Activities to Promote Sustainable Procurement
Supplier Surveys and Improvement Activities
Kirin Holdings aims to achieve "sustainable procurement" by having suppliers conduct activities based on the Kirin Group Sustainable Supplier Code. We regularly conduct supplier surveys to check the status of our efforts to comply with the Kirin Group Sustainable Supplier Code, and in 2020 we surveyed about 400 suppliers (accounting for about 90% of our total procurement value). The results of the survey showed that, while there is common progress in protecting the human rights of employees, fair corporate activities, quality, safety, and information security, the implementation of human rights and environmental initiatives upstream in the supply chain is an issue. As a result of the survey, we directly interviewed suppliers whose initiatives were deemed high-risk and provided them with advice for improvement, and some of them have gone on to formulate human rights policies and other measures. In the future, in addition to the supplier survey, we will utilize Sedex's self-assessment tool to strengthen risk management in the supply chain.
The results of the questionnaire survey for each company are as follows. As a result of the survey, we will interview those suppliers who are judged to be at high risk individually and encourage them to improve their efforts.
Japan Beer and Spirits Business and Japan Non-alcoholic Beverages Business
In fiscal 2019, Kirin Brewery Company, Limited, Kirin Beverage Company, Limited, and Mercian Corporation adopted the Sustainable Procurement Self-assessment Questionnaire developed by Global Compact Network Japan (GCNJ), which it now administers to suppliers, replacing a proprietary survey. In fiscal 2020, there were 412 respondents out of 421 suppliers that received the survey. The results show progress in all areas when compared to the previous fiscal year.
Risk assessment using the Sedex SAQ
The Kirin Group is a member of the Supplier Ethical Data Exchange (Sedex), a non-profit organization. In addition to the Oceania Adult beverages Business, which has been using Sedex for the first time, the entire Kirin Group will utilize Sedex Self-Assessment to strengthen risk assessment in the supply chain.
Utilization in Oceania Alcoholic Beverages Business
Lion preceded the Kirin Group and as part of its responsible sourcing program, Lion continues to require its high-priority suppliers to complete the Supplier Ethical Data Exchange (Sedex) Self-Assessment. By the end of 2020, more than 95% of our high-priority suppliers had been assessed for risk using this questionnaire, and by the end of 2021, we had achieved our CSV commitment goal of 100%.
Respect for Human Rights in the Supply Chain
Human Rights Risk Assessment and Action Plan for Major Agricultural Procurement Products
In February 2018, the Kirin Group established the Kirin Group Human Rights Policy in accordance with the United Nations Guiding Principles on Business and Human Rights ("Guiding Principles")*, a global standard. In line with the Guiding Principles and the Kirin Group Human Rights Policy, we are promoting human rights due diligence, an initiative to identify, prevent, and mitigate negative human rights impacts related to the Kirin Group's business. The issue has been positioned as one of the most important issues. Focusing on high-risk areas, the Group as a whole will further promote initiatives in this area in the future.
Past efforts include human rights impact assessments for countries rated as relatively high-risk by country-specific human rights risk assessments, starting in 2018; in 2018, a human rights impact assessment was conducted for a coffee supply chain in Laos; and in 2021, a human rights impact assessment was conducted for a soybean supply chain in China. The evaluation was conducted. For the Laos coffee supply chain assessment, on-site interviews were conducted with local secondary suppliers and key coffee farmers. Based on the results of an external organization's analysis of the human rights situation in Laos and the Laotian coffee supply chain, the assessment focused on five areas: occupational health and safety, working hours, forced labor, child labor, and impacts on surrounding communities. Although the assessment did not identify any significant human rights risks, we are continuing to raise awareness of human rights initiatives among our upstream suppliers through our primary suppliers, as well as conducting ongoing monitoring.
In the assessment of the soybean supply chain in China conducted in 2021, the evaluation was conducted through written responses to a questionnaire, targeting local soybean processing plants that serve as tertiary suppliers, as on-site surveys were difficult due to the impact of the new coronavirus infection. The questionnaire used was the CSR Procurement Self-Assessment Questionnaire of the Global Compact Network Japan, with additional written questions asked as necessary. As a result of the assessment, we confirmed that the supplier complied with the requirements of the Kirin Group Sustainable Supplier Code, including the establishment of a policy and management system for occupational health and safety, which is generally considered a high human rights risk. As part of our future efforts, we will promote awareness of human rights initiatives to our upstream suppliers through our primary suppliers and conduct ongoing monitoring.
Supply Chain Human Rights Asessment
Risk assessment of major agricultural products and processed agricultural products procured by the Kirin Group
Following the enactment of the Kirin Group Sustainable Procurement Policy and the Kirin Group Sustainable Supplier Code in April 2021, we once again conducted a risk assessment of agricultural products and processed agricultural products procured by the Kirin Group. We identified agricultural products and processed agricultural products with high human rights risks, with advice from Business for Social Responsibility™ (BSR), a specialist external organization, and used the Sedex assessment tool to evaluate the risks based on two axes: human rights risks in the country of procurement and the degree of impact on our business. Prioritization was done.
The procured products evaluated were malt (barley), hops, black tea leaves, green tea leaves, coffee beans, grapes, sugar, corn, soybeans, grapefruit juice, and lemon juice. As a future initiative, we plan to conduct human rights due diligence on agricultural products and processed agricultural products in the order in which they are evaluated as having relatively high risk through the assessment.
Responding to the UK Modern Slavery Act and the Australian Modern Slavery Act
In addition to its alcoholic beverage business in Oceania, Lion also operates in the United Kingdom. Lion has formulated a statement on compliance with the Modern Slavery Act in Australia and the United Kingdom, and is taking appropriate measures to address human rights issues in its supply chain.
Lion has established a dedicated whistle-blowing hotline that is available to all Lion personnel globally as well as personnel within our extended supply chain to provide appropriate and effective remedies to stakeholders in response to human rights issues in the supply chain.
Collaborating with Suppliers
Approaches to the Environment
In accordance with the Kirin Group Environmental Vision 2050 and the Kirin Group Environmental Policy, we are working with suppliers to address issues related to climate change, water resources, biological resources, and containers and packaging.
Actions regarding climate change
In order to achieve net-zero greenhouse gas emissions in the entire value chain, we are promoting the procurement of renewable energy, strengthening resilience in the upstream of the value chain, reducing the weight of containers, and optimizing procurement logistics by using Vendor-managed warehouses.
Actions regarding water resources
Water is not only a basic raw material for the Kirin Group, but also an essential resource for the growth of the agricultural products used as raw materials. 2014 and 2017 surveys estimated the water consumption of agricultural products used as raw materials upstream in the value chain, and we will promote appropriate measures to address water risks.
Actions regarding biological resources
As a certification for sustainable forest management, in addition to paper containers in our beverage business in Japan, we have switched to 100% FSC® certified paper or paper made from recycled paper in November 2020 for office paper such as copy paper, envelopes, business cards, company brochures and other printed materials.
In addition, we have been using the Book & Claim method of purchasing certified sustainable oil approved by the Roundtable for Sustainable Palm Oil (RSPO), and have been using RSPO-certified oil for all of our primary raw materials since 2013, and for secondary raw materials since 2014, based on estimated usage. In March 2018, we joined the RSPO as an associate member.
Actions regarding containers and packaging
In addition to promoting the 3Rs and resource recycling of containers and packaging, we are also expanding the procurement of sustainable materials for containers.
Partnerships with farms
In order to strengthen the sustainability of raw material production, the Kirin Group is helping to resolve issues and build the capacity of farms and farmers who produce raw materials for core products such as tea leaves, coffee beans, hops and grapes.
Since 2013, we have been working with the Alliance for Sustainable Landscape Management (the Rainforest Alliance) to provide support and training for tea plantations in Sri Lanka to obtain Rainforest Alliance certification in order to support plantation management that considers the environment and human rights. From 2018, the scope of support has been expanded to include small-scale farms.
As of the end of 2020, 93 farms, or about 30% of the total number of certified tea farms in Sri Lanka, have obtained certification with the support of the Kirin Group. 120 small-scale farms have already obtained certification, and we are aiming to support 10,000 farms in obtaining certification by the end of 2025.
Using the knowledge we have gained from supporting tea farms in Sri Lanka to obtain certification, we began supporting coffee farms in Vietnam to obtain Rainforest Alliance certification in 2020. As of the end of 2021, about 700 small farms have started training for certification.
96% of the hops grown in Japan are grown in Tohoku, and the Kirin Group is supporting the growers by purchasing about 70% of the hops. Production in Tono City has decreased to 1/5 of its peak level, and if left unchecked, the amount of hops to be procured in 10 years' time will decrease to about 70 tons/year, but we are procuring hops with a target of 100 tons/year. In addition, aiming at long-term and stable procurement of high-quality hops, we are working with the government, local communities, and hop growers to support the employment of successors, develop varieties that place less burden on growers, and provide technical support.
In Tono City, Iwate Prefecture, a major production area, the first harvest using German-style hop fields was conducted in 2019, taking into account the efficiency of hop farmers, and a working team was established in 2020 to discuss the realization of a sustainable production system.
We have signed a partnership agreement with Yokote City in Akita Prefecture, and are holding regular workshops for local agricultural school students to experience hop cultivation techniques in order to solve the problem of the number of successors to hop farmers.
In order to secure a stable supply of high-quality domestic grapes for wine and to expand the harvest volume, we share and support viticulture techniques with contract growers. In addition, in order to solve the shortage of successors, we are participating in human resource development programs in each wine-growing region.
Supplier Briefings / Training Sessions
The Kirin Group holds regular briefing/training sessions for suppliers to deepen their understanding of the human rights issues, labor standards and other social issues that we ask them to comply with in our Supplier Code of Conduct.
In addition to explaining the Kirin Group's policies (Compliance Guidelines, Human Rights Policy, Quality Policy, etc.) and initiatives that form the basis of the Supplier Code of Conduct, the briefings/training sessions focus on human rights and t environment issues hat require a deeper understanding by introducing specific examples.
In terms of suppliers who are judged to be at high risk as a result of the supplier questionnaire survey conducted by each operating company, we interview them individually about the status of their efforts and support their capacity building by sharing examples of other companies and proposing specific improvement measures.
Japan Beer and Spirits Business and Japan Non-alcoholic Beverages Business
In October and November 2021, we held online supplier briefings, which were attended by approximately 400 companies over a total of three days. At the briefings, we held a study session on "Changes in the Supply Chain and the Kirin Group's CSV Initiatives Policy," explained the content of the Kirin Group Sustainable Supplier Code established in April 2021, and asked suppliers to submit a written consent to the Code in order to gain their understanding and cooperation in our initiatives and cooperate in identifying their actual GHG emissions (Scope 3).
Kyowa Kirin provides opportunities for suppliers to deepen their understanding of CSR procurement, such as CSR procurement briefing sessions and supply chain exchange sessions, where information is exchanged regarding issues and solutions across the entire supply chain.