Human Rights Now
4F Suzuki Bldg., 335 Yamabukicho,
Shinjuku-ku, Tokyo 162-0801 JAPAN
Tel：+81-3-6228-1528
Website: http://hrn.or.jp/eng
Email: info@hrn.or.jp

12 March 2020

Japanese Trading Companies:
Measures for Human Rights Lag Far Behind International Standards
In the summer of 2019, Human Rights Now, a Tokyo-based international human rights
NGO, conducted a survey on human rights policies and related company efforts of seven general
trading companies in Japan (Mitsubishi Corporation, Mitsui & Co., Itochu Corporation, Sumitomo
Corporation, Marubeni Corporation, Sojitz Corporation, and Toyota Tsusho Corporation). HRN
received responses from all of these trading companies.
Given in particular the grave human rights issues throughout global supply chains, therole of trading companies that procure a wide variety of goods from all over the world, such as
clothing, food, timber, mineral resources, and energy, is extremely important.
There are strong expectations for trading companies to undertake fundamental reviewsof their human rights measures and to formulate and implement policies based on the United
Nations "Guiding Principles on Business and Human Rights" (“UNGP”), endorsed by the United
Nations Human Rights Council in 2011.
However, the answers to this survey indicate that while the trading companies are awareof the need to address human rights issues, the concrete systems and measures to realize this
responsibility remain insufficient, and the need for improvement is extremely high.
1. Human Rights Policy
The importance of establishing and implementing a human rights policy is pointed out
in the UNGP, as it establishes a clear commitment to respect human rights both internally and toparties outside of the company.
In this regard, six out of the seven companies responded that they had establishedhuman rights policies. The one that responded they had not done so, Sumitomo, is a signatory to
the 10 Principles of the United Nations Global Compact, and as such it is urgently required toadopt a human rights policy that demonstrates its commitment to human rights.
Companies’ human rights policies are required to specify the international human rights
standards upon which their business activities are based. In this regard, while all companies otherthan Toyota Tsusho Corporation (“Toyota Tsusho”) explicitly state that they are in compliancewith international human rights standards, only Sojitz Corporation (“Sojitz”), Marubeni
1Corporation (“Marubeni”), and ITOCHU Corporation (“Itochu”) have explicitly stated what
measures they would take if international human rights standards and national standards are in
conflict. It should be noted that, as in the past, a company’s compliance with domestic laws alone
is not sufficient for it to meet its responsibility to respect human rights as required by the UNGP.
It is even more important that a company take into consideration how it acts in such cases. In
addition, it is expected that companies make specific commitments that go beyond standard
language, such as referring to specific human rights that are particularly relevant to theirrespective sector.
It is also imperative that human rights policies are promoted throughout the company,
through measures such as internal training and fully embedding them into daily businessactivities.
The responses indicated that e-learning is likely to be provided for new employees andexecutives. However, there is room for improvement in the way the policies are disseminatedfrom the viewpoint of the effectiveness of such training, and the extent to which it has an impact.
In particular, it is crucial that companies take seriously the need to ensure employees
understand the UNGP. For instance, the seminar organized by Itochu inviting external experts on
Business and Human Rights, including civil society, may be evaluated as positive insofar as it could
promote a dialogue between civil society. The formulation of a human rights policy is just thefirst step, and it is expected that the policy will serve as a foundation for establishing a system
for implementing business activities in accordance with the policy.
2. Encouraging suppliers to protect human rights
It is positive that all seven companies require their suppliers to respect human rights
through their codes of conduct. For example, in fiscal 2013, Itochu answered that they had sent
their code of conduct to 4,000 companies with which they had ongoing business transactions,and from 2015, it has become obligatory to notify new suppliers. However, the sharing of thecode of conduct is not sufficient to prevent or mitigate human rights risks.
Only MITSUI & CO., LTD. (“Mitsui”), Mitsubishi Corporation (“Mitsubishi”) and Itochu
regularly audit their suppliers. Among them, Itochu and Mitsui replied that they conduct thirdparty audits. However, it is not clear from the responses whether these three companies
regularly audit just the direct suppliers of the materials they handle, or also the upstream
suppliers up to the country of origin of the raw materials.
Mitsubishi states on their website that "In order to ensure that the principles outlined
in our Policy for Sustainable Supply Chain Management are being upheld in our supply chains, we
conduct regular surveys of our suppliers that operate in higher risk industries such as agriculture
and apparel"; 1 however, there is information on only one on-site audit in fiscal 2018. As for

1 https://www.mitsubishicorp.com/jp/en/csr/management/supplychain.html

2

surveys, Mitsubishi also reported having received responses from approximately 300 companies
in approximately 30 countries and regions in 2018, but it is obvious that this does not cover all of
its suppliers.
Itochu states on their website that “in order to check the status of our various suppliers,
each of the Division Companies and relevant Group companies of Itochu selects significant
suppliers based on such parameters as high-risk countries, products handled and transaction
amounts", and it conducts sustainability surveys by providing questionnaires. It also mentions
that on-site surveys are conducted "as necessary”, which means on-site audits are limited,
although they state that for food products they conduct regular visits to food processing plantsof overseas suppliers.2
Mitsui said that it had conducted supplier surveys since 2015, including on-site
inspections of manufacturing sites. However, the publicly available information indicates thatsuch inspections are conducted only at one place per year, and that the products covered arelimited to food products.3
Marubeni, on the other hand, responded that it was in the process of establishing acomprehensive investigation system, and the remaining three companies reported auditing only
when deemed necessary. Thus, it cannot be said that these companies have a sufficient
governance system to ensure that they fulfill their human rights policies in their supply chains.
Under the current circumstances, human rights violations may not be addressed until they have
escalated to the level that they are evident to the companies.
On the other hand, Sojitz’s approach to wood procurement is commendable: "Sojitz also
has adopted use of WWF Japanʼs ‘Responsible Purchasing Checklist for Forest Products’ toconfirm 1) wood traceability in the countryof origin and 2) suitability of forest management withreferring to advices fromWWF Japan" (sic).
Overall, there are serious concerns from the survey that, even if the companies havehuman rights policies, their efforts are still limited to wishful thinking, leaving severe humanrights violations overlooked.
Questionnaires are one of the most commonly used methods for investigating humanrights violations, but they are only partially implemented, and violations are not detected if
suppliers do not provide honest answers about them. Only a handful of companies haveconducted on-site inspections.
The lack of disclosed information on supply chain issues related to minerals, resources,and energy (electricity, oil, coal-fired, and natural gas), all of which are prone to serious humanrights violations, is a growing concern, in addition to the limited number of initiatives in some
reported cases, such as in the food, textiles, timber, and palm oil sectors.

2 https://www.itochu.co.jp/en/csr/supply_chain/management/index.html

3 https://www.mitsui.com/jp/en/sustainability/sustainabilityreport/2019/pdf/en_sustainability_2019-38.pdf

3

In order to prevent, mitigate, and remedy human rights violations based on the UNGP,
it is necessary that companies conduct regular and effective audits of all commercial products
and publicly disclose the results.
With regard to human rights due diligence in supply chains, Sumitomo responded thatit remains unconducted, while Marubeni answered that it was in the process of establishing asystem. Sojitz was the only company in the survey that reported conducting human rights due
diligence, and the remaining four companies reported conducting it partially. Out of those four,
Itochu stated it carried out human rights due diligence on "Companies in high-risk countries withtransactions exceeding a certain amount," which comprise 8% of all companies with which they
have business. Mitsui responded that it conducted human rights due diligence only for "Newbusiness investment projects that have a significant impact on the environment and society".
Mitsubishi did not disclose any details regarding any human rights due diligence efforts.
A trading company is a unique type of business that operates its own group of companies
and is involved in a wide range of industries around the world. This results in a high level of humanrights risk. Therefore, comprehensive human rights due diligence across suppliers is
indispensable.
In this regard, Sojitz states that it makes risk assessments based on the assumption "thateven those trading businesses where transactions comprise small amounts or which carry a small
profit margin can belong to supply chains where upstream development/production carries asignificant impact on the environment and human rights." Additionally, Sojitz says that "[i]naddition to our wood procurement-related initiatives, we will continue to gradually expand thescope of risk assessment to Sojtiz Group companies and suppliers according to priority." 4 These
positions are commendable.
Both human rights due diligence and audits are measures that can identify, prevent,mitigate, and remedy potential or actual human rights risks across supply chains and value chains.
The increase in the number of companies reporting on their supplier fact-finding surveys
is a positive sign, in particular in that it involves direct communication with stakeholders, but the
number of fact-finding investigations clearly remains small, and comprehensive, transparent
audits are still required. It is critically important that companies disclose the human rights risks
identified among their suppliers as a whole as well as their responses, so as to ensureaccountability to stakeholders.
3. Identifying suppliers and disclosing supplier lists
Sojitz, states that it has information of suppliers up to tier 3 and beyond. Sumitomo saysthat it has information of up to tier 3 suppliers, and Itochu says that it has information including
some tier 2 suppliers. Sojitz has information on tier 1 suppliers of products other than timber.

4 https://www.sojitz.com/en/csr/supply/; https://www.sojitz.com/en/csr/supply/lumber/.
4

Also, Mitsui and Mitsubishi has information on tier 1 suppliers. Marubeni is now establishing asystem. Toyota Tsusho did not respond on this point.
Given the need for companies to respect human rights in their supply chains, it is aconsiderable problem for a company to not be fully aware of its suppliers. Companies shouldmake greater efforts to identify their suppliers in order to identify human rights risks, just as they
make great efforts in assessing quality control of their suppliers.
In addition, none of the companies surveyed has disclosed their supplier lists. In recent
years, an increasing number of companies have opened their supply chains to the public, as partof their responsibility to respect human rights.
The companies surely have a large number and variety of suppliers, due to the nature of
trading companies. However, the UNGP emphasizes that it is the role of companies to identify
human rights risks. Companies should disclose their supplier lists.
4. Identification of the employment of Technical Intern Trainees and prevention of human rights
violations against them
Mitsui and Sumitomo responded that their business partners, including suppliers,
employ technical intern trainees, while the rest of the companies stated that they did not know.
Technical intern trainees are in an extremely vulnerable position, with a high risk of human rights
abuses. Various government reports and media have already shown the grave violations that
occur against technical intern trainees, including deaths, disappearances, passport confiscations,and exploitative labor practices including pay under the minimum wage. It is of serious concernthat trading companies have not taken any measures in this regard. They should immediately
ascertain whether or not their suppliers are involved in such abuses and, if so, take appropriate
measures.
5. Diversity and prevention of discrimination and harassment
Although all of the companies stated they take measures to strengthen diversity, theratio of females among management staff is extremely low. While 0% of Mitsubishi’s and Sojitz’s
executive directors are female, Itochu has 4.5 %, and Toyota Tsusho has 2.9% according to their
responses. The rest of the companies did not state the ratio.
Discrimination and harassment are frequent violations of workers' rights, and it is crucial
to prevent them. However, Sojitz was the only company that went beyond the guidelines toengage in specific activities.
Sumitomo did not take any measures to prevent discrimination or harassment within
suppliers, at the time of its response. While Marubeni, Toyota Tsusho, Mitsubishi, Mitsui, andItochu have established Codes of Conduct, there do not appear to be any measures taken to
ensure their effectiveness. Those companies need to consider taking prompt action against
human rights risks.
5

It is also an urgent task for companies to establish systems to prevent harassment
internally, as some former trading company employees have reported being subject to sexual
harassment while job hunting. It is necessary for them to investigate the situation, and toestablish systems based on the "ILO Violence and Harassment Convention".
6. Living wages, child labor, and forced labor
According to the responses, Sumitomo has not taken any measures regarding theensuring of living wages. Mitsui and Mitsubishi state they are addressing the issue, and Marubeni
is establishing a survey system. Sojitz states, "At present, Sojitz strives to confirm and improvewith priority given to ‘payment of minimum wage’." Itochu and Toyota Tsusho have merely set
goals of preventing unfair low-wage labor practices. It is not clear if Mitsui and Mitsubishi havetaken concrete measures in this regard. Improving labor practices that violate human rights is an
important international issue, so effective efforts must be taken.
With respect to child labor, forced labor, and human trafficking, although the responses
differed for each company, it was not clear to what extent concrete measures have been
implemented across supply chains.
It is welcomed that Mitsubishi and Itochu have conducted on-site inspections of thesituation of migrant workers in their food industry supply chain in Thailand, in response to ourorganization's report on the issue.
7. Establishment of a grievance mechanism for the protection of human rights
All of the companies reported having a grievance mechanism for the protection ofhuman rights except for Marubeni, which said it was currently establishing one. Operating
grievance mechanisms in multiple languages (not only Japanese but also English and otherlanguages) are necessary for accessibility. For example, Sojitz offers its grievance mechanism in
24 languages for its employees including group companies, as well as in Japanese and English for
its external stakeholders. Toyota Tsusho offers one with 9 languages. However, only twocompanies, Itochu and Sojitz, have established grievance mechanisms that can be used bybusiness partners including suppliers. Another critical issue is whether people at the very end of
supply chains can access the system.
The UNGP calls for the establishment of grievance mechanisms not only through existing
judicial institutions but also within companies in order to ensure access to remedies. This aims
towards ensuring the voices of rights holders and also towards preventing human rights
violations from worsening. Companies must immediately establish a remedy consistent with the
UNGP, and make it accessible to broader stakeholders including workers in all supply chains of
all goods.

68. Stakeholder engagement
In human rights due diligence, since the implementing entity is the company itself, there
is often the incentive to focus on risks to the company, as opposed to the risks of rights holders.
However, the UNGP defines human rights due diligence as a process for preventing, mitigating,and remedying human rights violations of rights holders.
When considering human rights risks, it is essential to focus on rights holders who may
be affected by business activities, such as workers and local residents. Stakeholder engagement
is one of the means to ensure this perspective.
It is commendable that the surveyed companies have had dialogues with NGOs
(excluding Toyota Tsusho) and local residents (excluding Sojitz). It is desirable that all dialogues
be publicly disclosed, including not only the fact that the companies have had them, but also thehuman rights risks raised in them.
Business has a significant impact on the lives of local residents, especially sociallyvulnerable actors such as women, persons with disabilities, and children. Thus, companies should
also ensure dialogues with such actors.
9. Conclusion
It is positive that, since the adoption of the UNGP in 2011, efforts have been made byeach of the seven major trading companies to strengthen their respective human rights measures,such as the formulation of human rights policies. Nevertheless, there remain many issues ininvestigating and disclosing human rights issues in supply chains. The majority of the companies’
efforts, in terms of implementing an effective human rights due diligence system including
supplier audits, have been insufficient, and lag far behind international human rights standards
as required by the UNGP. Much room for improvement remains. In particular, there remain many
problems in ensuring respect for human rights in supply chains, regardless of the industry.
Effective auditing systems and human rights due diligence systems have been
established in only a handful of cases, and there is a significant gap between published humanrights guidelines and their implementation (systems for which remain lacking). If an effective
auditing system and human rights due diligence system are in the process of being established,
the process should be disclosed for the purposes of accountability. Despite this, most of thecompanies have not implemented adequate measures in terms of transparency and information
disclosure.
Under these circumstances, there is a serious concern that procurement by trading
companies are a "black box", and that many human rights violations in the global supply chains
related to Japanese businesses and consumers will continue without improvement.
An overview of the responses we received from our survey follows below. Cells in green
signify accordance with the UNGP to some extent; those in yellow mean measures are at a certain
standard but there is room for improvement; and those in red require urgent action.
7

8

We request each company to recognize their responsibility to ensure the respect andprotection of the human rights of workers and related stakeholders in their supply chains, and todemonstrate how it will achieve this in medium- to long-term management planning, including
roadmaps and specific KPIs.
Regarding the SDGs, some companies have mapped their efforts by specific goals.
However, SDGs are only guidelines, and excessive labeling of each goal departs somewhat fromthe true nature of the SDGs, which centers on the impact on people. Although often overlooked,
paragraph 67 of “Transforming our world: the 2030 Agenda for Sustainable Development” refers
to the UNGP as the main principle for private sector engagement in the SDGs. In other words, it
requires that all business activities comply with the UNGP when implementing initiatives toachieve each of the SDGs' goals. We urge the companies to recognize this.
Human rights risks in business cannot be entirely eliminated, so long as corporate
activities take place in connection with society and people. That is exactly why human rights risks
must be identified at an early stage and remedies provided as a responsible corporate action.
We recommend referring to the appendix, which describes the human rights due
diligence process which the OECD recommends as well as some good practices found among
foreign companies. It shows the serous gap between Japanese companies and international
trends.
If companies are slow to implement voluntary initiatives based on the UNGP, there is anincreasing need to consider introducing legislation that requires human rights due diligence
under specified conditions, such as in the United Kingdom, France, Australia, and the Netherlands,
as well as legal systems that prohibit the import of goods for human rights violations, such as
forced labor and child labor, such as the Trade Facilitation Act in the United States.
As a civil society organization, we will continue to engage in constructive dialogue topromote consumer awareness and, at the same time, accelerate collaboration toward therealization of a sustainable society.
Given the survey results, we, Human Rights Now, make the following requests again to eachgeneral trading company:







Develop a human rights policy in line with the UNGP;
Share the human rights policy with suppliers and business partners through dialogue, andwork together to implement them;
Promptly conduct human rights due diligence for the identification, prevention, andmitigation of human rights risks, and disclose the process, progress and challenges with due
diligence and with identified human rights risks to ensure accountability;
Identify suppliers up to the level of the procurement of raw materials and publish a list of
suppliers;
Conduct independent and effective periodic audits throughout the supply chains of all
9








products and disclose the results;
Immediately investigate whether technical intern trainees are involved in the company’s
supply chains, publish the findings of the investigation, and establish a mechanism to prevent,mitigate, and remedy human rights violations;
Identify human rights risks such as discrimination, harassment, forced labor, child labor, andhuman trafficking; establish mechanisms for the prevention, mitigation and remedy of suchrisks; at the same time work to achieve living wages; and fundamentally improve the genderratio among executive directors;
Implement continuous dialogue with stakeholders; andBuild a grievance mechanism accessible to all stakeholders in the company’s supply chains.

10