Supplior Monitoring
Responsible Procurement Surveys
We have conducted a survey targeting our key suppliers*1 using a Responsible Procurement Check Sheet since fiscal 2014.
The survey references the Responsible Business Alliance (RBA) Code of Conduct and the Japan Electronics and Information Technology Industries Association (JEITA)'s "Guidelines for Responsible Business Conduct." It aims to confirm the status of initiatives related to sustainable procurement as defined in the KDDI Group Sustainable and Responsible Procurement Guidelines, which include human rights and labor, safety and health, environment, fair and ethical trade, quality and safety, information security, and contribution to society. Through this survey, we make sure of sharing the KDDI Sustainable and Responsible Procurement Policy and other necessary information with suppliers.
Since fiscal 2023, we have adopted EcoVadis*2 and use independent third-party verification to evaluate our sustainability initiatives.
Additionally, we have started operating a common Self-Assessment Questionnaire, created jointly with NIPPON TELEGRAPH AND TELEPHONE CORPORATION and SoftBank Corp., establishing a unified set of questions and evaluation criteria. Furthermore, we request that our suppliers extend the same initiatives to their supply chains (secondary and beyond for the KDDI Group) through these questions, ensuring that the entire supply chain engages in these efforts.
The survey conducted with KDDI Group's key primary suppliers achieved a high response rate of 98% against a target collection rate of 90%, aiding in understanding the supply chain situation and analyzing risks. Additionally, we issue feedback sheets to all respondents, including scores and corrective comments.
- *1Key suppliers: We select primary suppliers (excluding secondary suppliers) accounting for around 90% of total order value, those handling critical products and services, irreplaceable suppliers, those meeting sustainability requirements (environmental, social, and governance), and suppliers with specific risk concerns related to products, countries, or sectors.
- *2A global sustainability assessment platform composed of four parts: "environment," "labor practices and human rights," "ethics," and "sustainable materials procurement."
| Summary of Implementation | Number of Companies |
|---|---|
| Total number of Tier 1 suppliers | About 3,000 |
| Total number of important Tier 1 suppliers (approximately 90% of the top KDDI Group purchases) | 150 |
| Total number of non-Tier 1 significant suppliers | 0 |
| Item | FY2024 KPI | FY2024 | (reference) FY2023 | (reference) FY2022 | (reference) FY2021 |
|---|---|---|---|---|---|
| Number of companies receiving Questionnaires | 150 | 147 | 143 | 145 | 98 |
| Questionnaire response rate | over 90% | 98% | 95% | 97% | 98% |
| Feedback Rate for Questionnaires | 100% | 100% | 100% | 100% | - |
| Questionnaire type | Number of companies | Ratio |
|---|---|---|
| Third-party Verification (EcoVadis etc.) | 104 | 69% |
| Common SAQ for the 3 Telecommunications Companies | 46 | 31% |
| Industry | Business | Number of companies | Ratio |
|---|---|---|---|
| Service Industry | Temporary staffing, consulting, advertising, etc. | 53 | 36% |
| Information and Communication | Software, SI, etc. | 35 | 23% |
| Manufacturing | Terminals, base stations, electronic equipment, etc. | 31 | 21% |
| Construction | Base station construction, telecommunications construction, etc. | 23 | 15% |
| Others | Finance, real estate, energy, etc. | 8 | 5% |
EcoVadis
Since fiscal 2023, the KDDI Group has used the third-party evaluation platform EcoVadis to assess the sustainability initiatives of our key suppliers. Through EcoVadis’s global-standard assessment, we review the status of their sustainability initiatives based on assessment items in four categories: environment, labor and human rights, ethics, and sustainable procurement.
Of the suppliers subject to the questionnaire survey, 66%-about half-have undergone an EcoVadis assessment. As a result of the assessment, the average scores of the assessed companies in all four categories were evaluated against EcoVadis’s standards as indicating that a framework for promoting sustainability has been established.
In addition, by having our suppliers respond to the EcoVadis assessment, we enable them to benchmark their sustainability performance against their industry peers and other companies, and we provide support through advice while implementing corrective actions.
We will continue to recommend EcoVadis and, by expanding its highly transparent and fair sustainability assessment, aim to enhance risk management and further strengthen engagement across our entire supply chain.
Common SAQ for the Three Telecommunications Companies
Survey Items
The common SAQ for the three telecommunications companies consists of 12 questions, divided into parts including human rights, such as respect for human rights and securing workers' rights (covering the technical intern trainees' program and child labor), environmental aspects, such as CO2 reduction plans and waste management, and supplier management, such as conducting surveys and audits of the supply chain (secondary and beyond for KDDI). For suppliers with risk concerns who do not meet the benchmark, we implement corrective measures, including detailed checks through on-site investigations and conducting interviews, as well as providing support through improvement proposals.
| Theme | Number of questions | Sample questions |
|---|---|---|
| Compliance with Laws and Regulations and Respect for International Norms | 3 | Confirmation of company policies and regulations regarding compliance with laws and international norms |
| Human rights and labor | 5 | Respect for human rights and securing workers' rights, the reality of child labor, and consideration for working hours |
| Health and Safety | 6 | The process of identifying, assessing, and addressing hazardous locations, emergency reporting and evacuation, and the presence or absence of occupational accidents, etc. |
| Environment | 4 | Obtaining environmental initiative certifications, calculating GHG emissions, reducing environmental impact, water management, effective use of resources, and waste management, etc. |
| Fair Trade/Ethics | 7 | Anti-corruption, proper disclosure, fair business practices, protection of informants, responsible mineral sourcing, etc. |
| Quality and Safety | 4 | Traceability management, presence or absence of violations, etc. |
| Information Security | 5 | Protection of personal information, prevention of confidential information leakage, and procedures for defending against cyber-attacks, etc. |
| Business Continuity Planning | 2 | Formulating responses to large-scale disasters, terrorism, and widespread infectious diseases |
| Establishment of Management System | 1 | Explanation to stakeholders regarding the identification of transaction risks and efforts to mitigate them |
| Supplier Management | 2 | Conducting surveys, on-site inspections, and audits of secondary suppliers |
| Development of Complaint Handling Mechanisms | 3 | Establishment of a complaint-handling office, informing stakeholders, and protection of whistleblowers, etc. |
| Disclosure of Initiative Status | 1 | Status of initiatives related to sustainability and sustainable procurement |
Report on Survey Results
The average score for each item from the suppliers who responded to the common SAQ for the three telecommunications companies was 70 points. High scores were achieved particularly in areas such as "Human Rights and Labor," and "Information Security." However, some suppliers need support in the "Environment" category. We will continue to request corrective actions and provide improvement support through dialogue and the provision of educational content.
| Rank | Total score | Ratio | Definition |
|---|---|---|---|
| Group A | 81 - 100 | 28% | Excellent efforts are being made. |
| Group B | 63 - 80 | 42% | General efforts are being made. |
| Group C | 0 - 62 | 30% | Some efforts are insufficient. |
Exchanging Opinions and Conducting Interviews with Suppliers
For suppliers deemed to have insufficient sustainability systems or initiatives based on the survey results, we provide feedback on the survey findings and conduct on-site investigations, as well as face-to-face or web-based hearings. This helps us understand the actual status of their initiatives and confirm transaction risks. Additionally, we conduct on-site investigations and provide improvement proposals through third-party audits. The results of the hearings with the suppliers we engaged with revealed that there were no critical risks requiring immediate termination of transactions. If improvements and corrective actions are not made within a specified period, we will consider terminating the transaction. (In fiscal 2024, no contracts with suppliers were terminated.)
| Item | FY2024 KPI | FY2024 | (reference) FY2023 | (reference) FY2022 | (reference) FY2021 |
|---|---|---|---|---|---|
| Number of Companies Interviewed (on-site third-party audits by auditing firms, on-site investigations, and interviews conducted by our company) |
over 50 | 72 | 63 | 33 | 5 |
| Improvement Proposal Completion Rate | 100% | 100% | 100% | 100% | - |
Initiatives for Improvement
To promote sustainable procurement activities across the entire supply chain, we conduct regular monitoring of the responses and improvement status of suppliers to whom we have requested improvements through questionnaires and interviews. By sharing KDDI’s know-how in sustainability activities and working in collaboration with our suppliers, we aim to enhance sustainability. Through communication with our suppliers, we are working to provide ongoing improvement support.
Since fiscal 2024, we have supported more concrete improvement activities by encouraging the use of the sustainability handbook and the handbook for visualizing corporate greenhouse gas emissions, which were prepared and published in collaboration with NTT, Inc. and SoftBank Corp.
Improvement Proposal
Based on the survey results for fiscal 2023, we conducted interviews with business partners identified as needing improvement and made the following representative improvement proposals.
| Theme | Main items of Opinion Exchange | Number of Improvement Proposals | Improvement Proposal Completion Rate |
|---|---|---|---|
| Human Rights | Regarding internal policies and regulations related to human rights | 22 | 100% |
| Establishment of a complaint reporting office | 25 | 100% | |
| Conducting human rights due diligence | 25 | 100% | |
| Environment | Calculation and external disclosure of carbon dioxide emissions | 32 | 100% |
Improvement Support
Based on the survey results from fiscal 2022, we conducted interviews and provided improvement suggestions to our business partners in fiscal 2023. As a result of monitoring these efforts, the following improvements were observed.
| Theme | Improvement Proposals, Support Details | Number of Improvement Support Cases | Improvement Completion Rate |
|---|---|---|---|
| Human Rights | Regarding internal policies and regulations related to human rights | 1 | 100% |
| Establishment of a complaint reporting office | 2 | 100% | |
| Conducting human rights due diligence | 1 | 100% | |
| Environment | Calculation and external disclosure of carbon dioxide emissions | 3 | 100% |
On third-party verification of the number of suppliers
The following indicators are subject to third-party verification.
- Total number of primary suppliers
- Total number of significant primary suppliers
- Percentage of total expenditure on significant primary suppliers
- Number of significant non-primary suppliers
- Number of significant suppliers (primary and non-primary)
- Total number of suppliers assessed at desktops or on-site