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Formulation of Supply Chain Policy (Principles of Action for Suppliers)

J. Front Retailing Group (the “Group”) has formulated the Principles of Action for Suppliers to indicate its stance on corporate behavior leading to creation of a sustainable society, which will be realized along with suppliers.

Based on this stance, we will enhance corporate value on a sustainable basis along with suppliers by fulfilling social responsibilities and promoting environment-friendly initiatives at the entire supply chain to eliminate risks at the entire supply chain and providing the products and services that customers can use pleasantly and securely in terms of environment and society. By doing so, we, along with suppliers, aim to contribute to realizing a sustainable society through the sustainable enhancement of corporate value.

In summer 2019 or later, we will mail the Principles of Action for Suppliers to and, as appropriate, hold explanatory meetings for suppliers to gain their understanding of the basic idea about these Principles of Action and share them with suppliers. We will also develop a self-assessment system.

Principles of Action for Suppliers

These principles of action for suppliers set forth the matters with which J. Front Retailing Group (hereinafter referred to as the “Group”) and suppliers shall comply to fulfill their social responsibilities together.
By complying with these principles, the Group will fulfill its social responsibilities along with suppliers and aim to enhance corporate value.
We hope suppliers will understand and comply with these principles.

Introduction
Since its inception, the Group has conducted business activities trusted by customers and other stakeholders based on the corporate credos “Service before profit” and “Abjure all evil and practice all good.”
With increasing economic globalization and diversification of stakeholder needs, what is expected of business activities is greatly changing. In particular, in procuring products and materials, ESG-related actions including consideration for the environment, work environment and human rights are becoming more important in addition to quality, performance, price, delivery time, etc., which have been deemed important before, and we are expected to promote ESG activities in the entire supply chain.
In response to such movement, the Group formulated a sustainability policy to make it clear that we will strive to resolve social issues through business activities in order to create values for suppliers and other stakeholders and contribute to creating a sustainable society.
We have to fulfill our social issues in each process of the supply chain in order to realize a sustainable society. Accordingly the Group newly developed the “principles of action for suppliers.” These principles clearly state the Group’s basic ideas on social responsibilities to be fulfilled as well as the code of conduct to be followed by the Group together with suppliers.
We hope the suppliers that deal directly with companies in the Group will understand and follow these principles to ensure the prevention of legal violation, the safety of products, quality improvement and ESG initiatives. We expect not only the Group’s direct suppliers but also their suppliers from which they procure products, raw materials, etc. to understand the Group’s principles of action for suppliers to enhance corporate value in the entire supply chain.

1.“Guidelines for action for suppliers”

(1)Fair business activities
Suppliers are expected to comply with laws and regulations and social norms and conduct fair and transparent business activities. Suppliers are also expected to comply with rules on antimonopoly, fair competition and fair transactions and not to engage in acts that deviate from these rules.

(i) Legal compliance
Suppliers are expected to comply with laws and regulations and relevant rules that apply in the countries and regions where they engage in business activities.

(ii) Prohibition of transactions with antisocial forces
Suppliers are expected to have no relationship with antisocial forces, organizations, groups or individuals that threaten social order and the safety of civilian life. And suppliers are expected to adopt a resolute stance against their pressure and eliminate them.

(iii) Prohibition of corruption, bribery and the like
Suppliers are expected to maintain a healthy and normal relationship with government agencies and civil servants and not to give bribes, illegal political contributions, etc.

(iv) Prohibition of giving and accepting of improper benefits
Suppliers are expected not to give to or accept from business partners including those in the Group improper benefits that lack or could undermine fairness.

(v) Prohibition of anticompetitive acts
Suppliers are expected not to engage in private monopoly, unfair restraint of trade such as a cartel, and other acts that interfere with free and fair competition.

(vi) Disclosure of information
In case suppliers become aware of events that cause doubt about the quality, safety, effectiveness, etc. of the products and services they offer, they are expected to actively disclose information to the Group regardless of whether or not such disclosure is required by laws and regulations.

(vii) Prevention of leakage of personal information
Suppliers are expected to appropriately manage and protect personal information of customers, third parties and suppliers' employees.

(viii) Protection of intellectual properties
Suppliers are expected to respect the rights of suppliers that have intellectual property rights in procurement transactions. And suppliers are expected not to engage in any transaction that violates third party’s rights. Suppliers are expected to actively disclose information on the quality, safety, effectiveness, etc. of products and services.

(2) Consideration for human rights and the work environment
Suppliers are expected to respect the human rights of everyone in the entire supply chain and not to be involved in human rights violations. And suppliers are expected to give consideration to the work environment and realize a safe and pleasant work environment.

(i) Prohibition of discrimination
Suppliers are expected not to discriminate on the basis of race, ethnicity, nationality, social status, gender, disability, health condition, thought and creed, sexual orientation and gender identity, job, employment status, etc. in head offices, business places and associated companies in Japan and abroad.

(ii) Prohibition of harassment
Suppliers are expected to respect employees’ human rights and not to be involved in any abuse, physical punishment, psychological/physical/sexual harassment and intimidation in head offices, business places and associated companies in Japan and abroad.

(iii) Provision of safe work environment
Suppliers are expected to design and build facilities and ensure the safety of facilities in consideration of the health and safety of employees in head offices, business places and associated companies in Japan and abroad. And suppliers are expected to monitor the situations where employees contact with biological and chemical substances that are harmful to humans, noise, bad odor, etc. in workplaces and take appropriate measures.

(iv) Respect for freedom of association and collective bargaining
In head offices, business places and associated companies in Japan and abroad, suppliers are expected to respect employees’ rights to form a labor union, to join or not to join it, and to engage in collective bargaining with head offices, business places and associated companies in Japan and abroad.

(v) Prohibition of forced labor
Suppliers are expected not to use any forced labor such as labor by means of physical or psychological restraint and not to engage in human trafficking in head offices, business places and associated companies in Japan and abroad.

(vi) Prohibition of child labor
Suppliers are expected not to hire children who do not reach the minimum labor age and not to allow child labor that may impair children’s development in head offices, business places and associated companies in Japan and abroad.

(vii) Responsibility for local communities
Suppliers are expected to strive to contribute to the development of the local communities affected by their businesses.

(viii) Disaster prevention measures
Suppliers are expected to prepare measures for possible emergencies including disasters and accidents, keep employees informed about them, and implement disaster prevention measures.

(3) Consideration for the environment
Suppliers are expected to comply with all environmental laws and regulations that apply in the countries and regions where they engage in business activities, maintain a proactive stance on environmental conservation through business activities, and strive to contribute to the development of society by reducing greenhouse gas emissions, saving energy and other resources, reducing waste and wastewater, recycling, preventing pollution, conserving biodiversity, and other means.

(i) Actions against global warming
Suppliers are expected to work to reduce greenhouse gasses to counter global warming.

(ii) Sustainable use of resources
Suppliers are expected to work to save energy and other resources, recycle and reduce waste. Suppliers are also expected to strive to reuse water resources and appropriately manage wastewater.

(iii) Prevention of pollution
Suppliers are expected to work to prevent pollution and health damage.

(iv) Biodiversity
Suppliers are expected to comply with international conventions and relevant laws and regulations and work to ensure biodiversity-conscious procurement to promote conservation of biodiversity and sustainable use.

(v) Elimination of chemicals
Suppliers are expected not to handle products using chemicals and raw materials prohibited by international conventions and relevant laws and regulations.

(4) Consideration for the safety and security of products and services
Suppliers are expected to provide products and services that comply with all laws and regulations that apply in the countries and regions where they engage in business activities. And suppliers are expected to strive to prevent accidents related to products and services from happening.

(i) Suppliers are expected to improve the quality of products and services and provide products and services that meet both the safety standards set in each country and by suppliers.

(ii) In case there is a fear that an accident that could affect the safety of customers may happen, suppliers are expected to take appropriate measures to prevent the accident from happening or expanding.

(iii) Suppliers are expected to respond to inquiries from customers in good faith and reflect them in improvement of products and services.

(5) Contribution to local communities
Suppliers, as corporate citizens that coexist with society, are expected to respect local culture and actively engage together with local stakeholders in creative activities that contribute to the development of local communities.

(i) Suppliers are expected to strive to engage in activities to realize together economic and cultural development of local communities in order to contribute to the development of local communities.

(ii) Suppliers are expected to pursue cooperation with a wide range of stakeholders including local communities, governments and educational institutions.

2. “Procurement policy”

While fulfilling social responsibilities, the Group will procure products and services, increase business competitiveness and enhance corporate value to realize the optimal procurement for business.
The Group will work to realize the optimization of the entire supply chain by providing suppliers with an understanding of this policy and listening to suppliers to communicate with each other.
The Group will strive to provide suppliers with an understanding of this policy.
We expect suppliers to understand and comply with the matters set forth in this policy.

(1) Quality first
Returning to our basic focus on providing safe and excellent products and services that satisfy customers, we will realize “optimal cost” and “high quality” always from “customer’s perspective.”

(2) Fair trade
We will provide all like-minded suppliers with opportunities for procurement transactions and actively consider procuring from new suppliers. We will judge in a comprehensive manner in terms of quality, cost, delivery time, services, ESG initiatives, etc. to select suppliers fairly.

(3) Thorough compliance
We will strive to trade fairly in compliance with laws and regulations and social norms and by giving full attention to corruption prevention and occupational health and safety.

(4) Prohibition of transactions with antisocial forces
We will have no relationship with antisocial forces, organizations, groups or individuals that threaten social order and the safety of civilian life. And we will adopt a resolute stance against their pressure and eliminate them.

(5) Compliance with the Antimonopoly Act, etc.
We will comply with laws and regulations including the Antimonopoly Act that ensure fair competition and relevant internal guidelines. And we will not engage in acts that restrict competition or will not be involved in bid rigging.

(6) Consideration for human rights
We will protect employees’ health, safety, human rights and other rights protected by law and contribute to improving their lives and working conditions.

(7) Consideration for the environment
We will recognize the importance of environmental conservation and maintain a proactive stance on environmental conservation in our procurement activities. We will comply with international conventions and environmental laws and regulations and work to manage the entire supply chain to create a recycling-oriented and sustainable society.
In particular, in order to promote conservation of biodiversity and sustainable use, we will comply with international conventions and relevant laws and regulations and work to ensure biodiversity-conscious procurement. And we will not handle products using chemicals and raw materials prohibited by international conventions and relevant laws and regulations.

(8) Appropriate management of information
We will put in place appropriate information management system to prevent confidential information and personal information obtained in the course of procurement transactions from being leaked.

(9) Protection of intellectual properties
We will respect the rights of suppliers that have intellectual property rights in procurement transactions. And we will not engage in any transaction that violates third party’s rights. We will actively disclose necessary and sufficient information on the quality, safety, effectiveness, etc. of products and services.

(10) Mutual trust and prosperity with suppliers
We will build a relationship of trust with suppliers based on high transparency and a sense of ethics through procurement transactions and aim to mutually evolve and develop as business partners.

3. “Human rights policy”

Since its inception, the Group has conducted business activities trusted by stakeholders based on the corporate credos “Service before profit” and “Abjure all evil and practice all good.”
Respect for human rights underlies all our business activities. Companies are expected to have a better understanding of various human rights issues related to all activities in each country or business and take appropriate actions. We at the Group will act based on this human rights policy of the Group.
The Group’s human rights policy applies to all officers and employees.
The Group will strive to provide suppliers with an understanding of this policy. We expect suppliers to understand and comply with the matters set forth in this policy.

(1) Basic ideas on human rights
We understand that our business affects human rights directly or indirectly in each process of value chain including the procurement and consumption and use of products.
And we support and work on the “International Bill of Human Rights” and the “Guiding Principles on Business and Human Rights.”
We also support and respect the “Ten Principles of the United Nations Global Compact” as a signatory to the United Nations Global Compact.

(2) Stakeholders and human rights
We commit to prohibition of discrimination on the basis of race, ethnicity, nationality, social status, gender, disability, health condition, thought and creed, sexual orientation and gender identity, job, employment status, etc., prohibition of harassment, provision of safe work environment, ensuring of minimum wage, responsible labor practices including appropriate management of working hours, and respect for freedom of association and collective bargaining.

(3) Implementation of responsibility for respect for human rights
We will identify negative impacts on human rights related to the Group’s business and work to prevent and reduce these impacts in accordance with the “Guiding Principles on Business and Human Rights.” We will not violate human rights themselves as a matter of course, and furthermore, we will build a responsible supply chain by taking appropriate corrective actions when finding negative impacts on human rights in our business activities.
We will strive to build a human rights due diligence system, identify the Group’s negative impacts on social human rights, and adopt appropriate and effective remedies.

(4) Development of corporate culture that respects human rights
We will provide education and awareness-raising activities for all officers and employees to have a corporate culture that respects human rights take root.

4. “Anti-corruption policy”

Recognizing corruption and bribery as a serious risk factor that severely damages the trust of companies, the Group will prevent the actions that may constitute corruption or bribery and perform fair and highly transparent corporate activities.
The Group will strive to provide suppliers with an understanding of this policy. We expect suppliers to understand and comply with the matters set forth in this policy.

(1) We will not engage in or be involved in any form of corruption including embezzlement and bid rigging.

(2) With a full understanding of laws and regulations, we will not offer to civil servants and the like entertainment or gifts that may cause society’s doubt or distrust or money or other benefits to gain unfair advantage.

(3) We will not offer to or accept from suppliers, etc. entertainment or gifts beyond business practices and social common sense.

(4) We will not use our statuses or positions in the companies to seek personal interests from suppliers, etc.

(5) We will provide education and awareness-raising activities for officers and employees to have an anti-corruption corporate culture take root.

5. “Occupational health and safety policy”

Based on the idea that occupational health and safety is the most important foundation of business activities, the Group will work to improve employees’ occupational health and safety levels with top priority on ensuring health and safety.
The Group will strive to provide suppliers with an understanding of this policy. We expect suppliers to understand and comply with the matters set forth in this policy.

(1) Creation of workplaces with priority on health and safety
We will give top priority to employees’ occupational health and safety in business activities.

(2) Compliance with laws and regulation on health and safety
We will comply with laws and regulations on health and safety and rules, etc. on health and safety set by the companies and business places in the Group.

(3) Creation of a safe and low-risk work environment
We will create a safe and low-risk work environment to prevent occupational accidents.

(4) Maintenance and enhancement of employees’ health
We will strive to improve our health management system and implement all-hands health and safety activities to prevent health problems from overwork and mental distress.

(5) Education and awareness-raising activities
We will provide education and awareness-raising activities for all officers and employees to have a health and safety corporate culture take root.

Established on June 17, 2019

To realize a recycling society at the entire supply chain

The Group aims to propose buying styles in which customers can participate and develop a new sharing economy business model through eco-friendly recycling and reuse activities.
Daimaru Matsuzakaya Department Stores has implemented “Ecoff recycling campaign” since fiscal year 2016 and started to use shopping bags made from eco-friendly FSC-certified paper at 16 stores in August 2019. In addition, plastic bags for food products will be replaced with “bags made from 30% plant-based materials.” We will implement initiatives like them to realize a recycling society.

Management of the Entire Supply chain