Basic Policy on Sustainable Procurement

In order to offer customers high-quality products and services, the Suntory Group, which includes the Company, believes it is crucial to promote sustainability throughout its entire supply chain. This means giving due consideration to the environment and society, as well as to safety and reliability.
In 2011, in order to promote sustainability, the Group established the Suntory Group's Basic Policy on Sustainable Procurement, which consists of six main pillars — legal compliance, human rights and labor standards, quality, environment, information security, and harmonious coexistence with society. The policy addresses global issues such as child labor, forced labor, freedom of association and collective bargaining, working hours, and the guarantee of minimum wages. To promote sustainability, the Group is working to raise awareness and deepen understanding among its business partners.
The Group is committed to avoiding situations in which purchasing practices negatively affect the human rights of its suppliers’ workers. To achieve this, the Group agrees in advance with its suppliers on estimated lead times, and shares payment terms in advance. The Group also implements the necessary mechanisms and procedures to ensure that payments are executed on the timeframe agreed with the supplier.
Furthermore, when the Company recognizes that there may be high human rights risk related to an ingredient it wishes to procure, it reviews the related purchasing practices and strives to reduce the risk.

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.

Partner Guidelines

The Suntory Group, which includes Suntory Beverage & Food, has established the Suntory Group Partner Guidelines based on the Basic Policy on Sustainable Procurement to contribute to the realization of a sustainable society while also accelerating sustainable procurement within the Group. These guidelines put in place specific compliance items required in each field from human rights and legal compliance to the environment for business partners of Suntory in Japan and overseas to confirm the same ethical values are shared between the Suntory Group and its business partners. Compliance with our human rights commitments is a prerequisite for engaging in a business relationship with business partners, and we require signing our Code of Conduct/Partner Guidelines to both new and current business partners. If a serious law-breaking human rights violation is discovered and it is recognized that the Partner has no intention of improving even after communication, it may lead to the termination of the contract. In order to comply with our Partner Guidelines, we are promoting joint efforts with our partners, such as sharing those guidelines at guidance meetings or sharing related information through Sedex.
In addition, in terms of human rights commitments, we request our partners to cascade down those commitments to their own suppliers.

Suntory Group Partner Guidelines PDF

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, which includes the Company, has established the Suntory Group Green Procurement Standard (revised 2011) based on the Suntory Group’s Basic Policy on Supply Chain Sustainability and seeks to reduce the environmental impact of procurement activities in cooperation with each business partner.

Implementation Structure for Sustainable Procurement

The Sustainability Committee, an advisory body for the Board of Directors, creates sustainability management strategies, drives related initiatives, and confirms progress on seven themes — water, greenhouse gases, containers and packaging, raw ingredients, health, human rights, and enriching life.

For more information on the Sustainability Committee, see Environmental Management

Implementing Human Rights Due Diligence Across the Supply Chain

The Suntory Group has established the Basic Policy on Sustainable Procurement, and in collaboration with business partners, promotes initiatives to respect human rights throughout the supply chain. In 2019, the Suntory Group joined Sedex, the world's largest ethical information sharing platform for suppliers. The Group requests its suppliers to join Sedex and share information, including SAQ* answers, in order to identify any potential issues.

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  Self-Assessment Questionnaire

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, 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, Suntory Beverage & Food believes it is crucial to promote sustainability throughout its entire supply chain. This means giving due consideration to the environment and society, as well as to safety and reliability. Based on this belief, we are pursuing a long-term global strategy for optimum procurement of raw materials and striving to practice sustainable procurement.

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°C), RCP 8.5 (4°C 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.

Activity Overview

The strategy development is based on the following steps:

1. Selection of important raw ingredients

• Identify materials that are particularly important to the business activities of the Suntory Group, which includes the Company.
• Conduct risk assessment of materials handled in the Group’s 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 material, including agricultural materials such as coffee beans, the material that undergo processing such as sugar, and vitamin C.
• (2)
  Risk Assessment
  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 materials such as corn, and coffee beans will be Significantly impacted in several production areas. On the other hand, for green tea leaves procured in Japan, it was found that the suitable growing area will increase.

Figure 2: Yield Impact Survey Results (2024)

4°C temperature increases scenario in 2050: Study of the effects of yield and suitable land on major raw materials and production area

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  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 ingredient commodities (see figure below), for which we are promoting activities.

• 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

3. Building strategy

• 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

4. Strategy monitoring

• Monitoring of signs of scenario change and strategy revision based on prior assumption of change
• Analysis of future world scenarios and description of the ideal state within those scenarios
• Revising road map of strategy building by reevaluating ingredients risk

Strategy Execution

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.

Activities in 2024

1. Strategic Implementation Based on the Roadmap Formulated in 2022

The focused task force set its time axis to 2050 with respect to the relevant raw ingredient categories, and considered publicly available scenarios from the IPCC, IEA, and other organizations. It then considered possible business impacts as of 2050 from an environmental perspective, including the impact of climate change, as well as from a social perspective, including human rights.
As part of the task force discussions, the business impact of future climate change is being assessed using S&P Global’s Climanomics platform.*
By the end of 2024, we completed the long-term strategic planning for raw material categories as outlined in our roadmap. Strategy-driven actions include participating in joint research on regenerative agriculture and disease control.
For core raw ingredients, the total business impact of the 4℃ scenario as of 2050 is projected to be 5.4 billion yen (Figure. 3). Prices of coffee, oolong tea, and corn are projected to rise due to falling output, raising procurement costs. At the same time, sugarcane and sugar beet prices are projected to decrease on higher output, resulting in a positive business impact.

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  Climanomics covers recommended disclosure items in accordance with the TCFD framework, based on comprehensive scientific data. By entering company information (for raw ingredients, purchase amounts) into the service, one can determine at a glance which company assets and crop-growing areas are likely to be impacted by climate change at any time up to 2100, and which areas are potentially at risk.

(Figure.3) Scenario Impact on business 4°C Scenario in 2050:

Total impact: 5.4 Billion

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  Currency exchange rate 1USD=146 JPY

2. Example of Activities Derived from Specific Strategies

Addressing human rights issues such as forced labor and child labor, as well as environmental issues including reducing greenhouse gas (GHG) emissions from agriculture, restoring soil biodiversity, and effectively using water, is becoming increasingly important upstream in the supply chain.
Suntory Group, which includes the Company, is engaged in a range of initiatives within our supply chain, in collaboration with production areas, to realize sustainable agriculture.

1. Participation in Sustainable Agriculture Initiatives

We are further promoting sustainable raw ingredient procurement by undertaking such initiatives as building networks, and engaging in collaboration, with companies and private organizations that are leaders in sustainable agriculture.

• (1)

  Sustainable Agriculture Initiative (SAI) Platform
  Recognizing the need for enhanced sustainability of agricultural raw ingredients cultivation, Suntory Group became the first Japanese company to join the Sustainable Agriculture Initiative Platform, an international organization launched in 2002.

  For more information, see “Suntory Group Joins the Sustainable Agriculture Initiative (SAI) Platform”

• (2)

  VIVE
  We are a member of VIVE, an international organization supporting sustainable procurement of agricultural products, mainly sugarcane, based on our sugar strategy. We were the first Japanese company to join this organization.

  For more information, see “Suntory Group Joins International Organization VIVE to contribute to sustainable sugarcane procurement”

2. Sustainable Sugar Procurement Initiatives

We are implementing the following 8 initiatives for sustainable agriculture in our supply chain.

Next Step

Based on the formulated strategy, we will consider and promote initiatives for regenerative agriculture, which is expected to have mitigation and adaptation effects for high climate change risk ingredients or high GHG emission risk ingredients in the 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.

Collaboration with Partners

Suntory Group, including the Company, is promoting pioneering initiatives in collaboration with diverse partners to reduce GHG emissions and address environmental and social challenges, such as human rights, throughout the value chain.

Collaboration with Green Tea Production Area

In order to promote sustainable procurement of the tea leaves used for green tea beverages, the Suntory Group, which includes the Company, has launched a long-term initiative in collaboration with tea production areas. Collaborating with the Kuma Regional Agricultural Cooperative (JA Kuma), the Group has succeeded in reducing GHG emissions by more than 30%*compared to the general production method by introducing an environmentally friendly process in the tea leaf production process at JA Kuma. We will continue to pursue high-quality tea production and contribute to the continuation of tea production in the region and the training of successors in tea farming.

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  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

Guatemala

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 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.

Brazil

In order to expand its human rights diligence efforts upstream in the supply chain, the Suntory Group, which includes Suntory Beverage & Food, is planning to formalize a partnership with Itochu and its 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. Going forward, the Group will monitor and improve the working conditions of the targeted farms during the initial three years of this pilot.

For more information, please visit the Sucafina website.

Engagement with Local Coffee Farm to Improve Community Resilience

The Suntory Group, which includes the Company, procures a portion of its coffee beans from the Fazenda Bau farm, which is a specialty coffee farm in Minas Gerais, Brazil, seeking 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.

Joint research for controlling orange diseases

Suntory Group, including the Company, is participating in a joint research by France’s CIRAD on controlling orange diseases, with a focus on citrus greening disease, considered to be one factor in declining orange yields.
Citrus greening is a bacterial disease that infects citrus fruits such as oranges. It causes a deterioration in fruit quality, including shape and taste. Orange harvests have been steadily declining in recent years, with citrus greening disease said to be one of the reasons. This joint research is taking place over a six-year period from 2024 and involves developing and cultivating orange varieties with improved resistance to citrus greening disease. Verification of adaptability will be done sequentially in Spain, Brazil, and other countries.

Supplier Engagement and Educational Activities

As a member of the Suntory Group, Suntory Beverage & Food 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

The Safety Promotion Committee, launched in collaboration with our logistics partners, promotes initiatives to ensure safety, environmental friendliness, and risk management. A safety promotion convention is held each year for those across Japan involved in transportation and delivery. The convention provides thorough safety education via study sessions and contests along with information sharing through outstanding case studies. Awards are presented to outstanding drivers and operation bases to raise awareness of the safety management system.
We are also working to strengthen our transportation and delivery safety management system by promoting the acquisition of G Mark Certification, which certifies business locations that have achieved safety excellence and reliability. This certification system is operated by Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT).

Industry Collaboration Initiatives

In addition, the Suntory Group, which includes the Company, 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.

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  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 its dealings with suppliers, the Suntory Group, which includes the Company, provides each company with an opportunity for equitable competition in keeping with its Purchasing Control Regulations and Business Partner Selection Standards, based on the Suntory Group’s Basic Policy on Supply Chain Sustainability. Additionally, when the Group selects new suppliers or determines whether to continue business with its existing business partners, it fairly evaluates the quality and supply capabilities of the products and services, financial status, assured safety, environmental conservation, and social contribution of each company.
The Group and its suppliers strive to be dependable partners for one another, working together to provide products and services that delight customers.

Suntory Group Standards for Business Conduct