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Supply Chain Management

Basic Approach

In order for a company to grow sustainably, it must be aware of and live up to its social responsibilities. The NSK Group works hard to meet the expectations of society while reinforcing its business foundations.

In the area of procurement, the NSK Group has instituted the Basic Policy for Procurement in order to carry out fair procurement activities that also consider impact on society and the environment. We understand that it is vital to build a shared awareness with suppliers and to pursue CSR initiatives throughout the supply chain.

●NSK Group Basic Policy for Procurement

1) Economic Rationality
Applicable companies shall conduct transactions whose quality and service are economically rational.
2) Fairness and Impartiality
Applicable companies shall conduct transactions in a fair and impartial manner regardless of region, company size, or whether the counterparty is a new or existing business partner.
3) Observance of All Laws
  1. Applicable companies shall strictly follow the procurement laws and regulations of each country, and possess awareness of their important societal role.
  2. Applicable companies shall conduct training and education programs to ensure strict observance of procurement laws and regulations.
4) Respect for Moral Standards
  1. Applicable companies shall adhere to strict moral standards.
    • -Transactions with counterparties and/or potential counterparties shall not be entered into if there are personal interests involved.
    • -Transactions with counterparties and/or potential counterparties shall not be entered into for the purpose of personal gains.
    • -Companies shall not compel counterparties and/or potential counterparties to make donations, etc.
  2. Applicable companies, when entering into transactions with subcontracting firms, shall strive to build a strong, cooperative partnership and maintain a stable supply.
5) Environmental Preservation, Resource Conservation (Green Procurement)
Applicable companies shall promote environment protection by procuring environmentally-conscious products from counterparties that make positive efforts toward environmental preservation.
6) Employee Training and Education
Applicable companies shall provide procurement training and education to employees.

NSK Supply Chain and CSR Procurement Promotion System

NSK has transactions with approximately 9,000 suppliers globally.

The share of NSK’s sales outside Japan is about 70%, and the share of its production outside Japan is roughly 55%, and these figures are expected to continue to grow. As a result, the Company expects to be doing more procurement outside Japan, as well.

NSK Group Suppliers

CSR Procurement Promotion System

In order to fulfill the Group’s social responsibility throughout the entire supply chain, the Procurement Division Headquarters, which is directed by a senior vice president, plays a central role in building systems to promote CSR procurement in collaboration with relevant functional headquarters, such as the Global Environmental Department, and production, procurement and administrative divisions within the Group.

At the biannual Global Procurement Conference, with those responsible for procurement in each global region participating, NSK shared policies pertaining to CSR activities and reviewed progress on related measures.

Building Relationships with Suppliers Based on Trust

Recognizing that mutual development with suppliers is important, the NSK Group works at establishing solid relationships of trust: longterm cooperative relationships. The Group shares the importance of CSR with suppliers at briefings and using other means, pursuing greater understanding through mutual communication.

Procurement Policy Briefings

NSK holds procurement policy briefings every year to explain its procurement and other policies to major suppliers, and it asks them to reinforce their efforts to implement CSR activities in pace with the entire supply chain.

Procurement policy briefing session

Procurement policy briefing session

Whistleblowing System (for Third Parties)

NSK has established a reporting system (whistleblowing hotline) for anyone to anonymously convey their criticisms, opinions, and concerns, enabling the Company to identify issues at an early stage and take corrective measures. The hotline has two points of contact: is the Head of the CSR Department and the other is an outside attorney. In addition to any internal whistleblowers, the Company is careful to ensure that suppliers can use the hotline safely and securely and face no repercussions due to using it.

NSK Supplier CSR Guidelines

NSK Supplier CSR Guidelines

NSK publishes and distributes NSK Supplier CSR Guidelines and asks suppliers to supply safe products, comply with laws and regulations, and give consideration to environmental protection, human rights, safety and health. In addition, basic business contracts contain clauses that pertain to environmental, social, and governance (ESG) performance.

●NSK Supplier CSR Guidelines (By items)

1.1 Compliance
1.1.1 Creation of a structure for complying with laws and corporate ethics
1.1.2 Compliance with competition laws
1.1.3 Preventing corruption and bribery
1.1.4 Preventing the giving or acceptance of improper benefits
1.1.5 Compliance with export-related laws and regulations
1.1.6 Protection of intellectual property
1.1.7 Protection of confidential and personal information
1.1.8 Provision of safe, quality products and services
1.2 Human Rights and Labor
1.2.1 Non-discrimination
1.2.2 Respect for human rights
1.2.3 Prohibition of child labor
1.2.4 Prohibition of forced labor
1.2.5 Management of working hours
1.2.6 Appropriate wages and benefits
1.2.7 Development of human resources
1.2.8 Creation of safe and healthy workplaces
1.2.9 Open communication with employees
1.3 Environment
1.3.1 Establishment and operation of an environmental management system
1.3.2 Compliance with environment-related laws and fulfillment of administrative procedures
1.3.3 Prevention of environmental pollution
1.3.4 Advancement of global warming countermeasures
1.3.5 Advancement of resource saving measures
1.3.6 Preservation of biodiversity
1.4 Local Communities
1.4.1 Responsible procurement
1.4.2 Social contribution
1.5 Risk
1.5.1 Risk reduction
1.5.2 Business Continuity Plan (BCP) formulation and improvement
1.6 Information Disclosure
1.7 Application of These Guidelines to Your Company's Suppliers

Supplier CSR Assessment

NSK asks suppliers to perform CSR assessments and monitor the actual state of their activities, and it feeds back the assessment results to all suppliers.

CSR Assessment Result in Fiscal 2018

Meeting Regulations for Information Disclosure about Conflict Minerals

Basic Approach

The NSK Group has a policy of not using conflict minerals and takes care in its procurement activities to avoid benefitting armed groups that violate human rights.

If involvement by armed forces is suspected, NSK takes steps to avoid using the suspected parts or materials.

Action Update

The Disclosure Rule under the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States requires an annual survey and disclosure of information on the status of use of four conflict minerals (tin, tantalum, tungsten, and gold) originating in the Democratic Republic of the Congo and surrounding countries. Its goal is to cut off the source of funding for armed groups and rebels involved in human rights violations. This rule took effect in January 2013.

NSK is not listed on a U.S. stock exchange and so is not subject to these rules. Nevertheless, NSK has adopted a policy of avoiding the use of conflict minerals and is working with its suppliers on this issue. In 2013, the NSK Supplier CSR Guidelines were revised to unequivocally prohibit the use of conflict minerals, and the Group has endeavored to raise awareness of that among its suppliers. Since then, NSK has conducted a conflict mineral survey every year with cooperation from the suppliers of parts and materials used in NSK products. Surveys through 2016 have not identified any case of conflict minerals produced in restricted regions.

●Policy against Conflict Minerals

Citation from “NSK Supplier CSR Guidelines”

1.4.1 Responsible Procurement
When procuring mineral resources, natural resources, and raw materials, ensure that there is no direct or indirect involvement with organizations that exert a serious, adverse influence on local societies, including regional conflicts, human rights violations, and destruction of the environment. If involvement with such organizations has been identified, implement measures to avoid the situation. In particular, minerals (conflict minerals1) that fund or profit destructive armed forces responsible for human rights violations in the vicinity of the Democratic Republic of the Congo (DRC) must not be used in products. If an investigation2 raises concerns that conflict minerals are being used, employ measures to avoid using the parts or raw materials in question.

*1 Four minerals (tantalum, tin, tungsten, gold) originating from the DRC and neighboring countries that have directly or indirectly contributed to the financing of armed groups.

*2 NSK offices may request an investigation of the status of conflict mineral usage as well as the results and pertinent information.