Supply Chain

In SVP 2030, we have reconfirmed CSR as a priority issue, notably factors concerning the environment, ethics, and human rights. Under the Fujifilm Group's Procurement Policy, we are strengthening our CSR foundation together with our suppliers to build a sounder supply chain that would achieve sustainable procurement.

In addition, based upon the Fujifilm Group Basic Concepts and Action Guidelines for Biodiversity Conservation (Guidelines for Biodiversity) established in June 2009, the Fujifilm Group is engaging in a wide range of environmental protection activities for the conservation and protection of biodiversity to sustain the various benefits we now receive from our ecosystem into the future.

Human Rights Statement

Guidelines for Biodiversity

[Target] Realize sustainable procurement

• Installed comprehensive supply chain management system in North America and commenced supplier surveys (FF)
• Achieved elimination of production line stops caused by suppliers' CSR risks in subsequent years ⇒ FX Shenzhen for three years & FX Haiphong for two years(FX)
• Obtained 100% response rate from suppliers for the Conflict Minerals Report (in the document business where customer interest is high)(FX)

[Target] Ensure compliance with legislation on biodiversity

• Continued risk assessment of biological resource procurement from the product design stage, based on internal rules (starting in February 2010)
• Participated in the Taskforce Committee for the Nagoya Protocol under the Ministry of Economy, Trade and Industry Japan (METI) (continuous participation since FY2014)
• Continued risk management for procurement of copier paper, one of our important products, based on internal rules and guidelines (since 2012)

Activities on Biodiversity Conservation

Fujifilm Group believes it is important that the business partners and suppliers, especially production materials suppliers, understand the importance of CSR management and work together with us in resolving issues. Therefore, we clearly stated the group-wide procurement approach, the Fujifilm Group Procurement Policy, and Requests to Suppliers.

In particular, Fuji Xerox, which has a high rate of overseas production (around 90%) and where the customer demand has been high at an earlier age, has started focusing on CSR procurement in 2007 and introduced a scheme for mutual consensus assessment for CSR operations concerning the environment, human rights & labor, and corporate ethics with its suppliers. Under our mutual consensus assessment scheme, the results of a self-assessment by a supplier is cross-checked by Fuji Xerox, followed by discussions on discrepancies to finally reach agreement. The scheme is designed to give assessments in a manner that is more acceptable to our suppliers. This activity was started with production material suppliers, and gradually expanded to logistics and indirect material suppliers. In 2009, Fujifilm also started to ask some suppliers to conduct self-assessments, and later expanded the scope of these assessments to suppliers covering 80% of the total procurement amount in each business division.

In FY2017, Fujifilm expanded CSR procurement assessments, that we have promoted in Japan and China, to suppliers for North America sites. In North America, we established a system to comprehensively manage the information of occupational health and safety, labor environments, and BCPs (Business Continuity Plans), as well as the conventionally managed the information of compliance for REACH, RoHS, and other regulations on chemical substances and mineral origins, including conflict mineral information. We then started gathering data through a survey of 90% of North American suppliers. By the end of FY2017, we achieved a 72% response rate. We are now analyzing the responses and discussing specific issues with suppliers. In FY2018, we plan to expand the survey to Fujifilm's production material suppliers in Europe.

The checklists used in these survey are based on the CSR standards issued by the United Nations Global Compact and the Responsible Business Alliance (RBA)(*), and also includes comments by external experts. The checklists are revised in response to changes in legal regulations and social demands. Based on the survey results, we also request and support our suppliers to change their practices if it's required. The ratios of production material suppliers with compliance rate of 90% or higher on “very important” items are 99% for Fujifilm and 96% for Fuji Xerox.

The Fujifilm Group also provides briefings and dialogue meetings to raise awareness on the Group's CSR Procurement Policy among suppliers, and to emphasize that compliance with CSR procurement will reinforce their competitiveness in the supply chain. In FY2017 Fujifilm continued to hold briefings for production material suppliers. Cumulative number of participants is around 400 suppliers for Fujifilm.

Fuji Xerox also makes on-site visits in which expert teams from the department of procurement, personnel, and environment, etc. visit suppliers to identify any CSR risks more accurately and provide advice and support for improvement. This scheme is supplementary to the conventional suppliers' self-assessment reporting in areas where there is a relatively high risk of production material supply cessation. We expanded this on-site visits to the suppliers of our Vietnam factories in FY2017, and in FY2018 we also plan to expand to suppliers in Korea and to start preparations for visits to suppliers of Fujifilm factories in China.

* Responsible Business Alliance and its Code of Conduct

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In recent years, there are growing concerns that the mining of mineral resources including in the Democratic Republic of Congo and the neighboring nine nations may have caused human rights violations and environmental destruction, and the profits earned from these minings may have financed unethical actions by armed groups.

The Fujifilm Group has declared that it will not use any minerals mined or refined by illegal practices, and will not be complicit, directly or indirectly, in supporting such activities. Further, our basic policy for procurement transactions states clearly that we are committed to addressing the issue of conflict minerals.

Fujifilm and Fuji Xerox participate in the Responsible Procurement of Minerals of the Japan Electronics and Information Technology Industries Association (JEITA(*1)), joining other companies to study reasonable and effective measures to prevent involvement in human rights violations throughout our supply chain. With our business divisions and Group companies that are subject to strong customer expectations, we hold briefings for our suppliers in efforts to gain their understanding of our actions on conflict minerals. At the same time, we are working continually to gather the information and improve its accuracy in cooperation with our suppliers.

At Fuji Xerox, a company that belongs to the electronic and electrical machinery industry and with strong demand from customers, since 2013 we have conducted the reviews of the history of the sources of our mineral supplies to identify whether there has been any armed intervention in our supply chain.

In the review conducted in FY2017, the supplier response rate reached 100%, and the percentage of conflict free smelters (CFSs)(*2) reached 46.2%, up by 6.2 percentage points over the previous year. Also, there are no information suggesting armed intervention. For FY2018, our target is to maintain the response rate at 95% or higher, and further effort will be made to improve data accuracy.

We are requesting our partners and suppliers to use conflict free smelters certified by RBA and other organizations, and will promote activities for responsible mineral procurement, in cooperation with our various stakeholders in the future.

*1 Japan Electronics and Information Technology Industries Association (JEITA): This industry organization aims to foster the sound production, trade, and consumption of electronic devices and components, thereby contributing to economic development and cultural promotion in Japan.

*2 Percentage of Conflict Free Smelters: The percentage of smelters designated in our supply chain that have obtained conflict-free certification by RBA, etc.

Recognizing the importance of respect for basic human rights, the Fujifilm Group explicitly declares its determination to implement this in the Fujifilm Group's Charter for Corporate Behavior and the Fujifilm Group's Code of Conduct, and organizes regular training programs to these ends.

Since 2012, we have been participating in the Stakeholder Engagement Program (SHE) organized by the Caux Round Table. As a result of human rights issues for each industry studied in the Program(*1), we have been working since 2015 to identify and address human rights issues in the Group*2. In the face of the expanding regulatory control on human rights issues, such as the Modern Slavery Act in the UK, California Transparency in Supply Chains Act, etc., and through dialogue with international human rights NGOs in FY2016, we have placed top priority on identifying and addressing potential human rights issues in the supply chain and with employees in the Group and have organized activities for CSR procurement collaborating with our suppliers and promoted CSR activities within the Group.

We have conducted our CSR procurement activities in Japan, China and the United States and conducted internal audits for the production sites of the Group. To expand the scope of our activities to other regions, to organize preliminary studies of response measures to be taken if a problem is discovered and to further strengthen and disseminate awareness of human rights issues within the Group, we decided to establish an independent policy, in addition to the Fujifilm Group’s Charter for Corporate Behavior and the Fujifilm Group’s Code of Conduct, to explicitly declare our respect for human rights. As a result, we established a Human Rights Statement with the approval of the CSR Committee headed by the President in June 2018. In establishing our Human Rights Statement, we have received various comments and suggestions from Group companies in Japan and other countries and other stakeholders (see Page 10). The process served as a great opportunity not only for the CSR division but also for the personnel and other relevant divisions to renew their awareness on human rights issues.

Stakeholder Communication

In the Human Rights Statement, we state that respect for human rights is the basis of all our business activities and declare our basic policy in introducing activities to prevent human rights violations. We will conduct internal and external communication to disseminate the Human Rights Statement, and will raise the awareness of the importance of human rights issues within the Group. At the same time, we will cooperate with our partners and suppliers to conduct a more comprehensive assessment of the impact of potential human rights risks in each business field and to strengthen prevention and mitigation measures. Furthermore, we will continue to conduct studies with other companies and activities proactively adopting suggestions from external parties, to incorporate the trends in society’s demands within the Group and to foster greater awareness.

Employees of the Group who have any concerns on the incompliance or human rights violations stated in the Code of Conduct are able to seek remediation or correction through the Compliance Helpline and other whistle-blowing systems. For external stakeholders, we have set up an inquiries contact on CSR matters to receive opinions and suggestions regarding our entire Group activities, including human rights issues.

*1 Human Rights Issues by Sector (Sixth Edition): Created by the Consortium based on the Human Rights Guidance Tool of the United Nations Environment Programme Finance Initiative (UNEP-FI).

*2 See figures; “Human Rights Due Diligence Process” and “Potential Human Rights Infringement in the Fujifilm Group.”

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