Mitsui Chemicals

Dialog : Supply Chain Management

In its 2025 Long-term Business Plan, the Mitsui Chemicals Group adopted “pursue thorough safety, high quality and fairness across the entire supply chain” as one of its environmental and social targets.
In recent years, in addition to the Paris Agreement and the United Nations’ Sustainable Development Goals (SDGs), there have been demands for initiatives that take supply chains into consideration, such as from the Organizing Committee of the 2020 Tokyo Olympic and Paralympic Games for procurement designed to make them a sustainable event.
On July 25, 2017, we therefore held a dialog with an outside expert concerning supply chain management that the Group should address in aiming to expand management on a global basis. For this dialog, after Mr. Hidemi Tomita had given a lecture, we conducted an exchange of opinions between Mr. Tomita and our management team.

Expert’s Resumé
Hidemi Tomita

Mr. Tomita graduated from the Department of Physics and Engineering, Faculty of Engineering at the University of Tokyo, and completed his master’s degree at the School of Engineering and Applied Science, Princeton University
Following the launch of Sony Corporation’s CSR Department, he served as general manager for about 10 years.
Currently, he is director and general manager of Business Development Division, Lloyd’s Register Japan K.K.
As chairperson of a subgroup of the ISO 26000 formulation working group, a GRI Technical Advisory Committee member and Japan’s representative expert on the formulation of ISO 20400 “sustainable procurement,” Mr. Tomita participates in the building of CSR-related international frameworks
A member of Tokyo 2020 Sustainable Procurement Working Group of the Olympic and Paralympic Organizing Committee, he also serves as a member of the Cabinet Office’s Investigation Research Planning Committee on accelerating the promotion of work-life balance etc., utilizing procurement by private companies.


Outside expert

Mr. Hidemi Tomita
Director, General Manager of Business Development Division, Lloyd’s Register Japan K.K.


Mr. Yoshihiko Yamabuki

Mitsui Chemicals Attendees

Tsutomu Tannowa
Representative Director, Member of the Board, President & CEO
Masaharu Kubo
Representative Director, Member of the Board, Executive Vice President, CFO,
Responsibilities: CSR Committee, Risk Compliance Committee
Shigeru Isayama
Representative Director, Member of the Board, Senior Managing Executive Officer, CTO
Hideki Matsuo
Member of the Board, Senior Managing Executive Officer, Center Executive, Production & Technology Center
Takayoshi Shimogori
Member of the Board, Managing Executive Officer, Business Sector President, Food & Packaging and Mobility business sectors
Yasuji Omura
Executive Vice President, Business Sector President, Materials Business Sector
Shinji Ogawa
Managing Executive Officer, Responsibilities: Responsible Care Committee
Shin Fukuda
Managing Executive Officer, Center Executive, R&D Center
Osamu Hashimoto
Managing Executive Officer, Business Sector President, Health Care Business Sector and General Manager, New Health Care Business Development Division
Yoshinori Andou
Executive Officer, General Manager, Human Resources Division
Akio Hirahara
Executive Officer, General Manager, Corporate Planning Division
Akihiko Matsunaga
Senior Director, General Manager, Corporate Administration & Legal Division
Haruko Kokue
Senior Director, General Manager, Corporate Communications Division
Atsushi Deguchi
General Manager, Safety & Environment Technology Division, Production & Technology Center
Kenta Tsubohara
General Manager, Planning & Coordination Division, Production & Technology Center
Yoshinobu Kanemura
General Manager, R/C and Quality Assurance Division
Ikunori Sakai
General Manager, Purchasing Division
Shigeo Suzuki
Member, Affiliates Coordination Division (deputizing for Division General Manager Toshihiro Komoto)
Akio Ayukawa
Corporate Auditor
Yasushi Nawa
Corporate Auditor
(20 attendees)

Lecture Overview

In recent years, there have been many cases in which companies have been identified as having problems with regard to human rights, occupational safety and consideration for the environment, not only in their own company, but also for their entire supply chains, such as contractors. It is deemed natural for a company to properly carry out its own CSR, as the fulfillment of social responsibility, including the supply chain, is nowadays the global viewpoint. The United Nations Guiding Principles on Business and Human Rights, ISO 26000, ISO 20400, ESG investment and others also encourage corporate supply chain management and, including the UK’s Modern Slavery Act, the strengthening of laws and regulations is advancing in various countries, such as the conflict mineral rules of the U.S. Dodd-Frank Act and the adoption of draft rules on conflict mineral resources at the European Parliament. Moreover, demands for consideration to be given to CSR with regard to procurement for the Tokyo Olympic Games and Paralympic Games have begun in Japan.

For this reason, it can be said that the negative impacts caused by supply chains, such as human rights abuses, labor problems, environmental destruction and unfair trade, are currently spreading to business risks, such as trading suspension, damage to brand image, litigation and negative corporate rating evaluations. Moreover, in compliance with laws and regulations, it is necessary to increase sensitivity to the laws of the countries in which transactions are conducted. Even in the case of the Mitsui Chemicals Group, the demands from client companies and institutional investors for supply chain management are sure to increase. Due diligence, such as conducting risk assessments after having analyzed the supply chain, clarified problems such as its specific characteristics, environment and human rights, is needed to respond to these demands. It is also important to disclose information on the aspects covered by due diligence in an appropriate manner and to gain the understanding of stakeholders.
Companies are required to reliably operate a system of this kind for the management of the entire supply chain.

Exchanges of Opinions

Europe is leading the way in ESG investment and CSR procurement. Faced with the importance that institutional investors place on corporate supply chain management, what kind of responses are European companies providing?
Information disclosure is very important in institutional investors’ ESG evaluations, and if information is not disclosed, an evaluation will not be conducted. Mandatory disclosure is beginning to be imposed on European companies under the EU directive on disclosure of non-financial information, but Japanese companies are not obligated by statutory disclosure and it is currently the case that the gap will easily become wider.
Particularly in the disclosure of information relating to supply chains, a series of details, which include the structure of the supply chain, the ascertaining of high-risk suppliers, risk monitoring methods, extracted problems and remedial measures, are being requested. Recently, disclosing highly transparent information, such as disclosing lists of suppliers, has started to become a global trend.
How should we best consider the necessity of ensuring confidentiality in the disclosure of supply chain information?
In the European and U.S. models, customers and third parties conduct audits of suppliers, so keeping information confidential presents a difficult task. There is a need for security through individual negotiations, such as by the signing of a contract. However, unlike Western companies that frequently change their suppliers, Japanese companies are characterized by a close relationship with their suppliers. That is also a strong point of Japanese companies. I think that it is one way for Japanese companies to devise their own method of engagement rather than using the Western-type audit system.

Faced with ESG risks, compliance capabilities and their policies that vary depending on the country, how best can we unify global standards for when a company addresses supply chain management?
What is noteworthy now is management not on a by country basis but by each company. The borders of what we call countries are becoming blurred, and global companies need to manage not only national legislation but supply chains as well.
Environment and human rights NGOs also recognize that it is better to focus on companies rather than countries in order to change the world. As a company that wants to protect the value of its brand will begin to work on supply chain management around the world once it receives a suggestion, the ripple effect is overwhelmingly large regardless of the regions in which that company operates. This is not limited to NGOs but also in the field of investment, and the concept of borders is diluted in the sense of evaluating global risks. I believe that more appropriate responses will be possible if this way of thinking is adopted.
There are many codes of conduct and procurement standards, but which ones should we remain in line with and up to what level?
Rather than covering the code of conduct and procurement criteria, it is important to first make a risk assessment and to deal with the high-priority issues. With regard to labor practices, the level indicated by the International Labor Organization (ILO) has become the benchmark. Also, for example, the Electric Industry Citizenship Coalition (EICC) auditing standards used in the electronics industry are very clear. As a level of indication, classification is divided from a major level, where urgent remediation is required, to a minor level, which is permissible even though it can take a little time to respond. I think that it is good to refer to such things as you go.
How should we address ISO 20400?
ISO 20400 is a guideline on “sustainable procurement,” and I think that its use is meaningful from the viewpoint of checking a variety of supply chain management issues. In the case of the Mitsui Chemicals Group, I think that there are business fields in which the supply chains are significantly different among new businesses as compared with existing materials-related businesses. When developing new business, would it not be better to use ISO 20400 as a method for identifying risks, such as the environment and human rights?

There are many procurement platforms for supply chain management, but how should they best be dealt with?
There is an obligation to respond to CSR procurement questionnaires as well as requests for replies to procurement platforms from client companies. However, there are quite a few cases where answers cannot be properly given or are left unattended by sales persons who receive the request from the customer and have a low understanding of ESG evaluation. This carries the risk of a trading suspension or a more severe request for corrective action. It is also important to promote internal understanding and to build a system that centrally collates information and ensures consistency.
On the other hand, I think that there are various specific characteristics in each industry with regard to your Group’s supply chain management. I think that you should devise your own schemes, including an examination of platform utilization.
Are there any points we should be careful about when addressing the visualization of the contribution to the environment and society throughout the supply chain?
I think the visualization of contributions made by Blue Value™ and Rose Value™ products is a very interesting initiative. The life cycle assessment of the certification process involves supply chains. For example, would it not be a better effort if you could go as far as proposals in which you state your ability to contribute more to the environment by changing such a supply chain?
However, despite extolling their contribution to the environment and society, if a serious problem was to be found in the supply chain, you run the risk that this would end up harming the reputation of the contributing products themselves. I think that the likelihood of such risks is relatively low in Mitsui Chemicals Group businesses, but I think it is better to carry out due diligence.

After Completing the Dialog

The scope of corporate responsibility covers not only our company but also extends along the entire supply chain. For example, if there is a lack of awareness about other countries’ laws, such as the UK’s Modern Slavery Act that was raised in the lecture, and the response is delayed, it could bring harm to our corporate value. We need to recognize again that a problem occurring in the supply chain presents a risk to the entire enterprise and calls for a response.
However, such supply chain management cannot be achieved by only one department. We believe that each department, with a focus on the Corporate Communications Department, should maintain a high awareness and that management is an issue to be addressed across the organization.
The Group wishes to proceed with a practical approach to “pursue thorough safety, high quality and fairness across the entire supply chain,” as established in its 2025 Long-term Business Plan.

Representative Director, President & CEO
Tsutomu Tannowa