Risk Assessment
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 determined not to comply with the criteria, we conduct supplier engagement activities for risk improvement.
NIPSEA Group & Japan Group
Since 2022, we have decided to adopt 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
We 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. The program includes undertaking on-site audits of suppliers (and their facilities) to verify compliance with our Sustainable Procurement Standard and identify any required improvement actions.
Dunn-Edwards
We respect the inherent worth of each individual, and we strive to conduct all our business with the highest sense of ethics, integrity and responsibility. To that end, our 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.
Supplier Audit Plan and Results: Japan Group
The Japan Group regularly sends audit teams with people from design, quality control, and procurement departments to perform on-site audits of factories of important raw material suppliers. There are also audits of suppliers and production contractors where quality issues have occurred. Audit teams conduct on-site audits of suppliers from the perspective of quality control and business continuity as well as environmental protection and safety. The goal is to reduce risk through direct engagement with suppliers at raw material manufacturing facilities. In 2022, document-based audits were conducted on six suppliers due to the pandemic. In 2023, however, on-site audits were conducted on most pre-arranged suppliers because the pandemic was gradually controlled. In the event a non-conformance issue is identified, we request corrective action for improvement with a deadline for compliance.
| Supplier | Number of business sites | Results | |||
|---|---|---|---|---|---|
| Status of audit | Scheduled | Conducted | Conforming | Conforming with conditions | Non-conforming |
| 2023 | 29 | 24 | 24 | 0 | 0 |
| 2022 | 6 | 6 | 6 | 0 | 0 |
*We were unable to conduct audits on five suppliers due to circumstances on their part.
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 166 suppliers have responded in agreement to our Supplier Code of Conduct. These suppliers represents about 22% of Nippon Paint’s total procurement value. Prior to this group survey, various countries have conducted similar sustainability surveys. Altogether 481 suppliers are deemed approved and they represent about 61% of Nippon Paint’s total procurement value. We have achieved our target of 40% for 2023. Our target is to increase this ratio to 90% by 2025.。
Results of supplier sustainability questionnaire*
| NIPSEA Group | Japan Group | DuluxGroup | Dunn-Edwards | Total | |
|---|---|---|---|---|---|
|
Number of approved suppliers |
— | — | — | — | 481 |
|
Ratio to the total procurement value |
52% | 78% | 89% | 80% | 61% |
* Exclude Cromology, JUB, NPAA
Supplier Training
Nippon Paint Group has been holding training sessions for suppliers since 2020 in order to exchange information and achieve a better understanding of our policies. In 2020, we explained our Group's ESG management as well as key points for preparing raw material specification sheets.
To explain our ESG management, we discussed the Group's environmental, social, and governance issues and policies to address our ESG issues throughout the supply chain while building relationships of trust. In our explanation of environmental issues, we talked about initiatives such as reducing our environmental impact throughout the supply chain. In our explanation of social issues, we talked about requirements of various stakeholders. In 2021, we developed the RMS (raw material management system) with the aim of strengthening collaboration with suppliers, and held a briefing for introducing this system to suppliers. This briefing session has been held continuously in 2022 and thereafter. Additionally, we started conducting a supplier sustainability survey in 2023 targeting the top 100 companies in terms of the purchase of raw materials. We interviewed five suppliers whose scores were low to encourage these suppliers to take remedial actions. In the event of a disaster or when there were revisions to the Chemical Substances Control Law, we conduct supplier surveys promptly to work together with suppliers.