CSR Procurement

Throughout its history, Panasonic has based relationships with business partners and suppliers on a philosophy of mutual prosperity. At the heart of these relationships is a spirit of mutual responsibility and mutual trust between self-reliant companies that take responsibility for their own operations. We believe that a partnership should be a relationship in which both parties pursue prosperity while sharing these same values. By achieving its own growth targets, a company contributes to the growth of the partner, too. Enlarging this chain of growth can eventually produce greater prosperity and happiness in society as a whole. This is why Panasonic believes that the spirit of mutual prosperity is vital in using partnerships to benefit society and serve as a responsible corporate citizen.

• Recycling Parts and Materials to Achieve Balance between the Ecology and Costs
• Approach to CSR Procurement
• Panasonic’s Position on Conflict Minerals
• Promoting Green Innovation with Supply Chain Partners
• Initiatives in Green Logistics
• Thoughts About CSR Procurement from a Supplier

Globally, Panasonic procures parts, materials, and equipment from approximately 9,000 suppliers. To date, we have worked in collaboration with many of our suppliers to put our CSR policies into practice, including our Clean Procurement Declaration, which ensures rigorous compliance in our own procurement activities, our Supplier Evaluation System, which includes an assessment of supplier CSR initiatives, and our Green Procurement policy, which ensures that specific chemical substances are not used in the parts and materials we procure.

As concerns about resource depletion grow, Panasonic, in its quest to become a Green Innovation Company, is focused on two areas key to achieving recycling-oriented manufacturing: resource conservation and recycling. The departments involved in procurement, which are responsible for the flow of resources to manufacturing, are particularly focused on contributing in the area of recycling, and work to promote procurement of recyclable materials, paints, and reclaimed materials. In addition, our design and manufacturing departments work in close alliance with suppliers that have world-leading technical capabilities, developing processing technologies and new applications to make use of these materials. We also promote centralized purchasing by developing common components, which leads to further expansion of resource recycling, and enhanced competitiveness through rationalization of costs. Using these initiatives to share expertise with our suppliers, we hope to raise the level of technology on both sides, and spread recycling-oriented manufacturing throughout the entire supply chain. Going forward, we will focus first on the most basic resources among those that we use such as metals and resins, aiming to raise the ratio of recycled resources to total resources used to more than 12% by the year ending March 2013.

Another important initiative is the reduction of CO₂ in logistics. We are working with our partner companies to strengthen efforts in this area, including switching to lower-emission transport methods, promoting joint transport with other companies, and a variety of other measures. We are also expanding outside Japan our system and structure for managing the volume of CO₂ emissions, originally developed in Japan, working to reduce CO₂ emissions globally while also enhancing competitiveness.

By ensuring that these goals are met, and based on the concept of fair trade, we hope that our procurement activities can contribute significantly to the achievement of a sustainable society.

[Promoting Recycling-Oriented Manufacturing]

[The Panasonic Approach to CSR Procurement]

Panasonic concentrates business on business partners that have outstanding technologies and quality along with a strong commitment to CSR. Currently, major business partners account for more than 70% of our procurement. All new business partners must comprehend and agree with the Panasonic management philosophy and CSR Procurement guidelines. New business partners worldwide must also sign a Basic Purchasing Agreement before receiving the first order. Afterward, we review these business relationships periodically by performing audits that evaluate QCDS (Quality, Cost, Delivery and Service) criteria, the performance of management and CSR activities.

If a business partner violates the CSR requirements of the Basic Purchasing Agreement, we ask the company to take immediate actions to resolve the problem and report back to us. For serious violations, we may reduce or even terminate purchases from that business partner.

As part of our Green Procurement activities, we have been performing Environmental Quality Assurance System Audits since fiscal 2005. These audits were instrumental to our completion of measures to comply with the RoHS Directive in October 2005, six months before compliance became mandatory. Currently, we are using these audits to comply with REACH.

The Clean Procurement Declaration describes our commitment to fair and equitable procurement activities. To explain our stance and give business partners a better understanding of Clean Procurement, we once again sent information about this declaration to our approximately 5,000 business partners in Japan in 2008.

Compliance is at the heart of all activities at Panasonic. We are dedicated to complying with Japan's Subcontracting Law, customs laws governing global procurement activities, and other laws, regulations and social standards around the world. We frequently conduct employee training events and audits in order to procure goods and services with emphasis on fair and unrestricted competition among business partners.

Information security is essential to creating an environment for close cooperation with business partners, starting with the design and development of a new product. Security is particularly important for business partners with access to confidential information. We require these business partners to implement the same level of information security as Panasonic to prevent information leaks. Approximately 1,000 companies worldwide have access to highly sensitive information. By 2008, all of these business partners in Japan had achieved the same security level as at Panasonic. We are now working with overseas business partners to improve their security systems so they can meet our standards.

With regard to human rights, employment, and occupational health and safety, our Basic Purchasing Agreement and other contracts require business partners to respect the rights of employees in four areas: (1) equal opportunity employment, (2) prevention of discrimination, (3) respect for privacy and (4) sound relationships between the company and its employees. Panasonic business partners must also provide workplaces that are safe and not harmful to employees' health. To meet this standard, business partners must comply with all labor-related laws and regulations, including laws concerning forced labor, child labor and illegal workers.

We initiated activities toward integrating CSR-conscious procurement promotion methods and programs following the inclusion of SANYO Electric Co., Ltd. in the Panasonic Group in December 2009.

Related Links

• Procurement Activities

Panasonic considers the issue of conflict minerals*1 to be of grave concern as a source of funding for organizations that are involved with human rights abuses, environmental destruction, bribery, and other unlawful activities in conflict areas.*2 To fulfill its social responsibility in its procurement practices, Panasonic, in principle, has adopted a policy of non-use of conflict-related minerals as raw materials. In the unlikely event that Panasonic discovers that it is inadvertently using conflict-related minerals, the Company will immediately take steps towards their non-use. To put this system in place, Panasonic sent a communication to all members of the Panasonic Group in December 2010, ordering them to make sure that they are not using conflict-related minerals. In February 2011, Panasonic began encouraging its main suppliers to identify their mineral sources.

However, in conflict areas there are still companies and individuals who are engaged in legitimate business. The Company must make every effort to ensure that its decisions not to use illegal minerals do not harm the business activities of these legitimate operators.

This is why it is important for Panasonic to maintain contact with the various stakeholders in the legitimate mineral supply chain in conflict-affected areas, including governments, corporations, and NPOs. For this reason, Panasonic participated in the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas project that the Organization for Economic Co-operation and Development (OECD) began in July 2011. By participating in this project, following OECD guidelines, and adopting a management process that is in accordance with global standards, Panasonic is contributing to international efforts that seek to overcome the conflict minerals problem.

*1. Tin, tantalum, tungsten, gold
*2. Democratic Republic of the Congo, and neighboring nations

Related Links

• Headquarters News: Panasonic to Implement OECD Due Diligence Guidance to Ensure Conflict-Free Procurement

Going forward, we will place even greater focus on recycling-oriented manufacturing, encourage even more of our suppliers to take an active part in our ECO-VC initiatives, and, based on the concept of fair trade, continue to play a proactive role in contributing to the global environment.

CO₂ emissions from Panasonic factories in the fiscal year ended March 2010 totaled 3.14 million tons, while logistics-related emissions totaled 780,000 tons, equal to about 20% of factory emissions. In order to reduce CO₂ emissions from logistics, Panasonic has worked to shift from trucks to rail transport (modal shift), use more eco cars and biodiesel fuels, and improve the loading ratio through joint transport with other companies.

In the fiscal year ended March 2010, we formed an alliance with The Asahi Shimbun Company, one of the leading Japanese newspaper companies, which has been active in working to reduce CO₂ emissions in the transport of newspapers. We have begun an initiative with Asahi in which trucks used for delivering newspapers can be used on their return trips for Panasonic logistics. Transport involves use of mid-size trucks powered by compressed natural gas (CNG), biodiesel fuel made from used cooking oil, and other alternative fuels.

Outside of Japan, we are working to switch from ocean-based shipping to railroad transport. In the fiscal year ended March 2010, transport from the Far East to Moscow, which would normally involve sea routes by way of India and Africa, was, with adjustments to transport methods, shifted to the Trans-Siberian railroad, resulting in a 38% reduction in CO₂ emissions. Transports from China to Kazakhstan, which until now had gone by sea to Europe, and then overland to Kazakhstan, were also shifted to rail transport using the same kind of adjustments to transport methods, achieving a 62% reduction in CO₂.

In terms of recycling, we aim to achieve zero emissions and conduct environmentally conscious manufacturing. This includes promoting recovery of rare and precious metals and making use of our own technologies. These activities also help to streamline costs.

We are confident that Panasonic's products will continue helping to create more environmentally conscious and richer lives for everyone. We are determined to play our part in contributing to society by helping Panasonic.