Daido Steel Group Procurement Policy

Fair and Impartial Transactions

• Based on the SDGs, we provide procurement opportunities to diverse suppliers, both domestically and internationally, if doing so is rational from the perspectives of laws and regulations, safety, protection of rights, quality, delivery times, and costs.
• We make fair judgments based on economic rationality in selecting suppliers.
• We strive to achieve coexistence and mutual prosperity with Suppliers from a fair standpoint. Accordingly, we do not receive from or give to Suppliers, any entertainment or gifts that go beyond social norms.

Compliance with Laws and Regulations

• We comply not only with domestic laws and regulations, but also with foreign laws and regulations applicable to us and protect human rights of all people by taking measures including avoiding the use of conflict minerals. We expect Suppliers to do the same. Please refer to the Appendix 1 for details.
• We protect personal information, intellectual property, and trade secrets of all stakeholders.
• We continue to improve our systems and educate our employees to prevent fraud and unfairness in business transactions. We prohibit our employees from having inappropriate relationships and contacts with Suppliers that deviate from common sense even if it is not illegal.
• We do not have any relations with antisocial forces. We expect Suppliers to do the same.

Being Part of Society

• Our group’s environmental philosophy is to contribute to “building an environmentally conscious society” and “conserving the global environment.” In line with the philosophy, we make efforts to conserve the environment and to develop a recycling-oriented society in all our business activities from a long-term and global perspective. We request Suppliers to take measures to protect the global environment. Please refer to the Appendix 2 for details.
• In order to protect the global environment by reducing CO2, we give priority to procuring recycled products and low environmental impact products with the aim of green procurement. We are willing to receive proposals for products and services that help us develop good relationships with society and local communities, and those that help our customers and Suppliers protect the environment.
• In order to build a better society through serving our customers, we prioritize procurement from Suppliers who not only offer high-quality products but also work on quality improvement. To this end, we discuss prices and delivery dates of the products and services we procure with Suppliers, using reasonable judgment.
• We prioritize not only prices but also costs and environmental impact that will be generated in maintenance and management after procurement.
• We are willing to consider proposals for products and services that can be used safely by our employees as well as by our customers and Suppliers.

Appendix 1: Requests regarding Respect for Human Rights

1. Prohibition of Child Labor

• Suppliers shall not allow children under the minimum working age set by the laws of each country to work. (As a general rule, the minimum working age is 15 years in Japan.)
• Suppliers shall not allow workers under the age of 18 to engage in work that may be harmful to health, safety, or morals (e.g. late-night work, work at a height of 5 meters or more where there is a risk of falling, or work handling heavy objects).

2. Prohibition of Forced Labor

• Suppliers shall not use threats of punishment (e.g. refusal to pay wages, prohibition of free movement from offices or plants, violence, physical obligation, or intimidation) to force people to labor.
• In addition, basic human rights to free choice of work and occupation must not be violated and Suppliers shall not force workers to engage in the work against their will by means including confiscating their passports, identification cards, or travel-related documents, withholding wages or remuneration to repay debts, using illegal recruitment agencies, or charging workers expensive recruitment fees. (A passport, identification card, work permit, etc. may be deposited only when required by law.)
• Suppliers shall not decide workers’ place of residence or movement or restrict movement against their will.

3. Prohibition of Discrimination

• Suppliers shall not discriminate, in any way, against any person on the basis of attributes or the type of employment (regular or temporary) that are unrelated to the work to be performed, including nationality, race, ethnicity, color, gender, age, pregnancy, culture, religion, philosophy, organization, sexual orientation, sexual identity and sexual expression, political opinion, marital status, disability, military service experience or other conditions (such as health status).
• Suppliers shall not discriminate against or treat any person unfairly with regard to employment opportunities, wages, and other employment terms and conditions, on the grounds of biological, social, and cultural gender roles.
• In addition, sexual minorities must not be disadvantaged by discrimination in the workplace and in recruitment.

4. Right to organize and bargain collectively

• Suppliers shall not infringe on the right of workers to freely join and form unions.
• Suppliers shall not require workers to refrain from joining a union or to withdraw from a union as a condition of employment.
• Suppliers shall not dismiss or unfavorably treat workers for reasons such as their union membership, or participation in union activities outside working hours, or during working hours with the approval of their employer.
• Opportunities for workers or their representatives to communicate with management regarding working conditions, etc. must be provided.

5. Reduction of excess labor

• Workers shall not be allowed to work beyond the limits stipulated by the laws of each country. In addition, the working hours, and days off of workers must be appropriately managed.
• In Japan, in addition to working hours of 8 hours x 5 days per week, the upper limit of overtime work stipulated in the 36 Agreement (45 hours per month and 360 hours per year) must not be exceeded except under extraordinary circumstances. Even when the labor-management agreement has been concluded under extraordinary circumstances, overtime must not exceed 720 hours per year, and shall be within 80 hours per month on average for multiple months (including holiday work) and shall be less than 100 hours per month (including holiday work). Monthly overtime exceeding 45 hours is allowed up to 6 times in a year.
• Suppliers shall not prevent workers from taking appropriate breaks as well as the leave stipulated by laws, such as annual paid leave and childcare leave.
• Suppliers have a duty of care to the health and safety of workers even when working hours are in accordance with the 36 Agreement, and it is necessary to bear in mind that the longer the working hours, the higher the risk of death from overwork.

6. Appropriate wages

• Regardless of the minimum wage amount stipulated by law, Suppliers shall pay wages (living wages) that enable workers and their families to afford a decent standard of living.
• Workers must receive wages stipulated in labor contracts or employment regulations on the prescribed payment date. In addition, Suppliers shall provide workers with a payroll statement at an appropriate time that contains information that enables workers to verify the exact wages for work performed during the payroll period.

7. Occupational Health & Safety

• Measures must be taken to ensure that work-related injuries and illnesses (adverse effects on the human body, mind, or cognitive status) do not occur.
• Suppliers shall ensure the safety and health of workers by creating a comfortable working environment and by improving working conditions.
• Consideration must be given to female workers who are pregnant or breastfeeding, which includes eliminating or mitigating occupational health and safety risks and adjusting their workload and responsibilities.

Appendix 2: Request regarding Global Environmental Protection

1. Reduction of CO2 emissions and promotion of energy conservation

• Suppliers are encouraged to reduce CO2 emissions and to conserve energy by taking such measures as improving energy efficiency in manufacturing, processing, and heat-treating, as well as introducing energy-saving facilities, for the purpose of preventing global warming.
• Suppliers are also encouraged to take measures to reduce CO2 emissions and energy consumption in the distribution process of products and raw materials as well as at offices.

2. Reduction of water and resource consumption

• Suppliers are encouraged to reduce the wasteful use of water as it is a valuable resource. In addition, they shall comply with the relevant laws and regulations of each country when discharging water.
• Suppliers are encouraged to carry out maintenance of facilities, equipment, and components, which includes extension of their lifetime, repairment, and partial replacement, etc. that can help to reduce resource consumption.
• Suppliers are encouraged to consider not only prices and performance but also resource efficiency when choosing raw materials and parts (e.g. resource-saving or recycled materials).

3. Reduction and prevention of pollution

• Suppliers shall comply with the relevant laws and regulations of each country and strive to reduce the emission of harmful substances into the air, water, and soil.
• Suppliers shall analyze and monitor hazardous substances before discharging them and take necessary measures to prevent pollution based on the results.

4. Promotion of the 3R (Reduce, Reuse, and Recycle) and reduction of waste

• Suppliers shall deal with waste and by-products in accordance with the relevant laws and regulations of each country and dispose of, reuse, and recycle them in a responsible manner.
• Suppliers are encouraged to separately collect all by-products with the aim of reducing, reusing, and recycling all by-products generated by business activities.
• Suppliers are encouraged to promote resource conservation and recycling activities aimed at realizing a circular economy (recycling-oriented society) by utilizing by-products generated in other industries.
• Suppliers are encouraged to aim to reduce the amount of waste (the amount of waste that is not recycled and is disposed of).

5. Mitigation of impacts on biodiversity

• Suppliers are encouraged to take care of biodiversity (protection of forests, grasslands, and water resources, etc.) while conducting business activities and to strive to reduce the impact on biodiversity.
• Suppliers are encouraged to maintain and recover biodiversity of company-owned parks and forests, if any.

6. Efforts to protect the global environment through collaboration with us

• We can collaborate with Suppliers on innovations to reduce the environmental impact of products and services.
• We present an award to Suppliers for their outstanding efforts to improve environmental performance and to realize carbon neutral, nature positive (nature revitalization), and circular economy.