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 of Companies Sustainable Procurement Guidelines.
By enhancing the reach and understanding of these guidelines which outline collaborative efforts between the Group and business partners to solve societal sustainability issues through our business, we endeavor to further our sustainability goals.

Risks and Opportunities

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
• [TAISEI VISION 2030] Achievement Plan / Policy on Business Foundation Development: Sustainability Management Strategy (Environment and Energy, Human Rights)

Goals

Human Rights

• We respect human rights of each employee involved in the Group's business.

Environment

• FY2050 target: Scope 3 Zero CO₂ emissions throughout the supply chain

Safety

• We aim to maintain zero fatal accidents, zero serious accidents, and zero environmental accidents.

KPIs

• Percentage of confirmation on sustainability activities of subcontractors and suppliers
  [FY2026] 100% / [FY2030] 100% across the Group

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 in the working group that studies supply chains as a member company in the Japan Business Initiative for Biodiversity (JBIB) that works to ensure biodiversity. 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

Structures and Systems

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 (CSuO), 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 resolving environmental and social issues, including human rights, through our business activities, Taisei communicated the Taisei Group of Companies Sustainable Procurement Guidelines, which outline the actions to be implemented jointly by the Taisei Group and its subcontractors, suppliers, and other business partners to all parties. We are requesting their commitment to sustainability activities based on the Guidelines. Specifically, we ensure that our Guidelines are communicated to all our business partners as part of the terms and conditions when requesting estimates for construction contracts, both in Japan and overseas. When entering into a contract, the essence of the Guidelines is incorporated in the contract, and we seek the understanding and cooperation of our business partners to address environmental and human rights issues. In addition, we are working to ensure that the Guidelines are understood and implemented throughout the supply chain. We offer training and e-learning on the Guidelines to all subcontractors and suppliers we contracted with in the previous year and confirm their implementation status. Additionally, we require them to provide education and guidance to secondary and lower-tier subcontractors and suppliers. The Guidelines are continuously reviewed in response to evolving global and social trends related to environmental and social issues.

Activities / Efforts

Procurement Activities Together with Employees, Subcontractors and Suppliers

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

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

Support and Capacity-Building for Subcontractors and Suppliers

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 (Japanese only), which provides a clear overview of our initiatives to solve sustainable issues such as human rights and environmental due diligence to subcontractors and suppliers.
We accelerate the initiatives to realize a sustainable society by using this handbook to enhance their understanding and awareness of sustainable issues and promoting collective efforts across the entire supply chain.

• - Training results of sustainability activities which have been conducted for subcontractors and suppliers.
  Conducted at all 12 branches in Japan on January 2024
  Conducted at National Safety Conference held on February 2024
  (Board members of the Taisei Corporation Safety, Health, and Environment Cooperation Association from all 12 branches in Japan attended).
• - Number of individuals and companies attending online learning courses in sustainable procurement for business partners.
  January - February 2024  3,407 individuals  1,053 companies
  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 overseas from FY2015 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. In FY2022, briefings were resumed in the Philippines and were subsequently held in Indonesia in FY2023, and in Thailand in FY2024.

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  Number of participants at sustainable procurement briefings at a worksite in Indonesia (January 24-26, 2024)

  • Taisei construction site office employees: 2
  • Overseas subsidiary employees: 43
  • Local subcontractors and suppliers: 11 companies

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  Number of participants at sustainable procurement briefings at a worksite in Thailand (September 30-October 2, 2024)

  • Taisei construction site office employees: 7
  • Overseas subsidiary employees: 40
  • Local subcontractors and suppliers: 64 companies

Risk Assessment

Effectiveness Evaluation: Self-Assessment

The Taisei Group conducts annual risk assessments of societal and environmental challenges, including human rights, in the supply chain according to the following procedures.

1. Conduct a questionnaire survey on sustainability activities (self-assessment).
   (Confirm the extent to which companies to be surveyed have implemented measures and initiatives based on the Taisei Group of Companies Sustainable Procurement Guidelines with respect to various challenges, including human rights and the environment.)
2. Quantitatively analyze self-assessment results and identify “subcontractors and suppliers whose efforts should be verified” based on certain conditions.
3. Confirm in writing, by telephone, etc., the status of efforts, improvement plans, and other aspects of subcontractors and suppliers whose efforts should be verified.
4. Conduct on-site audits of subcontractors and suppliers, as appropriate, request them to reduce negative social and environmental impacts, exchange views, and share best practices with employers and others for improvement.
5. If risks are determined to be high through any of the above, regularly follow up on the status of improvements to mitigate risks related to societal and environmental challenges in the supply chain.

Furthermore, since FY2023, we have been requesting primary contractors to educate and guide their subcontractors and have been conducting trial direct dialogues with some secondary subcontractors and suppliers. These efforts aim to raise the overall level of our supply chain and strengthen our initiatives. As one of initiatives, we have newly conducted the direct communication with the second-tier subcontractors and suppliers since FY2023.

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 FY2023, responses were received from 314 companies that have hired foreign technical interns. For 25 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).

In addition, we have taken the following actions in response to the requests and opinions received from company owners and others in the exchange of views in FY2023.

• In response to requests to improve the selection process for foreign technical interns who enter Taisei's work sites for the first time --which is more stringent than that of other companies in the same industry --we have eliminated branch office interviews as part of the process and streamlined it to enable a more dynamic and efficient selection.
• In response to the opinion that "due to labor shortages, foreign technical interns have become a valuable asset," we have expanded our support measures for Soyukai members to help them recruit Japanese and foreign technical workers.

Survey on wood procurement

In view of the importance of conserving forest resources and forest environments and ensuring sustainable procurement, from October through December 2023 a Survey on wood 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 wood procurement and make improvements as needed in order to minimize the adverse impact on forest resources and forest environments and achieve sustainable wood procurement.

Survey on wood procurement (October - December 2023)

• Target companies: 68 companies (companies dealing in wooden furniture, wooden joinery, wood finishing carpentry work, formwork construction and other major wood products having a trading volume above a certain level)
• Responding companies: 64 companies (percentage of companies surveyed on a contract amount basis, based on wooden product contract sums for contracts signed in FY2022: 73%)
• Description: Through 15 visits and 4 online meetings, we conducted hearings on the status of activities and exchanges of views with owners and others.

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 193 new subcontractors and suppliers

Efforts to Enhance Productivity through Linkage and Collaboration with Business Partners

Through Production Process DX based on the key issue identified in [TAISEI VISION 2030] Achievement 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.