Sustainability in the supply chain

The PPIH group believes that addressing issues related to human rights, labor environment, health and safety for all people involved in its business and reducing the environmental impact of the entire supply chain are important challenges for the group as a retailer. We also believe that fulfilling our social responsibility in the supply chain will contribute to the realization of a sustainable society and lead to the growth of both our suppliers, and the group itself. The supply chain management subcommittee, a subsidiary organization of the sustainability committee, is taking the lead in promoting responsible procurement throughout the supply chain based on strong partnerships with suppliers, in accordance with the "Guidelines on Respecting Human Rights in Responsible Supply Chains" issued by the Ministry of Economy, Trade and Industry (METI) and other international guidelines.

In January 2022, the PPIH group established the PPIH group supply chain code of conduct in an effort to procure products that take human rights and environmental issues into consideration.
In November 2023, reflecting international guidelines, consultations with external organizations, and expert advice, and with the approval of the board of directors, we revised items related to the working environment in the supply chain (payment of a living wage, prohibition and reduction of excessive overtime work, etc.) and environmental protection (introduction of renewable energy, effective use of resources including water, prevention of pollution, etc.).

The PPIH group supply chain code of conduct is available in six languages as of June 2024.

In order to promote respect for human rights and environmental considerations in the supply chain, we ask suppliers who handle PB/OEM products to submit a written pledge that they comply with the "PPIH group sustainable procurement policy" and the "PPIH group supply chain code of conduct". In addition, we ask all new suppliers to submit a written pledge before commencing transactions, regardless of whether they are dealing with PB/OEM products or not.
To date, we have had a total of over 1,800 suppliers submit pledges cumulatively (as of June 2025).

In order to promote responsible procurement that takes human rights and the environment into consideration throughout the supply chain in the development of PB/OEM products together, we have held briefing sessions both in person and online for targeted suppliers in 2022. At these briefing sessions, we explained the objectives and policies of the group's supply chain management efforts, as well as the code of conduct, which includes human rights and environmental content.

Briefing session participation (2022)

Briefing session held in 2022.

To identify risks in our supply chain and check compliance with the PPIH Group Supply Chain Code of Conduct, we conduct a self-assessment questionnaire (SAQ) and third-party audits for our suppliers. The SAQ is conducted at all factories contracted to manufacture our private-label and OEM products, while third-party audits are conducted targeting factories selected based on various risk management factors such as the scale of transactions, the type of products they manufacture, and the country where the factory is located.

In June 2022 we created a self-assessment questionnaire (SAQ) for our suppliers based on the ILO Core Labor Standards Handbook and other instruments. Since then we have conducted the survey twice for current suppliers contracted to manufacture our private-label and OEM products. Suppliers check the conditions at their factories using the SAQ and submit their responses. If an issue is identified, we provide the results as feedback to encourage continuous improvement and corrective action. The SAQ initially contained 45 questions in eight categories, and in July 2024 we expanded this to 83 questions in 18 categories for a more in-depth risk assessment. Along with further segmenting questions regarding human rights and labor, we added questions designed to strengthen business continuity and the supply chain.

The SAQ responses are evaluated overall based on compliance status with each item and the severity of the risk. We prioritize the areas related to human rights the most, such as child labor, forced labor, prohibition of discrimination, and harassment. After reviewing responses to the past SAQs about serious risks related to human rights, labor and health and safety, we have confirmed that there are no factories where serious risks have been identified, or incidents have occurred (as of December 2024). Through the 2nd SAQ, however, 57 factories were found not to have in place policies or guidelines on preventing child labor, forced labor or discrimination. To encourage improvement at factories, we share SAQ results with suppliers and are also planning training to support them in further respecting and protecting human rights.

Follow-up seminars for risk assessment and monitoring are conducted for suppliers who have been identified through the SAQ as having issues that need to be addressed.
Based on the "Guidelines on Respecting Human Rights in Responsible Supply Chains" issued by METI and other guidelines, we explain the necessary actions companies need to take and provide advice on specific strategies, such as implementing human rights due diligence practices.

・No. of times implemented in 2022 : 12
・No. of times implemented in 2023 : 8

Examples of the materials used in the follow-up seminar

Among the factories that manufacture our private-label and OEM products, including those under the "Jonetsu Kakaku" brand, the Group has been conducting third-party audits since the fiscal year ending June 2024.These audits target factories that are deemed to be particularly important from a risk management perspective, based on factors such as the scale of transactions, the product genres outsourced for manufacturing, and the countries in which the factories are located.

Prior to implementation, we notify the factories contracted to manufacture our products through their suppliers.　Auditors then visit the sites to verify compliance with CSR audit items through on-site inspections, document and data reviews, and interviews with managers and workers. To prevent any instructions or retaliation from employers, interviews with workers are conducted privately in a separate room, attended only by the auditors. All materials and images submitted by factories during the audit are appropriately managed and stored in accordance with confidentiality agreements, ensuring that no information is disclosed externally.

In the fiscal year ending June 2025, we conducted third-party CSR audits at 39 factories both in Japan and overseas. As a result of reviewing the most critical areas of human rights and labor, which we prioritize the most, we confirmed that there were no factories where serious risks or incidents were identified. However, a number of observations related to occupational safety and health were found at many factories. In addition, at factories that received a "D" rating, issues were identified in areas such as deficiencies in fire protection equipment and labor management. These findings are shared not only with the audited factories but also with their respective suppliers, along with evaluation results. We provide specific advice and hold follow-up seminars to encourage improvements based on the findings. Furthermore, for factories that received "C" or "D" ratings in the third-party audits conducted in the fiscal year ending June 2025, we plan to conduct re-audits in the fiscal year ending June 2026.

<< Steps for improvement efforts >>

In the future, we plan to expand the scale and conduct third-party audits on more factories contracted for the production of PB/OEM products.

The Group has established a reporting hotline exclusively for business partners, including suppliers. Information about the hotline is posted in our business meeting rooms to raise awareness. Both internal and external contact points (third-party law firms) are available, and the privacy of those consulting or reporting is strictly protected. Anonymous consultations and reports are also accepted. It is clearly stipulated that business partners will not be subject to any disadvantage or retaliation as a result of their consultation. We take the feedback received from our business partners through the hotline seriously and work to resolve issues after conducting the necessary investigations.

The supply chain management subcommittee of the sustainability committee plays a central role in the group's training programs for personnel involved in the development of PB/OEM products. The training was based on the "Guiding Principles on Business and Human Rights" issued by UN and the "Guidelines on Respect for Human Rights in Responsible Supply Chains" by METI, and explained the group's procurement policy, human rights and environmental risks in the supply chain, as well as actual cases. 376 participants attended the training held in April 2024.

Examples of the materials used in internal education

In addition, the compliance training we provide to employees every month covers topics related to the Antimonopoly Act and abuse of a superior bargaining position anout once a year, and we are working to ensure that our dealings with business partners do not have a negative impact on human rights.

Declaration of Partnership Building:

In 2024 we made the Declaration of Partnership Building, and we are committed to product procurement with a focus on human rights and the environment, as well as to preventing excessive overtime work at our suppliers.
Our Declaration (Japanese)

The Global Alliance for Sustainable Supply Chain

An NGO (non-governmental organization) that works with companies to address issues in the supply chain. At our Group, we began collaborating with this organization in 2025 with the aim of enhancing the effectiveness of our human rights due diligence process, including the identification and remediation of human rights risks within the supply chain.

Japan Climate Leaders Partnership (JCLP)

We agree with and support the principle that the industry should have a healthy sense of urgency and initiate proactive actions in order to achieve a sustainable decarbonized society, and we are committed to participating in this partnership. Study sessions are also held on the theme of decarbonizing the entire supply chain.