In line with its Purchasing Policy, the TOTO Group cooperates with suppliers in procuring raw materials and parts in a sustainable manner. In recent years, overseas suppliers have accounted for nearly 30% of our procurement expenses.
TOTO Group Purchasing Policy
The TOTO Group fulfills its corporate responsibility in all aspects of business management, the environment and society, and carries out balanced activities with the aim of achieving sustainable development of businesses, society and the Earth. Through fair and equitable purchasing and in cooperation with suppliers, the TOTO Group continues to offer valuable products and services for customers.
The TOTO Group aims at being an existence that contribute widely and continuously to society and the environment under its Corporate Philosophy. For this purpose, we endeavor to create value for stakeholders, while trying to integrate company management and CSR and leveraging its strength. Risks we face are becoming more and more complex in keeping pace with the globalization of supply chains. The TOTO Group considers that execution of CSR not only by the Company but also by the whole supply chain at a high level is necessary in order to take ethical actions, which are effective for society and the environment. Therefore, we are committed to engaging in CSR activities with our suppliers.
We continuously endeavor to improve the level of activities by focusing on explanation of our policy to suppliers, questionnaire surveys, and on-site audits and taking international guidelines on human rights, labor, and the environment into consideration. Especially for critical suppliers and suppliers with high sustainability risk, we increase the chance of visiting and monitoring suppliers, provide education and support to help them understand the necessity of CSR initiatives, and endeavor to improve the level of initiatives in CSR procurement across the whole supply chain.
Categorization of Critical Suppliers The TOTO Group categorizes suppliers into critical suppliers, considering the volume of business and importance or irreplaceability of the parts or raw materials they supply.
Categorization of Suppliers with High Sustainability Risk The TOTO Group categorizes suppliers into suppliers with high sustainability risk, considering the degree of impact of the natural raw materials they supply on the environment and biodiversity or human rights and labor.
Structural rate of procurement expenses
Working With Suppliers
Supplier Code of Conduct
The TOTO Group believes that not only the TOTO Group but also the entire supply chain must practice CSR management at a high level in order to act ethically and effectively for society and the environment. Together with our suppliers, we have put together a "Supplier Code of Conduct" that outlines the basic ideas for working to realize a sustainable society. This code is based on the "10 Principles of the United Nations Global Compact" and has been prepared by adding "Correspondence to Business Continuity Plan (BCP)" as a unique requirement of TOTO. In addition, regarding compliance with this "Supplier Code of Conduct," we ask all suppliers, as well as direct transaction suppliers, to do the same.
Based on the TOTO Group Global Environment Policy, the TOTO Group promotes the reduction of environmental loads in all processes of its corporate activities in order to reduce the environmental loads at all our companies. In our procurement activities we will continue to contribute to the achievement of a sustainable society in cooperation with our suppliers by protecting the global environment and biodiversity and reducing the environmental loads in the entire supply chain. In putting it into practice, we have established the Green Procurement Guidelines with the concept of the initiative and the content we would like to ask our suppliers.
In selecting suppliers, through fair and impartial purchasing activities, in addition to quality, cost, and delivery time, we check the status of CSR initiatives such as human rights, labor, anti-corruption, health and safety, and environmental considerations. In addition, the achievement of standards for compliance items set by the TOTO Group is a condition for starting transactions.
Responding to Disasters and Other Risks
To strengthen response to natural disasters in recent years, the presence of effects must be assessed immediately when a risk occurs and a system in which response measures can be implemented must be formulated with the cooperation of suppliers.
Assess parts items and manufacturing sites
Set up an office to manage information flows when the supplier chain is broken
Quickly check the damage situation when a natural disaster occurs using external services
Supplier's CSR efforts evaluation during ongoing transactions
The TOTO Group grasps and evaluates the status of CSR activities of suppliers who are in continuous business. Starting in 2019, we will standardize operations globally and check all suppliers that supply raw materials and parts used in products with one cycle of three years and confirm compliance items set by the TOTO Group. Suppliers who have not achieved the compliance items will formulate and implement corrective action plans. We support the activity until the improvement is completed. FY 2020, all suppliers achieved the standard.
FY2020 Target : Achievement rate of compliance with the TOTO standards 100%
Assessment items for suppliers
1. Human rights/labor
(1) Prohibition of forced labor
(2) Prohibition of inhumane labor
(3) Prohibition of child labor
(4) Prohibition of discrimination
(5) Appropriate wages
(6) Working hours
(7) Right to organize employees
2. Safety/ Health
(1) Workplace safety and hygiene
(2) Occupational accidents and occupational diseases
(3) Emergency response
(4) Consideration for work that requires physical Load
(5) Safety measures for mechanical devices
(6) Health and safety of facilities
(7) Communication of health and safety related matters
(8) Employee health management
(1) Environmental management system
(2) Environmental permit and report
(3) Pollution prevention and resource saving
(4) Hazardous substances
(5) Solid waste
(6) Emission into the atmosphere
(7) Resource limitation
(8) Water management
(9) Energy consumption and greenhouse gas emission environment
4. Fairness / Ethics
(1) Business integrity
(2) Disclosure of information
(3) Respect for intellectual property
(4) Ensuring anonymity and eliminating retaliation
(5) Responsible mineral procurement
5. Quality / Safety
(1) Ensuring product safety
(2) Quality management system
6. Response to business continuity plan (BCP)
7. Information security
(1) Information technology security
(2) Prevention of leakage of personal information
8. Social contributions
(1) Contribution to society/region
9. Management system
Result of questionnaire survey
Number of suppliers who have participated in the assessment survey
Achievement rate of compliance with the TOTO standards*
* Achievement rate of compliance with the TOTO standards：Rate of suppliers who have cleared standards for compliance items determined by the TOTO Group among all suppliers (includes completion of corrective actions).
Communication with Suppliers
To encourage two-way communication with suppliers and deepen trust, we hold policy briefing sessions.In 2020, due to the influence of the coronavirus, it was held in a new format, such as holding online and distributing materials. In addition to communicating TOTO's purchasing policy to suppliers, he explained the sharing of production information, the importance of CSR, and requests for cooperation with BCP. We also commended suppliers who contributed to cost reduction, on-time delivery, and quality improvement that year.
Results of Policy Briefings for fiscal 2020
Monitoring of Local Suppliers
Our overseas group companies are engaged in local procurement activities, such as purchasing raw materials and parts from local suppliers. For important suppliers, we visit them directly to let them understand the importance of CSR activities, and also check the progress of their activities to improve their efforts. ＜Case (TOTO (Guangzhou) Co., Ltd.)＞ In 2020, TOTO (Guangzhou) Co., Ltd. visited 5 important suppliers. We have confirmed that we have achieved the standards set by TOTO centering on human rights, safety and health, the environment, fair trade and ethics, and quality. We will continue to make efforts and promote "CSR procurement" together with our suppliers.
Procurement Respecting Biodiversity
The TOTO Group positions global environmental preservation as a priority issue. We conduct our business activities with strong
environmental awareness and make efforts to preserve biodiversity and achieve sustainable use of resources to help create
a sustainable society with our efforts and through our suppliers.
Sustainable Raw Material Procurement Standards were established in 2010. The procurement of earth and stone raw materials and wood materials, from which our staple products are made, is regarded as an critical issue to consider. In addition to human rights, labor and compliance, we take into consideration the effects on the environment and ecosystem in the places where our raw materials are produced, as we pursue the appropriate balance between the sustainable use of resources and stable procurement and push forward with CSR procurement in cooperation with suppliers.
For earth and stone raw materials used for plants in Japan, we confirm the legality and sustainability at all mines through
assessment or the results of informational interviews via trading companies, including whether TOTO-designated standards
concerning reforestation or restoration of areas where mining has ended and measures to prevent pollution of rivers and
lakes from mining or tailings are being met.
We visit mines or resource production sites as needed to confirm conditions and confirmed that all mines met our standards.
Mines targeted:Target both domestic and overseas suppliers.
Survey coverage rate*
Achievement rate of compliance with the TOTO standards
*Survey coverage rate: Percentage of mines surveyed against all mines that the ceramic sanitary ware plants purchase stone materials from.
Assessment items for Mines
0. Mining certificate
(1) Mining rights
(2) Safety production permit
1. Human rights/labor
(1) Prohibition of inhumane work and discrimination
(2) Wages and working hours
(3) Building good relationship between management and labor
2. Health and safety
(1) Health and safety measures at workplaces and facilities
(2) Measures to prevent mine collapses and cave-ins
(3) Explosives/chemical management etc.
(1) Reforestation plans
(2) Pollution-control measures for rivers and lakes
(3) Administrative guidance, etc.
4. Fair trade and ethics
(1) Compliance, preventing misconduct and early detection
(2) Preventing abuse of superior bargaining position
(1) Quality management
(2) Quality complaints
6. Social contribution
(1) Contributing to the community and society
Initiatives for keeping rivers clean
As an initiative for keeping rivers clean, TOTO also monitors sedimentation reservoirs to ensure that the clear water above the sediment is discharged into the river.
Build a reservoir and release the clear water sitting above the sediment into the river
Reforestation after mining activity has ceased
We conduct tree-planting activities in completed mine areas to regenerate forests.
Illegal logging and excessive logging of forests is a major cause of loss of forests, leading to loss of biodiversity. The TOTO Group basically handles timber and timber products that have been certified as legal. Based on the Japanese Forestry Agency's "Guidelines for certifying legality and sustainability of timber and timber products,"we survey information necessary for traceability regarding the wood materials to be procured (country of origin, commercial distribution, legality certification, etc.) every year. In addition, we have set a target value for the ratio of legal materials and recycled materials to the amount of wood materials used for the products we produce, and confirm the actual values.
FY2020 Target : Composition of Legal materials + recycled materials 100% Recycle materials：Wood based materials that are made from wood that has been used once, wood that has not been used, or that has been discarded.
Use ratio of legal wood-based materials and recycled materials in products
The results of legality of wood-based materials used in FY 2020 showed that 6% were legal wood-based materials and 94% were recycled materials. We also confirmed that the rate of use of legal wood-based materials were 100%.Going forward, we will continue endeavoring to improve the ratio of legal wood-based materials and recycled resources.