Supply Chain | Society | ESG Initiatives (Social) | Sustainability

Basic Policy

The food supply chain, which starts with agricultural, livestock, and fishery production, has been greatly affected in recent years by climate change, conflicts between countries, infectious diseases, and other factors, raising the question of how to ensure a stable supply. Moreover, the entire supply chain must share a commitment to reducing environmental impact and addressing social issues such as illegal labor and violations of human rights. Together with its suppliers, the Group will address these requirements to realize a sustainable supply chain through environmentally and socially responsible procurement.

Risks	Opportunities
Disruption of stable procurement due to soaring food prices and tight supply Damage to the brand and customer churn caused by human rights violations and other issues Adverse effects of extreme weather and disasters on supply chain processes Labor shortage in the logistics industry	Fostering trust in our co-creation partners by addressing environmental and social issues Corporate value created by a sustainable supply chain Capturing customer needs by developing products with low environmental impact

KPI

KPI setting	FY2024 result	FY2025 result	FY2027 target	FY2029 target
Auditing of suppliers (Build a supply chain with consideration given to the environment and human rights)	92%	100%	93%	97%

Examples of Activities

Basic Policy of Procurement

The Product Department in the Group Product Division handles all procurement functions for food ingredients for the Group's businesses in Japan. This is done to reduce procurement costs and increase operational efficiency, as well as to maintain stable procurement and ensure the quality and safety of food ingredients.

Procurement Policy

To build a sustainable supply chain, we will conduct secure procurement in compliance with the following policy. We will also ensure that our suppliers and employees are aware of the policy and put it into practice.

Procuring safe food ingredients in compliance with our quality control standards
Building good relationships that will enable both suppliers and the Group to earn reasonable profits
Improving quality and safety through communication between our employees and growers
When selecting suppliers, the Group Product Division interviews them about their responses to illegal labor, human rights violations, and labor issues in the supply chain. It also ensures that suppliers are aware of the Group's policies on and approaches to human rights, and, after trading has commenced, conducts inspections based on an assessment checklist.
We share our approaches to sustainability and our materiality with suppliers, in our aim to establish co-creation and build a sustainable supply chain with suppliers that are able to empathize and engage with those approaches.

Supplier Audits

Our procurement team conducts regular visits to suppliers' manufacturing facilities to gather operational insights and perform routine factory audits. We review, evaluate, and provide guidance on food safety processes, actively documenting and sharing these findings with our suppliers to drive continuous improvement.
During these audits, we use standardized assessment checklists to evaluate facility conditions and processes relating to raw materials and finished products. This enables us to assess whether suppliers can maintain a stable and sustainable supply while ensuring end-to-end quality and safety, from product planning and procurement through to final consumption. The scope of our audits and assessment criteria are reviewed and updated annually in light of emerging social issues, regulatory changes, and evolving international expectations.
Our Group has established the “Supplier Sustainability Guidelines” to build a sustainable supply chain in collaboration with our suppliers. In our audits, we assess our suppliers’ practices not only in terms of food safety and quality management, but also across a range of areas, including human rights and labor practices, compliance, environmental management, quality, risk management, and supply chain management.

In the area of human rights and labor, we assess suppliers’ efforts to prevent discrimination and harassment, respect internationally recognized human rights, protect the rights of migrant workers, prohibit forced and child labor, appropriately manage wages and working hours, respect freedom of association and the right to collective bargaining, and provide a safe and healthy working environment.

In the area of compliance, we assess suppliers’ efforts to comply with applicable laws, social norms, and international rules, prevent bribery and improper benefits, ensure fair competition, protect intellectual property rights, maintain information security, establish and operate internal whistleblowing systems, and eliminate relationships with antisocial forces.

In the area of environmental management, we assess suppliers’ compliance with environmental laws and regulations, operation of environmental management systems, measurement and reduction of greenhouse gas (GHG) emissions, efforts toward decarbonization, use of renewable energy, resource circulation (the 3Rs), food loss reduction, consideration for biodiversity, and prevention of environmental pollution. For suppliers that handle livestock products, we also assess their efforts to promote animal welfare in animal raising and management practices.

In the area of quality and safety, we assess management systems designed to ensure the safety and reliability of products and services, including quality control systems, hygiene management based on HACCP principles, and traceability from raw materials through to finished products.

We also assess suppliers’ business continuity arrangements, including business continuity plans (BCPs) for natural disasters, infectious diseases, and cyberattacks; emergency communication and employee safety confirmation systems; information system recovery procedures; and document and record management.

We also ask our suppliers to extend the principles of these guidelines beyond their own organizations and throughout their supply chains, while promoting initiatives that contribute to the coexistence and development of local communities. Through corrective and improvement measures based on audit findings, together with ongoing monitoring, we work with our suppliers to build a sustainable supply chain.
We review the results of food hygiene inspections in coordination with our quality management department.
For overseas suppliers, CSR audits are conducted not solely based on local laws, customs, and circumstances, but also with reference to relevant international standards, Japanese laws and regulations, and applicable practices.
If any non-conformities or serious violations are identified during supplier audits, we first verify the relevant facts and then request that the supplier take corrective action. If the required corrective action is not taken, we may take appropriate measures, including reconsidering our business relationship with the supplier.

Education and Training of Buyers

New buyers are given basic knowledge through practical plant training and hygiene training based on a prescribed curriculum.
All buyers are educated on safety and security through guidance by the quality control department. We also conduct training on environmental and social issues and on amendments to laws and regulations as necessary.
When buyers call on suppliers, they conduct on-site checks through hands-on training accompanied by the Quality Assurance Department.
Purchasing department staff comply with laws and regulations and with industry agreements and standards. They make efforts to gather information from the relevant government agencies, industry bodies, and suppliers. They also establish and revise management methods by sharing information with relevant departments in the Group, including the Quality Assurance Department.
With the full recognition that, based on social conventions, the Group is in a superior position to its suppliers, we strive to establish fair, reasonable, and transparent business relationships, to ensure that our suppliers do not gain the mistaken impression that they have entered into unfair business dealings.
As a part of our quality control, buyers conduct inspections of production sites to ensure that livestock production is not being conducted in poor conditions. We will continue to work closely with our suppliers to ensure that animals reared for our services enjoy a high level of welfare and are reared using the correct methods. To this end, the Group advocates and promotes the globally-recognized Five Freedoms of animal welfare.

Cooperation with External Organizations

To reduce our environmental impact and solve social issues, in addition to actively collecting information on innovative initiatives in Japan and overseas, we engage in seminars and other activities in cooperation with companies in other industries.
The Group participates in the Safety and Security Committee hosted by the Japan Foodservice Association.
We participate in the White Logistics Movement, which aims to eliminate drivers' long working hours and heavy workloads. We are pursuing various initiatives, such as logistics improvement proposals and collaborations, order volume leveling, and consideration of legal compliance.
For the improvement of logistics, the Group serves as a mediator to encourage cooperation among shipping companies, as well as using in-house drivers for irregular deliveries. These efforts are leading to lighter workloads and to the improvement of operational efficiency. We also provide support for recruitment of drivers.