Product-by-Product Approaches to Sustainable Procurement

At ITOCHU Corporation, we handle a broad range of products all over the world. Recognizing the impact of each product on the society surrounding it and on the global environment, we have established individual procurement policies and measures for products with large impacts and reflect them in our daily business activities.

Natural Rubber Procurement Policy

Preface

ITOCHU has established its sustainability approach based on the original spirit of sampo yoshi in its Basic Policy on Promotion of Sustainability, which aims to bring about and lead towards a sustainable society.
In addition, ITOCHU has established ITOCHU Corporation's Sustainability Action Guidelines for Supply Chains, and ITOCHU is striving to improve its supply chains and prevent the occurrence of problems through dialogues with its suppliers.
ITOCHU has participated in the "Global Platform for Sustainable Natural Rubber (GPSNR)" (established in October 2018) as one of its founding members. ITOCHU has agreed to the GPSNR's 12 specified principles, and ITOCHU will continue to assist with and contribute to the development of the standards and operation of this platform.

Purpose

The purpose of ITOCHU's policy in this area is to bring about a sustainable natural rubber supply and to define the procurement policies for its natural rubber business, so that it fulfils ITOCHU's social responsibilities.

  • ITOCHU conducts processing and trading operations in the natural rubber business.

Scope

This policy is applicable to the ITOCHU and its subsidiaries.

Priority items

  • We commit to working towards providing safe, hygienic and healthy working conditions and paying at least the national, regional or local minimum wage to employees. We commit to respecting international norms, such as the fundamental principles reflected in the International Labour Organization (ILO), and all of the applicable laws and regulations in the countries/regions where we operate and conduct business activities.
  • We will work to actively collect information to encourage zero deforestation in raw material-producing areas and we shall endeavor to explore new technologies and methods to enhance the traceability of natural rubber and to ensure compliance by all members of the rubber supply chain, which consists of many stakeholders, including small holders (small-scale farmers) and intermediate raw material dealers.
  • We shall use our best efforts to establish measures to identify any suppliers developing on High Conservation Value (HCV) areas, High Carbon Stock (HCS) areas and peatland, in order to avoid procuring rubber from them.
  • We shall follow the procedures set out in the Free, Prior and Informed Consent (FPIC) principles, which were established by the "Reducing Emissions from Deforestation and Forest Degradation (UN-REDD)" program. In addition, we will undertake to identify suppliers whose activities cause any negative impacts to indigenous peoples - such as the illegal acquisition of land, - in order to avoid procurement of rubber from them.
  • We are committed to complying with all applicable laws and regulations in the countries/regions in which we operate regarding water usage and effluent discharge, we will ensure to treat discharged water in accordance with all laws and regulations, and we shall work to reduce water consumption through the recycling and reuse of water resources.

Reference

Policy regarding Operations

We will work to review the operational policies of ITOCHU periodically in cooperation with suppliers, specialists, NGOs and other stakeholders, while considering further initiatives for the entire supply chain aimed at the sustainability of natural rubber, all of which we shall conduct through GPSNR.

Approach to Conflict Minerals Issues

Some of the minerals produced in the Democratic Republic of the Congo and neighboring countries where conflicts are taking place can potentially provide sources of funding to armed groups which engage in inhumane acts, foment conflict or bring about human rights violations. The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in the United States in July 2010, required that U.S. listed companies disclose information such as their use of "conflict minerals*" produced in the Democratic Republic of the Congo and neighboring countries in their products.
While ITOCHU Corporation is not bound by the reporting requirements of the United States' Securities Exchange Act, to fulfill its social responsibility in procurement activities, ITOCHU Corporation will coordinate with its business partners in keeping with the spirit of this legislation and promote initiatives to ensure that it does not help armed grounds that engage in human rights violations.

  • "Conflict Minerals" as defined by the law refer to tantalum, tin, gold, tungsten and other minerals specified by the U.S. Secretary of State.

Policy on Procurement and Supply of Nuclear Fuels

ITOCHU and its subsidiaries procure all nuclear fuels inside and outside Japan solely through ledger transfer transactions. Believing it is important to obtain an understanding of, and cooperation in, its procurement and supply policy and recognizing that the mission of playing a part in the nuclear fuel cycle is the role it has to play, ITOCHU endeavors to make its policy known to the parties concerned, to bolster its internal structure, and to secure a sense of ethics.

All the nuclear fuels it procures inside and outside Japan are solely used for civilian power generation or for peaceful purposes. It complies with all Japanese and overseas laws and regulations related to nuclear security.

Activities for Sustainable Procurement of Palm Oil

To ensure that sustainable procurement can be carried out consistently in consideration of human rights and environmental conservation, ITOCHU Corporation makes notice of its Sustainability Action Guidelines for Supply Chains to its suppliers and undertakes regular communications with them on sustainable procurement through fact-finding surveys and other activities. We recognize that the procurement of palm oil in particular requires consideration for environmental issues, occupational safety, human rights, and relationships with local communities, so we became a member of the Roundtable on Sustainable Palm Oil (RSPO) in 2006. We participate regularly in its meetings to promote the transparency of our supply chains and trade with suppliers who improve traceability.
In the future, we will strive to establish a structure in which we can closely cooperate with stakeholders such as suppliers, customers, various certification bodies, etc., in order to achieve the goal of 100% handling of RSPO or equivalent certified palm oil by 2025.

Policy on Procurement of Wood, Wood Products, Paper Manufacturing Materials, and Paper Products

Objective and Background

In order to fulfill its corporate social responsibility, ITOCHU has established the Sustainability Action Guidelines for Supply Chains and engages in business activities aimed at achieving a sustainable society. However, natural forests around the world continue to be decreased at high rate. One of the primary drivers of deforestation is unsustainable forest management for production such as large-scale clear-cutting. In response, ITOCHU has established the following procurement policy to conserve natural forests and to continue the sustainable use of forest resources. It was drafted through consultation with WWF Japan.

Scope of Application

This policy covers wood and paper products that ITOCHU and its consolidated subsidiaries procure in Japan and overseas. Specifically, it covers raw wood, wood products, paper manufacturing materials such as wood chips and pulp, and paper products (hereafter, "Forest products").

Basic Policy

ITOCHU and its consolidated subsidiaries which handle Forest products will work to ensure the traceability of Forest products and procurement based on the following policies.

  1. Support expansion of reliable forest management certification systems and give priority to Forest products with reliable certifications.
  2. Production and manufacture of Forest products shall not impose an excessive environmental burden on High Conservation Value Forest.
  3. Forest products and their materials shall have been produced (or logged) through appropriate procedures by following the laws and regulations of the area where the raw material is produced.
  4. Forest products shall not be procured from any suppliers who contribute to serious environmental or social problems, such as the destruction of High Conservation Value Forest.

Implementation and Operation

ITOCHU and its consolidated subsidiaries which handle Forest products will strive to implement the above basic policy in a phased manner in consideration of the characteristics of each country and region. In implementing the policy, we will review this policy regularly and cooperate with customers, specialists, and stakeholders, including NGOs, while also considering the provision of support for the shift to production systems which will help improve sustainability of production areas.

Information Disclosure and External Communication

To ensure transparency, we will disclose the progress of our initiatives through the Sustainability Report and promote society's understanding of the sustainable use of forest resources through appropriate communication with customers.