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Creation of a Sustainable Supply Chain

Realization of Sustainable Procurement through the Dissemination of the JFR Principles of Action for Suppliers

Dissemination ratio of the JFR Principles of Action for Suppliers

Formulation and sharing of the JFR Principles of Action for Suppliers

The Group identified the “management of the entire supply chain” as one of its materiality issues in 2018 and formulated the JFR Principles of Action and the JFR Principles of Action for Suppliers in 2019.
We sent the formulated JFR Principles of Action for Suppliers to suppliers and asked them to support our view and rules on social responsibilities.
Furthermore, Daimaru Matsuzakaya Department Stores held meetings to explain the JFR Principles of Action for Suppliers and 530 suppliers attended them.

To conduct an assessment

In fiscal year 2021, we will start an assessment of the suppliers that have supported the Principles of Action for Suppliers to see the state of their understanding of and compliance with the shared Principles of Action for Suppliers.
We will conduct such assessment continuously on a biennial basis by sending suppliers questionnaire concerning the major content of the JFR Principles of Action for Suppliers including environment and human rights and asking them to answer. Particularly, concerning human rights, we ask many questions in accordance with the Human Rights Policy.
If there are some problems in the result of the assessment, we will make improvements through the dialogue with relevant suppliers as necessary. By repeating the improvement process through assessment and dialogue, the Group will disseminate the Principles of Action for Suppliers, thereby identifying risks in the supply chain and creating a sustainable supply chain with suppliers.

Meeting to explain the Principles of Action for Suppliers

Flow of the dissemination of the JFR Principles of Action for Suppliers

Supplier assessment conducted in FY2021

An assessment was conducted for the first time in fiscal year 2021 to identify the environmental and social supply chain risks facing the Group. As part of this effort, we sent questionnaires to relevant suppliers and analyzed their responses in order to confirm the status of their compliance with our shared Principles of Action. We will conduct such assessment continuously once every two years.

【Overview of assessment】

1. Companies that conducted the assessment
・9 companies including J. Front Retailing, Daimaru Matsuzakaya Department Stores, JFR Card, J. Front Design & Construction, Daimaru Kogyo, Consumer Product End-Use Research Institute, Angel Park, JFR Service, and JFR Information Center
*Their revenue share is approximately 74%.

 

2. Scope
・7,415 primary suppliers with whom the Principles of Action are shared
(Suppliers with whom the companies have continuous long-term business relationships)

3. Period of assessment
・October 1 – December 31, 2021

4. Questions
・About “compliance with the policy” and “internal dissemination” in accordance with 6 items of the guidelines for action for suppliers (12 questions)
・Concerning human rights, the number of questions was increased in accordance with the Human Rights Policy. (5 questions)
・Concerning the environment, the “clarification of responsibility system” and the “presence of medium- to long-term goals” were added. (2 questions)
・19 questions in total

5. Assessment criteria
・Suppliers who answered “yes” to 80% or more of total questions (16 or more out of 19 questions) are deemed to comply with the Principles of Action for Suppliers (including human rights efforts).
・A criterion for selecting supplier candidates for dialogue, which is the next process, is answering “yes” to less than 30% of total questions (5 questions or less).
*Answering “yes”:A 80% or more B 50% - less than 80% C30% - less than 50% D Less than 30%

【Assessment results】

Questionnaires were sent to 7,415 primary suppliers of the Group, of which 3,012 companies responded. Approximately 60% of the suppliers answered "yes" to 80% or more of total questions, which is a measure of the degree to which the Principles of Action have permeated, and we deem that the Principles of Action are being disseminated. And the percentage of the suppliers with whom we will engage in dialogue is only 1.5%.

Assessment implementation status

Subject

No. of suppliers to
whom questionnaires were sent

No. of suppliers who responded

Response rate in 2021

The Group’s sprimary suppliers

7,415

3,012

40.6%

*KPI: Response rate of 80% in 2023

Dissemination ratio of Principles of Action for Suppliers

Item of Principles of Action

A

B

C

D

Fair business activities

95.0%

3.7%

0%

1.4%

Consideration for human rights and the work environment

58.3%

29.1%

6.9%

5.6%

Consideration for the environment

48.4%

41.0%

0%

10.6%

Consideration for the safety and security of products and services

96.0%

2.3%

0%

1.7%

Responsible marketing

94.5%

2.5%

0%

3.1%

Contribution to local communities

69.2%

6.1%

0%

24.7%

Dissemination ratio of Principles of Action in 2021

60.9%

33.5%

4.2%

1.5%

*KPI: Dissemination ratio of 25% in 2023

【Future efforts】

When some problems are found, we will share again the importance of following the Principles of Action. Based on the results of the assessment, we will engage in dialogue with the suppliers that we believe need improvement to ensure that they understand and endorse the importance of following the Principles of Action and respecting human rights.
And we will strive to further disseminate the JFR Principles of Action for Suppliers, for example by holding briefings for suppliers.
In addition, we will strive to improve the response rate in preparation for the next assessment.

Management of the Entire Supply Chain