Partnering With Suppliers

Policy and Guidelines

Framework

Main Activities and Results (Fiscal2012)

Monitoring and Improvement

Objectives and Achievements

Policy and Guidelines

NEC Group Procurement Policy

NEC has formulated the NEC Group Procurement Policy and is using this policy to develop internal controls for CSR and expand them to suppliers.
Regarding purchasing ethics and other forms of internal control, NEC has established the Basic Rules for Procurement and ensures that all employees remain in compliance with the regulations. To strengthen procurement-related internal controls, we have established specific business regulations in the purchasing process, and are striving to make all staff members involved in purchasing activities fully aware of them by holding regular training sessions.
In fiscal 2012, NEC revised the NEC Group Procurement Policy to encourage suppliers to promote CSR activities among their upstream suppliers based on ISO 26000, the international standard for CSR.

Supply-Chain CSR Guidelines

NEC has formulated Supply-Chain CSR Guidelines to promote CSR-related activities together with its suppliers. Using these guidelines and the Supply-Chain CSR Check Sheet, we are continuing to make efforts to nurture partnerships from a long-term perspective so that steady progress is made while deepening mutual understanding.
In fiscal 2012, NEC revised its guidelines to encourage suppliers to proactively manage their upstream suppliers with emphasis on three themes: tackling the conflict mineral issue, addressing RoHS and REACH standards, and ensuring business continuity.

Framework

NEC's CSR activities in the area of procurement are carried out by staff members responsible for purchasing. The Supply-Chain CSR Subcommittee and the Consolidated Procurement Management Meeting are convened every six months to propose and promote specific measures in this area. In fiscal 2012, the committees examined issues including the selection of suppliers subject to CSR questionnaire surveys, management of survey progress, and measures to support independent CSR activities by suppliers.

Main Activities and Results (Fiscal2012)

Communication with Suppliers

CSR-related activity status surveys of suppliers

NEC has surveyed the status of CSR-related activities at suppliers since fiscal 2007. The survey uses the Supply-Chain CSR Check Sheet based on the Supply-Chain CSR Deployment Guidebook published by the Japan Electronics and Information Technology Industries Association (JEITA).
The survey mainly covers suppliers with whom NEC has large transaction amounts in the outsourcing field and overseas production contractors (in China and the Southeast Asian region), in such areas as mechanical and engineering components and product assembly. In fiscal 2012, we surveyed 37 suppliers. NEC issued feedback reports showing strengths, weaknesses and points for improvement to every respondent. We analyzed survey data from a total of 248 suppliers, including the 37 suppliers surveyed in fiscal 2012 and 211 suppliers who previously filled out self-check sheets.
The results of the analyses are outlined below. NEC is using these results to plan future communications with suppliers.

Compliance-related status

All of the 37 suppliers reported zero compliance breaches with respect to the six priority risk categories (product quality/safety, the environment, information security, fair trading, occupational health and safety, and human rights).

Analysis by priority risk category

The greatest advances in CSR-related activities among suppliers were in the fields of product quality/safety and the environment. The results of this analysis showed a similar trend compared with the previous year.

Analysis by CSR management item

We found that awareness of CSR norms and the CSR promotion structure were almost satisfactory at all of the 37 suppliers. However, they could still improve their ability to monitor the actual compliance status and to ensure rigorous internal enforcement. The results of this analysis also showed a similar trend compared with the previous year.

Supporting suppliers’ CSR improvements

From an analysis of the feedback report of the previous year, we found that suppliers’ measures are lagging in the fields of human rights, occupational health and safety, and fair trading. We also learned that the suppliers’ measures to monitor the actual compliance status and to ensure rigorous internal enforcement tend to be weak. That said, we find it difficult to fully grasp the actual conditions of suppliers through written replies alone.

In response, in fiscal 2012, NEC started studying a scheme to confirm the status of suppliers’ CSR activities from these perspectives through on-site visits. From fiscal 2013, NEC is preparing to launch an on-site assessment program. The goal of this program is to enable suppliers to more independently implement CSR activities through CSR assessments by NEC and advice reflecting actual conditions.

Education and Training

Corporate ethics training for purchasing staff

NEC strives to maintain proper business execution by holding regular training sessions on procurement transactions for purchasing staff. In fiscal 2012, we held corporate ethics training in June and November 2011.

Web-based training for onsite contracting and dispatch staffing

NEC conducts web-based training when it accepts employees from partner companies through on-site contracting or dispatch staffing. The training is designed to ensure that managers at each workplace understand the relevant requirements. By the end of fiscal 2007, NEC had completed training of all management personnel. Since fiscal 2008, all newly appointed management personnel have taken part in web-based training every year. In fiscal 2012, NEC provided web-based training from November to March to all newly appointed management personnel.

Initiatives Addressing Individual Issues

Promoting green procurement

Since fiscal 1998, NEC has operated a green certification system based on the Green Procurement Guidelines that covers the procurement of not only hardware, but also software and services.
We have maintained a green procurement rate of 100% for product-related materials, excluding some supplies for internal use.
To comply with chemical substances regulations around the world, notably the European RoHS (Restriction on Hazardous Substances) Directive, China RoHS and European REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) Regulation, we continuously conduct chemical substance content surveys covering purchased items. For details, please follow link.

Strengthening information security

To strengthen information security, NEC has implemented measures including holding seminars on confidential information management, conducting rigorous management of subcontracting, carrying out assessments of implementation status, and organizing seminars for information security instructors. Going forward, NEC will continue to support the enhancement of the systematic capabilities (capacity building) of suppliers. For further details, please follow this link.

Addressing the issue of mineral resources that fuel conflict

Certain mineral resources, such as gold, columbite-tantalite (coltan), cassiterite, and wolframite, mined in the Democratic Republic of the Congo in Africa and adjoining countries have been reportedly used to help finance armed groups. These mineral resources may thus be responsible for triggering a rash of problems including tribal conflict, human rights abuses, and environmental destruction.
To tackle the conflict mineral issue, NEC has joined the Responsible Minerals Trade Working Study Group organized by JEITA and is promoting activities in concert with the industry. JEITA’s Working Group is coordinating its activities with the EICC-GeSI project*, which has implemented pioneering activities to address the conflict minerals issue.
Furthermore, in November 2011, NEC and its overseas regional headquarters examined the global policy on addressing conflict minerals. As a result, NEC clarified its global policy for the Group as a whole. The Group’s policy is to ensure that no mineral resources obtained illegitimately in conflict regions shall be procured or used in NEC’s products. The NEC Group has also sought the understanding and cooperation of its suppliers in this regard by establishing the Conflict Minerals Guidelines (for Suppliers).Going forward, by continuing to pursue even higher levels of transparency in the supply chain, the NEC Group will make every effort to ensure that customers can use its products with peace of mind.

(*) A global initiative by the electric machinery, electronics and telecommunications industries through cooperation between the Electronics Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI).

 EICC(Electronics Industry Citizenship Coalition)

Promoting business continuity plan

Amid the increasing complexity and sophistication of supply chains, NEC must fulfill its social responsibility to continuously supply goods and services. To this end, actions on two fronts are vital. NEC must implement preparedness measures while suppliers must promote business continuity plans (BCPs).
In the event that a damaging accident occurs in the supply chain, based on its business continuity plan (BCP), NEC will post “Information about Damage at Suppliers (operational status of plants, information on difficult-to-obtain materials, etc.),” which is gathered by each procurement division from suppliers, on an information-sharing database accessible to the entire company. NEC will make effective use of this database to exchange information so as to stabilize the procurement of materials, with the view to minimizing the impact of damage on its business operations
Meanwhile, NEC has distributed the Supply-Chain BCP Guideline (for Suppliers) to promote BCPs at suppliers. NEC has also conducted surveys of BCP implementation measures using the Supply-Chain BCP Check Sheet. NEC had surveyed a total of 181 suppliers through fiscal 2012. Through these activities, NEC will remain focused on encouraging suppliers to enhance their ability to ensure business continuity.

Monitoring and Improvement

Compliance Hotline (for Suppliers)

The Compliance Hotline, a point of contact for compliance consultation and reporting, has been made available to suppliers since 2003. This mechanism provides an independent channel for transaction-related complaints and consultation by suppliers. The Compliance Hotline has been made easily accessible from NEC's website.

Internal Auditing for Onsite Contracting and Dispatch Staffing

We continued to conduct internal auditing activities in fiscal 2012 to further promote appropriate onsite contracting and dispatch staffing practices. Audits conducted at each division of NEC Corporation and the NEC Group revealed no major problems pertaining to onsite contracting and dispatch staffing practices.

Objectives and Achievements

Objectives for the Medium Term (From Fiscal 2011 to Fiscal 2013) and Fiscal 2012, Achievements and Progress, and Degree of Completion

(Degree of completion: achieved/mostly achieved/some progress/no progress)

Fiscal 2013 Objectives

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