The Suntory Group is promoting sustainable procurement with our business partners to contribute to the realization of a sustainable society as a company that has signed the United Nations Global Compact.
Basic Policy on Sustainable Procurement
In order to offer our customers high-quality products and services, at the Suntory Group we believe it is crucial to promote sustainability throughout our entire supply chain. This means to give due consideration to environment and society, as well as to safety and reliability.
In 2011, in order to promote sustainability, we established the Suntory Group's Basic Policy on the Sustainable Supply Chain that consists of six main pillars - legal compliance, human rights and labor standards, quality, environment, information security, and the coexistence with society - that address global issues such as child labor, forced labor, freedom of association and collective bargaining, working hours, the guarantee of minimum wages, etc. In order to promote sustainability, we are raising awareness and deepening understanding with our business partners.
In order to avoid that our purchasing practices affect negatively the human rights of our suppliers’ workers, we agree on estimated lead times in advance with our suppliers, and share our payment terms in advance. We also implement the necessary mechanisms and procedures so that payments are executed on the timeframe agreed with the supplier.
Furthermore, if we assume that there is a high human rights risk in one particular ingredient, we review our purchasing practices and strive to reduce the risk. For example, in some of our business units we switch to sustainable-certified palm oil in order to minimize human rights and environmental risks.
The Suntory Group's Basic Policy on Supply Chain Sustainability (Established 2011)
In order to provide high-quality products and services safely and reliably based on our corporate philosophy of "To Create Harmony with People and Nature" and our Code of Business Ethics, the Suntory Group engages in fair business practices and, in collaboration with supply chain business partners, promotes procurement activities that take social responsibility into consideration, mindful of such issues as human rights, labor standards, and the environment.
We build good partnerships with our business partners and contribute toward realizing a truly affluent and sustainable society.
1. Legal Compliance and Respect for International Standards of Conduct
We will promote fair and equitable procurement activities that comply with each country's laws and respect international standards of conduct.
2. Consideration for Human Rights, Labor, and Safety and Health
We will promote supply chain CSR initiatives that respect basic human rights and are mindful of labor conditions and safety and health.
3. Guaranteeing Quality and Safety
Aligned with the Suntory Group Quality Policy, we will promote supply chain CSR initiatives that seek to guarantee a high level of quality and safety based on the optimal standards for quality, cost, and supply.
4. Consideration for the Global Environment
Aligned with the Basic Principles of Suntory Group's Environmental Policy, we will promote procurement activities mindful of the global environment.
5. Preservation of Information Security
Confidential information regarding procurement dealings and personal information will be strictly controlled.
6. Coexistence with Society
We will promote social contribution initiatives directed toward coexisting within society.
Furthermore, as stated in our Human Rights Policy, we require our suppliers to understand and comply with the ILO Tripartite declaration of principles concerning multinational enterprises and social policy and ILO Declaration on Fundamental Principles and Rights at Work. We expect compliance through the voluntary efforts of our suppliers, even if the ILO principles are not adequately protected by local law.
Promoting Sustainability Activities Throughout the Entire Supply Chain
In April 2021 we established the Procurement Development Department to further fulfill our corporate responsibility in climate change, environmental issues, human rights, and other social issues. From January 2022, this department was reorganized into the Supply Chain Excellence Department, which cooperates with the newly established Sustainability Management Division. With this new team, we strengthened long-term raw material procurement strategy, optimum procurement globally and sustainable procurement throughout the Group. We also hold a monthly meeting with overseas group companies to discuss overall strategy and progress regarding procurement, including sustainable procurement. Initiatives related to sustainable procurement are regularly discussed and reported to the Global Sustainability Committee, an advisory body of the Board of Directors.
Establishing Supplier Guidelines
We established the Suntory Group Supplier Guidelines based on the Basic Policy on the Sustainable Supply Chain in June 2017 to contribute to the realization of a sustainable society while also accelerating sustainable procurement within the Suntory Group. These guidelines put in place specific compliance items required in each field from human rights and legal compliance to the environment for suppliers of Suntory in Japan and overseas to confirm the same ethical values are shared between the Suntory Group and its suppliers. Compliance with our human rights commitments is a prerequisite for engaging in a business relationship with suppliers, and we require signing our Code of Conduct/Supplier Guidelines to both new and current suppliers. If a serious law-breaking human rights violation is discovered and it is recognized that the supplier has no intention of improving even after communication, it may lead to the termination of the contract. In order to comply with our Supplier Guidelines, we are promoting joint efforts with suppliers, such as sharing those guidelines at supplier meetings or sharing related information through Sedex.
In addition, in terms of human rights commitments, we request suppliers to cascade down those commitments to their own suppliers.
Monitoring of Suppliers
In order to promote risk assessment as a part of our human rights due diligence process, we have conducted a potential risk assessment in collaboration with Verisk Maplecroft, a global risk consulting company, for our major ingredients using general country and industry data. (major ingredients × country combinations for a total of 124 patterns)
|Low risk:||21 items||17%|
|Mid risk:||58 items||47%|
|High risk:||37 items||30%|
|Very high risk:||8 items||6%|
*Covered human rights risks: child labor, forced labor, working hours, fair wage and welfare, discrimination, harassment, freedom of association and, right to collective bargaining, access to remedy, health, and safety
Of these, following were items that have very high risks and impact (have high sales volume) on child and forced labor.
Forced labor: coffee, oolong tea, ethanol, and sugar
Child labor: coffee and sugar
The Suntory Group is working to promote activities for respecting human rights throughout the entire supply chain while linking to business partners by establishing the Basic Policy on Supply Chain Sustainability.
Impact Assessment by Sedex
We joined Sedex in June 2019, and since then we are engaging our suppliers to share information through Sedex by answering to the SAQ*. These SAQs evaluate the potential social risks in the supply chain by focusing on child labor, forced labor and other human rights issues as well as considerations toward the work environment and occupational safety. As of November 2022, we have confirmed that over 1,100 manufacturing sites of approximately 700 major suppliers have joined the Sedex. We will continue to promote all major suppliers to join the Sedex. We will prioritize the strategy for each region based on the result of the risk assessment to formulate an action plan and promote corrective actions when needed.
Impact Assessment Status
Suntory Group identifies potential and actualized risks using a risk assessment tool offered by Sedex. Specifically, we evaluate the ability to manage potential and actualized risks of the suppliers with SAQ. In addition, we also confirm actualized risks based on third-party audit information that can be checked on Sedex.
Potential Risks of Suppliers (As of November 2022)
In the first half of 2022, we continued our risk assessments through Sedex, during which we obtained data for 1,072 manufacturing plants from suppliers worldwide (an increase of 36 from April 2022).
|November 2022||Fluctuation||April 2022|
|Waiting for answer||89||9%||4||85||8%|
Actualized Risks of Suppliers (As of November 2022)
The total number of non-compliances identified was 246 (an increase of 38 from April 2022).
Monitoring through Supplier Assessment Questionnaires
We also conduct sustainable procurement questionnaires targeting suppliers that have not joined Sedex. We examine not only our existing suppliers to identify those that are at high risk, but also assess potential new suppliers before we start business relationships.
In addition, the Suntory Group shares the Suntory Group Supplier Guidelines with our overseas Group companies and verifies initiatives toward sustainability at each company at the Global Procurement Conference in which our overseas Group companies participate.
As part of our efforts to promote corrective measures, if it becomes clear that Suntory Group business activities have directly caused negative impacts on human rights, or if indirect negative impact through business relations come to light or are suspected, the Suntory Group will take corrective measures (remedy) through dialogue with related parts, based on international standards and through appropriate procedures. Furthermore, we expect Suntory Group's suppliers to undertake corrective measures (remedy) as well. In order to implement corrective measures, we will also work with external organizations such as human rights experts (NPOs) and Sedex to engage suppliers regarding any issues discovered, and to work together on corrective steps.
Corrective Process (Remedy)
As stated in our Human Rights Policy, our key themes in human rights include child labor, forced labor, discrimination and harassment, freedom of association, and a good working environment (health and safety). We have identified numerous questions in the Sedex SAQ that relate to each of these key themes, and we use them for assessment and ongoing monitoring in our own plants and supply chain. We currently conduct continuous monitoring of our suppliers through Sedex, representing over 70% of our purchasing volume globally, and we strongly engage suppliers which we have been able to identify actualized risks. The monitoring process leverages also SMETA audit information on the supply chain, including interviews with local workers. In this way, we try to leverage the voices of rightholders.
Our remedy process using Sedex and SMETA information is as follows:
Cases of Potential Risk
1.Goal: to confirm that sufficient measures are taken toward avoiding potential risks.
2.Index: Sedex risk and management scores.
3.Timeframe: check the risk score and management capability score periodically (about once every six months), and confirm the status of the improvement activities of business partners.
Cases of Actualized Risk
1.Goal: bring actualized risks down to zero.
2.Index: key findings of third-party audit.
3.Timeframe: confirm within 6 months that the identified issues have been resolved.
Potential Risks of Suppliers (As of November 2022)
Regarding the above-mentioned potential risks that can be confirmed in Sedex, we also assess the management capability of our supplier’s manufacturing sites in respect to the potential risks. Based on that, we engage manufacturing sites, in particular sites with "high risk + low management capability" and work together to improve their management capability. As a result, from the start of these engagements with the suppliers in January 2021 to the end of November 2022, there were 224 manufacturing sites with at least 10% up to 50% improvement in their management capability (25% of the total of sites), which is an increase of 66 manufacturing sites since the end of April 2022. Going forward, we will continue to engage our suppliers and promote improvement activities.
Actualized Risks of Suppliers (As of November 2022)
We communicate directly with suppliers regarding issues identified in Sedex by third-party audits, and we check that the these issues are corrected within six months of having been pointed out. Of a total of 246 important non-compliances specified as of the end of November 2022, we confirmed that 217 have been corrected. We will continue to engage with suppliers on the remaining non-compliances as we move ahead with remedial actions.
More specifically, we have reviewed all Sedex SAQ responses regarding the following key human rights themes, and identified data indicating potential risks. At the same time, we have reviewed the findings of SMETA audits, to be check whether any potential risks have been actualized. In those cases, we engaged our suppliers and confirmed the status of the corrective actions taken.
● Child Labor
We regard child labor as one of the key human rights risks in supply chains, and are strengthening management of suppliers through Sedex and SMETA information. For example, we use the questions in Sedex to identify direct and indirect workers who may be considered underage workers (under 15). In addition, based on actual on-site audits conducted through SMETA, we confirmed that worker age verification is being performed properly, and corrective actions are being taken when issues become apparent.
A review of SAQ responses from approximately 1,000 manufacturing sites indicated that there was no child labor by those under the age of 15. At 5% of plants, there were workers of ages 16-17, which by itself is a legal working age on the countries where those workers were found. The findings of one SMETA audit also noted a 17-year-old worker, but we have confirmed that this was not a problem under local law.
4 instances of inadequate worker age records were also noted, but we have engaged the suppliers and confirmed that the recording methods have been corrected.
● Forced Labor
We consider forced labor to be one of the key human rights risks in supply chains and are strengthening management of suppliers through Sedex and SMETA information.
1) Recruitment fees
A review of SAQ responses from approximately 1,000 supplier manufacturing sites showed that 1% of the respondents had no initiatives to address the burden of recruitment fees on workers. In addition, 3% of the respondents indicated that the workers bear costs in some form. Two SMETA audit also found non-compliances related to the burden of recruitment fees on workers, but we confirmed that this has already been addressed by revising the supplier’s internal regulations. Similarly, there were three findings regarding wage reductions, but we confirmed that there were no deductions that were problematic under local law.
A review of SAQ responses from approximately 1,000 supplier manufacturing sites showed that 8% of the responses indicated possible issues with overtime pay.
The review also showed lack of visibility regarding indirect employees’ minimum wage. SMETA audit findings also included 21 non-compliances related to wages and 25 non-compliances related to the management of overtime. We have engaged our suppliers and confirmed that currently there are no confirmed cases of uncorrected wage issues (the issues found had been solved).
3) Freedom of movement
No risk information regarding freedom of movement was found in the SAQ responses or the SMETA audit.
● Freedom of Association and Collective Bargaining
We consider impediments to freedom of association and collective bargaining to be one of the key human rights risks in supply chains, and are strengthening management of suppliers through Sedex and SMETA information to prevent infringement of these rights. For example, we leverage questions in Sedex to check the presence of labor unions, as well as processes and organizations in which workers can participate and have their participation reflected in decision-making by the supplier company. In addition, we confirm through SMETA audit data whether the rights to freedom of association and collective bargaining are being protected, and engage in corrective actions when issues become apparent and are uncorrected.
On the point of whether processes, organizations, and arrangements were in place for workers to use and reflect in company decision making, the SAQ data indicated that 12% of supplier manufacturing sites did not have these mechanisms in place. In addition, data from the SMETA audit included three findings related to freedom of association and collective bargaining, but we have confirmed that corrections have already been made.
● Health and Safety
We regard health and safety to be one of the key human rights risks in supply chains, and we are strengthening management of our dealings with our suppliers through Sedex and SMETA information to promote their health and safety conditions. For example, we leverage questions in Sedex to check facts such as whether a health and safety policy is in place, whether there have been any serious work accidents, the numbers of participants in fire safety drills, and the supplier's existing efforts to enhance health and safety. We also analyze similar data through SMETA audits and engage in corrective actions when issues are apparent and uncorrected.
The SAQ data showed that 2% of production plants had more than 100 recorded accidents in the past 12 months, in which 1% reported more than 20 serious accidents. We will engage with these high-risk supplier manufacturing sites and work toward enhancing their occupational safety. Data from the SMETA audit also showed 64 non-compliances, with remedial actions having already been taken on 55 of them. We will continue to engage with suppliers on the remaining 9 issues for which corrective actions are still pending. Corrective actions for the health and safety risks found through the Sedex's SAQ answers and non-compliance by SMETA were shared with other suppliers to improve health and safety management.
● Land Rights
We are strengthening management of suppliers through Sedex information to identify human rights risks related to land rights. Specifically, we leverage questions in Sedex to determine whether the land on which a given supplier's production plant is sited was used as a residence before construction. The SAQ results showed that 1% of such land was used for residential buildings prior to conversion to an industrial site. We will engage with the suppliers to confirm whether there is a possibility that the conversion could have led to a violation of land rights.
● Water Access and Sanitation
We are strengthening management of suppliers through Sedex data to understand risks related to the water access and sanitation rights of local communities . For example, we leverage questions in Sedex to check various pollution risks (soil, rivers, etc.) from supplier operations, their water usage volumes, whether they manage wastewater, and management of water quality impacts on local areas. The SAQ results showed that 2% of the manufacturing plants were not managing quality of their wastewater. The SMETA audit data showed two non-compliances, one of which has already been corrected. For the other, we are working with the supplier to solve the issue.
● Women's Rights
We are strengthening management of suppliers through Sedex data to identify risks related to women's rights. For example, we leverage questions in Sedex to check the ratio of male to female workers, the ratio of female managers, whether anti-discrimination policies are in place, and rates of absenteeism and turnover among female workers. The SAQ data showed that 5% of manufacturing sites did not have separate washing facilities for men and women, 5% of manufacturing sites had a turnover rate among female workers of more than 50% during the previous year, and 2% of manufacturing sites had an absenteeism rate among female workers of more than 30% during the previous year. The data from the SMETA audits, however, did not confirm any non-compliance in this respect.
Measuring the Effectiveness of Actions Taken
We measure the effectiveness of our assessment and remediation efforts through Sedex at our plants and in our supply chain by measuring the degree of improvement across multiple risks (health and safety, worker age, discrimination, work based on free choice, etc.) before and after the execution of remediation efforts addressing the risks we have identified through the Sedex. In the case of Sedex assessment, there are items for which it is challenging to reduce the potential risk, but even if the potential risk is high, the risk can be controlled if the management capability is high. Based on this premise, we focus on improving management capability as we undertake corrective actions at our own plants and with our suppliers.
Furthermore, as part of the series of steps noted above, we provide feedback to stakeholders on the results of our effectiveness measurement, and carry out direct engagement that leads to further actions for improvement.
While taking into consideration the risks and other factors identified through the above process, we will implement the following priority initiatives as our action plan.
● Supply Chain
With regard to 1st tier suppliers, we will continue to promote the remedy of important non-compliances that have become apparent through Sedex, and will continue to encourage suppliers to improve their management capabilities with regard to potential risks. In addition, we will move forward with impact assessments for upstream suppliers in our main raw materials supply chain.
● Migrant Workers
We will identify sites other than our own plants where migrant workers (especially technical intern trainees) are present, and consider necessary steps depending on the degree to which the significant risk of forced labor is present.
Access to Remedy
External Reporting System
Since its founding, the Suntory Group has placed customer satisfaction first and valued proactive communication with customers. In addition, based on our belief that all our stakeholders are customers, suppliers are also regarded as important customers. Therefore, when promoting human rights due diligence, we think it is important that not only our employees, but also our direct suppliers, their own suppliers, as well as other related parties (their local community, etc.) have access to a grievance mechanism, including human rights issues.
Furthermore, as stated in our supplier guidelines, we expect suppliers to establish similar grievance mechanisms (with no retaliation) within their own supply chain, thereby striving to promote access to remedy upstream in our supply chain. Currently, we have established a Customer Center as a contact point for suppliers and their related parties (communities) to use. The Customer Center accepts inquiries from all customers.
For human rights issues and other inquiries from suppliers, please contact us using the form below (English/Japanese available)
Evaluating the Impact of COVID-19 Pandemic in the Supply Chain
Suntory Group evaluates the impact of the COVID-19 pandemic on suppliers in each region to ensure safety. In 2020, we evaluated the impact using a special module on Sedex SAQ related to Covid-19 impact to confirm the current risks and measures implemented by suppliers. We received answers from approximately 800 manufacturing sites gaining more visibility on the current impact within our supply chain.
We confirm the situation of the suppliers through this SAQ and direct communication and offer masks and support implementation of measures.
Contract Farms to promote High-quality and Stable Supply
The Suntory Group procures a portion of its coffee beans, from the "Fazenda Bau" farm, which is a specialty coffee farm in Minas Gerais, Brazil, as we aim for the highest quality and sustainable supply of coffee beans. Fazenda Bau has acquired international certifications from organizations that include the Rainforest Alliance*1 and UTZ*2, and they are highly praised for their thorough quality management and workplace environment.
Fazenda Bau has been engaging in a wide range of activities to promote sustainability, turning their attention to labor practices and the labor environment, conducting efforts such as courses on the health and safety of employees, as well as courses about motivation and human relationships in the workplace, among other initiatives. Environmental conservation activities such as separating trash and comprehensive management of the water intake as well as tree planting initiatives show their awareness regarding their impact on the environment. In addition, the Fazenda Bau have been engaging in a support project at a neighboring school since 2011 with the purpose of contributing to the local community.
- *1Rainforest Alliance: International non-profit organization established with purpose of preserving the global environment through protecting the rainforests in 1987.
- *2UTZ: International certification program for sustainable agriculture. Certification is only give to those that fulfill all standards in appropriate farming practices and farm maintenance, safe and healthy labor conditions, abolition of child labor, etc.
Supporting Sustainable Agriculture of Blackcurrant Farmers
Suntory Beverage & Food Great Britain and Ireland manufactures and sells Ribena, a soft drink loved by many in Europe and other regions. 90% of the blackcurrants grown in the U.K are used by this iconic juice drink brand. SBF GB&I began supporting sustainable agriculture of blackcurrant farmers in UK from 2004. SBF GB&I employs agronomists, that directly advice farmers and design biodiversity plans according to the biological habitat of each farm and surrounding area to protect the ecosystem of rivers and wetlands. We also conduct research on new species of blackcurrant that are resilient to climate change. In July 2020, a new variety of blackcurrant that is more resilient to climate change named Ben Lawers blackcurrant was harvested. This was a result of a long-term joint research with the James Hutton Institute, a research institute for agriculture.
The Suntory Group promotes sustainability throughout the supply chain in order to bring safe and reliable products to customers now and into the future.
Activities for stable procurement of raw materials
Promotion System of activities for stable procurement of raw materials
With regard to agricultural products and other raw ingredients that are essential to our products, we cooperate with business partners across the supply chain, identify social and environmental issues, and promote sustainability initiatives that enable us to grow together, thereby enriching our communities.
It is predicted that extreme weather, such as drought and flooding, occurring due to the rise in the Earth's average temperature due to climate change will have a major impact on production activities, including causing fluctuations in production volumes and creating the need to move to other locations which offer suitable cultivation. Furthermore, in with the increasing globalization of corporate activities, demand for right responses to social issues is growing, such as consideration for the human rights of people working in the supply chain. To offer our customers high-quality products and services, at the Suntory Group we believe it is crucial to promote sustainability throughout our entire supply chain. This means we need to give due consideration to environment and society, as well as to safety and reliability.
Based on this belief, Suntory Group is promoting long-term raw material strategy optimum procurement globally and deliver sustainable procurement throughout the Group.
Overview of long-term strategy
The TCFD framework is used to formulate the strategy, and it also utilizes open scenario such as RCP2.6 (scenarios below 2℃), RCP 8.5 (4℃ scenario) from the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) scenarios, to draw up the future world and understand risks and opportunities. The documents, information, data, etc. referred to in this report are current as of the time of the review, and the analyses and calculations based on them are subject to uncertainty.
Furthermore, by focusing on our own policies such as Environmental Vision toward 2050 or The Suntory Group's Basic Policy on Supply Chain Sustainability and long-term trends specific to raw materials, we aim to create a vision of what we would like raw material procurement to be in the future world, and to find countermeasures based on the gaps between the current situation, so that we can respond to a wider range of social and environmental sustainability issues.
The strategy development is based on the following steps:
1.Selection of important raw ingredients
- Identify materials that are particularly important for our business activities.
- Conduct risk assessment of materials handled in our business.
- Based on the results of the assessments, the materials category for which long-term strategies are to be formulated are selected through consultations with related parties.
＜Risk assessment process＞
1.Extraction of important raw materials
The impact is defined as the loss of product sales that the business would suffer if there were a problem with the supply of raw materials, and raw materials with a high impact were extracted as priority raw materials, including agricultural materials such as barley and corn, the material that undergo a certain processing such as sugar, vitamin C, and oak wood.
To evaluate the possibility of problems in the supply of the extracted key raw materials – the effects of climate change on yield and suitable areas for cultivation, which are considered to have the greatest impact on future supply, were studied and evaluated from the research and statistical perspectives. One of the results is shown in Figure 2. For raw materials that undergo a certain amount of processing, the risk assessment considers the impact of climate change on the production area of the base material and the ratio of raw materials used in the process. (Example: for sugar, see the results of climate change impact assessment for sugar cane and sugar beet)
Based on the above approach, we found that the yields of agricultural raw materials such as barley and corn used in both alcoholic beverages and non-alcoholic beverages, oak and hops used in the alcoholic beverage business, coffee beans used in non-alcoholic beverages, will be significantly impacted in several production areas.
Figure 2: Yield Impact Survey Results (2022)
4℃ temperature increases scenario in 2050: Study of the effects of yield and suitable land on major raw materials and production area
Suitable land ：
Suitable land ：
*Include origin of processed material
3.Formulation of activity plan
Based on the results of the survey, we consulted with the relevant departments and selected the following raw material commodities for which we will formulate a long-term strategy based on our overall judgment in 2021.
2021: Ethanol, Coffee, Oak, Oolong Tea and Corn
2022: Barley, Sugar, High Fructose Corn Syrup (HFCS), Vitamin C and Citric Acid
2023: Lemon, Orange, Grapefruit, and Black Tea
2024: Dairy, Wheat and Rye
Coffee refers to the results of a climate change impact study on coffee beans. Similarly, sugar refers sugarcane etc. HFCS, vitamin C, and citric acid refer to the results of a climate change impact study on corn.
2.Creation of focused teams
- A team consisting of experts within the group from various departments such as research, development, procurement, and quality assurance is formed to work on the selected materials
- Analysis of market, company, and trends by team of experts
- Analysis of future world scenarios and description of the ideal state within those scenarios
- Design of activities by backcasting from the future world back to the present to set issues
- Monitoring of signs of scenario change and strategy revision based on prior assumption of change
- Revise road map of strategy building by reevaluating materials risk
The long-term strategy formulated by the team of experts is discussed with each operating company to promote its activities. The Global Sustainability Committee, which is an advisory body to the Board of Directors, also discusses the strategy on a regular basis.
Progress of Activity in 2022
Based on the aforementioned approach to strategy formulation, we have implemented the following activities 2022.
1.Expansion of climate change risk assessment
We have introduced S&P Global Climanomics to quantitatively evaluate the impact of climate change on detailed production areas. The Climanomics platform comprehensively covers recommendations in line with the TCFD framework with scientific data, and by entering corporate asset information (Spend in the case of raw materials) into the service, it will show potential financial impact associated with climate risk out to 2100. It is also enables the us to grasp information such as where the area which will contain future climate risk is.
2.Creation of new focused teams
Continuing from 2021, focused team for barley, sugar, HFCS, vitamin C, and citric acid have been formed based on the activity plan for 2022. In addition to the above, teams were formed in consideration of the importance of hops and agave (ingredients for tequila), which are used in specific product categories in the alcoholic beverage business.
We look ahead year 2050 for the raw material items for the task force was formed, while referring to publicly available scenarios from the IPCC, IEA, and other organizations, we envision changes in the future world at that time from an environmental perspective, including climate change impacts as well as from a social perspective, including financial impacts on human rights. Then, based on the trend analysis and the company’s own goals, the ideal state of raw material procurement in the future world is drawn, and the way to reach this goal is examined. We used the newly introduced Climanomics platform to conduct detailed analysis and evaluation of the impact of future climate change on business. (Figure.3)
*Currency exchanged rate 1USD=139 JPY
*Scope of company: Beam Suntory Inc.,
Suntory Beverage & Food Limited, Suntory Spirits Ltd.
*For corn, for which efforts began in 2021,
only estimates were made for alcoholic beverage use.
4.Promotion of activities derived from strategy
(1)As a concrete activity based on our strategy, we recognized the need to further improve the sustainability of agricultural raw materials and joined the Sustainable Agriculture Initiative (SAI) platform, an international organization established in 2002 to promote sustainable agriculture as Suntory Group. This is the first time for a Japanese company to participate in the platform.
(2)Start Pilot of Regenerative agriculture
We have started a pilot program of regenerative agriculture, which is expected to have a positive effect on climate change mitigation and adaptation by reducing GHG through reduced use of chemical fertilizers and pesticides, and by regenerating biodiversity in the soil, making the soil more fertile and enabling effective use of water.
Our practices began in UK for barley and agave in Mexico.
Based on activity plans for strategy creation and ongoing dialogue with operation unit, we will keep forming focused team for important raw materials, build long-term strategies, and share formulated strategies within Suntory Group. In addition, based on the formulated strategy, we will consider and proceed initiatives for regenerative agriculture, which is expected to have mitigation and adaptation effects for high climate change risk material or high GHG emissions material in future.
In Strategy Monitoring, we will periodically check for the occurrence of events such as the junctures of multiple possible scenarios and the success of technological innovations necessary to achieve the desired goals. This will enable us to capture important changes as much as possible in advance and revise the strategy to incorporate them.
We will also revise road map of strategy building by regular reevaluating materials risk.
Procurement Ratio by Supplier Region
Suntory Group are purchasing raw materials from the suppliers in the regions below. We promote the sustainability of raw materials in cooperation with our suppliers.
In addition, in order to increase transparency in the supply chain, from a basic purchasing practice perspective, we have formal contracts with all 1st tier suppliers and obtain basic information about those suppliers. Additionally, we try to obtain information on 2nd tier and beyond suppliers via the 1st tier supplier when possible, and carry out on-site visits of those 2nd tier and beyond suppliers.
Improving Cooperation with Business Partners
The Suntory Group strives to promote sustainable procurement together with all of its business partners in the supply chain. We are promoting better awareness and support so that the necessity of sustainability initiatives is understood through education for our company representatives and policy briefings and questionnaires for our ingredient suppliers, manufacturing outsources, logistic affiliates, and other primary business partners. In addition, Suntory Group participates in the Consumer Goods Forum Japan*, which promotes distribution networks of consumer goods across the industry, to reduce the environmental impact of the Suntory supply chain.
*The Consumer Goods Forum Japan is an organization primarily made up of companies in the consumer goods distribution industry that engages in cooperative manufacturing, distribution and sales efforts to address common challenges in non-competitive industries in Japan.
Promoting Green Procurement
Suntory Group has established Suntory Group Green Procurement Standard (revised 2011) based on the Suntory Group's Basic Policy on Supply Chain Sustainability and promotes procurement activities to lower environmental impact in corporation with each business partner.
Currently 80% of the plants we have transactions with have acquired International Standard ISO14001 and environmental responsiveness are improving. Also, Packaging Material Development Department is implementing a comprehensive evaluation of green procurement based on business partner evaluation standards in the Green Procurement Guideline to determine that environmental initiatives are advancing.