Policies and Our Approach
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 Procurement 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 Sustainable Procurement (Established 2011)
In order to provide high-quality products and services safely and reliably based on our corporate philosophy 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 International Labour Organization (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.
Establishing Supplier Guidelines
We established the Suntory Group Supplier Guidelines based on the Basic Policy on the Sustainable Procurement 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.
Promoting Green Procurement
Green procurement is selecting items and services that consider the environment, such as by not including hazardous substances or efficient use of resources, when selecting ingredients, materials and equipment to purchase.
The 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.
Suntory Group Green Procurement Standard (revised 2011)
Suntory Group strives to purchase ingredients, materials and services that have the lowest environmental impact as possible for items and services used in the Group to build a sustainable society.
a)Consider not to use environmentally polluting substances, etc.
b)Consider resource- and energy-saving through use of renewable resources, miniaturization, etc.
c)Consider resources collection that does not damage the ecosystem
d)Long-term use is possible through repair, parts replacement, etc.
e)Whether if it is reusable
f)Whether if it is design to be recyclable
g)Whether if it is easy to dispose or treat
h)Whether if it is environmental information about the item is disclosed
i)Consider the items is manufactured or sold by business operator that actively engages in environmental preservation such as acquiring ISO14001
Global Sustainability Committee
To promote sustainability management, the Global Sustainability Committee (GSC) acts as an advisory committee to the Board of Directors. The Group’s sustainability strategies and the progress on priority themes (water, climate change, containers and packaging, raw ingredients, health, human rights and enriching life) are discussed in the GSC under the lead of the Chief Sustainability Officer.
Supply Chain-related Human Rights Due Diligence
The Suntory Group has established a Basic Policy on Sustainable Procurement, and in collaboration with our business partners, promotes initiatives to respect human rights throughout the supply chain.
In 2019, we joined Sedex, the world's largest ethical information sharing platform for suppliers. We request that our suppliers join Sedex and share information, including SAQ* participation, to enable us to identify issues, if any.
Activities for Stable Procurement of Raw Ingredients
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, 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, the Suntory Group is formulating long-term strategy and promoting activities for optimum and sustainable procurement throughout the Group.
Overview of Long-term Strategy
The TCFD framework is used to formulate the strategy and we also referred to open scenarios from RCP2.6 (scenarios below 2℃), RCP 8.5 (4℃ scenario) from the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) for identifying risks and opportunities. The documents, information, and data referred to in this exercise are current as of the time of the review, and the analyses and calculations based on them are subject to uncertainty.
By focusing on our policies such as Environmental Vision toward 2050 and The Suntory Group's Basic Policy on Supply Chain Sustainability in addition to long-term trends specific to raw ingredients, we aim to create a vision of what we would like raw ingredient procurement to be in the future, find countermeasures based on the gaps between the current situation and be ready to 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 ingredients that are particularly important for our business activities.
- Conduct risk assessment of ingredients handled in our business.
- Based on the results of the assessments, the ingredients 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 ingredients
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 ingredients, and raw ingredients with a high impact were extracted as priority raw ingredients, including agricultural products such as barley and corn, the ingredient 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 ingredients – 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 ingredients that undergo a certain amount of processing, the risk assessment considers the impact of climate change on the production area of the base ingredient and the ratio of raw ingredients 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 ingredients 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: the results of a climate change impact study
4℃ temperature increases scenario in 2050: Study of the effects of yield and suitable land on major raw ingredients and production area
Suitable land ：
Suitable land ：
*Include origin of processed ingredient
3)Formulation of activity plan
Based on the results of the survey, we consulted with the relevant departments and selected the following raw ingredient 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
Note) 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 taskforce consisting of experts within the group from various departments such as research, development, procurement, and quality assurance is formed to work on the selected ingredients
- 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
- Revising road map of strategy building by reevaluating ingredients 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 In 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 (Purchase amount in the case of raw ingredients) into the service, it will show potential financial impact associated with climate risk out to 2100. It is also enables 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 taskforces for barley, sugar, HFCS, vitamin C, and citric acid have been formed based on the activity plan for 2022. In addition to the above, taskforces 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 ingredient 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 ingredient 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)Sustainable Agriculture Initiatives
As a concrete activity based on our strategy, we recognized the need to further improve the sustainability of agricultural raw ingredients and joined the Sustainable Agriculture Initiative (SAI) platform, an international organization established in 2002 to promote sustainable agriculture as the 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 development and ongoing dialogue with operation unit, we will keep forming focused taskforce for important raw ingredients, build long-term strategies, and share formulated strategies within the 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 ingredients or high GHG emissions ingredients 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 ingredients risk.
Sustainability Sourced Raw Ingredients
Reduce Barley Production Emissions through Regenerative Agriculture
The Suntory Group has launched a new initiative to reduce greenhouse gas (GHG) emissions by procuring UK-grown barley produced using regenerative agriculture practices. In collaboration with UK based Malt supplier Muntons Plc (Muntons), sustainable agriculture and supply chain consultancy Future Food Solutions Ltd, and local barley farmers in the East Anglia region, the project will start production from 2023 with the ambition to produce barley with 50% lower GHG emissions within five years. Regenerative agriculture is a sustainable farming method that reduces the application of chemical fertilizers and pesticides through the use of cover crops and no-till farming. It not only lowers GHG emissions but also increases soil biodiversity, thus improving soil fertility and water retention, leading to sustainable use of agricultural land.
Challenging Climate Change with a New Cultivation Technique for Wine Grapes
Suntory Tomi no Oka Winery has introduced a new cultivation technique called "Secondary Induced Shoot Cultivation" for wine grapes in collaboration with the local University of Yamanashi. The large difference in temperature between the cold and hot months, with the minimum temperature dropping from around mid-July, increases the sugar content of the grapes and promotes ripening, but in recent years, due to the warming of the climate, the grapes are now facing the challenge of not progressing to maturity. However, due to the warming of the climate in recent years, the grapes are now facing the problem of slow ripening. In Secondary Induced Shoot Cultivation, the tips of shoots that sprout in April are purposely cut off and the side shoots that sprout afterwards are nurtured, delaying the start of grape ripening from mid-July to early September, when temperatures begin to drop, and thus shifting the ripening period so that grapes can be harvested around mid-November.
In addition, Tomi no Oka Winery is creating rich soil suitable for biodiversity with cover crops in the vineyards.
Tomi no Oka Winery is also involved in "4-Permil Initiative," which pruned branches are carbonized and mixed with soil to store CO2.
Initiatives in Collaboration with Green Tea Production Area
In order to promote sustainable procurement of tea leaves used for green tea beverages, the Suntory Group has launched a long-term initiative in collaboration with tea production area. Collaborating with Kuma Regional Agricultural Cooperative (JA Kuma), we have succeeded in reducing GHG emissions by more than 30%*compared to the general method by introducing an environmentally friendly process in the tea leaf production process at JA Kuma. In addition to pursuing high-quality tea production, we hope to contribute to the continuation of tea production in the region and the training of successors in tea farming.
*Emissions per unit production weight in the production of green tea raw ingredients in the process from leaves to Aracha tea
Supporting Sustainable Agriculture of Blackcurrant Farmers
Suntory Beverage & Food Great Britain and Ireland (SBF GB&I) manufactures and sells Ribena, a soft drink loved by many in Europe and other regions. 90% of the blackcurrants grown in the UK 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.
Promoting Sustainable Procurement in Upstream Supply Chain for Coffee
The Suntory Group is supporting Guatemala coffee export company Unex on promoting their program “farmer aid,” aimed at helping coffee farmers to tackle different environmental and social challenges and strengthen the sustainability of the coffee beans they produce. The famer aid program is based on 4 pillars: health, education, sustainability, climate change. In 2022, The Suntory group financially supported this program in 2 ways:
(1) Child care center in Alotenango
This child care center is open during school holidays (from October to January) and is used as a free education and recreation place for coffee farmer’s children, and also serves the purpose of minimizing the risk of child labor by taking care of the children during harvesting season. The center also provides medical services to both children and their parents.
(2) Coffee Farmer Training in Santa Barbara
We are supporting the current sustainable practices of the farm via training providing which benefits small producers to strengthen their coffee production and improve their families livelihood. We also empower women through farming practice trainings in order to contribute to a better livelihood for them and their families. Through the farmer aid sponsorship, we are being able to create positive impact on approximately 300 families, including children, in Guatemala.
In order to expand our human rights diligence efforts to upper tiers of our supply chain, we are planning to formalize a partnership with Itochu and their local partner in Brazil Sucafina to start a pilot program to assess and support coffee farmers in the Cerrado region of Brazil.
The pilot leverages Sucafina’s responsible sourcing program “IMPACT,” and its founded on 5 main pillars: carbon emissions, deforestation, human rights, living income, and regenerative agriculture. IMPACT standard verification ensures compliance with 80 social, environmental, and economic standards modelled on the Global Coffee Platform’s Sustainability Reference Code, with independent audits done every 3 years. Regarding human rights, IMPACT has key indicators such as health and wellbeing, forced labor, child labor, freedom of association, grievance, working hours, discrimination and land rights. From now on we will monitor and improve the working conditions of the targeted farms during the initial 3 years of this pilot.
Engagement with Local Coffee Farm to Improve Community Resilience
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 sustainable certifications, and their thorough quality management and workplace environment are highly praised.
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.
Supplier Engagement and Educational Activities
The Suntory Group strives to promote sustainable procurement together with all of its business partners in the supply chain.
In addition to providing education to our employees, we hold annual policy briefings for our major business partners, such as raw material suppliers, contract manufacturers, and logistics partners. We are promoting better awareness and support for sustainability initiatives within each company or in cooperation with the Suntory Group by introducing Suntory Group initiatives and providing questionnaires.
Collaboration with Logistics Partners
As of the end of 2022, the Safety Committee launched in collaboration with our logistics partners had 325 members from 76 companies promoting initiatives to ensure safety, environmental friendliness, and risk management. The committee holds an annual Safety Promotion conference for managers of 150 sites nationwide, including distribution centers, warehouses of logistics partners, and transportation and delivery operations. At this convention, we conduct thorough safety education through study sessions and contests, share information by introducing outstanding case studies, and present awards to outstanding drivers and logistics bases to encourage and strengthen safety initiatives of each company. To underpin safety management levels at our logistics subcontractors and improve them continuously, we promote Top Safety Site certification, an initiative of the Ministry of Land, Infrastructure, Transport and Tourism. As of the end of 2022, 635 of the Suntory Group’s 1047 logistics partners had already acquired certification, and 98 were scheduled to acquire certification in 2023, bringing the total certification rate to 70%. In 2008, the scope of certification was expanded from direct subcontractors to secondary subcontractors, to further strengthen safety management systems for transportation and delivery.
Industry Collaboration Initiatives
In addition, the 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.
Rigorously Engaging in Fair and Equitable Business Practices with Suppliers
In our dealings with suppliers, we provide each company with an opportunity for equitable competition in keeping with our Purchasing Control Regulations and our Business Partner Selection Standards, based on the Suntory Group’s Basic Policy on Supply Chain Sustainability. At the same time, we fairly evaluate efforts regarding the quality and supply capabilities of the products and services, financial status, assured safety, environmental conservation, and social contribution of each company, when we select new suppliers or determine whether to continue business with our existing business partners.
By joining forces with our business partners as mutually reliable partners, we aim to provide products and services that delight our customers.