plantations are essential to building an ethical supply chain.

Shiseido joined RSPO (Roundtable on Sustainable Palm Oil)in 2010 and formulated Shiseido Group Sustainable Raw Materials Procurement Guidelines to procure palm oil and palm kernel oil that is environmentally and socially friendly.
Since 2018, we have been supporting sustainable production of palm oil by purchasing certificates (credits) equivalent to 100% of palm oil and palm-derived materials. In 2020, we acquired RSPO supply chain certification* at our three new plants, bringing our certification status to a total of 10 plants. We will continue to promote sustainable procurement, including the procurement of certified raw materials, using physical supply chain options, identity preserved, segregated, and/or mass balance.

In 2018, we became a member of the Consumer Goods Forum (CGF), and Japan Sustainability Local Group Palm Oil Working Group, and in 2019 we joined the Japan Sustainable Palm Oil Network (JaSPON). Through the activities of CGF and JaSPON, sustainable use of Japanese palm oil is now possible, and we will contribute to the promotion of this.

  • * RSPO Supply Chain Certification: The certification to ensure logistically reliable delivery of RSPO-certified raw materials.

Mica

Mica is a mineral used in various industries such as electrical machinery and painting. It is also used as an ingredient mainly in cosmetic products to add shimmer, sparkle or a glow effect to the skin.

In recent years, there have been cases where child labor is suspected to have been involved in the mining of India-produced mica. In May 2017, we joined the Responsible Mica Initiative (RMI), an initiative to ensure sustainable mica procurement. The goal of the RMI is to work with members of various industries to turn all Indian mica into a sustainably produced raw material by 2022. Through the activities of RMI, we will also cooperate with NGOs to improve the working conditions of mica miners and the educational system for local children.

Dialogues with Stakeholders

In order to ensure sustainable and responsible procurement and respect for human rights in the course of our business activities, we work with various stakeholders to discuss environmental and social issues, share information, and create solutions.

●Working with NGOs/NPOs and oil palm smallholder farmers

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 oil palm smallholder farmers, we deepened our understanding of the human rights risks, abuses, and labor issues involved in palm oil production. In order to be a company that fulfils our responsibility to human rights, we will act on these discussions by setting up an ethical supply chain.

●Working with human rights experts

In October 2019, we had a series of talks with World Benchmarking Alliance/ Corporate Human Rights Benchmark, the leading research company, Verisk Maplecroft, and Rishi Sher Singh—business and human rights experts and supply chain experts in India. Their experts advised us on key areas and elements we should investigate in our company. We are currently working to implement this knowledge through our supply chain following the results of our Self-Assessment Questionnaire.

Biodiversity Conservation

We recognize that the activities of the Shiseido Group have a considerable impact on the biodiversity of our planet – from procurement of raw materials, through sales and distribution, to the disposal of our products.

To preserve biodiversity, we have defined a number of initiatives. We understand the importance of biodiversity and will work more proactively.

●Afforestation at raw material production sites in Nagasaki, Japan

Since 2011, we have promoted camellia planting and conservation activities at the abandoned farmlands of the Goto Islands in Nagasaki Prefecture, the production site of raw material for our hair care brand, TSUBAKI.

To ensure sustainable and socially responsible raw material procurement, we protect and grow camellias in collaboration with the local residents. Over nine years, 352 Shiseido employees have joined this activity and planted 738 seedlings of camellia japonica across 0.194 hectares of land in Nagasaki.

Raw material procurement and products

●Honeybee protection in production sites in France

Many crops rely on bees to be pollinated. But in Europe, there are concerns about the decline in the number of bees*1. At our Val de Loire Factory and Gien Factory (Shiseido International France S.A.S.), we have included the conservation of bees and the ecosystem of the local community in our sustainability plan. Along with setting up beehives, we have banned the use of agrochemicals on the factory premises. About 150kg of honey was produced in only a year from the beehives installed*2.

  • *1:Regarding the bee population, a beehive counts around 15,000 bees in winter and 80,000 in summer
  • *2:The beekeeper gives 600 jars of honey each year, which are distributed to employees

Honeybee Protection in Production Facilities in France