Supplier risk assessment and engagement

The Group conducts supplier risk assessment at each partner company using the questionnaire sheet based on the Code of Conduct. For suppliers who are deemed not to have complied with the criteria, we conduct supplier engagement activities for risk improvement.

NIPSEA Group and Japan Group

Since 2022, NIPSEA Group and Japan Group adopted the Supplier Sustainability Questionnaire newly developed by our group to standardize survey method globally. If nonconformance is found at a supplier site, we discuss and agree with the supplier in question on corrective actions to be implemented within a specified period of time.

DuluxGroup

DuluxGroup manage modern slavery risks throughout our supply chain through our the Supplier Procurement Program. The program is designed to accord with standard global supply chain systems and guidance, including International Labour Organization (ILO) conventions, the Ethical Trading Initiative (ETI) base code, ISO 14001 and the SEDEX code, with the aim of identifying and addressing modern slavery risks and maintaining a responsible and transparent supply chain. In addition, DuluxGroup is currently reviewing options for third-party audit providers, to gain further assurance for suppliers deemed to be at high risk.

Dunn-Edwards

Dunn-Edwards partners with suppliers that share the same values, working together to ensure the supply chain is free from forced labor, child labor, human trafficking and slavery. This effort includes initiatives aimed to clearly articulate our shared expectations and audit for compliance through our Supplier Code of Conduct initiative.

AOC

AOC conducts in-depth analyses to determine the most effective ways to engage the marketplace by evaluating supply risk against the criticality of materials. This structured assessment supports the development of tailored sourcing strategies for each material category, incorporating key considerations such as security of supply, price management, contractual frameworks, and negotiation approaches. We have proactively addressed risks related to conflict minerals and forced labor through a targeted, risk-based assessment of our supplier portfolio. This approach allows us to focus resources on higher-risk suppliers and materials while maintaining oversight across the broader supply base. To further strengthen supplier sustainability governance and ensure consistency across regions, We are in the process of adopting the Nippon Paint Supplier Sustainability Questionnaire. This initiative will standardize sustainability expectations and data collection for all unique AOC suppliers globally, supporting enhanced transparency, risk management, and supplier engagement.

Supplier Audit and Results: Japan Group

Japan Group regularly conducts on-site audits of factories of key raw material suppliers. These audits also target suppliers and production contractors where quality issues have arisen. Our audit teams, comprising members from the design, quality control, and procurement departments, evaluate suppliers from multiple perspectives, including quality control, business continuity, environmental protection, and safety. The objective is to mitigate risks through direct engagement with suppliers at their raw material manufacturing facilities. In 2024, we continued to conduct on-site audits. When non-conformance issues are identified, we request corrective actions with specified deadlines to ensure timely improvements.

Supplier Sustainability Questionnaire results

In conjunction with the Supplier Code of Conduct 2022, we have developed a Supplier Sustainability Questionnaire to survey suppliers on their ESG commitment. The group survey started from October 2022, and to date more than 1,600 suppliers have responded in agreement to our Supplier Code of Conduct. These suppliers represents about 94% of our group’s total procurement value, exceeding our 2025 target of more than 90%. From 2025 onwards, NIPSEA Group reports sustainable procurement metrics in alignment with GRI 308-1 and 414-1, shifting from a procurement value-based approach to one based on new suppliers confirmation on supplier sustainabiity questionnaire upon onboarding All new suppliers are required to adhere to NIPSEA Group's Supllier Code of Conduct in line with the group directives while existing suppliers are continuously monitored to ensure allignment with updated requirements.

Results of supplier sustainability questionnaire^*1

*1 Exclude Cromology, JUB, NPAE, Allina
*2 The total figure for each partner company is a unique value without double counting

Supplier Training

Japan Group

Japan Group has been conducting training programs for suppliers since 2020 to share information and promote our policies. In 2020, the training focused on introducing our ESG management and key points to check when preparing raw material specification sheets.

While explaining our ESG management, we shared Japan Group’s environmental, social, and governance issues and policies, striving to build trust with suppliers and address ESG challenges across the entire supply chain. For instance, regarding environmental concerns, we highlighted initiatives to reduce the environmental impact throughout the supply chain. On the social front, we outlined the demands and expectations of various stakeholders. In 2021, we developed the RMS (Raw Material Management System) to strengthen cooperation with suppliers and held introductory briefings for major suppliers. Since 2022, we have continued to hold sessions on using the RMS. Additionally, we initiated the supplier sustainability survey targeting the top 100 suppliers by raw material purchase value, and we conduct interviews with five lowest-scoring suppliers to drive improvements. In 2024, more than 90% of all suppliers responded to the survey. We strive to disseminate the Supplier Code of Conduct and continue our proactive engagement by requesting suppliers to disclose GHG emissions from raw materials, aiming to reduce the greenhouse gas (GHG) emissions and thereby lessen the environmental impact. When a disaster occurs or chemical substance laws and regulations are revised, we swiftly conduct impact assessments and work closely with suppliers to ensure the stable supply of raw materials.

NIPSEA Group

NIPSEA Group incorporate ESG during supplier audits. We engage suppliers on ESG topics during regular audit activities. We have initiated ESG Business Partner Awareness Training program aimed at strengthening sustainability practices across our supply chain. Together with our ESG team, we have conducted training sessions for our procurement team who serves as the primary interface for suppliers. With the training, we equipped the team method to collect ESG related data from suppliers, evaluate and score them based on ESG criteria ( with SSQ as the back bone ).

DuluxGroup

DuluxGroup uses SEDEX for supplier audits, incorporating ESG requirements - engagement with the SEDEX process is a way for us to work with high risk category suppliers to ensure ESG progress

Dunn-Edwards

Dunn-Edwards’ rigorous onboarding process articulates shared goals and expectations, while supplier reviews and scorecards help shape future innovation and engagement. Our “Greener by Design” platform helps guide the relationship between global suppliers and our Product Development and Sourcing Teams. The high level of collaboration ensures responsible and ethical sourcing, as well as regulatory compliance.

AOC

AOC’s procurement team works in close partnership with global suppliers and their key account management teams to align expectations, manage risk, and drive performance improvement. Through structured onboarding, targeted training, ongoing engagement, and formal annual business reviews, procurement collaborates with suppliers to reinforce standards related to quality, ethics, responsible sourcing, and compliance. This partnership‑based approach supports consistent execution, continuous improvement, and long‑term value creation across our global supply base.