Murata and People
Responsibility to and Actions Concerning Suppliers
Murata observes all laws and ordinances in its procurement, and expects the same compliance, along with due consideration for the community and environment, from its suppliers as they conduct their corporate activities. We believe that Corporate Social Responsibility (CSR) procurement helps to build mutual trust and prosperity.
Basic approach to procurement
A Procurement Policy Based on Fairness, Impartiality, and Sincerity
At Murata, we believe it is important to establish relations of trust and prosperity with our suppliers. In our procurement operations, we ensure a spirit of courtesy, fairness, impartiality, and sincerity, respect for laws and ordinances, avoidance of private conflicts of interests, and conformity with social ethics. Throughout the supply chain, we try to ensure that our corporate activities take into account community and environmental needs.
Murata provides its suppliers with information regarding its basic approach to procurement and transaction methods via a business transaction guidebook and a Murata Procurement Department website. In accord with the following basic approach to procurement, our buyers conduct transactions with our suppliers in a fair, just, and sincere manner.
- Murata’s buyers will responsibly carry out procurement operations, practicing good manners and following the dictates of common sense.
- Murata’s buyers will maintain friendly relationships with suppliers, but have no personal interest with them.
- Murata’s buyers will accomplish dealings in compliance with all relevant laws, rules, in-house regulations, and societal norms.
Link: Procurement Policy
Basic Attitudes that Murata Requires of Suppliers
By providing guidance enabling suppliers to continuously improve quality themselves, Murata increases the quality of product procurement (raw materials and equipment), enabling it to and improve its own product quality levels.
When the number of abnormalities discovered in products from a supplier reaches a certain level, Murata discusses the matter with the supplier and sets improvement topics and targets. Progress reports are compiled regularly. Murata also performs annual or more frequent analyses and appraisals of quality management competence, responsiveness to cost, lead time, and technology requests, and financial position. We pinpoint overall points for improvement and develop topics.
- Compliance with laws and regulations as well as social norms
- Promotion of sound business management
- Emphasis on quality, lead times, and stable supply
- Emphasis on initiatives targeting reduced environmental impact (green procurement)
- Emphasis on value engineering activities
- Emphasis on information disclosure
- Emphasis on measures to accelerate material procurement
- Observance of confidentiality
- Emphasis on IT application
- Elimination of antisocial forces
- Promoting “Responsible Minerals Procurement”
For more detailed explanations of these items, please visit:Link: Our Expectations of Suppliers
Murata Group Supply Chain CSR Procurement Guidelines
Based on the "RBA Code of Conduct" we have summarized our approach to CSR procurement, which we want our suppliers to comply with and practice. We have distributed this document to our suppliers.
Legal compliance in procurement
Thorough legal compliance in our training, operational diagnoses, and systems
As a company with a compliance-oriented management, Murata insists on observance of laws and ordinances relating to procurement. In particular, we organize ongoing briefing sessions to give employees a full understanding of the terms of the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors (Subcontract Act) to prevent violations due to lack of awareness.
In fiscal 2019, we worked to promote education on the Subcontract Act and our internal control system. We held 60 training sessions on these subjects for related departments, including representatives of affiliated companies. We also used e-learning and e-tests to inform employees about purchase requests and conducted education on the Subcontract Act and the internal control system. In the future, by carrying out such training on a continual basis, we will make steady efforts to raise employee awareness even further. In addition, by managing the entire chain of our procurement operations in our procurement system, and by controlling those operations in the system itself, Murata has put in place a structure to prevent violations of laws and regulations from occurring.
About the Subcontract Act
The Act against Delay in Payment of Subcontract Proceeds, Etc.
to Subcontractors (Subcontract Act) prohibits the outsourcer from using its advantageous standpoint to the detriment of the legitimate interests of the subcontracted business operator.
Diagnosis of the legality, efficiency, and propriety of procurement operations at Group Companies in Japan and abroad
At Murata, the Office of Internal Audit and accountants establish items to be examined and assess the operations of materials procurement departments throughout the Group worldwide. Following procedures for operational diagnosis planning, implementation, reporting, improvement progress management, and compilation of the final report, we diagnose the legality, efficiency, and propriety of procurement operations.
To ensure maximal rigor in procurement, we give regular training to employees in all the kinds of legislation relating to procurement transactions to keep up and deepen their understanding and awareness of the legal issues.
Supplier consultation window
Window for consultation on improper conduct
Suppliers can use a consultation service in the event of apparent legal violation or social impropriety arising in dealings with Murata.
This service is a company hotline email, directly to the manager of the Procurement Division. The dedicated e-mail address will be provided to suppliers at the start of the transaction.
Nothing detrimental will occur to people as a result of seeking consultation.
We are bolstering our stance on compliance by continually urging suppliers to make use of this service when appropriate.
“We contribute to the advancement of society by … being trustworthy and, together with all our stakeholders, thankful for the increase in prosperity.”
This is a quote from Murata’s Philosophy.
This phrase is a foundation of the ideas that we see as most important as we work to advance our business together with our suppliers.
With honesty, fairness, and transparency as the guiding principles of its procurement activities, Murata has always sought to build partnerships with its suppliers, working to realize mutually satisfying and prosperous relationships based on the Murata Procurement Policy.
Going forward, we will seek to further enhance this principle in order to realize prosperity for all of our stakeholders, without changing its essence in any way.
We are actively working to reduce supply chain CSR risks in relation to procurement, such as prohibition of child labor, forced labor, and gender or religious discrimination, and responsible procurement of minerals.Murata is currently focusing efforts on the following three areas:
We have formulated a Murata CSR Charter, which rests on the foundation of the Murata Philosophy, and, based on this, a statement of “Our Expectations of Suppliers,” and we request our suppliers to comply with both.
When we open an account with a supplier, we conclude a CSR Agreement, and we request the supplier to agree to pursue their business activities in conformity with the Code of Conduct of the Responsible Business Alliance (RBA).
Since 2017, we have been employing a “CSR Compliance Checklist” to enable our suppliers to self-assess their level of compliance with our CSR requirements. At the same time, by visualizing the issues, we aim to achieve more efficient and fundamental solutions by discussing the issues and how to correct them together with Murata.
This checklist is assessed on a regular basis every year, and last year’s assessment of about 110 major suppliers showed a “100% recovery rate” and “no critical risk at the time of survey.” We believe that in order to effectively put these initiatives into practice, it is important for us to avoid simply making unilateral demands on our suppliers. Rather, we work together with our suppliers, based on the partnerships that we have built up with them.
In recent years, we have been required to expand the scope of these CSR activities from companies with which we are directly involved to our entire supply chain. Based firmly on the spirit of the Murata Philosophy, we will continue in our efforts to realize mutually satisfying and prosperous relationships with our stakeholders, working to build long-lasting trust and solid partnerships, expanding the scope and increasing the sophistication of our CSR procurement as we strive to realize a supply chain that all of our stakeholders can have confidence in.
Percentage of suppliers that have undertaken CSR Agreements (as of March 31, 2020)
Also, based on the idea that non-financial issues such as CSR and ESG should be incorporated into management strategies, Murata has identified material issues (key issues) starting with social issues and launched company-wide projects to take action. From a procurement point of view, we are participating in this project to roll out efforts to address material issues into the supply chain. Further, the procurement department’s medium-term policy is “Realizing CSR Procurement while Incorporating ESG,” and we will strive to implement this policy by taking into account issues from our stakeholders’ perspectives as well as our own. Specifically, we identified about 30 issues based on the ESG index and other survey items, as well as questions from shareholders, investors, and customers. To clarify the positioning of these issues, we used a matrix created from the two perspectives of “Are we working on these issues internally?” and “Is this information available to stakeholders?” The implementation plan was prepared by further dividing into three quadrants based on how the plan will be implemented: “Start actions based on new themes,” “Study and implement information disclosure methods,” and “Reconfirm and revise the currently published content as necessary.” This year, we will focus and take action on the key themes of “Creating a code of conduct for suppliers” and “Conducting CSR audits of suppliers.”
We will work together with our suppliers to resolve issues based on the plan we have prepared, regularly update the matrix as we progress, and strive to disclose information to our shareholders, investors, and other stakeholders.
CSR procurement that responds to environmental issues
Based on the Responsible Business Alliance (RBA) Code of Conduct, Murata decides on suppliers after
presenting them with a list of environmentally-friendly items for implementation.*1
In addition, we ask that our suppliers sign and comply with a letter of consent regarding our CSR procurement policies and code of conduct.*2
We also work to survey and identify the status of compliance with CSR principles, including those related to environmental issues, at our existing suppliers. In our last year’s survey, we surveyed approximately 110 companies, and verified that there was no need for auditing or concrete action.
Going forward, we will continue these surveys regularly, and we will conduct audits and apply other measures to any suppliers that survey results show are in need of improvement.
Environmentally-friendly Items for Implementation by Murata’s Business Partners (Excerpt)
Social responsibility in relation to the environment based on local laws
Reduction of emissions and runoff: Efforts including monitoring, control, and treatment of air and water pollution
Efforts to conserve resources and energy through the establishment of voluntary targets and the realization of efficient use
Reduction of greenhouse gas emissions
Minimization of consumption of water
Establishment, operation, and maintenance of an environmental management system
Management, reduction, and recycling of waste
Reduction of resource use, recycling, and the setting of voluntary targets for conservation of resources
Business activities that consider biodiversity
Letter of Consent regarding Murata’s CSR Procurement Policies and Code of Conduct
In order to collaborate with the industry, 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 manage information on chemical substances contained in an article appropriately and to establish and disseminate the concrete system to disclose and transmit the information through companies on supply chain smoothly.”
Promoting “Responsible Minerals Procurement”
Serious violations of human rights have become a social problem in mineral procurement, and interests in responsible mineral procurement are rising.
Murata regards this as part of our corporate social responsibility (CSR) efforts, and conducts surveys and provides information in compliance with the industry standards based on our responsive policies. Furthermore, as an internal framework, the CSR Management Committee, chaired by a Representative Director, shares information with top management on activities, progress, and any issues regarding responsible mineral procurement, and makes any resulting decisions.
Response to Customers Requirement for our Supply Chain Information
In response to requests from our customers for our supply chain information, in addition to the Conflict Minerals Reporting Template (CMRT) published by the Responsible Minerals Initiative (RMI), we started to provide information on cobalt using the Cobalt Reporting Template (CRT) last year. We also regularly conduct surveys on our suppliers to check for any changes in that information. In the 3TG supply chain survey, we have already confirmed that our mainstay products such as multilayer ceramic capacitors, inductors, thermistors, and piezoelectric components are conflict-free. For lithium-ion secondary battery products, in which cobalt is frequently used, we have received responses from about 80% of all suppliers and are actively working on conflict-free initiatives, such as calling for smelters that do not participate in the RMAP to undergo the validation process. In order to ensure the safety of our mineral supply chain, we will continue to investigate. We also continue to implement initiatives that help reduce the risks to human rights in the supply chain by working together with our suppliers for improvement. This entails reviewing reported information in line with the internal standards prescribed based on the OECD Due Diligence Guidance and carrying out corrective measures, as necessary.
Responsible mineral procurement policy
Working within the framework of CSR procurement activities based on the Murata Manufacturing CSR Charter
Building a management framework in accordance with the OECD Due Diligence Guidance.
Using the above mechanisms to promote the responsible procurement of minerals used by Murata, such as by preventing the financing of armed groups as part of the minerals supply chain for gold, tin, tantalum, tungsten, and cobalt, etc., protecting human rights, and promoting fair trade, through continued efforts to use low-risk components and materials. Also, refusing to conduct procurement from companies that are clearly involved in conflicts or human rights violations
Conducting sensible and efficient procurement in a sincere manner, based on industry standards, and in close collaboration with industry organizations
Sharing information regarding minerals that are obtained through the supply chain with partner companies as quickly as possible
With regards to gross human rights violations in the supply chain, such as child labor and forced labor under harsh working conditions, Murata is committed to sustainable procurement that addresses human rights due diligence. For example, we revised our policy on responsible minerals sourcing risk assessment to include OECD Annex II risks*1 and expanded the scope of risk assessment to include Conflict-Affected and High-Risk Areas (CAHRAs)*2, as well as reviewed the system of periodic mineral supply chain risk assessments for suppliers and established a contact point for issues of concern in minerals sourcing.
Going forward, Murata will continue to actively address the expansion of target minerals such as mica, lithium, and graphite, as well as the increased risk. We will also work more closely with our customers, suppliers, and the industry to ensure transparency in the supply chain, and we will continue to engage in CSR procurement that takes into account human rights and other risks.
And by advancing and realizing these initiatives, we will deliver safety and security to our stakeholders.
Addressing issues through industry actions
Murata is also a member company of JEITA Responsible Minerals Trade Working Group*3 and of RMI*5. We are proactively working on issues that are difficult to solve as an individual company, such as creating industry-wide frameworks as a member of industry organizations. We also participate in the JEITA-sponsored Responsible Minerals Sourcing Inquiry Briefings as a lecturer, and we are a member of the JEITA Smelter Support Team*4, which encourages smelters and refiners that do not participate in RMAP to undergo the validation process.
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.
5-Step Framework for OECD Due Diligence Guidance
|Step 1:||Establish strong company management systems|
|Step 2:||Identify and assess risks in the supply chain|
|Step 3:||Design and implement a strategy to respond to identified risks|
|Step 4:||Carry out independent third-party audit of smelter/refiner’s due diligence practices|
|Step 5:||Report annually on supply chain due diligence|
Step 1: Establish strong company management systems
- Murata has established a Responsible Minerals Sourcing Policy and a system to manage any Annex II risks in CAHRAs for the minerals contained in our products.
- Responsible minerals sourcing initiatives and issues are regularly shared with top management in the CSR Management Committee for decision-making.
- We make our policies known through our website and other media, and we ask our suppliers to agree with us on initiatives based on Murata’s policies.
- To identify smelters/refiners in the supply chain, we conduct surveys based on industry standards (RMAP) for domestic and international suppliers.
- Every year, we send our suppliers an invitation to the JEITA’s annual Responsible Minerals Sourcing Inquiry Briefings and invite them to attend workshops on the latest industry trends and current issues.
Step 2: Identify and assess risks in the supply chain
- We regularly conduct smelter/refiner surveys using the CMRT and CRT issued by the RMI.
- We require our suppliers to use smelters/refineries that have been certified under the audit program of a third-party institution.
- Our surveys include confirmation of 3TG and cobalt content, confirmation of country of origin, and identification of smelters/refiners.
- We conduct risk assessments in accordance with internal standards on the smelter/refiner information reported by our suppliers and the management system for responsible minerals sourcing.
- For identified smelter/refiners, we review RMI audit reports, websites, and other sources of information that may lead to risk as needed.
Step 3: Design and implement a strategy to respond to identified risks
- Suppliers are asked to work for human rights and to reduce conflict risk in accordance with Murata’s responsible mineral procurement policy. If we use high-risk smelters/refiners, we communicate the details of the risks and discuss appropriate measures for improvement with our suppliers.
- If a company’s relationship with an Annex II risk, such as a relationship with armed forces or human rights violations, is identified, we will consider suspending the transaction.
Step 4: Carry out independent third-party audit of smelter/refiner’s due diligence practices
- As a member of the RMI and the JEITA Responsible Minerals Trade Working Group, Murata works at the industry level to address issues that are difficult for individual companies to resolve.
For example, we provide speakers at industry-sponsored explanatory meetings and encourage smelters/refiners who do not participate in RMAP to undergo the validation process.
Step 5: Annual Report on Supply Chain Due Diligence
- Murata's Responsible Mineral Procurement Activities are reported in the Integrated Report.
Risks of a serious negative impact that may arise in relation to unearthing, trading, handling, or exporting minerals from conflict affected, and high-risk areas
Conflict-Affected and High-Risk Areas
JEITA Responsible Minerals Trade Working Group (https://home.jeita.or.jp/mineral/eng/index_e.html)
JEITA Smelter Support Team (https://home.jeita.or.jp/mineral/eng/support.html)