Promoting CSR Procurement

Approach toward CSR Procurement

At Pigeon, we conduct all our business activities in accordance with the Pigeon Way based on the essence and core of our company: Love. This Pigeon Way is the cornerstone of all our activities. It embodies our heart and soul and lays the groundwork that enables our actions to stream from this core.

The Pigeon ESG/SDGs Policy embodies the Pigeon Way and frames our contribution to a sustainable society. One of the medium-term targets of the Pigeon ESG/SDGs Policy is “To be loved by stakeholders.” To continue to meet this target, Pigeon has established the CSR Procurement Policy, which outlines the basic approach and stance of its procurement activities, and the CSR Procurement Guidelines, which constitute our activity policy for working with suppliers.

Based on this Policy and these Guidelines, Pigeon maintains fair business practices, with strict compliance and a strong ethical outlook. We pursue a stable supply of high-quality products and materials and build win-win relationships with suppliers.

CSR Procurement Policy

The policy was formulated in December 2020 in order to fullfill our responsibiity in procurement for the development of a sustainable society.

1. Social responsibility
   (1) Quality and safety
   (2) Stable procurement and stable supply
   (3) Respect for human rights
   (4) Respect for labor
   (5) BCPs
   (6) Safety measures
2. Reduction of environmental impact
   (1) Promoting environmental preservation
   (2) Promoting efficient use of resources and resource-saving practices
   (3) Reduction of waste
   (4) Reduction of emissions of global-warming substances
   (5) Control of chemicals used in manufacturing processes and products
   (6) Biodiversity
3. Fair business practices
   (1) Respect for social norms
   (2) Compliance
   (3) Fair competition
   (4) Prohibition of corruption and bribery
   (5) Prohibition of abuse of dominant position
   (6) Building relationships of trust
   (7) Information management and security

Established December 21, 2020

CSR Procurement Guidelines

These Guidelines were formulated in December 2020 to promote sustainable procurement in cooperation with our suppliers.

1. Social responsibility
   (1) Quality and safety

   Pigeon not only conforms to the standards expected in each market but also establishes standards from an independent perspective on safety and quality for babies. Guided by these Pigeon Quality Standards (PQS), Pigeon procures only products and materials that have been evaluated and confirmed to offer excellent quality in terms of safety, durability and ease of use.

   (2) Stable procurement and stable supply

   Pigeon places great value on stable procurement and stable supply, so that it can always deliver excellent products and services to customers. We work with suppliers to achieve stable procurement and share information with them on risk preparedness. We ask suppliers to prepare against risks to stable supply and to notify us immediately if supply must be suspended or delayed for any reason. In this way Pigeon and its suppliers take responsibility for supply by mutual agreement.

   Other factors Pigeon stresses in its procurement activities are the procurement of products and materials that are economical and of confirmed quality as well as sufficient manufacturing and supply capacity to satisfy Pigeon’s needs.

   (3) Respect for human rights

   In carrying out its procurement activities, Pigeon focuses keenly on respect for human rights, prohibiting discrimination of all kinds. Our approach is one of respect and acceptance of all people regardless of nationality, sex, age, creed, ability/disability, social status, sexual identity and sexual orientation. We require our suppliers to carry out efforts to instill respect for human rights, to prevent negative impact on or belittling of human rights in the course of business activities related to suppliers’ products and services.

   (4) Respect for labor

   Pigeon takes care to prohibit the use of child labor, forced labor and illegal labor. We strive to develop a sufficient awareness of inhumane labor practices and promote appropriate hiring.

   We comply with labor-related laws and regulations and mandated labor conditions. Pigeon promotes the provision of safe and hygienic work environments, the guarantee of minimum wages and the prevention of excessive work hours.

   Pigeon respects freedom of association and approves of the exercise of collective-bargaining rights. We prohibit discrimination in hiring and treatment of employees and undertake a number of measures to prevent unfair treatment in the workplace, including harassment in all its forms.

   (5) BCPs

   In preparation for risks such as natural disasters, accidents, terrorism, bankruptcy and cessation of supply due to management problems, Pigeon proposes business continuity plans (BCPs) and makes efforts to reduce risk on that basis. To support the BCPs, Pigeon agrees with suppliers to a policy of mutual disclosure and transparency.

   (6) Safety measures

   Above all things, Pigeon prizes the peace of mind, satisfaction and trust of the babies and their families who use our products. Pigeon therefore discloses the composition of its products, including the inclusion of chemicals that Pigeon regards as harmful, in all processes from development through manufacturing and sale to after-sale follow-up. Complying strictly with the laws, regulations, safety standards and other requirements of each country, Pigeon works hard to secure the quality and safety of its products.

   Pigeon also recognizes the movement to eliminate animal testing as an important worldwide demand. We are striving constantly to make the elimination of animal testing a reality.

2. Reduction of environmental impact
   (1) Promoting environmental preservation

   At Pigeon, we understand the importance of preserving the environment. We work with our suppliers to restrain and reduce the environmental impact caused by emissions of harmful substances activities, such as air, water and soil pollution generated by business activities.

   (2) Promoting efficient use of resources and resource-saving practices

   Pigeon works with suppliers to accomplish sustainable and efficient use of resources (energy, water, raw materials, etc.) and to reduce resource consumption (reduce, reuse, recycle).

   (3) Reduction of waste

   Pigeon identifies, manages and reduces waste and disposes of it responsibly. We also work with suppliers to reduce waste.

   (4) Reduction of emissions of global-warming substances

   Pigeon is pursuing further development of environmental management systems. In particular, Pigeon is striving to identify and reduce emissions of global-warming substances. We also keep appropriate records related to reduction of CO₂ emissions.

   (5) Control of chemicals used in manufacturing processes and products

   To ensure that the management of chemicals included in products and used in manufacturing processes complies with the environmental laws, regulations, bylaws and arrangements of each country, Pigeon requires all suppliers to examine and understand the information about the chemicals they use and to conduct the necessary compliance.

   (6) Biodiversity

   Pigeon asks its suppliers to examine their impact on ecosystems, both direct and indirect, to protect biodiversity and use resources sustainably.

3. Fair business practices
   (1) Respect for social norms

   In every aspect of its procurement activities, Pigeon maintains high standards of ethics. We promote compliance-focused activities and eliminate profit that depends on violations of laws, regulations and corporate ethics.

   (2) Compliance

   Guided and inspired by the Pigeon Way, Pigeon complies strictly with the laws and regulations of the countries and regions in which it does business, fully mindful of its social purpose. We practice thorough compliance, refraining from actions that violate this principle or may cause misunderstanding.

   Naturally, we refuse all relations with anti-social forces. If faced with an inappropriate request, we firmly refuse and contact to the appropriate authorities, dealing with the issue in a systematic fashion.

   (3) Fair competition

   In procurement, as with other business activities, Pigeon aims to grow as an enterprise through fair, transparent and free commerce and competition, thereby contributing to sound economic development. We therefore comply strictly with a wide variety of competition laws. Taking these laws into consideration, we establish suitable methods of doing business, working closely with suppliers to establish responsible procurement.

   Intellectual property must be managed and used appropriately, as it is a vital wellspring of competitiveness in enterprise activity. Pigeon recognizes the importance of its intellectual property rights, including patent rights, utility model rights, trademark rights, design rights and copyrights. Pigeon correctly establishes rights to and carefully protects its research and development results. By the same token, Pigeon takes great care in handling the intellectual property rights of third parties, so as not to infringe them.

   (4) Prohibition of corruption and bribery

   Pigeon never gives to or receives from supplier’s entertainments, gifts, monies or other benefits for the purpose of obtaining or holding illicit gains or favors.

   (5) Prohibition of abuse of dominant position

   Guided and inspired by the Pigeon Way, Pigeon complies strictly with the laws and regulations of the countries and regions in which it does business, fully mindful of its social purpose. We never abuse any position of dominance we may enjoy, striving to maintain fair and equitable relations with all suppliers.

   (6) Building relationships of trust

   Through the trading of products and materials that enjoy the peace of mind, satisfaction and trust of babies and their families, Pigeon builds relations of mutual trust with its suppliers.

   Pigeon strives to achieve mutual business development and improvement of business results, exchanging necessary information with suppliers, engaging in mutual, rigorous evaluation of terms of trade and each other’s actions.

   (7) Information management and security

   In the conduct of its procurement activities, Pigeon manages confidential and personal information with the strictest care. We take prudent steps to prevent the unlawful use of confidential and other sensitive information.

Established December 21, 2020

Initiatives to Promote CSR Procurement

In order to promote CSR procurement and fulfill our social responsibility in each process of the value chain, the Pigeon Group emphasizes mutual communication with suppliers. This basic policy and these guidelines formulated in December 2020 were originally written in Japanese and have been translated into Chinese and English and adopted in each Business Unit. We are engaging with suppliers to obtain their understanding of and compliance with the guidelines set forth in the CSR Procurement Policy. Moreover, once a year we conduct a CSR procurement assessment and continuously promote CSR procurement.

Briefing Sessions for Suppiers

In line with the formulation of the CSR Procurement Policy, the Japan Business Unit held an advance online briefing session on February 18, 2021, to encourage the understanding and cooperation of suppliers. A total of 60 partner companies took part in this session.

CSR Procurement Assessment

In addition to existing controls based on laws and regulations, we have adopted the CSR Procurement Self-Assessment Questionnaire developed by the Global Compact Network Japan (GCNJ). In April 2021 we began conducting surveys in the Japan Business Unit, China Business Unit and Singapore Business Unit as the scope of tabulation.

Purpose of Assessment

The purpose of this assessment is to understand suppliers' efforts on ESG and identify issues in our supply chain. By working with suppliers to resolve the issues revealed by the survey, we are committed to contribute to solving social issues and build stronger relationships with our suppliers.

Scope of Tabulation

Japan Business Unit, China Business Unit, Singapore Business Unit

Suppliers Assessed

In the FY2021 survey, all primary suppliers in the Japan Business Unit, China Business Unit and Singapore Business Unit(except Group companies) and suppliers of raw materials to production subsidiaries in Japan and overseas, for a total of 235 companies assessed. Of these, 223 companies responded, yielding a response rate of 94.9%.

Scope of tabulation	No. of requested	No.of responded	Response rate
Japan Business Unit	112	108	96.4%
China Business Unit	107	99	92.5%
Singapore Business Unit	16	16	100.0%
Total	235	223	94.9%

Assessed Items

The questionnaire used for the assessment was the Self-assessment Questionnaire (SAQ) prepared by UN Global Compact Network Japan (GCNJ), the Japan chapter of the United Nations initiative on corporate sustainability. The assessed items are as listed in the table in "Survey Results" below. Each intermediate-level item is broken down into five subitems: Legal awareness interpretation, Policy, System and Responsibilities, Corrective actions. Respondents are asked to rank their own performance in each subitem on a scale of 1 to 3. For detailed descriptions of each item, please view the respective reports in "2021 Assessment Report (by Business)" at the bottom of the page.

Assessment Results (Consolidated)

The average score is 78%. Overall, respondents scored highest on Quality and safety and on Labor and lowest on Supply chains, Harmonious coexistence with local communities, Human rights, and Corporate governance regarding CSR. With respect to items on which respondents scored relatively poorly, we will provide feedback and support for improvement efforts, to assist suppliers to improve their scores going forward.

Note: Consolidated results excluding Lansinoh group
Note: Questions answered with “Not applicable” are deducted from the denominator when calculating the supplier’s score rate.

Efforts Toward Improvement

We will provide suppliers who responded to the questionnaire with their own tabulation results and the average score rates. For items judged to be high-risk, we will highlight them to suppliers and encourage them to make improvements in each business.