CSR Procurement

Panasonic's Position on Conflict Minerals

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-affected minerals as raw materials. In the unlikely event that Panasonic discovers that it is inadvertently using conflict-affected 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-affected 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

Responsible Sourcing of Minerals

We at Panasonic are concerned that the issue of conflict minerals-tin, tantalum, tungsten, and gold sourced from the Democratic Republic of the Congo (DRC) and neighboring countries that may support armed groups that are involved with human rights abuses, environmental destruction, bribery, and other unlawful activities in conflict areas-is one of the most pressing environmental and social concerns facing our supply chain. In order to avoid funding illegal organizations, as well as to fulfill our social responsibility in our procurement practices, we have adopted a policy of avoiding the use of conflict-affected minerals as raw materials.

In December 2010, we communicated this policy to all members of the Panasonic Group, requiring them to make sure that they are not using conflict-affected minerals. In February 2011, we began encouraging our main suppliers to identify their mineral sources to ensure conflict-affected minerals are not being used. The issue is complicated by the fact that, even in conflict areas, there are still companies and individuals who are engaged in legitimate work that is unrelated to the regional conflicts-work that is fundamental to their livelihoods and to the long-term peaceful and sustainable development of the DRC and its neighboring countries. We are therefore making every effort to ensure that our decision not to use conflictaffected minerals does not harm the business activities of legitimate operators in the region or the prospects for longer-term economic development. We are also participating in a pilot project to implement the "OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas." This project provides us with opportunities to engage and collaborate with international organization, governments, NGOs, companies, and industrial associations that are working to address and develop solutions for this issue.

Specifically, our participation in the OECD pilot project between August 2011 and August 2012 is setting us up to do the following: identify products and business areas and select suppliers that is setting subject to conflict-related minerals due diligence; inspect and analyze existing suppliers for risks related to conflict-related minerals; and establish a policy, management system, and process to start a full-scale due diligence program beginning the next fiscal year. Since September 2011, we have made significant progress in meeting these objectives. For example, we have completed a pilot supplier survey for one of our Group companies to investigate the possibility of conflict-affected minerals use and to identify any guidance or lessons that can be applied to our corporate-wide due diligence efforts. From this survey, we have recognized that there are still suppliers that do not recognize the importance of sharing smelter information, and this could pose as an impediment to the due diligence efforts of downstream companies, such as set manufacturers. Thus, this complex issue needs to be addressed with an industry-wide approach.

In addition to our involvement with the OECD pilot project, we are working with other key stakeholders-including NPO/NGOs and industry associations-to understand social requirements, as well as drive industry-wide change. For instance, our participation in the "Responsible Minerals Trade Task Force" of the Japan Electronics and Information Technology Industries Association (JEITA) has provided us with a platform to collaborate with other sectors on conflict-related minerals due diligence.

Understanding the need to raise awareness about this issue, we have also been collaborating with the NPO, Japan Youth Ecology League-a nation-wide network of youth organizations promoting environmental issues-in developing educational materials for younger generations on this serious topic.

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