Policy

The Denka Group, based on its Sustainable Procurement Basic Policy and Guidelines, is promoting the building of a sustainable supply chain together with its suppliers.
These Policy and Guidelines stipulate important matters in procurement activities such as human rights and labor, the environment, health and safety, quality and safety, and compliance.

Denka Group Sustainable Procurement Basic Policy and Guidelines

Promotion Structure and Governance

The Denka Group positions supply chain management as one of its important management issues and, under the Chief Supply Chain Officer (CSCO), is working to promote sustainable procurement, supplier risk assessment, and BCP response in collaboration with relevant departments centered on the Head Office Procurement Department. The progress of these initiatives is reported to The Sustainability Committee as non-financial KPIs, and the results of these reports are submitted to the Board of Directors.

Engagement with suppliers

The Denka Group positions suppliers as important partners that support its business activities and promotes the establishment of a sustainable supply chain through dialogue and collaboration.
Since 2017, we have been conducting direct visits to suppliers to share our ESG initiatives and approaches to social responsibility, and to ascertain issues and requests.
In 2025, we will inform all suppliers we do business with of our revised Sustainable Procurement Basic Policy and Guidelines, and conduct a survey to seek their agreement. We have already received agreement from almost all suppliers. In addition, we have signed the United Nations Global Compact (UNGC), the world’s largest sustainability initiative, and are working to strengthen initiatives throughout the supply chain by utilizing Supplier Self-Assessment Questionnaires (SAQs).

Supply chain data

Supplier risk assessment

The Denka Group uses the Supplier Self-Assessment Questionnaire (SAQ) provided by the United Nations Global Compact (UNGC) to evaluate the status of its suppliers' efforts regarding human rights and labor, the environment, and fair corporate activities. Analysis of the results of these questionnaires has confirmed that, overall, many suppliers are conducting appropriate management. However, it has also revealed that some suppliers have room for improvement in the maturity of their efforts.

Based on these results, we began individual hearings with 93 companies whose evaluation of important human rights and labor items did not meet a certain standard from fiscal 2025. During the hearings, we confirm the status of human rights policies and management systems, and the implementation of training and awareness-raising activities, and are working to identify issues and provide support for improvement. As of the end of March 2025, we have completed hearings with 42 companies, and plan to complete hearings with the target suppliers by the end of fiscal 2026 and conduct another questionnaire for corrective action confirmation.

Supply chain data

Denka Group's Efforts for Human Rights

Supply chain risk management

The Denka Group is working with its suppliers to address human rights, environmental, quality, and procurement risks in building a sustainable and resilient supply chain.

Response to Conflict Minerals

The Denka Group recognizes that minerals sourced from conflict areas, such as those in the African continent, can be a source of funding for forces that promote conflict activities. Although we are not subject to the U.S. Dodd-Frank Act or related regulations in Europe, we promote responsible mineral procurement in light of social demands.
For products for which we receive survey requests from our business partners, we also conduct surveys to confirm the presence or absence of conflict minerals, and report the results using internationally recognized survey templates such as the Conflict Minerals Reporting Template (CMRT).
Furthermore, to ascertain mineral-derived risks in our supply chain, we have been utilizing internationally recognized reporting formats such as CMRT and the Ethical Minerals Reporting Template (EMRT) provided by the Responsible Minerals Initiative (RMI) to share information with our suppliers.
In addition, to continuously check sanction lists and negative news, we have established a monitoring system using screening tools to ascertain risks in our supply chain at an early stage and reduce procurement risks.

Ensuring stable supply (BCP)

The Denka Group recognizes various risks that affect raw material procurement, including natural disasters, geopolitical risks, and the spread of infectious diseases, as important management issues. To ensure business continuity and stable supply, we have been promoting BCP measures based on raw material assessment for important raw materials.
Specifically, we evaluate supply risks and alternative possibilities for each raw material, consider countermeasures in cooperation with relevant departments, and aim to build a system that minimizes the impact on our business in the event of an unforeseen situation by promoting procurement source diversification and the consideration of alternative raw materials.
As a result of these efforts, the number of high-risk raw materials that have a large impact when supply is interrupted has decreased from 531 items as of May 2020, when we conducted our first assessment, to 302 items as of the end of March 2025. We will continue our ongoing assessment and countermeasures, aiming to reduce this number to 200 items by fiscal year 2028.

Supply Chain Data

Acquisition status of external certification

Our Response and Approach to Responsible Mineral Procurement

Minerals from conflict areas such as the African continent can be a source of funds for those who promote conflicts, and therefore regulations have been established such as regulations pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act in the U.S. and similar regulations in Europe. Although we are not directly obligated to comply with these regulations, we are investigating the use of conflict minerals in our products about which there have been requests for investigations from our customers driven by societal demands. We report the investigation results in the CMRT (Conflict Minerals Reporting Template) format, which is an international template for investigations.

Promotion of BCP Measures Through Raw Material Risk Evaluation

At Denka, we regularly conduct objective risk evaluation of raw material procurement and collaborate with the relevant departments to discuss countermeasures so that our raw material supply chain does not stop during the occurrence of unforeseen situations such as large-scale natural disasters (including earthquakes and damage from storms and floods), sudden geopolitical events, and pandemics. We are promoting the reduction of procurement risk and the strengthening of our business foundation.