Sustainable Procurement

Concept of Sustainable Procurement

Idemitsu aims for the sustainable development of society and the company by conducting fair and equitable procurement based on proper procurement ethics, contributing to the improvement of business competitiveness, and conducting honest management for all stakeholders. To this end, we have established  "Basic Procurement Policy" and internal rules "General rules concerning procurement activities."

We aim to contribute to the realization of a sustainable society throughout the supply chain by establishing a policy for selecting suppliers when purchasing or borrowing the materials, construction, and services necessary for our company's business operations, and by having suppliers understand the policy on our procurement activities.

Improvement Flow
出光興産, DFF Inc.

Promotion System

The Group established its Basic Procurement Policy based on the Management Philosophy and Action Mindset. To co-create a sustainable society throughout the entire supply chain with our business partners through procurement activities based on strict ethics, the Procurement Department is leading efforts to move forward in close collaboration with our partners and based on the Sustainable Procurement Guidelines.

出光興産, DFF Inc.

About Our Sustainable Procurement Guidelines

The business environment is diversifying, and in order to achieve sustainable development, it is expected that every company will actively strive to fulfill its social responsibilities not only for itself but for the entire supply chain. The Basic Procurement Policy is based on the Management Philosophy and Action Mindset and we will work with business partners to co-create a sustainable society throughout the entire supply chain through procurement activities grounded in unwavering ethics. In order to fulfill this responsibility, we formulated our own Sustainable Procurement Guidelines based on ISO 26000 (Guidance on Social Responsibility), ISO 20400 (Guide to Sustainable Procurement), the Sustainable Development Goals (SDGs), and the 10 principles of the United Nations Global Compact. Our guidelines cover seven fields: 1) organizational governance, 2) human rights, 3) labor practices, 4) environment, 5) fair business practices, 6) consumer issues, and 7) social contribution. We exchange information with business partners regarding the status of our sustainability-related efforts as we strive to mutually attain a higher level.

Procurement Information

出光興産, DFF Inc.

Conduct Self-Assessment of Sustainable Procurement for Suppliers

To promote sustainable procurement throughout the entire supply chain, in 2019 we began an independent survey to determine the degree to which our major suppliers are adopting sustainable procurement. The Corporate Sustainability Department, the Procurement Department, and some other departments collaborated to send a Sustainable Procurement Self-Evaluation Sheet consisting of 35 items in 7 fields—organizational governance, human rights, labor practices, the environment, fair business practices, consumer issues, and social contribution—based on the Sustainable Procurement Guidelines to major suppliers and asked them to perform self-evaluations. In FY 2019, we conducted a survey of around 300 major suppliers, and, in FY 2020, we entered into dialogue with 96 of these companies, asking them to make improvements. In addition to providing feedback on the results of these assessments, if there are any concerns, we work with suppliers to improve and solve those issues together through dialogue, thereby reducing risk throughout the entire supply chain. This survey will be repeated once every three years to ensure continuous improvement.

Our sustainable procurement initiatives have only just begun, but we are working with society and suppliers to achieve a triple win.

出光興産, DFF Inc.

Achievement in Supplier Dialogue (FY2020)

Prior to engaging in dialogue, we sent out a supplier questionnaire drawn up in conformity with our Sustainable Procurement Guidelines. Covering 35 items, the questionnaire enabled respondents to provide self-evaluations based on a five-grade rating system. We subsequently entered into dialogue with the respondents, prioritizing suppliers whose answers rated them among the lowest for one or more items. After that, we entered into dialogue with respondents whose answers for one or more items in our questionnaires indicated a second lowest rating.

  • The number of suppliers called upon to enter into dialogue with Idemitsu: 124
  • The number of suppliers that have already completed their dialogue with Idemitsu: 96

Since engaging in dialogue, each supplier has been striving to make improvements in items that they rated the lowest. To assist them in their efforts, we have established reporting hotlines for suppliers while communicating initiatives being undertaken by Idemitsu via, for example, the sharing of the Company’s cyber security letter. We also accommodate requests for support from suppliers in the course of promoting sustainable procurement.
In FY2021, we intend to engage in ongoing dialogue with 28 suppliers whose answers for one or more items in our questionnaires indicated a second lowest rating.

出光興産, DFF Inc.

Supplier Training

We are working to deepen mutual understanding while communicating the Company’s stance on sustainable procurement and its Basic Human Rights Policy. Specifically, from the perspective of preemptively preventing threats to our computer network, we are making such improvements as sharing the Company’s cyber security letter to suppliers upon request and establishing reporting hotlines in the supply chain. On an as-necessary basis, we also provide suppliers with document drafts designed to help them formulate various rules while assisting them in the implementation of employee education on biodiversity. Through these and other support measures, we are striving to help suppliers resolve issues confronting them.

出光興産, DFF Inc.

Selection of New Suppliers Based on Social and Environmental Standards

Working in collaboration with all our suppliers, we hold in-house workshops as part of our procurement activities to convey that we strive to fulfill our social responsibility through the entire supply chain. Furthermore, when selecting new suppliers, we adhere to our Sustainable Procurement Guidelines.

出光興産, DFF Inc.

Announcement of the Partnership Building Declaration

On June 7, 2022, Idemitsu announced its Partnership Building Declaration in support of the purpose of the Future-Focused Partnership Building Council, whose members include the president of the Nippon Keidanren (Japan Business Federation), the chairman of the Japan Chamber of Commerce and Industry (JCCI), the president of the Japanese Trade Union Confederation (RENGO), and relevant cabinet ministers (the Cabinet Office; Ministry of the Economy, Trade and Industry; Ministry of Health, Labour and Welfare; Ministry of Agriculture, Forestry and Fisheries; and Ministry of Land, Infrastructure, Transport and Tourism). ''Partnership Building Declaration'' is the declaration which build new partnerships by promoting collaboration and mutual prosperity in the supply chain with operators who strive to create value as well as suppliers.
In October 2021, we formulated the Idemitsu Group Sustainability Policy and will work closely with our partners to help realize a sustainable society throughout the entire supply chain as Your Reliable Partner for a Brighter Future, which is our 2030 vision.

Idemitsu Partnership Building Declaration

Idemitsu declares that it will take measures focused on the following items to build new partnerships by promoting collaboration and mutual prosperity in the supply chain with operators who strive to create value as well as suppliers.

  1. Mutual prosperity throughout the supply chain and new collaborations that extend beyond scale and sectors
    We aim to foster mutual prosperity with suppliers through collaborations that extend beyond existing trade relationships and corporate scale as we work to enhance added value throughout the supply chain by reaching out to suppliers (Tier N+1) that our direct suppliers (Tier N) work with.
    Individual Items:
    〇We engage in cross-company collaboration utilizing open innovation as well as joint development of low-carbon and decarbonization technologies.
  2. Compliance with promotion criteria

    We comply with ideal trade practices when dealing with new operators and subcontractors (applying criteria based on the Act on the Promotion of Subcontracting Small and Medium-sized Enterprises) and actively work to correct trade and business practices that hamper the building of partnerships with suppliers.

    1. (1) Price setting method
      We do not make unreasonable demands to lower the cost of sales. When setting trade prices, if subcontractors request a discussion, we fully engage in discussions to ensure appropriate profits for subcontractors, taking into consideration the impact of increases in labor costs. Regarding agreements, including those determining trade prices, new operators must clarify and issue written agreement conditions.
    2. (2) Notes and other payment conditions
      We pay subcontracting fees in cash. We do not pay with notes.
    3. (3) Intellectual property and know-how
      We engage in trade based on agreement models and guidelines related to trade in intellectual property and do not ask partners to conclude unilateral confidentiality agreements, use their trade position to obtain or disclose know-how, or engage in the uncompensated transfer of intellectual property rights.
    4. (4) Shifting duties due mainly to workstyle reforms
      To allow suppliers time to adapt to workstyle reforms, we do not make sudden specification changes or tight delivery orders that impose undue cost burdens on subcontractors. We work to ensure that we do not unilaterally thrust trade burdens on subcontractors during times of crisis and that we maintain good trade relations to the extent possible when business restarts.
  3. Others
    Idemitsu has established its Sustainability Policy and works closely with partners to help realize a sustainable society throughout the supply chain.

June 7, 2022
Idemitsu Kosan Co.,Ltd.
President and Representative Director
Shunichi Kito

出光興産, DFF Inc.