Supply Chain Management

Basic Approach

In today's increasingly globalized world, social issues in various countries are becoming closely related to corporate operations and are now impacting procurement activities as well.
The KDDI Group believes that promoting sustainable procurement not only within the company but also throughout the entire supply chain will strengthen our management base, lead to sustainable business activities, and contribute to fulfilling our social responsibilities.
Based on this belief, the KDDI Group declares its commitment to establishing a partnership framework that ensures mutual prosperity through fair and equitable transactions with our business partners. Additionally, the KDDI Group's procurement policy aims to further enhance sustainable procurement standards, focusing on human rights and the environment, in cooperation with our business partners.
We aim to contribute to society and advance our business through fair and equitable transactions with our partners and by improving sustainable procurement standards.

Procurement Policy

KDDI Group Sustainable and Responsible Procurement Policy

As an integrated telecommunications operator that supports social infrastructure, the KDDI Group has formulated the "KDDI Group Sustainable and Responsible Procurement Policy" to avoid procurement risks in the supply chain and to meet social demands at a higher level. We are committed to strengthening risk identification and management with all our domestic and international business partners.
The policy defines eight applicable themes for appropriate supply chain management: Co-existence and Co-prosperity with Business Partners, Consideration of Global Environment, Fair and Equitable Trade, Considerations for Human Rights and Labor Environment, Fair Management of Information, Ensuring Quality and Safety, Co-existence with Society and Applicable Scope.
To offer satisfactory services to our customers and achieve the sustainable development of the company and society together with our business partners, we are extending our demands and support based on this policy to all business partners inside and outside Japan. This policy has been rolled out in four languages (Japanese, English, Chinese, and Korean), with the aim of spreading the policy throughout the entire supply chain.

Declaration of Partnership Building

Logo: Declaration of Partnership Building

To promote fair transactions throughout the entire supply chain, KDDI is establishing new partnerships based on requests from the Ministry of Economy, Trade and Industry and the Small and Medium Enterprise Agency. As part of these specific efforts, we have formulated and published the "Declaration of Partnership Building [1]".
This declaration aims to promote mutual prosperity by cooperating with supply chain partners and businesses striving for value creation. Additionally, as part of the telecommunications industry, the Telecommunications Carriers Association has formulated the "Voluntary Action Plan for Fair Transactions Across the Entire Supply Chain in the Telecommunications Industry [2]" based on the "Guidelines for Price Negotiations to Appropriately Transfer Labor Costs" published by the Cabinet Secretariat and the Japan Fair Trade Commission. In accordance with this voluntary action plan, KDDI will strive to ensure transparency and fairness in transactions and work towards further value creation and enhancement of added value.

  1. [1]This structure was established within the "Conference for Promoting Partnership Building to Open the Future," comprising members including relevant ministers (from the Cabinet Office, Ministry of Economy, Trade and Industry, Ministry of Health, Labour and Welfare, Ministry of Agriculture, Forestry and Fisheries, Ministry of Land, Infrastructure, Transport, and Tourism, and the Deputy Chief Cabinet Secretary), as well as the chairpersons of Keidanren (Japan Business Federation), the Japan Chamber of Commerce and Industry, and J TUC-Rengo (Japanese Trade Union Confederation).
  2. [2]The voluntary action plan formulated by the Telecommunications Carriers Association aims to pursue fairness and transparency in the transaction environment and to promote mutual prosperity across the entire supply chain. This plan is based on three principles: fair and equitable transactions, mutual prosperity throughout the supply chain, and the assurance of two-way communication.

Procurement Guidelines

KDDI Group Sustainable and Responsible Procurement Guidelines

We established the KDDI Group Sustainable and Responsible Procurement Guidelines for implementing its procurement policy and published them on our website (in Japanese and English). The guidelines were formulated based on the Responsible Business Alliance (RBA) Code of Conduct and the Responsible Business Conduct Guidelines published by the Japan Electronics and Information Technology Industries Association (JEITA). The guidelines provide criteria to consider in selecting business partners and procurement items, not only for quality, price, delivery and stability of supply but also for environmental and social impacts.
This guideline establishes nine items: Respecting Laws and Internationally Recognized Standards, Human Rights and Labor, Safety and Health, Environment, Fair Trading and Ethics, Quality and Safety, Information Security, Business Continuity Planning, and Social Contribution.
In response to the results of the human rights impact assessment conducted in March 2020, we revised the content of the guidelines in March 2021 to further include consideration for human rights.
Additionally, the KDDI Group Sustainable and Responsible Procurement Policy and the KDDI Group Sustainable and Responsible Procurement Guidelines are periodically reviewed to ensure compliance with changing social conditions and legal regulations.
We have also established the KDDI Green Procurement Guidelines to reduce CO2 emissions throughout the entire supply chain and are cooperating and collaborating with our business partners to achieve carbon neutrality.

Conflict Minerals

The U.S. government requires companies listed in the United States to disclose the use in their products of conflict minerals [3] or minerals produced in the Democratic Republic of the Congo and other disputed regions.
Although the KDDI Group is not listed in the United States, we are promoting initiatives to eliminate the use of conflict minerals through Responsible Procurement Surveys in collaboration with our customers to fulfill our social responsibilities in our procurement activities.

  1. [3]Tantalum, tin, gold, tungsten, cobalt and other minerals designated as such by the U.S. Secretary of State are applicable

Selection of Business Partners

The KDDI Group sets criteria for selecting business partners and procurement items, prioritizing not only quality, price, delivery, and stability of supply but also considering environmental and social impacts.
KDDI utilizes external research organizations to conduct risk assessments of new business partners from environmental and social aspects. KDDI investigates the partners' scale, background, credibility, business conditions, financial conditions, etc., and if they meet a predetermined standard, we conduct business with them. In case of a serious violation of compliance, such as those related to human lives, we consider remedial measures through communication and deal with issues, including termination of transactions, until corrective actions are completed.
Through Sustainable Procurement Surveys targeting our tier-1 suppliers and other key suppliers [4], we have also conducted surveys of tier-2 and subsequent tier suppliers on issues such as human rights and conflict minerals since fiscal 2018. In this way, we confirm each supplier's compliance with the KDDI Group Sustainable and Responsible Procurement Policy.
Furthermore, the KDDI Group, in accordance with the KDDI Code of Business Conduct, will not engage in any transactions with "anti-social forces."

  1. [4]Key suppliers: We select primary suppliers (excluding tier-2 suppliers) accounting for the top 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 or concerns related to products, countries, or sectors.

Sustainable Procurement Initiatives

Activity Guidelines

The KDDI Group, together with its business partners, is committed to improving the sustainability of the entire supply chain by implementing the PDCA (Plan-Do-Check-Act) management cycle. We conduct surveys with key suppliers to understand their efforts and perform risk assessments. These surveys aim to raise their awareness and support them to understand the importance of sustainable procurement, while also requesting that suppliers share their challenges and current initiatives. In cases of compliance violations by business partners, we investigate the causes and request improvements, providing guidance and support as necessary. Additionally, to build better partnerships with our business partners, we hold policy briefing sessions, conduct visits, and engage in online meetings to exchange opinions on sustainable procurement initiatives.
Matters related to the promotion of sustainable procurement, including survey results, are regularly reported to and overseen by the Executive Officer of Sustainability (Executive Director, Corporate Sector).

Figure: The PDCA management cycle

Initiatives Toward Advancement

Industry collaboration

We have announced collaboration with Nippon Telegraph and Telephone Corporation and SoftBank Corp. regarding sustainable procurement among telecommunications operators. This includes holding regular meetings and creating a common Self-Assessment Questionnaire for the telecommunications industry, aiming to standardize sustainability surveys and reduce the burden on our business partners.
From fiscal 2023, we have implemented the EcoVadis [5] third-party evaluation platform and a common SAQ (Self-Assessment Questionnaire) for the three companies (NTT, KDDI, and SoftBank) to further strengthen engagement with our business partners.
In fiscal 2024, we published a handbook introducing initiatives and concepts related to sustainability, which we would like our business partners to implement, including the measurement of their own CO2 emissions. This handbook aims to support our business partners' activities and enhance the sustainability of the supply chain.

  1. [5]A sustainability assessment service composed of four parts: "environment," "labor and human rights," "ethics," and "sustainable materials procurement."

Education and Awareness Activities

In promoting sustainable procurement, we conduct training sessions for our purchasing staff to enhance their understanding and skills. Additionally, we raise awareness among our suppliers about the importance of sustainability, including human rights and environmental protection, through briefings and surveys.

Target Details of Initiatives
Training and Raising Awareness for Purchasing Staff
  • Training programs for purchasing staff
    We provide and regularly conduct training programs for purchasing staff on compliance with purchasing regulations, the importance of sustainable procurement, and how to achieve it.
  • Recommendation of certification as procurement professionals
    We encourage our purchasing staff to obtain the Certified Procurement Professional (CPP) qualification.
  • Sustainable procurement training sessions for purchasing staff
    To implement sustainable procurement across the company, we create and deliver training content for purchasing staff that covers topics such as human rights, environment, and fair trade.
  • Interviews and on-site investigations on sustainable procurement
    We conduct face-to-face interviews with our suppliers on various aspects of sustainability and carry out on-site investigations to verify working environment.
Raising Awareness among Our Suppliers
  • Briefings for suppliers (ability building programs)
    In fiscal 2023, we held the event online, with 101 suppliers in attendance. (target number of attending companies: 95)
    During the briefings, we share information on general sustainable procurement awareness, policies and initiatives, and collaborative efforts within the telecommunications industry.
  • Introduction of sustainability assessment in supplier selection
    Starting from fiscal 2023, we began a trial implementation of sustainability assessments in the supplier selection process. We apply the assessments to our supplier selection criteria, prioritizing contracts with suppliers who demonstrate superior sustainability performance.
  • Providing awareness-raising content for suppliers (technical support)
    In fiscal 2024, to support our suppliers' sustainability activities, we are providing them with awareness-raising content that includes specific procedures for promoting these initiatives. Additionally, during regular visits to our suppliers, we introduce the awareness-raising content and support their efforts to promote sustainability initiatives.

Helpline for Suppliers: Grievance Mechanism

The KDDI Group has formulated the "KDDI Group Human Rights Policy" and promotes respect for human rights by encouraging suppliers and business partners not to infringe on human rights and working together with them. In addition, in the "KDDI Group Sustainable and Responsible Procurement Guidelines", we clearly state the prohibition of forced labor, inhumane treatment, child labor, and discrimination, and ask our suppliers to understand and practice such prohibitions.
We have established a helpline for employees of KDDI Group suppliers to consult or report violations of corporate ethics and legal compliance, including human rights issues, that deviate from the "KDDI Group Human Rights Policy" and the "KDDI Group Sustainable and Responsible Procurement Guidelines". We always accept consultation and reports by e-mail, etc., through the internal or external contact point established in collaboration with external experts.

Helpline for Suppliers (Japanese, English support)
e-mail: kddi-supplier-helpline@city-yuwa.com

  1. *This is different from the reporting contact from KDDI Group employees.

Subject of Consultation/Report

  • Violent behavior, pressure acts of KDDI Group employees

  • Suspicion of violation of subcontracting law

  • Forced labor, child labor, and other content related to human rights including discrimination

  • excessive working hours and other content related to occupational safety and health etc.

We accept anonymous reports, giving due consideration to the privacy of the consultants and the protection of the informants. In accordance with the Whistleblower Protection Act, we ensure the confidentiality of those who consult with us and report to us and make every effort to protect them so that they will not be treated unfairly because they have consulted with us or have reported something to us. KDDI concludes nondisclosure agreements with external contacts with whom we work together to resolve issues.
If it is identified that its business activities has caused, or had any adverse impact on human rights, KDDI ensures that it will provide relief for those affected.

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