The IHI Group Procurement Policy guides procurement activities around three main principles: practicing fair and impartial procurement, establishing mutually beneficial partnerships, and complying with laws and regulations and fulfilling our social responsibilities.
In line with these three principles, the IHI Group specifies in the IHI Group Code of Conduct for Business Partners that each business partner and its supply chain drive CSR activities eyeing human rights/labor, health and safety, the environment, fair trade/ethics, information security, responsible procurement of mineral resources, and so on, on top of basic requirements such as legal compliance, quality, price, and delivery.
Furthermore, each procurement department of the IHI Group conducts its procurement activities following the Basic Rules of Procurement for the IHI Group enacted in accordance with the IHI Group Procurement Policy. It is through these rules that we fulfill our social responsibility by building sustainable supply chains.
IHI Group Procurement Policy
The IHI Group conducts procurement activities in accordance with the “Basic Code of Conduct for the IHI Group” as set forth below.
Fair and Impartial Procurement
We provide business opportunities in an open manner to business partners from around the world, and welcome working with creative and competitive business partners. We also evaluate and select business partners in a comprehensive and fair manner based on factors such as quality, price, delivery schedule, technology development capabilities, and financial conditions.
Mutually Beneficial Partnership with Our Business Partners
We regard our business partners as value creators, and through seeking to realize optimal levels for quality, price and delivery, together with procurement reliability, we aim to establish relationships of trust with our business partners and bring about the mutual enhancement of competitiveness and prosperity with them.
Approach to Compliance and Social Responsibility
We comply with the related laws that govern our local and global businesses. To fulfill our social responsibility, we shall conduct CSR procurement with due consideration not only of basic requirements such as quality, price and delivery, but also of human rights, labor conditions, health and safety, the environment, and information management.
To Our Business Partners
We, as the IHI Group, work hard on CSR procurement in our business activities, undertaking our social responsibilities in collaboration with our business partners. Our mission is to fully pay attention to due consideration not only for basic requirements such as quality, price and delivery commitments, but for human rights and labor, health and safety, environment, and information security. With our intent above in mind, we ask for your kind cooperation to drive your own proactive CSR activities in line with the attached “IHI Group Code of Conduct for Business Partners.” We highly appreciate your understanding that we could confirm progress on your own CSR activities.
IHI Group Code of Conduct for Business Partners
In February 2023, the IHI Group published the IHI Group Code of Conduct for Business Partners, which actualizes the philosophy of the IHI Group Procurement Policy. This is a request to business partners to comply with laws and give sufficient consideration to human rights, labor, environment, and information security.
The IHI Group prioritizes training and internal audits related to laws and regulations relevant to security trade control and procurement to continually strengthen compliance.
We conduct a variety of professional procurement and other training programs aimed at not only our IHI Group procurement departments but also all other departments with a need to understand procurement-related laws, and from fiscal 2023 have been conducting new educational lectures on security trade control for our procurement departments. Regarding our e-learning programs, the content is designed so that every employee in charge of IHI Group procurement can acquire the knowledge necessary for conducting their work, including the Subcontract Act, mandate and quasi-mandate contracts, basic agreements via electronic signature, proper import declarations, and so on.
Each IHI Group procurement department voluntarily reviews the Subcontract Act on a monthly basis and import declarations on an annual basis to ensure proper practices and to promote improvements. In addition, internal audits provide guidance regarding areas of improvement.
Participants in Procurement Training
(Unit: People, Scope: IHI and affiliated companies in Japan)
Item
FY2020
FY2021
FY2022
Lecture on Subcontract Act*1
38
143
379
Lecture on Construction Business Act*1
40
98
354
Lecture on Overseas Procurement*1
78
82
112
Professional Procurement Training*2,*3
233
642
1,367
These three lectures are part of the Professional Procurement Training and the numbers of participants are included in the numbers of participants for the Professional Procurement Training.
Professional Procurement Training was held only for the second half of fiscal 2020 due to COVID-19.
Lectures on security trade control were added from fiscal 2022.
Initiatives
Strengthen Supply Chains
The IHI Group is promoting activities to strengthen the supply chain globally including those that prevent delayed production and business activity due to natural disasters, infectious diseases, conflicts, and other incidents that have occurred in recent years.
Specifically, we are looking into confirming the scope of impact from the prolonged delivery time of electrical components due to a lack of semiconductors and implementing measures for handling this Group-wide, such as securing multiple suppliers, changing to specifications that have higher interchangeability, and securing appropriate stock in response to the increased time for delivery.
Mutually Beneficial Business Partnership
In September 2020, the IHI Group announced the registration of its Declaration for Building Partnerships. Based on this, the Group aims for mutually beneficial partnership with its business partners.
As an example of its joint improvement activities with business partners, the Group has implemented bottleneck process improvement and technological activities to reduce manufacturing costs through a relaxation of tolerances and requirement changes with consideration to actual process conditions. The Group shares these benefits. The IHI Group considers its business partners as partners with whom the Group advances its business together, and by valuing open dialogue and cooperation, the Group desires to work together to strengthen competitiveness and prosperity in a way that is mutually beneficial.
CSR Procurement Monitoring
The IHI Group developed a self-checklist for all our business partners based on the IHI Group Code of Conduct for Business Partners. Through this self-checklist, the Group asks its business partners to recognize issues to be addressed and to drive CSR activities.
The IHI Group will confirm ESG risks by proactively supporting, through dialogue, its business partners’ CSR activities.
CSR Activity Promotion Process
Responding to Anti-social Forces and Anticorruption
The IHI Group contractually requires business partners to prohibit all relationships with anti-social forces and commit no acts of bribery toward foreign government officials as prohibited by the Penal Code and the Unfair Competition Prevention Act or against the laws enacted in the particular country. If any business partner is found guilty of such acts, they are required to cooperate in the reporting and investigation process.
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