Promotion of Supply Chain Management

Promotion of Supply Chain Management

Policies and Basic Approach

For the Taisei Group, subcontractors, suppliers, and other business partners play a pivotal role as essential business collaborators in addressing environmental, human rights, and other societal challenges. In our “Action Guidelines for Taisei Personnel and the Taisei Group as a Whole,” which emphasizes promoting partnerships with business associates, we are committed to forging fair and mutually trusting relationships. Aligned with our Declaration of Partnership Building announced in 2020, we aim to amplify value and champion mutual growth and harmony throughout the entire supply chain.
To be specific, we are advancing our sustainability initiatives based on the Taisei Group Sustainable Procurement Guidelines.
By enhancing the reach and understanding of these guidelines—hich outline collaborative efforts between the Group and business partners to solve societal sustainability issues through our business—e endeavor to further our sustainability goals.

Risks and Opportunities

Efforts towards addressing sustainability challenges must be advanced not only within the Group but also throughout the entire supply chain. If these endeavors fall short, there is a risk of adverse impacts on our stakeholders due to potential environmental degradation and human rights breaches within the supply chain. This could subsequently lead to diminished corporate value and our reputation among our stakeholders.
Conversely, initiatives aimed at resolving sustainability issues across the full supply chain help to achieve mutual growth and harmony with our business partners, further bolstering the Group’s productivity and competitive advantage.

Policies / Commitments

• Action Guidelines for Taisei: Promoting partnerships with subcontractors and suppliers, ensuring fair business transactions
• Fundamental Policy on Sustainable Development
• Procurement Policy
• Human Rights Policy
• Declaration of Partnership Building
• Taisei Group Sustainable Procurement Guidelines
• Green Procurement Guideline
• Medium-Term Business Plan (2021–2023): To promote the supply chain management aimed at solving environmental and social issues

Goals and Targets

KPIs

Performance

Suppliers' conformity rate with the Taisei Group Sustainable Procurement Standards for FY2022 was 91.3% for Taisei Corporation alone.

Initiatives

The Taisei Group participates in the Human Rights Due Diligence (HRDD) Subcommittee and Supply Chain Subcommittee of the Global Compact Network Japan (GCNJ) which is made up of companies participating in the United Nations Global Compact. In 2022, Taisei participated as a member company in the Japan Business Initiative for Biodiversity (JBIB) that works to ensure biodiversity, and served as a member of the working group that studies supply chains. Since 2019, Taisei has also been registered with EcoVadis as a supplier and has disclosed required information.

• United Nations Global Compact, “Human Rights,” “Labor,” “Environment,” and “Anti-Corruption”
• Supply Chain Sub-Committee (GCNJ)
• HRDD Sub-Committee (GCNJ)
• JBIB (Japan Business Initiative for Biodiversity)
• EcoVadis

Sustainability Governance and Oversight

Sustainable Procurement Promotion Framework

The Sustainable Procurement Council made up of responsible personnel from the Sustainability Management Promotion Division and relevant divisions (Civil Engineering, Building Construction, Procurement, and Safety Administration) studies implementation plans relating to supply chain management and sustainable procurement, confirms the results of implementation, and studies improvements to activities. The Council is under the direction of the Chief Sustainability Officer (CSO), and it reports to, and is reviewed by, the Sustainability Committee (a committee within the Board).

Taisei Group of Companies Sustainable Procurement Guidlines

To contribute to resolve social issues through business activities, including issues relating to the environment and human rights, Taisei established the Taisei Group of Companies Sustainable Procurement Guidelines summarizing matters to be implemented jointly by the Taisei Group and its subcontractors and suppliers (established in 2014 as CSR Procurement Guidelines, and revised in April 2022 as the Taisei Group of Companies Sustainable Procurement Guidelines). Taisei works to ensure that all subcontractors and suppliers thoroughly understand the Guidelines and conduct sustainability activities in accordance with these Guidelines. Taisei also conducts training and online learning courses for subcontractors and suppliers relating to the Guidelines. We also ask business partners to provide training and guidance to their employees and work to ensure a thorough understanding of the Guidelines throughout the entire supply chain.

To ensure even greater awareness and compliance the Guidelines, beginning in FY2022 the essentials of the Guidelines have been included in contracts concluded with subcontractors and suppliers to seek their understanding and cooperation.

The content of the Guidelines is reviewed on an ongoing basis to ensure that it reflects global and societal trends relating to environmental and social issues.

Activities / Efforts

Activities to Promote Sustainable Procurement

Employee training

In September 2022, Taisei published the TAISEI Sustainability Handbook for training Group employees, and distributed it to all employees of Taisei and Group companies. The Handbook is designed to ensure a thorough awareness of the Fundamental Policy on Sustainable Development, its Human Rights Policy, the Taisei Group of Companies Sustainable Procurement Guidelines and so on. Taisei has also conducted briefings for individual departments and exchanges of views to ensure understanding.

Moreover, briefings on sustainable procurement are also held each year for the executives of the Taisei Corporation Procurement Division and the persons in charge of procurement at individual branch offices. In addition, online learning courses on the Taisei Group of Companies Sustainable Procurement Guidelines as well as global social issues in the supply chain relating to the environment, human rights, labor issues and so on are conducted available to all employees including those in the Procurement Division.

Briefings for Subcontractors and Suppliers by Chief of Branch

At the annual Safety Conference and other venues, each of the chiefs of all 12 branches in Japan explain the importance of sustainable procurement to subcontractors and suppliers and ask for their corporation in promoting activities at each company.

Supplier Support and Capacity-Building

The “Soyukai” is an organization of key subcontractors among the Taisei Corporation partner companies. Multiple councils have been established at the national Soyukai Federation as well as the branch Soyukai made up of members at individual branches. These councils meet regularly to hold exchanges of views between Taisei and member companies and to conduct training. These exchanges of views deal with social issues such as the need on the part of partner companies to secure leaders and successors, the need to improve benefits and so on, and the results are reflected in various measures. Moreover, Youth Management Study Groups made up of young managers who will be the leaders of next generation have been established as subsidiary organizations of the branch Soyukai. These study groups hold workshops and get-togethers and so on to improve the quality of the personnel who will serve as managers and top Soyukai officials.

In addition, sustainability training sessions for subcontractor and supplier owners have been held at the annual Safety Conference and other venues to provide training in social issues, including issues relating to the environment and human rights. Online learning courses relating to the Taisei Group of Companies Sustainable Procurement Guidelines are also offered to subcontractor and supplier employees.

In January 2024, we have issued the Taisei Group Supply Chain Sustainability Handbook, which provides a clear overview of our initiatives to solve sustainable issues such as human rights and environmental due diligence to subcontractors and suppliers.
Going forward, we will further accelerate the initiatives to realize a sustainable society by using this handbook to enhance subcontractors and suppliers' understanding and awareness of sustainable issues and promoting collective efforts across the entire supply chain.

• - No. of branches at which training in sustainability activities has been conducted for subcontractors and suppliers
  Held in January 2023 at all 12 branches in Japan
• - No. of individuals and companies attending online learning courses in sustainable procurement
  January - February 2023  2,579 individuals  1,142 companies
  January - February 2022  7,391 individuals  3,200 companies

Holding of Sustainable Procurement Briefings Overseas

Sustainable procurement briefings were conducted in Taiwan (2015), Singapore (2017), Vietnam (2018) and Myanmar (2019) to explain the Taisei Group's policy and activities regarding sustainability issues and request cooperation, and to ensure prevention of forced labor, child labor and other human rights violations. The briefings were held for Taisei Corporation construction site offices and overseas subsidiaries as well as local subcontractors and suppliers.
No briefings were held beginning in 2020 due to the effects of the COVID-19 pandemic. However, briefings were resumed in 2023 with a briefing held in March in the Philippines.

No. of participants at sustainable procurement briefings in the Philippines (March 1-3, 2023)

• Taisei construction site office employees: 24
• Overseas subsidiary employees: 12
• Local subcontractors and suppliers’ employees: 42

Risk Management and Risk Assessment

Sustainability Activity Survey (Self-Assessment) for Subcontractors and Suppliers

Since FY2016, Taisei has conducted regular opinion survey by self-assessments to confirm the status of sustainability activities, including activities relating to the Taisei Group of Companies Sustainable Procurement Guidelines and their observance by subcontractors and suppliers. Beginning in FY2022, these assessments have been conducted annually.

Moreover, based on the results of self-assessment, TAISEI visits and audits companies whose status of activities relating to environmental, human rights, labor and other sustainability issues needs to be confirmed. On these occasions, exchanges of views are held with company owners and best practices are shared in order to effect improvements. Taisei is also working to improve the overall level and enhance activities throughout the entire supply chain, such as by asking subcontractors and suppliers to provide education and guidance for each of their business partners.

Survey of Foreign Technical Interns

Out of consideration for the possibility that foreign workers may be placed in a vulnerable position, the Taisei Group designates human rights problems relating to foreign workers as a priority issue for human rights due diligence, and works to prevent and reduce human rights risks pertaining to foreign workers. Particularly with regard to foreign technical interns, we work to foster an environment in which everyone is able to work with peace of mind, by establishing a procedure for accepting technical interns to ensure smooth acceptance at workplaces, and by conducting surveys of owners with regard to acceptance status and interviews with the interns themselves and so on. In the opinion survey conducted in FY2022, responses were received from 251 companies that have hired foreign technical interns. For 16 of the responding companies, Taisei checked the nature of the activities being conducted by responded documents, and as assessment feedback following the opinion survey, five companies were visited to conduct interviews on the status of activities as well as to exchange views with the owners, etc. To the degree that could be determined through the results of the surveys and interviews, no major human rights risks relating to the training were determined (improper collection of money or deduction from salary, non-payment of salary, or other negative impacts on human rights).

Response Regarding Sustainable Construction Equipment and Materials Procurement

Traceability Survey

Diverse raw materials including wood and stone are used in the construction industry. For raw materials whose place of origin is a developing country, there is increasing societal concern regarding illegal sourcing (cutting), oppression of native populations, forced labor and child labor and other legal and regulatory violations, environmental destruction, human rights violations and so on.
For this reason, in January 2019 Taisei conducted a questionnaire survey of its major material suppliers, in order to confirm their supply chains from raw material sourcing through delivery at worksites, and to determine whether there had been any legal and regulatory violations, human rights violations, or other violations by the overseas companies in these supply chains.

Based on the following survey results, in FY2019 as a follow-up survey we visited companies that submitted responses relating to lumber, stone and tile, as well as wholesalers and trading companies making up the supply chain, to explain our Procurement Policy and the Taisei Group CSR Guidelines (now the Taisei Group of Companies Sustainable Procurement Guidelines) and to require their understanding regarding sustainable procurement activities. At companies where interviews were conducted, we also held exchanges of views regarding the current status and future issues relating to traceability.

* Traceability: Releasing (making traceable) production histories and distribution channels

Survey of lumber procurement

In view of the importance of conserving forest resources and forest environments and ensuring sustainable procurement, from November 2022 through January 2023 a survey of lumber procurement by an opinion survey was conducted for subcontractors and suppliers dealing in major wooden products. Based on the results of the opinion survey, subcontractors and suppliers were visited and interviews regarding the status of activities and exchanges of views with owners, etc. were conducted.

The Taisei Group will continue to determine the status of lumber procurement and make improvements as needed in order to minimize the negative impact on forest resources and forest environments and achieve sustainable lumber procurement.

Due Diligence for New Subcontractors and Suppliers

As one part of supply chain management, when Taisei Corporation begins trading with new subcontractors and suppliers, it strives to familiarize the company with the Environmental Policy and Human Rights Policy of the Taisei Group as well as the Taisei Group of Companies Sustainable Procurement Guidelines, etc., and to confirm the status of efforts on the part of the new subcontractor or supplier relating to environmental issues, human rights and other social issues, health and safety, legal compliance, comprehensive efforts to prevent corruption and so on, by a self-assessment. If needed, interview surveys and exchanges of views are conducted in order to effect improvements.
The results for self-assessment were as follows:

4QFY2022 50 new subcontractors and suppliers
1QFY2023 85 new subcontractors and suppliers

Efforts to Enhance Productivity through Linkage and Collaboration with Business Partners

Primarily through Production Process DX based on the key issue identified in the Medium-Term Business Plan, "To innovate production systems, and reform workstyles through digital transformation (DX)," Taisei Corporation works as one with our supply chain to improve aspects such as productivity, safety, and quality at construction worksites.
Information is shared at each stage, including design and construction, by utilizing BIM/CIM data linkage with subcontractors and suppliers as well as on-site management systems such as T-BasisX for construction projects and T-iDigital Field® for civil engineering projects. This has successfully reduced rework and menial tasks, in addition to shortening construction periods, and we have been promoting development of efficient, high-quality construction production systems.
Furthermore, we have also been promoting application of DX such as the Face Recognition Gate Management System and the Safety Documentation System, in our efforts for efficient labor management and safety documentation at worksites, as well as the cooperative operation control system T-iCraft® of the automatic construction machine for civil engineering projects T-iROBO® series.
Moreover, in our efforts beyond our DX initiatives, we are making efforts to improve productivity and safety with the supply chain by applying secondary concrete products (precast) for concrete construction, along with other measures.

Data

Social Data

Sustainability

• Top Commitment
• Sustainability Management
  • Sustainability Management
  • Message from Chief Sustainability Officer (CSO)
  • Sustainability of the Taisei Group
  • Creation of Value and Policies
    • Toward Value Creation and Sustainable Growth
  • Materiality and SDGs
  • Participation in Initiatives
  • The seven core subjects of ISO 26000
• Environment(E)
  • Environment(E)
  • Realization of a Sustainable and Environmentally Friendly Society
    • TAISEI Green Target 2050
    • Decarbonized Society
      • Avoided Emissions
    • Recycling-Oriented Society
    • Nature Co-Existing Society
    • Forest Resources / Forest Environment
    • Water Resources / Water Environment
    • Compliance with Environment-related Laws and Regulations
  • Environmental Due Diligence
  • Environmental Data
  • Independent Assurance
  • Information Disclosure Based on TCFD Recommendations
• Social(S)
  • Social(S)
  • Human Rights
    • Respect for Human Rights
    • Diversity, Equity, and Inclusion
    • Human Rights Due Diligence
  • Labor Practices
    • Realization of an Attractive Working Environment That Is Good to Work in
    • Human Resource Development
    • Health Management
    • Thorough Management of Occupational Health and Safety
    • Cultivation of Technical Staff and Securing of Human Resources
  • Consumer Issues
    • Ensuring Quality and Improving Technology
    • Technical Development for Realizing a Sustainable Society
  • Fair Operating Practices
    • Promotion of Supply Chain Management
  • Community Involvement and Development
    • Contribution to Local Communities
    • Social and Cultural Contribution Activities
• Governance(G)
  • Governance(G)
  • Corporate Governance
  • Risk Management
  • Fair Operating Practices
    • Thorough Compliance / Restructuring of the Group Governance System
    • Management of Information and Intellectual Property Rights
• External Evaluations/Sustainable Finance
  • External Evaluations/Sustainable Finance
  • External Evaluations
  • Sustainable Finance
    • Green Bonds
    • Sustainability Link Linked Loans, etc
• ESG Data and Comparisons
  • ESG Data and Comparisons
  • ESG Data
  • GRI Standards Comparison Chart
  • ISO26000 Comparison Table
  • Information Disclosure Based on TCFD Recommendations
• Editorial Policy
• Library