Murata and Society

Murata set targets for fiscal 2022 through 2024 and are working toward achieving CSR procurement that ensures compliance with laws and respect for proper labor conditions (human rights), the environment, and health and safety throughout the entire supply chain.

Murata issues CSR procurement guidelines to help suppliers understand our concept of CSR procurement. The guidelines are distributed to all suppliers, and as a condition for starting business with Murata, we request that they sign a “CSR Agreement,” practice the guidelines (covering human rights, health and safety, environment, ethics, information security, etc.), and extend them to their supply chains. In fiscal 2024, we attained a guidelines compliance contract rate of 97%.

As shown below, based on CSR risks, Murata conducts CSR audits both to understand suppliers’ status of compliance with the Guidelines and to help them deepen their understanding of Murata’s procurement policies and Guidelines.

• Audits have been conducted for approximately 100 significant suppliers that account for approximately 80% of transaction value from fiscal 2022 to fiscal 2024. Corrective measures are implemented depending on results, and improvement support and follow-up audits are conducted if required.
• Audits are conducted for all suppliers that do business with Murata based on Murata’s verification results and EcoVadis assessment results. Based on risk assessments, audits are being conducted starting with the highest-priority suppliers.
• We closely review the self-assessment results and conduct additional audits if deemed necessary. This enables the early detection of and response to potential risks.

In fiscal 2024, we conducted CSR audits for a total of 33 significant suppliers. Based on the audit results, we take corrective measures and provide improvement support, promoting initiatives to build a sustainable supply chain. The audits are conducted in compliance with the RBA VAP by Murata and third-party specialized organizations. In addition to desk-based document verification, we comprehensively verify the actual conditions of our suppliers by using diverse methods, including on-site observations, employee interviews, and reviews of actual work hours.

[CSR audit cases]

[Evaluation ranks and results]

Corrective action

Suppliers are categorized into three ranks –A, B, or C– based on their CSR risk levels, following a similar approach to the self-assessment process. If non-conformities are identified, Murata requests the suppliers to take corrective actions and provides support to resolve the problems, regardless of their ranks. For C-ranked suppliers, Murata performs a re-audit after they have completed corrective actions, to verify the effectiveness of the actions.
The fiscal 2024 CSR audit results showed that 14 suppliers were classified as A rank, while 19 were ranked B, with none falling into C rank.
The major corrections requested included:

• Consecutive working days of seven or more
• Long working hours exceeding 60 hours per week
• Objects placed in the evacuation paths
• No evacuation route maps or emergency exit lighting placed on-site.

Murata notifies the suppliers of all issues that require correction on the day of the audit, and immediately initiates discussions and provides on-site advice for corrective actions.

Non-conformity	Initiatives for corrections
Consecutive working days of seven or more	Murata advised that excessive numbers of consecutive working days and long working hours can negatively affect workers' health, and also provided guidance on managing working hours properly and ensuring that the workplace regulations are observed by supervisors and employees alike.
Long working hours exceeding 60 hours per week
Objects placed in the evacuation paths	Murata informed that any objects obstructing the evacuation paths can hinder safe passage and delay evacuation and that the absence of displayed evacuation maps or emergency exit lighting can also make it difficult to identify the proper routes, increasing the evacuation time. Murata requested securing appropriate evacuation routes and installing both evacuation maps and emergency exit lighting in place.

Dialogues with suppliers

Through CSR audits, Murata engages in direct dialogues with suppliers to communicate the significance of adhering to its procurement policies and Guidelines. These audits also serve as a platform to exchange views on the progress and challenges of their CSR initiatives, fostering collaborative discussions to identify solutions. As a result of these audits, Murata has received words of gratitude from the suppliers.

Before the audit
Murata holds one-on-one briefings with the suppliers to explain the audit's purposes and methods/items, as well as the necessity of complying with its guidelines and fulfilling corporate social responsibilities.

On the day of the audit
Murata not only identifies non-conformities but also explains their causes and collaborates with the suppliers to determine corrective actions through discussions.

After the audit (corrective actions)
Murata proposes specific corrective actions and provides advice based on each supplier's situation, collaborating with them to address the non-conformities.

Awards program

Murata recognizes suppliers that have given us great assistance in achieving CSR procurement in addition to their contributions in terms of improvement of quality and delivery, cost reduction activities, and technological innovation, by presenting them letters of appreciation. Through this commendation, Murata conveys its gratitude to suppliers and seeks to build a continuous trust relationship.
For fiscal 2024, Murata recognized three suppliers for their contributions to Murata's sustainable environmental initiatives.

Recognition examples:

• Investing in equipment and adopting recycled solutions to eliminate toluene –a solvent harmful to human health– from the manufacturing processes
• Visualizing recycle rates and achieving horizontal recycling for specific product types

Initiatives

Under the common understanding that protection and conservation of the global environment is imperative for the sound and continuous development of the human society, countries around the world are rapidly enacting environmental protection laws and regulations. Against this backdrop, Murata established the Murata Group EHS Disaster Preparedness Policy as one of the codes of practice for Murata’s corporate slogan and management philosophy and is working on environmental conservation.

For our parts procurement activities, we declare “environmentally-friendly parts procurement” in our procurement code of conduct and promote prioritized procurement from suppliers that actively engage in environmental initiatives, including manufacturing products with minimal environmental burden (green procurement). Through these efforts, Murata is striving to reduce the environmental burden across its entire supply chain.

Link: Murata Group EHS Disaster Prevention Policy

Green procurement

In order to reduce the environmental load of products, "green procurement" is required to procure materials with a low environmental load. At Murata, we ask for the understanding and cooperation of suppliers in putting environmental management into practice.

When conducting new business, we ask that our partners address global environmental problems such as climate change and environmental pollution based on the "Murata Group Supply Chain CSR Procurement Guidelines." Moreover, in addition to asking to verify the certification status of suppliers under environmental management systems (ISO 14001, etc.), we audit the state of chemical substance control at the manufacturing sites to determine whether we can do business with a supplier. After we have started doing business with a supplier, we ask them to periodically fill out the CSR Checklist and continuously verify the status of initiatives for environmental problems and the results of improvement at suppliers.

Link: Green procurement

Global climate countermeasures and use of sustainable resources

With the changing global environment, promoting decarbonization and fostering a recycling-based society have emerged as key themes. Murata promotes global climate initiatives and use of sustainable resources to contribute to the realization of sustainable society.
Category 1 (purchased goods and services) accounts for over half of Murata’s Scope3 GHG emissions. For this reason, it is essential to have the cooperation of suppliers to promote our efforts for reducing GHG emissions. To ensure sustainable use of resources in Murata’s business activities, collaboration with our suppliers is essential.

Following the previous fiscal year, Murata held its FY2024 environmental activity policy briefing, with participation from over 250 companies. The session highlighted the urgency of decarbonization and sustainable resource use, while also encouraging the participants to promote environmental activities. In addition, Murata continues to hold one-on-one interviews with the suppliers, offering guidance on their GHG calculations and engaging in discussions aimed at reducing GHG emissions.

Link: Reduction of GHG Scope3
Link: Efforts for use of sustainable resources

Collaborations with industry organizations

Murata participates as a member of JEITA (Japan Electronics and Information Technology Industries Association) and as a founding member of JAMP (Joint Article Management Promotion-consortium), whose purpose is "to appropriately manage the information on chemical substances contained in an article and to establish and disseminate a system to smoothly disclose and transmit the information through the companies in the supply chain." We are actively cooperating with industry organizations on issues that are difficult to solve as an individual company such as creating industry-wide frameworks.

Link: JAMP (Joint Article Management Promotion-consortium)
Link: Member List
Link: JEITA (Japan Electronics and Information Technology Industries Association)
Link: JEITA Members

Concerns about forced labor, child labor, and other human rights risks in the supply chain are increasing. As an initiative to reduce these risks, at Murata we also ask suppliers to observe the Guidelines while also monitoring the state of compliance through the self-assessment and initiating corrections as needed. For significant suppliers, we also conduct CSR audits. Through audits by third-party organizations, we will identify human rights risks professionally and objectively, as well as facilitate improvements based on the results of audits and through discussions with the suppliers. Moreover, regarding forced labor, child labor, and other human rights violations under harsh labor environments at small-scale mines, Murata actively promotes responsible mineral procurement activities and appropriately discloses information in response to customer demand.

Link: Murata Group Human Rights Policy
Link: Declaration regarding the modern slavery act (United Kingdom)
Link: For all stakeholders (Japan Center for Engagement and Remedy on Business and Human Rights (JaCER))(*Link to Japanese language page)

In order to provide a stable supply to our customers even in times of emergency, the Murata group deepens its ties with its partners on a regular basis and advances the following initiatives.

Emergency situations

Earthquakes, tsunami, fire, floods and other wide-area disasters, accidents, compliance violations, infectious disease, and other unforeseen circumstances

BCP (Business Continuity Planning) procurement initiative

• Prior collection of information to be used in an emergency and a rapid initial response
  In order to verify the damage suffered by business partners, status of their safety, and supply conditions in times of emergency, we have created a database of manufacturing locations, etc. and other information which includes secondary business partners.
  We are building a system to extract information about business partners to be verified together with disaster information particularly during urgent natural disasters, and we are working on an initial response system.
• BCP/BCM survey of business partners
  In addition to surveying business partners regarding the status of BCP initiatives, we are requiring them to promote BCP activities as needed.

In order to achieve a sustainable society together with the entire supply chain, it is essential for the buyers to practice the concept of CSR procurement. As part of necessary training for procurement activities, Murata provides CSR procurement education on topics such as human rights and labor, health and safety, environment, and information security to buyers based on the Guidelines upon their assignment and once a year. Additionally, to maintain compliance in subcontracting, we provide Subcontract Act seminars via e-learning to buyers every year. The participation rate in fiscal 2024 was 100% for both training programs.

Link: Respect for Human Rights
Link: Information security
Link: ESG data collection

Murata regards this as part of its corporate social responsibility (CSR) and conducts surveys in compliance with global standards and provides information based on its response policy.
Furthermore, as an internal framework, the CSR management committee, chaired by the president, shares information with top management on activities, progress, and any issues regarding responsible mineral procurement, and makes any resulting decisions.

We have established a response policy to promote responsible mineral procurement and are building a system to manage the potential for any Annex Ⅱ risks in CAHRAs for target minerals included in our products. We conduct surveys in compliance with the RMAP^*4 industry standard and evaluations in accordance with internal standards to identify smelters and refiners in the supply chain. If we discover the use of high-risk smelters and refiners, we communicate the details of these risks to our suppliers and require that they switch to RMAP-certified smelters and refiners.
Through repeated communication, we have succeeded in helping our suppliers transition to RMAP-certified smelters.

Link: Information and awards program for suppliers

Every year, Murata receives over 5,000 customer requests to provide supply chain information. Based on the results of responses from our suppliers, we report this information based on the CMRT and EMRT issued by the RMI^*5.

Efforts for compliance with 5-Step framework of OECD Due Diligence Guidance

In order to reduce the Annex Ⅱ risks of human rights violations in CAHRAs, such as human rights violations for 3TG and cobalt in our products, Murata is committed to the following initiatives in compliance with the OECD Due Diligence Guidance.

At Murata, we regularly conduct surveys of our suppliers to check for Annex Ⅱ risks concerning CAHRAs for the relevant minerals contained in their products. As a result of the responsible minerals survey conducted in fiscal 2024 across 174 major suppliers, we confirmed that the percentage of RMAP-certified smelters is 96% of all smelters. Through previous conflict mineral surveys, we confirmed that our mainstay products such as multilayer ceramic capacitors, inductors, thermistors, and ceramic resonators are already conflict-free.

Fiscal 2024 responsible mineral procurement survey results

Murata broadly recognizes three issues and believes that it is important to advance initiatives to solve these issues.

Murata is a member company of industry organizations such as the JEITA “Responsible Minerals Trade Working Group” and RMI^*7. We are proactively working on issues that are difficult to solve as an individual company, such as creating industry-wide frameworks.

Initiative (1):
For cobalt, there are still many refiners that do not participate in the RMAP. As a member of the JEITA “Smelter Support Team”^*8, we carry out activities to encourage smelters and refiners that do not participate in RMAP to undergo the validation process.

Initiative (2):
We participate in the operation of the “Responsible Minerals Sourcing Inquiry Briefings” hosted by JEITA and share the latest information with suppliers and many other companies through these briefings to educate and enlighten them so as to deepen their understanding of the importance of this initiative.

Initiative (3):
Regarding worries about the risks of new minerals, we are clarifying the problems, proposing mechanisms, and engaging in other active debates at the JEITA working group to make proposals to RMI so that RMAP support may proceed in an efficient manner.

Suppliers can use our consultation service in the event an apparent legal, regulatory, or ethical violation, or a risk thereof, is detected in dealings with the Murata Group.
Murata also has a dedicated online consultation service where people can seek consultation anonymously if they desired. The service accepts consultation requests from Japan and abroad. In Japan, Murata offers this service to suppliers when starting business with them.

Consultation requests are received by the compliance department at each Murata Group company, which will coordinate with relevant organizations as necessary and take necessary measures for investigation and rectification.
Murata will protect the anonymity and privacy of the consulting individual, as well as ensure that nothing detrimental will occur to such individuals as a result of seeking consultation.
We are bolstering our stance on compliance by continually informing suppliers of this consultation service as well as encouraging them to use this service when necessary.

Link: Compliance
Link: Consultation Window for Business Partners (suppliers)