We are supported in our business activities by our business partners. Accordingly, we work with these partners to mutually improve quality and ensure safety based on a foundation of fair competitive opportunities, evaluation, and selection.

The Suntory Group has explicitly laid out Standards for Business Conduct that governs relations with business partners. These standards strongly prohibit employees from accepting gifts, entertainment, or other actions that violate social mores. We offer fair competitive opportunities to each company in accordance with our Purchasing Control Regulations and Business Partner Selection Standards. At the same time, we evaluate each of our business partners fairly on such points as the quality of their products and services, supply capacity, finances, safety assurance, and environmental initiatives. We then make our decisions on whether or not to select or continue doing business with each partner based on those evaluations.
We also actively collaborate with our business partners to ensure safety and environmental protection initiatives.

Complying with the Subcontracting Law

We architect and operate our accounting system in compliance with the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors (the Subcontracting Law)^*. This system registers information regarding payment and other conditions at the time an order is placed for materials and product ingredients. If payment procedures are not in accordance with the original schedule, then an alert is displayed on the management screen, preventing issues due to late payments and other problems. We had no violations of the Subcontracting Law in 2010.

Introducing Electronic Billing for Business Partners

In 2010, we introduced an electronic billing system with almost all of our business partners. The introduction of this mechanism will contribute much to diversifying the ways in which our business partners raise funds (early capitalization). We are also working to reduce the risk that a response will be missed by unifying the way we deal with payment conditions for the companies to whom we subcontract.

Building Trading Frameworks with Attention to CSR

Supporting farmers who grow hops, the main ingredient of beer

The Suntory Group's Business Partner Selection Standards also touch on CSR issues such as consideration for the environment and compliance. However, we now need to create specific, clearly documented standards and regulations in order to clarify our social responsibility in procurement.
To promote procurement based on CSR principles, in 2010 we created a body of standards for evaluating the activities of our business partners and selecting them from the perspective of CSR, and developed a framework for considering the formulation of new standards. In addition, we began in 2009 to provide management assistance to farmers who grow hops—one of the principle ingredients of beer—to ensure that this ingredient is stably procured.

Strengthening Partnerships to Improve Quality

Onsite inspections of oolong tea fields

We value the opportunities to carry out dialogues with individual business partners, aiming at enabling our business partners and the Suntory Group to mutually improve their quality and business processes. Once a year, we evaluate our business partners and notify them of the results of these evaluations. In addition, we provide information and exchange views on an ongoing basis, in order to implement improvements. We also hold separate Quality Conferences where we discuss quality improvements and other matters, and we select materials and advance joint development in order to reduce environmental impact and promote universal design.

Reflecting Feedback from Business Partners

In addition to our daily business interactions, we have set up opportunities for regular dialogues with our business partners. We explain the Suntory Group's philosophy at policy briefing sessions and quality workshops, and have our business partners answer questionnaires to let us know the degree to which they understand our thinking and give us their thoughts. The questionnaires are thoroughly analyzed and their content reflected in our business activities.

Safe and Eco-friendly Distribution

The Suntory Group created the Safety Committee in partnership with the distribution affiliates to which we contract transportation operations. As of the end of 2010, the Committee had 250 members from 60 companies. The Committee promotes initiatives in such areas as safety assurance, environmental concerns, and risk management.

Enhancing Safety at Partner Companies

The Safety Committee has published Five Principles for Distribution Safety. We ensure that all employees at each company are aware of these principles. Additionally, the committee's administrative bureau^* visits the sites of each company and inspects the state of their safety measures.

The Safety Committee's Joint Activities

Each year, we hold a Safety Promotion conference attended by safety representatives from 120 sites nationwide. The conference is used to promote safety at each company by sharing information through the showcasing of outstanding initiatives and making sure people are thoroughly educated in safety through study groups and contests, to say nothing of deploying alcohol detectors at all sites.

Enhancing Safety Management at Partner Companies

We are pursuing certifications under the Top Safety Site Program being led by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT). Our goal in doing this is to maintain a minimum standard in the safety management organizations of our distribution affiliates at all times and continually improve these systems.
Certifications have been obtained for 78 of the 83 dispatching and shipping sites operated by the Suntory Group's distribution affiliates (as of the end of 2010), for a certification rate of 94%. This greatly exceeds the 18% certification rate (according to a December 2010 Japan Trucking Association survey) for the trucking industry as a whole.
In 2008, we expanded the scope of certification from direct contractors to include secondary affiliates, and we are striving to enhance safety management in dispatching and transport.

Green Management Certification at Partner Companies

As part of our commitment to reducing our environmental impact from distribution, we are encouraging our affiliates to gain certifications for Green Management^*, as well as ISO 14001, Eco Stage, and other certifications. As of the end of 2010, 77 of our distribution affiliates' total of 87 sites (89%) have obtained these certifications. We will continue to promote obtaining certification. We also collect data on CO₂ emissions by our distribution affiliates in accordance with the revised Law Concerning the Rational Use of Energy. The emissions data is based on distances traveled, fuel used, load volumes, and other data for our distribution affiliates, by month and by vehicle. We then use this data to set reduction targets.

Preparing for Disasters and Emergencies

We have created a project with our distribution affiliates in order to respond to disasters and emergencies. The project includes establishing the operational level of the "171" emergency hotline phone number at all sites. We have also created an action plan for an earthquake with an epicenter directly below the Tokyo or Kinki metropolitan areas. This plan includes making use of the "171" emergency hotline and satellite telephones, arranging for emergency shipments of Suntory Natural Mineral Water to affected areas from sites other than the ones that would normally serve their location, and also ensuring shipments to non-affected areas.

Activities of Overseas Businesses

Frucor Group — New Zealand