Activities to Promote Sustainable Procurement
Supplier Surveys and Improvement Activities
Kirin Holdings aims to achieve "sustainable procurement" by having suppliers conduct activities based on the Kirin Group Sustainable Supplier Code.
We conduct supplier surveys on a regular basis to check the status of initiatives against the Kirin Group Sustainable Supplier Code and to identify issues in the supply chain. For suppliers that are identified as high risk as a result of the survey, we directly interview them about the status of their initiatives and provide advice on how to improve them. Some of the suppliers have already formulated human rights policies. In the future, in addition to the supplier survey, we will utilize Sedex's self-assessment questionnaire tool to strengthen the management of sustainable procurement risks in the supply chain.
Survey Results
The results of the questionnaire survey for each company are as follows. As a result of the survey, we will interview those suppliers who are judged to be at high risk individually and encourage them to improve their efforts.
Japan Beer and Spirits Business and Japan Non-alcoholic Beverages Business
In fiscal 2019, Kirin Brewery Company, Limited, Kirin Beverage Company, Limited, and Mercian Corporation adopted the Sustainable Procurement Self-assessment Questionnaire developed by Global Compact Network Japan (GCNJ), which it now administers to suppliers, replacing a proprietary survey.
In fiscal 2022, we received responses from 387 of the 393 companies that made requests (accounting for approximately 90% of the total as procurement value). The results of the survey confirmed that improvements were made in many areas compared to the previous survey. In the areas of quality, safety, and information security, the company continues to make progress in achieving a high level of commitment. In addition, we found that the practice of human rights and environmental initiatives, which had been an issue in the past, is on an improving trend. These results are fed back to suppliers by the person in charge of each item, and are used in the selection of suppliers as evaluation items in the supplier evaluation conducted once a year.
Risk assessment using the Sedex SAQ
The Kirin Group has joined the Supplier Ethical Data Exchange (Sedex), which provides an online platform for "managing and improving working conditions" in the supply chain. In addition to the Oceania Alcoholic Beverages business, which is the first to use the platform, the entire group will use Sedex's self-assessment to enhance risk assessment in the supply chain.
Utilization in Oceania Alcoholic Beverages Business
Lion preceded the Kirin Group and as part of its responsible sourcing program, Lion continues to require its high-priority suppliers to complete the Supplier Ethical Data Exchange (Sedex) Self-Assessment. By the end of 2020, more than 95% of our high-priority suppliers had been assessed for risk using this questionnaire, and by the end of 2021, we had achieved our CSV commitment goal of 100%.
Respect for Human Rights in the Supply Chain
In order to promote initiatives for further respect for human rights based on the "Group Materiality Matrix (GMM)," which was reevaluated at the start of the new medium-term management plan, we held a dialogue on human rights with external experts, focusing on human rights in the supply chain, and exchanged opinions on past and future initiatives. The dialogue was held to exchange opinions on past and future initiatives.
Human Rights Risk Assessment and Action Plan for Major Agricultural Procurement Products
In February 2018, the Kirin Group established the Kirin Group Human Rights Policy in accordance with the United Nations Guiding Principles on Business and Human Rights ("Guiding Principles")*, a global standard. In line with the Guiding Principles and the Kirin Group Human Rights Policy, we are promoting human rights due diligence, an initiative to identify, prevent, and mitigate negative human rights impacts related to the Kirin Group's business. The issue has been positioned as one of the most important issues. Focusing on high-risk areas, the Group as a whole will further promote initiatives in this area in the future.
As a main initiative, we conduct Human rights impact assessments targeting countries that have been relatively high-risk based on the results of country-specific human rights risk assessments.
In 2022, we have conducted a social audit on the Sri Lankan tea supply chain through a third-party audit organization. The results of the assessment showed both good practices and issues requiring improvement. Of the items assessed, good practices were found to be in place in management, Environmental, Safety and Health (EHS), and first aid. On the other hand, issues were found in some areas such as work rules, labor contracts, and wages. Based on our response policy, we worked collaboratively with our primary and secondary suppliers to address the issues. In November 2023, audit personnel from Kirin's procurement department conducted a follow-up on-site audit and confirmed that the issues had been resolved. To prevent recurrence, we will establish a monitoring system through our primary supplier and conduct regular checks. .
In 2023, we have conducted a social audit on the Argentine grape juice supply chain through a third-party audit organization. Although there were some recommendations regarding documentation and supplier management systems, no significant non-compliance was found. Good practices were found in quality management systems and environmental certification efforts. For the identified issues, we have started communication by sharing the audit report with the primary supplier to conduct fact-checking and have formulated response policies for improvement. Regarding supplier management systems, improvements are already in progress.
In 2024, we are planning to conduct a social audit on the Brazilian sugarcane supply chain through a third party audit organaization.
The progress of the above initiatives will be disclosed in a timely manner on our company's website.
Supply Chain Human Rights Asessment
Response policy for on-site audits of human right due diligence for suppliers
Human rights impact assessment of the Argentine Grape juice supply chain(February 2024)
Human rights impact assessment of the Sri Lankan Tea supply chain(February 2024)
Human rights impact assessment of the Sri Lankan Tea supply chain(May 2023)
Risk assessment of major agricultural products and processed agricultural products procured by the Kirin Group
Following the enactment of the Kirin Group Sustainable Procurement Policy and the Kirin Group Sustainable Supplier Code in April 2021, we once again conducted a risk assessment of agricultural products and processed agricultural products procured by the Kirin Group. We identified agricultural products and processed agricultural products with high human rights risks, with advice from Business for Social Responsibility™ (BSR), a specialist external organization, and used the Sedex assessment tool to evaluate the risks based on two axes: human rights risks in the country of procurement and the degree of impact on our business. Prioritization was done.
The procured products evaluated were malt (barley), hops, black tea leaves, green tea leaves, coffee beans, grapes, sugar, corn, soybeans, grapefruit juice, and lemon juice. As a future initiative, we plan to conduct human rights due diligence on agricultural products and processed agricultural products in the order in which they are evaluated as having relatively high risk through the assessment.
Responding to the UK Modern Slavery Act and the Australian Modern Slavery Act
In addition to its alcoholic beverage business in Oceania, Lion also operates in the United Kingdom. Lion has formulated a statement on compliance with the Modern Slavery Act in Australia and the United Kingdom, and is taking appropriate measures to address human rights issues in its supply chain.
Grievance mechanism
Lion has established a dedicated whistle-blowing hotline that is available to all Lion personnel globally as well as personnel within our extended supply chain to provide appropriate and effective remedies to stakeholders in response to human rights issues in the supply chain.
Collaborating with Suppliers
Working with suppliers, we are identifying supply chains that can respond quickly to natural disasters, political and geopolitical risks, information security, environmental issues, human rights issues, and other risks. In response to the recent spread of the new coronavirus, we are working to enhance sustainability by visualizing and improving our supply chain, going back to the manufacturing sites (plants and farms).
Approaches to the Environment
In accordance with the Kirin Group Environmental Vision 2050 and the Kirin Group Environmental Policy, we are working with suppliers to address issues related to climate change, water resources, biological resources, and containers and packaging.
Actions regarding climate change
In order to achieve net-zero greenhouse gas emissions in the entire value chain, we are promoting the procurement of renewable energy, strengthening resilience in the upstream of the value chain, reducing the weight of containers, and optimizing procurement logistics by using Vendor-managed warehouses.
Actions regarding water resources
Water is not only a basic raw material for the Kirin Group, but also an essential resource for the growth of the agricultural products used as raw materials. 2014 and 2017 surveys estimated the water consumption of agricultural products used as raw materials upstream in the value chain, and we will promote appropriate measures to address water risks.
Actions regarding biological resources
As a certification for sustainable forest management, in addition to paper containers in our beverage business in Japan, we have switched to 100% FSC® certified paper or paper made from recycled paper in November 2020 for office paper such as copy paper, envelopes, business cards, company brochures and other printed materials.
In addition, we have been using the Book & Claim method of purchasing certified sustainable oil approved by the Roundtable for Sustainable Palm Oil (RSPO), and have been using RSPO-certified oil for all of our primary raw materials since 2013, and for secondary raw materials since 2014, based on estimated usage. In March 2018, we joined the RSPO as an associate member.
Actions regarding containers and packaging
In addition to promoting the 3Rs and resource recycling of containers and packaging, we are also expanding the procurement of sustainable materials for containers.
Partnerships with farms
In order to strengthen the sustainability of raw material production, the Kirin Group is helping to resolve issues and build the capacity of farms and farmers who produce raw materials for core products such as tea leaves, coffee beans, hops and grapes.
Tea Farms
Since 2013, we have been working with the Alliance for Sustainable Landscape Management (the Rainforest Alliance) to provide support and training for tea plantations in Sri Lanka to obtain Rainforest Alliance certification in order to support plantation management that considers the environment and human rights. From 2018, the scope of support has been expanded to include small-scale farms.
As of the end of 2020, 93 farms, or about 30% of the total number of certified tea farms in Sri Lanka, have obtained certification with the support of the Kirin Group. 120 small-scale farms have already obtained certification, and we are aiming to support 10,000 farms in obtaining certification by the end of 2025.
Coffee farms
Using the knowledge we have gained from supporting tea farms in Sri Lanka to obtain certification, we began supporting coffee farms in Vietnam to obtain Rainforest Alliance certification in 2020. As of the end of 2021, about 700 small farms have started training for certification.
Hop farms
96% of the hops grown in Japan are grown in Tohoku, and the Kirin Group is supporting the growers by purchasing about 70% of the hops. Production in Tono City has decreased to 1/5 of its peak level, and if left unchecked, the amount of hops to be procured in 10 years' time will decrease to about 70 tons/year, but we are procuring hops with a target of 100 tons/year. In addition, aiming at long-term and stable procurement of high-quality hops, we are working with the government, local communities, and hop growers to support the employment of successors, develop varieties that place less burden on growers, and provide technical support.
In Tono City, Iwate Prefecture, a major production area, the first harvest using German-style hop fields was conducted in 2019, taking into account the efficiency of hop farmers, and a working team was established in 2020 to discuss the realization of a sustainable production system.
We have signed a partnership agreement with Yokote City in Akita Prefecture, and are holding regular workshops for local agricultural school students to experience hop cultivation techniques in order to solve the problem of the number of successors to hop farmers.
Vineyards
In order to secure a stable supply of high-quality domestic grapes for wine and to expand the harvest volume, we share and support viticulture techniques with contract growers. In addition, in order to solve the shortage of successors, we are participating in human resource development programs in each wine-growing region.
Supplier Briefings / Training Sessions
The Kirin Group holds regular briefing/training sessions for suppliers to deepen their understanding of the human rights issues, labor standards and other social issues that we ask them to comply with in our Supplier Code of Conduct.
In addition to explaining the Kirin Group's policies (Compliance Guidelines, Human Rights Policy, Quality Policy, etc.) and initiatives that form the basis of the Supplier Code of Conduct, the briefings/training sessions focus on human rights and t environment issues hat require a deeper understanding by introducing specific examples.
In terms of suppliers who are judged to be at high risk as a result of the supplier questionnaire survey conducted by each operating company, we interview them individually about the status of their efforts and support their capacity building by sharing examples of other companies and proposing specific improvement measures.
Japan Beer and Spirits Business and Japan Non-alcoholic Beverages Business
In October and November 2021, we held online supplier briefings, which were attended by approximately 400 companies over a total of three days. At the briefings, we held a study session on "Changes in the Supply Chain and the Kirin Group's CSV Initiatives Policy," explained the content of the Kirin Group Sustainable Supplier Code established in April 2021, and asked suppliers to submit a written consent to the Code in order to gain their understanding and cooperation in our initiatives and cooperate in identifying their actual GHG emissions (Scope 3).
Pharmaceuticals Business
Kyowa Kirin provides opportunities for suppliers to deepen their understanding of CSR procurement, such as CSR procurement briefing sessions and supply chain exchange sessions, where information is exchanged regarding issues and solutions across the entire supply chain.
Education for Procurement Department Staff and Purchasing Requesters
We conduct the following activities to implement procurement activities in line with our sustainable procurement policy.
Compliance Training
We have prepared a guidebook for procurement department staff and purchasing requesters, and conduct compliance and other training on a regular basis.
Sustainable Supply Chain Training
Training sessions on human rights and environmental issues in the supply chain are held twice a year for all department members.
Acquisition of the Certified Procurement Professional (CPP) certification
We are improving our procurement knowledge, including sustainable procurement, by acquiring the Procurement Professional Qualification (CPP) sponsored by the Japan Management Association.