Procurement Policy and Guidelines

[ Procurement Policy ]

Basic Concept
SMC stipulates in its SMC Group Code of Conduct; “We will establish relationship of mutual trust among us, our company and its counterparties through free and fair business relations, and aim to realize mutual development of our company and the counterparties.”, that the entire Group is committed to develop together with business partners. We will also implement procurement activities on a group-wide, global basis in compliance with all applicable legal norms, both within and outside Japan, and in consideration of global environmental conservation and social impact. Furthermore, we will provide fair and transparent opportunities for competition to our suppliers to strengthen the relationship of mutual trust and build coexistence and co-prosperity.

• （1）Comply with legal norms
• We will strive to ensure that our procurement activities comply with all laws, regulations, and codes of ethics, whether national or international.
• （2）Provide opportunities for competition
• We will aim to provide free, fair and transparent competitive opportunities whether national or international.
• （3）Build trusting relationships
• We will aim to build a relationship of trust with our business partners and establish coexistence and co-prosperity.
• （4）Addressing environmental initiatives
• Based on the recognition that conserving the global environment is a material issue common to all human beings, we will strive to procure environmentally friendly parts and materials in order to continuously reduce our environmental impact.
• （5）Addressing the conflict minerals issue
• In order to prevent the encouragement of human rights abuses, violence and other illegal activities by non-governmental armed groups and other such organizations, and with the cooperation of our suppliers, we will strive to make every commercially reasonable effort to establish responsible supply chains for minerals sourced from conflict zones and high-risk areas.
• （6）Thorough information management
• We will strive to strictly manage business confidentiality and personal information of our suppliers.
• （7）Dealing with antisocial forces, groups, etc.
• We will not engage in any form of relationship with antisocial forces, groups, or individuals that may disrupt social order or hinder sound corporate activities. In addition, we will stand firm against demands from such parties and will not respond to any improper demands.

[ Procurement Guidelines ]

Basic Concept
SMC stipulates in its SMC Group Code of Conduct; “We will establish relationship of mutual trust among us, our company and its counterparties through free and fair business relations, and aim to realize mutual development of our company and the counterparties.”, that the entire Group is committed to develop together with their business partners. We will also promote sustainability not only within the group, but also throughout the entire supply chain. We will request our suppliers to understand the purpose of the procurement guidelines, respect the human rights of their employees, and promote the creation of a safe and secure work environment.

• （1）Comply with legal norms
• We ask our suppliers that all their corporate activities comply with all laws, regulations, and codes of ethics, whether national or international.
• （2）Prohibition of forced labor
• We ask our suppliers to respect the human rights of their employees, prohibit forced labor, child labor, and other similar practices, and properly manage working hours and wages.
• （3）Respect for Personality and Prohibition of Discrimination
• We ask our suppliers to respect the personality and individuality of their employees and create a work environment that is free from any unreasonable discrimination or harassment based on nationality, race, ethnicity, faith, religion, gender, or other factors.
• （4）Health and Safety Initiatives
• We ask our suppliers to take care of the working environment and health and safety to prevent accidents and occupational diseases in the workplace.
• （5）Addressing environmental initiative
• To protect the global environment, we ask our suppliers to promote efforts to reduce greenhouse gas emissions, avoid the use of environmentally hazardous substances, and reduce and properly dispose of noise, wastewater, and waste.
• （6）Supply continuity in the event of disasters, etc.
• We ask our suppliers to establish preparations from normal times and build a system that will not suspend business activities in the event of an emergency, and that will allow for the prompt resumption of operations in the event of such a suspension.
• （7）CSR promotion to business partners
• We also request our suppliers to let their business partners understand and comply with the above as well.

[ Addressing Conflict Minerals ]

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States, SMC strives to eliminate the use of mineral resources (referred to as “conflict minerals” in the said Act) collected from the Republic of Congo and other nearby regions that are likely to fund non-government armed groups that contribute to immoral acts.
With the cooperation of each supplier, we investigates transactions with smelters using the Conflict Mineral Report Template (CMRT) and carries out additional investigations whenever needed. We also provide our customers the database of the results of these investigations.

• Addressing Conflict Minerals

Supply Chain Engagement

Supplier Briefings

Declaration of Partnership Building

Supplier Whistleblowing System

SMC has set up a reporting hotline at an independent outside law firm to receive consultations and reports from suppliers and employees of the suppliers.
The system will be operated in accordance with the Revised Whistleblower Protection Act that went into effect in June 2022. Reports made to this hotline will be investigated while ensuring that the reporter remains anonymous and is protected from adverse actions.