SocialSupply Chain Management
Basic ApproachBack to Top
TOPPAN promotes sustainable procurement throughout the supply chain in cooperation with suppliers and subcontractors (“business partners”) to fulfill the Group’s social responsibilities and support a sustainable society. We also seek to enhance corporate value for ourselves as well as our business partners through sustainable procurement endeavors.
A revised set of TOPPAN Group Sustainable Procurement Guidelines issued in January 2022 will be shared throughout the supply chain. The revisions are a response to the growing demand in society for supply-chain management practices that address human rights, better ensure occupational safety and health, preserve the environment, and attain various other sustainability targets. We will accelerate sustainable procurement with business partners through a cycle of operations, audits, and refinement.
Under a Declaration of Partnership Building released by Toppan Inc. in September 2022, we will be working with business partners to fulfill our corporate social responsibilities on both sides through supply-chain-wide initiatives that help develop a sustainable society. We strive for co-prosperity with business partners by maintaining good business practices and supporting our partners with advice on their business continuity planning (BCP) activities.
The Sustainable Procurement Guidelines
The TOPPAN Group Sustainable Procurement Guidelines consist of the Basic Procurement Policy, a basic framework to be observed by every department responsible for procurement or involved in operations linked to products and services, and the Sustainable Procurement Standards, which are to be satisfied by our business partners.
The Sustainable Procurement Standards comprise nine sections: “legal compliance and respect for internationally recognized standards,” “human rights and labor,” “health and safety,” “environment,” “fair business and ethics,” “quality and safety,” “information security,” “business continuity planning,” and “establishing a management system.”
Based on the TOPPAN Group Human Rights Policy, the Annex to the TOPPAN Group Declaration on the Global Environment, and the Declaration of Partnership Building, our procurement departments engage in BCP activities, implement human rights and environmental conservation initiatives in the supply chain, and take a proactive approach to the sustainable use of natural resources to avoid or minimize impacts on biodiversity in the global environment.
The Structure of the TOPPAN Group Sustainable Procurement Guidelines
Basic Procurement Policy
This is a basic policy that applies to all workers involved in procurement activities at the TOPPAN Group.
We fairly and impartially offer opportunities to all Business Partners and potential Business Partners.
We comply with domestic and overseas laws and regulations and conduct fair business transactions based on corporate ethics.
We strictly control the information obtained through procurement activities.
We work to conserve the environment and reduce impact on the environment.
We pursue QCD (Quality, Cost, Delivery) in order to meet the needs of the market.
We work to foster mutual cooperation and build relationships of trust with Business Partners.
We promote sustainable procurement throughout the entire supply chain.
Sustainable Procurement Standards
These are sections that set out requirements for suppliers and subcontractors*.
- 1.
- Legal Compliance and Respect for Internationally Recognized Standards
- 2.
- Human Rights and Labor
- 3.
- Health and Safety
- 4.
- Environment
- 5.
- Fair Business and Ethics
- 6.
- Quality and Safety
- 7.
- Information Security
- 8.
- Business Continuity Planning
- 9.
- Establishing a Management System
- *
- “Subcontractors” are referred to as “Business Partners” in these guidelines.
Promotion FrameworkBack to Top
The Executive Officer, who also serves as the head of the Corporate Planning Division, plays a responsible role for the TOPPAN Group's sustainable procurement initiatives. The Sustainability Promotion Committee examines and deliberates on specific measures for sustainable procurement and reports to the Board of Directors through the Management Committee. The Board of Directors makes comprehensive decisions on sustainable procurement. In addition, the Board of Directors continuously discusses, monitors, and oversees the implementation of sustainable procurement measures, the target setting, and the tracking of progress. Initiatives are undertaken, not only by the divisions primarily responsible for procurement, but also by all divisions that procure goods and services as part of their business activities.
Promotion Structure
(as of March 2024)
Departments that Work with Business Partners
| Departments | Key Business Categories |
|---|---|
| Production control | OEMs |
| Purchasing | Suppliers |
| Planning | Subcontractors |
| General affairs | Temp staffing agencies |
Selecting Key Business Partners
The TOPPAN Group selects significant business partners based on the following screening process, which is applied to both new and existing business partners. First, we assess the ESG risks specific to the sectors of our business partners, focusing on those with whom we have ongoing transactions. Next, business partners that account for 90% of our procurement by monetary value or those with high country-specific and sector-specific risk are identified as “significant business partners.“ Ultimately, they are categorized into four major categories.
Country-specific risk is assessed on a three-tier scale based on the risk classification developed based on country ESG risk indicators such as the Global Slavery Index for forced labor and the FTSE ESG for various ESG risks.
For sector-specific risk, we refer to the Environmental and Social Risk Categorization List published by the European Bank for Reconstruction and Development (EBRD) and FTSE ESG and assess the business partners’ ESG risk specific to their sector and business activities. For example, we consider environmental and social risks such as air, soil, water pollution, climate change, labor rights, impact on communities, occupational safety and health, risk management, and anti-corruption corresponding to certain sectors such as manufacturing, service industry, and printing industry.
Approach to Selecting Key Business Partners
Group Policies and Measures for Sustainable Procurement
| Group Policy | Policy (details) | Risks Identified by the Evaluation | KPI Benchmark or Management Metric or Standard | Business Partners Covered |
|---|---|---|---|---|
| TOPPAN Group Human Rights Policy | Human rights initiatives | Forced labor, harassment, or other human rights issues in the supply chain | Dissemination of the human rights policy and confirmation of compliance | Key business partners* |
| TOPPAN Group Sustainable Procurement Guidelines | Basic Procurement Policy | Compliance violations (violations of subcontract law, etc.); acts contrary to accepted social ethics | Compliance training in procurement departments | Related departments within the Group |
| Training on the Sustainable Procurement Guidelines in procurement departments | Related departments within the Group | |||
| Monitoring on compliance in procurement departments and the assessment of monitoring results | Key business partners* | |||
| Sustainable Procurement Standards | Quality-related incidents, environmental incidents, legal violations, insufficiencies in raw material supply, or other incidents in the supply chain that can develop into issues in wider society | Number and percentage of business partners (meeting the Group’s sales criterion) that have signed cooperation agreements, basic transaction agreements, and basic sale & purchase agreements stipulating the observance of the TOPPAN Group Sustainable Procurement Guidelines | Key business partners* | |
| Self-assessment questionnaires business partners can use to assess their own ESG efforts based on the TOPPAN Group Sustainable Procurement Standards | Key business partners* | |||
| Declaration of Partnership Building | Continuation of business operations with business partners in the event of a disaster | Supply disruption of materials, components, or equipment caused by earthquakes, storms, floods, or other natural disasters | Enhancement of the business continuity competencies of business partners (through questionnaires and workshops on BCP) | Key business partners* |
| Observance of good business practices with business partners | Damage to social credibility arising from failures to rectify business practices concerning pricing methods, payment terms, work style reform, intellectual property usage, the sharing of expenses for mold management, etc. | Training on good business practices (training on transaction-related legislation and the Declaration of Partnership Building) | Related departments within the Group | |
| TOPPAN Group Environmental Policy | Control of chemical substances in products | Reduced product safety resulting from the admixture of hazardous substances into raw materials | Dissemination of the TOPPAN Group Standards for the Management of Chemical Components of Raw Materials | Key business partners* |
| Proactive approach to the sustainable use of natural resources by avoiding or minimizing impacts on biodiversity | Suspension of operations at paper manufacturers resulting from interruptions in the supply of lumber derived from forest resources (the main material of paper) that are considered to have significant impact on biodiversity | Verification of the legality of lumber to promote the sustainable use of forest resources for paper production | All paper manufacturers in the supply chain | |
| Supply stoppage of printing paper and suspensions of printing operations | Dissemination of the Paper Procurement Guidelines for the Sustainable Use of Forest Resources | Key business partners* |
- *
- Significant business partners are those who engage in ongoing business with the TOPPAN Group and either account for 90% of supply by monetary value or have country-specific or sector-specific ESG risks.
Sustainable Procurement InitiativesBack to Top
Applying the Sustainable Procurement Guidelines
We began implementing the following measures in fiscal 2022 to apply the TOPPAN Group Sustainable Procurement Guidelines throughout the entire supply chain, in cooperation with key business partners.
- Hold briefing sessions on the procurement guidelines
- Conclude cooperation agreements, basic transaction agreements, and basic sale & purchase agreements (stipulating the observance of the procurement guidelines)
- Ask business partners to fill out self-assessment questionnaires on the Sustainable Procurement Standards and encourage them to rectify the issues they have identified
- Confirm the BCP steps business partners are taking to address wide-scale disasters
We have also established the Standards for the Management of Chemical Components of Raw Materials, a set of standards to control chemical components throughout the entire supply chain.
Advocating the Basic Procurement Policy
(Fair transactions by procurement departments)
Sustainable procurement practices should be built upon trust between business partners and us. We have set up a Supplier Hotline to enhance transparency and fairness in transactions and deepen relationships of trust with business partners. The hotline is open for use by all of our partners.
We have also sent business partners questionnaires to monitor whether our procurement departments operate properly in accordance with the Basic Procurement Policy in their transactions with the partners.
Conserving Biodiversity
We promote the sustainable use of natural resources based on the Environmental Policy. To govern the procurement of raw materials, we have formulated a set of paper procurement guidelines to advance the sustainable use of paper, a resource representing 70% of our material input.
To assure the sustainable use of forest resources, we cooperate with paper manufacturers in the supply chain to confirm that the lumber they use for paper production is legally obtained.
Main Activities and ResultsBack to Top
Selecting Key Business Partners
For wider dissemination of the sustainability initiatives throughout the supply chain, we select key business partners and ask them to observe the TOPPAN Group Sustainable Procurement Guidelines.
Regarding the procurement of paper, which accounts for 70% of the TOPPAN Group's material input, we select significant paper manufacturers that represent more than 90% of our total paper purchases by monetary value. We promote the sustainable use of lumber through the “Survey on the Legality of Lumber for Paper Production.”
No. of Key Business Partners
| Item | Fiscal 2022 | |
|---|---|---|
| No. of Companies | Proportion of Total Procurement by Monetary Value | |
| Total number of significant business partners in Tier-1 | 2,919 | 88% |
| Total number of significant business partners in Tier-2（paper manufacturers）*2 | 10 | − |
| Total number of significant business partners *3 | 2,929 | − |
- *1
- % of total spend on significant business partners in Tier-1
- *2
- Total number of significant suppliers in non Tier-1
- *3
- Includes Tier-1 and non Tier-1
Concluding Agreements with Business Partners on Compliance with the Sustainable Procurement Guidelines
We have been promoting sustainable procurement throughout the entire supply chain by encouraging business partners to conclude cooperation agreements, basic transaction agreements, and basic sale & purchase agreements stipulating the observance of the TOPPAN Group Sustainable Procurement Guidelines. Our goal is to conclude agreements with 90% of significant business partners by no later than fiscal 2025.
We ask our business partners to adhere to the TOPPAN Group Sustainable Procurement Guidelines through the conclusion of basic transaction agreements and basic sale & purchase agreements.
In the event of a violation of the Guidelines, we request the applicable business partner to take corrective measures. Should corrections not be made within a set timeframe, we may reconsider the transaction, up to and including the termination of the contract, in accordance with the stipulations of the agreements.
Turning to the environment, we advance sustainable procurement in line with specific standards such as the Standards for the Management of Chemical Components of Raw Materials and the Paper Procurement Guidelines for the Sustainable Use of Forest Resources.
Ex. 1: Cooperation Agreement text (excerpt)
The company understands the intent of sustainable procurement, and in transactions with TOPPAN Group companies, shall observe sustainable procurement standards and shall comply with said procurement standards or equivalent company standards.
Ex. 2: Basic Transaction Agreement (excerpt)
Article 41.
Legal Compliance and Promotion of Corporate Social Responsibility
Through procurement, manufacturing, sales, disposal, and all other business activities, the company shall observe the Sustainable Procurement Guidelines, and shall request its own business partners to comply with said guidelines or with equivalent guidelines established by the company.
No. of Partners with Cooperation, Basic Transaction,
or Basic Sale & Purchase Agreements
| Fiscal 2022 | ||
|---|---|---|
| Target | 2,919 | |
| Actual | 2,068 | |
| Rate of conclusion of agreements | 71% | |
| Breakdown by business category | OEMs | 658 |
| Suppliers | 1,072 | |
| Subcontractors | 337 | |
| Temporary staffing agencies | 1 | |
Requesting Self-assessments
The TOPPAN Group uses self-assessment questionnaires (SAQ) to understand our business partners’ ESG activities and to help them verify and improve their compliance with the Sustainable Procurement Guidelines on their own. The SAQ is prepared with reference to international codes of conduct, guidelines, and assessment criteria on sustainability including human rights, such as those established by the Responsible Business Alliance (RBA) and the Japan Electronics and Information Technology Industries Association (JEITA). We feedback the SAQ results to the business partners and request them to implement corrective measures if necessary.
Based on the results of the SAQ, our employees and contracted consultants conduct on-site assessments and provide guidance on corrective actions.
In the FY2023 questionnaire, we evaluated items such as "establishment of an internal whistle-blowing system for reporting harassment," "management of working hours," and "payment of appropriate wages" in the "human rights and labor" section. 15% of the respondents said that they did not have an internal whistle-blowing system for reporting harassment. For feedback, we provided the respondent business partners with the questionnaire results, industry average, items in need of improvement, and recommended corrective measures. Items in need of improvement were provided together with sample corrective measures. There were no serious human rights abuses found. Our employees conducted on-site assessments for the four business partners that received low scores on the questionnaire, indicating high risk.
Questionnaire Themes (excerpt)
International certifications obtained / Policies and rules formulated
1. Legal compliance and respect for internationally recognized standards
2. Human rights and labor
3. Health and safety
4. Environment
5. Fair business and ethics
6. Quality and safety
7. Information security
8. Business continuity planning
9. Establishing a management system
Number of Business Partners Assessed via Desk Assessments / On-site Assessments
| FY2023 | ||
|---|---|---|
| Target (desk assessments) | 2,919 | |
| Actual (desk assessments) | 1,952 | |
| Percentage of SAQ response provided | 67% | |
| Breakdown by business category | ||
| OEMs | 674 | |
| Suppliers | 919 | |
| Subcontractors | 356 | |
| Temporary staffing agencies | 3 | |
| Feedback provided (*1) | 468 | |
| Subject to corrective measures (*2) | 4 | |
| Subject to on-site assessment (*3) | 4 | |
| Confirmed that corrective action plans were implemented (*4) | 1(*6) | |
| Transaction terminated (*5) | 0 |
- *1
- Number of business partners that were provided with feedback on the result of the self-assessment questionnaire, risk mitigation measures, and recommended corrective measures.
- *2
- Number of business partners assessed with substantial actual/potential negative impacts.
- *3
- Number of business partners assessed with substantial actual/potential negative impacts that were evaluated through on-site assessments.
- *4
- Number of business partners assessed with substantial actual/potential negative impacts that implemented the corrective action plan.
- *5
- Number of business partners with substantial actual/potential negative impacts that were terminated.
- *6
- Three companies that have not yet completed corrective measures are also continuing to implement the corrective action plan.
Self-Assessment Questionnaire Feedback
Business partners who responded to the questionnaires will receive feedback on the overall result and the evaluation results of each ESG risk item.
Questionnaire Evaluation
This ratio represents the number of companies within each risk rating category. It allows you to compare the positioning against the evaluations of other companies.
Industry Average
You can check your company's position by comparing your score with the industry average score for each risk item.
● Detailed Evaluation by Risk Item
Below are the risk items to be checked in particular:
・Items that require confirmation: Items to be confirmed and corrected
・Areas for more progress: Areas where more sustainability initiatives are encouraged
・Risk factors: Risk items to be confirmed and corrected
・Important management questions: Items to be priortized
●Provision of Detailed Case of Corrective Measure
We provide examples of corrective measures for reference.
| ⑤Inadequate Environmental Permits and Reports | As a corrective measure, it is necessary to collect information on the latest applicable laws and regulations and to establish systems and mechanisms for compliance within the company. |
Support Provided to Implement Corrective Measures through On-site Assessments
In fiscal 2023, we provided support for business partners to implement corrective measures for each risk item. We confirmed that corrective measures were taken and resulted in remediations.
| Number of target business partners | Human Rights and Labor | Health and Safety | Environment | Fair Business and Ethics | Quality and Safety | Information Security | Business Continuity Planning | Establishing a Management System | Total number of cases | |
|---|---|---|---|---|---|---|---|---|---|---|
| Number of cases of support provided to implement corrective measures through on-site assessments | 4 | 9 cases | 7 cases | 1 cases | 2 cases | 1 cases | 3 cases | 23 cases | ||
| Confirmed that corrective measures were implemented | 1 | 1 cases | 1 cases | 1 cases | 3 cases |
Enhancing BCP Competencies
Business partners need to prepare procedures in advance to ensure that production can be promptly resumed when a wide-scale natural disaster or other emergency affects their operations. The Declaration of Partnership Building released from Toppan Inc. in September 2022 voices our support for business continuity planning (BCP) at business partners to secure the continuity of their businesses in the event of a disaster. We survey the BCP steps taken by key business partners and hold BCP workshops with them.
Out of the 248 partners surveyed, 80 participated in online workshops and discussed BCP matters in fiscal 2022.
BCP Survey Results
| Fiscal 2020 | Fiscal 2021 | Fiscal 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Tier 1 Suppliers | Tier 2 Suppliers | Total | Tier 1 Suppliers | Tier 2 Suppliers | Total | Tier 1 Suppliers | Tier 2 Suppliers | Total | ||
| Survey results | 48 | 115 | 163 | 63 | 122 | 185 | 25 | 223 | 248 | |
| No. of companies participating in workshops | 13 | 4 | 17 | 14 | 6 | 20 | 7 | 73 | 80 | |
| No. of companies participating in workshops whose survey evaluation improved | 2 | 1 | 3 | 2 | 1 | 3 | 2 | 9 | 11 | |
| No. of companies participating in workshops whose survey evaluation improved (cumulative total) | 4 | 8 | 12 | 6 | 9 | 15 | 8 | 18 | 26 | |
TOPPAN Group’s Training on the Sustainable Procurement Guidelines
The TOPPAN Group Sustainable Procurement Guidelines apply to every department linked to goods and services used in Group operations. Training on the guidelines is organized for employees in every department concerned and for significant business partners.
The Declaration of Partnership Building, issued by TOPPAN Holdings in September 2022, pledges our ongoing commitment to the building of close relationships and the observance of good business practices with business partners.
We hold training sessions on transaction-related legislation and on the Declaration of Partnership Building at the procurement departments to remind personnel of their obligation to practice the following commitment set forth in the Basic Procurement Policy: “We comply with domestic and overseas laws and regulations and conduct fair business transactions based on corporate ethics.”
Training for Relevant Departments in the TOPPAN Group on the Sustainable Procurement Guidelines
| Training result | FY2021 | FY2022 | FY2023 |
|---|---|---|---|
| Total number of employees receiving training | 495 | 2,129 | 1,492 |
| Breakdown Production control | 327 | 653 | 781 |
| Purchasing | 168 | 302 | 259 |
| Planning | － | 1,019 | 311 |
| General affairs | － | 155 | 141 |
Training for Significant Business Partners on the Sustainable Procurement Guidelines
| Training result | FY2023 |
|---|---|
| Target number of companies | 630 |
| Total number of companies | 630 |
| Breakdown OEMs | 269 |
| Suppliers | 186 |
| Subcontractors | 161 |
| Temporary staffing agencies | 14 |
Training on the Declaration of Partnership Building and Transaction-related Legislation
| Training Result | Fiscal 2020 | Fiscal 2021 | Fiscal 2022 |
|---|---|---|---|
| No. of participants: production control | 2,592 | 777 | 2,644 |
Monitoring Compliance in Procurement Departments
We regularly ask key business partners to fill out questionnaires on their transactions with us. With the questionnaire results, we monitor whether our procurement departments operate properly in accordance with the Basic Procurement Policy. Information gleaned from the responses of 10 partners in fiscal 2022 led to improvements in compliance in our procurement operations.
Monitoring Results
| Fiscal 2020 | Fiscal 2021 | Fiscal 2022 | |
|---|---|---|---|
| No. of responding companies | 17 | 10 | 10 |
| Cumulative no. of companies | 151 | 161 | 171 |
Verifying the Legality of Lumber for Paper Production
The Annex to the TOPPAN Group Declaration on the Global Environment, issued in March 2022, stipulates that we will take a proactive approach to the sustainable use of natural resources by avoiding or minimizing the impact on biodiversity when procuring raw materials. As a major procurer of paper, a resource representing 70% of our material input, we promote the sustainable use of forest resources by surveying the legality of lumber, the main material of paper.
We monitor paper manufacturers to verify that the lumber used for their products (representing more than 90% of our total paper purchases by monetary value) is obtained through legal channels. In a survey of 16 sites of 10 business partners around the world in fiscal 2022, we confirmed that all of the lumber procured from them was obtained legally. In yen terms, these 16 partner sites supplied 97.4% of the paper we used in fiscal 2022.
Survey Results on the Legality of Lumber for Paper Production (Paper suppliers representing over 90% of our paper purchases)
| Fiscal 2020 | Fiscal 2021 | Fiscal 2022 | |
|---|---|---|---|
| Paper suppliers surveyed* | 13 | 13 | 10 |
| Purchase value basis | 90.0% | 91.8% | 97.4% |
| Percentage of lumber sources verified as legal | 100% | 100% | 100% |
- *
- Paper suppliers subject to a higher risk of noncompliance over the most recent three-year period