Kawasaki GroupCSR Procurement Guidelines
Procurement Division
Kawasaki Heavy Industries, Ltd.

Contents
I.

Kawasaki Group Policies for Material Procurement ・・・・・・・・・・・・・・・・・・1

II.

A Request to Our Business Partners (Detailed Rules)
1. Compliance・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・3(1) Thoroughgoing Implementation of Compliance Measures in All Aspects ofCorporate Activities(2) Fair and Impartial Competition(3) Appropriate Export-Import Control(4) Exclusion of Relationships with Anti-Social Forces(5) Strict Control of Confidential Information(6) Prevention of Infringement of Intellectual Property, Etc.
(7) Building Fair and Impartial Relationships(8) Establishment of a Compliance Whistle-Blowing System(9) Prohibition of Insider Trading(10) Prohibition of Acts Involving Conflicts of Interest(11) Proper Approach to Issues Associated with Conflict Minerals
2. Consideration for Human Rights, Labor, and Occupational Safety and Health・・・6(1) Compliance with Labor-Related Laws and Ordinances(2) Respect for Human Rights(3) Prohibition of Forced Labor and Child Labor(4) Working Hours and Wages(5) Thoroughgoing Measures for Occupational Safety and Health(6) Recognition of Freedom of Association and Respect for the Right to Collective
Bargaining(7) Exclusion of Transactions with Companies that Benefit from Inhumane Labor
Practices
3. Ensuring Quality and Safety ・・・・・・・・・・・・・・・・・・・・・・・・・・・7(1) Quality Assurance(2) Creation, Maintenance, and Improvement of Quality Control Systems(3) Responsibility for Third Parties(4) Appropriate Response to Product Accident and/or the Distribution of Defective
Products(5) Traceability Control Pertaining to Raw Materials and Parts

4. Reinforcing Competitiveness・・・・・・・・・・・・・・・・・・・・・・・・・・・8(1) Enhancement of Competitiveness and Creation of Added Value(2) Provision of Information on New Materials, New Technologies, New
Manufacturing Methods, Etc.
(3) Promotion of Cost Reductions
5. Stable Supply ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・8(1) Stable Supply(2) Observance of Delivery Schedules(3) Development of BCPs
6. Information Disclosure・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・9(1) Information Disclosure to Stakeholders
7. Consideration for the Global Environment ・・・・・・・・・・・・・・・・・・・・9(1) Compliance with Environment-Related Laws, Ordinances, and Regulations(2) Development of Environmental Management Systems(3) Reduction and Elimination of Environmental Substances of Concern(4) Pollution Prevention and Environmental Protection(5) Efficient Use of Resources(6) Contribution to Global Environmental Protection
8. Harmonious Coexistence with Society ・・・・・・・・・・・・・・・・・・・・・ 10(1) Social Contribution
Our Call for CSR Activities Penetrating the Entire Supply Chain・・・・・・・・・10

The Kawasaki Group conducts procurement activities based on the following Kawasaki Group
Basic Policies for Material Procurement.
I.

Kawasaki Group Policies for Material Procurement

Basic Policies
The Kawasaki Group conducts procurement activities based on the Kawasaki Group Mission
Statement, the encapsulation of the Group’s management principles.


Fair and Impartial Procurement
We will provide broad and impartial opportunities for our business partners and will makeselections with integrity and in good faith after conducting comprehensive and fairevaluations of quality, price, delivery schedule, technological development capabilities, andother such factors.



Relationships with Business Partners
The Kawasaki Group will take a long-term perspective as it strives to build relationships oftrust with business partners based on mutual respect for one another’s vision and position
with the aim of mutual enhancement of competitiveness and prosperity.

Compliance
We will observe related statutes and regulations as well as social norms. We will placeinformation gained through procurement under appropriate controls and will takethoroughgoing measures to protect confidential information and prevent leaks.

Consideration for Human Rights, Labor and Occupational Safety and Health
We will advance procurement activities with consideration for human rights, the work
environment, and occupational safety and health.

Harmony with the Global Environment through Green Procurement
We will advance procurement with consideration for the global environment with respect tothe materials used in products.

To Our Suppliers
The Kawasaki Group’s business activities are made possible by its partnerships with suppliers. In
its business activities, the Kawasaki Group is advancing initiatives in the following areas. We
therefore ask that our suppliers do the same.

11. Compliance
We ask that our suppliers observe applicable statutes and regulations as well as social
norms in their respective business areas. We also ask that they place information gained
through procurement activities under appropriate controls and take thoroughgoingmeasures to protect confidential information and prevent leaks.
2. Consideration for Human Rights, Labor, and Occupational Safety and Health
We ask that our suppliers and business partners give consideration to human rights, thework environment, and occupational safety and health.
3. Ensuring Quality and Safety
We ask that our suppliers provide materials that meet the high standards of quality andsafety required by the Kawasaki Group.
4. Reinforcing CompetitivenessWe ask that our suppliers share with us the challenges they face and their goals as well as
information about new materials, technologies, and techniques while proactively making
suggestions related to value engineering and other ways of reducing costs in order todevelop competitive technologies and products.
5. Stable Supply
We ask that our suppliers maintain production and crisis management systems capable ofstably securing and providing materials in order to supply materials in a timely manner.
6. Information Disclosure
We ask that our suppliers implement the timely disclosure of information relevant tosociety (such as that on environmental and social impacts).
7. Consideration for the Global Environment
We ask that our suppliers comply with environmental laws and regulations and select andsupply products with minimal environmental burden.
8. Harmonious Coexistence with Society
We ask that our suppliers endeavor to implement initiatives aimed at achieving harmonious
coexistence with international society and local communities.

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II.

A Request to Our Business Partners (Detailed Rules)

A corporation must fulfill its social responsibilities by complying with laws and ordinances and by
showing consideration for human rights and other concerns. We ask that our business partners also
engage in the planning, implementation, and improvement of initiatives to promote the practices
described in items “1. Compliance,” which prescribes the observation of laws and ordinances, and“2. Consideration for Human Rights, Labor, and Occupational Safety and Health,” which deals withthe treatment of employees.
1. Compliance(1) Thoroughgoing Implementation of Compliance Measures in All Aspects of Corporate Activities
You are asked to observe the laws and ordinances enforced in the countries and regions inwhich your corporate activities take place and to respect international norms of behavior to thegreatest possible extent.
(2) Fair and Impartial Competition
You are asked to adhere with the competition laws in each country and region in which you
operate, recognize the importance of free competition in the market and refrain from behavior
that limits or obstructs fair and impartial competition.
(3) Appropriate Export-Import Control
In addition to creating systems for appropriate export-import control, you are asked to engage
in export-import procedures in accordance with the laws, regulations, and other practices ofeach country and region in which you operate.
(4) Exclusion of Relationships with Anti-Social Forces
You are asked to declare and warrant that you are not an organized crime group, a member ofan organized crime group, a quasi-member of an organized crime group, or a party affiliatedwith such a group, or any other entity constituting an anti-social force (hereafter collectively
referred to as “anti-social forces”). You are also asked to declare and warrant that you neveruse violence, force, threatening language, or fraudulent means to make improper demands,
and that you have no relationship of any kind with anti-social forces.

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(5) Strict Control of Confidential Information
You are asked to implement stringent measures to ensure the appropriate management andstrict retention of information obtained through transactions and to prevent the leakage of suchinformation. This applies to information regarding technologies, products, pricing, and otherbusiness matters as well as personal information regarding business partners and otherconfidential information. In addition, you are asked to refrain from the improper acquisition anddisclosure of such information and to properly manage such information via the implementationof preventive measures against computer and network security threats so as not to expose
yourself and other companies to risk.
(6) Prevention of Infringement of Intellectual Property, Etc.
You are asked to take care not to improperly acquire or wrongfully use patent rights, utility
model rights, design rights, trademark rights, copyrights, or other intellectual property or
technical information (hereafter referred to as intellectual property and related information)
belonging to third parties. Also, you are asked to avoid involvement in any infringement ofintellectual property and related information.
(7) Building Fair and Impartial Relationships
In the course of engagement with customers and procurement sources, you are asked to build
fair and impartial relationships with them and refrain from the improper provision or receipt ofmoney or any other action constituting the provision of illicit benefits.
(8) Establishment of a Compliance Whistle-Blowing System
You are asked to establish a whistle-blowing system to allow employees to directly report to or
consult with dedicated departments or external contacts when they recognize the emergenceof material risks, such as those arising from illegal conduct being undertaken by other
employees or such conduct in which whistle-blowers themselves are involved. This system must
likewise accept direct reports and consultation from business partners and consumers who areaware of material risks arising from transactions with your company. Moreover, you are asked
to ensure that confidentiality will be strictly observed in the course of such reporting or
consultation and that the whistle-blowers will not suffer from detrimental treatment.

4(9) Prohibition of Insider Trading
You are asked to refrain from buying or selling the stock of your company or other companies
in a way that leverages unpublished critical information that may influence the stock price. You
are also asked to refrain from encouraging others to engage in stock trading that leverages
such information or provide them with such information.
(10) Prohibition of Acts Involving Conflicts of Interest
You are asked to prohibit your employees from acquiring benefits for themselves or a third
party by sacrificing the interest of the company.
(11) Proper Approach to Issues Associated with Conflict Minerals
You are asked to prevent the purchase and use of conflict minerals (gold, tantalum, tungsten,tin, etc.) that serve as a source of finance for local armed groups involved in inhumane behavior
in the Democratic Republic of the Congo and its surrounding countries.

52. Consideration for Human Rights, Labor, and Occupational Safety and Health(1) Compliance with Labor-Related Laws and Ordinances
You are asked to comply with the labor-related laws and ordinances enforced in the countries
and regions in which your corporate activities take place. You are also asked to pay the greatest
possible respect to international norms of behavior and engage in thoroughgoing occupationalsafety and health management.
(2) Respect for Human Rights
You are asked not to tolerate any human rights violations, such as unfair labor practices,
discrimination, and harassment, on the grounds of race, ethnicity, nationality, religion, age,gender, occupation, or other status requiring protection.
(3) Prohibition of Forced Labor and Child Labor
You are asked to declare and warrant that labor should never be forced by anyone else, butrather should be voluntarily carried out in accordance with the person’s own will, and that labor
practices exploiting children not of working age must be forbidden and eradicated.
(4) Working Hours and Wages
Regarding employee working hours and wages, you are asked to comply with the laws andordinances enforced in the countries and regions in which your corporate activities take place.
(5) Thoroughgoing Measures for Occupational Safety and HealthAs a business operator, you are asked to establish disaster prevention standards, exert theutmost efforts to prevent workplace accidents, and take a thoroughgoing approach tooccupational safety management. In addition, you are asked to engage in conscientious
occupational health management, including employee health management.
(6) Recognition of Freedom of Association and Respect for the Right to Collective Bargaining
You are asked to respect employees’ freedom to associate, join a labor union, and engage inprotests without being subject to retaliation, intimidation, or harassment. You are also asked toprovide opportunities for dialogue between labor unions and management.
(7) Exclusion of Transactions with Companies that Benefit from Inhumane Labor Practices
You are asked to investigate your suppliers to confirm they are not benefitting from inhumanlabor practices, including unfair labor agreements, working regulations, or wage regulations.

6We consider it Kawasaki’s responsibility to provide customers with a stable supply of safe, highquality products and services. In order to fulfill this responsibility, we believe that the cooperationof our business partners is essential, and we therefore ask our business partners to take active
measures to promote the practices described in the items “3. Ensuring Quality and Safety,” “4.
Reinforcing Competitiveness,” and “5. Stable Supply.”
3. Ensuring Quality and Safety(1) Quality Assurance
In addition to assuring the reliability and safety of products and services, you are asked toensure a level of quality that satisfies Kawasaki’s requirements.
(2) Creation, Maintenance, and Improvement of Quality Control Systems
You are asked to create, maintain, and improve optimal quality control systems in order tomaintain and assure the quality of products and services.
(3) Responsibility for Third Parties
You are asked to avoid causing any hazard, harm, or damage to any third party or otherwise
endangering such entity’s livelihood, physical well-being, or property.
(4) Appropriate Response to Product Accidents and/or the Distribution of Defective Products
You are asked to establish a system for handling product accidents and/or the unintentional
distribution of defective products via the implementation of appropriate countermeasures,
including the disclosure of information, contacting the relevant authorities, executing a productrecall, and helping purchasers carry out safety measures.
(5) Traceability Control Pertaining to Raw Materials and Parts
You are asked to keep records of suppliers and all other relevant counterparties playing a rolein each business process from the purchase of raw materials and parts to manufacturing,assembly, distribution, and sales to allow us to trace the purchase history of said materials andparts.

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4. Reinforcing Competitiveness(1) Enhancement of Competitiveness and Creation of Added Value
You are asked to develop and provide technologies, products, and services that are competitiveand have high added value.
(2) Provision of Information on New Materials, New Technologies, New Manufacturing Methods, Etc.
You are asked to strive for innovation in technical development and production technology andto actively provide information on new materials, new technologies, new manufacturingmethods, and so on.
(3) Promotion of Cost Reductions
You are asked to actively promote cost reductions via the use of such means as value
engineering (VE).

5. Stable Supply(1) Stable Supply
You are asked to build production and crisis management systems capable of maintaining thestable procurement and supply of materials.
(2) Observance of Delivery Schedules
You are asked to implement thoroughgoing measures to ensure the management of day-to-day
operational progress and to observe delivery schedules.
(3) Development of BCPs
You are asked to establish a plan/system beforehand to secure the ability to continue yourbusiness if such an emergency as a disaster or epidemic were to occur.

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Kawasaki is acutely aware of the corporate social responsibilities it is expected to fulfill in the
countries and regions in which it operates. Based on this awareness, we believe that our
involvement in initiatives aimed at securing the harmonious coexistence of our businesses and theglobal environment, society at large, and regional communities and their residents is key to creating,
maintaining, and developing relationships with our stakeholders and winning their trust. We also
consider that, to this end, we need to work in tandem with our business partners. Therefore, we
ask our business partners to implement active measures to promote the practices described in theitems “6. Information Disclosure,” “7. Consideration for the Global Environment,” and “8.
Harmonious Coexistence with Society.”
6. Information Disclosure(1) Information Disclosure to Stakeholders
You are asked to provide stakeholders with, and publicly disclose, accurate and timely
information regarding your management policies, finances, and business activities along with
non-financial information deemed highly relevant to society as a whole, such as updates onsocial contribution and environmental protection activities being undertaken. In addition tothereby assuring corporate transparency, you are asked to work to build, maintain, and develop
relationships with stakeholders and win their trust via the aforementioned endeavors.

7. Consideration for the Global Environment(1) Compliance with Environment-Related Laws, Ordinances, and Regulations
You are asked to comply with Japan’s Basic Environment Law, local government ordinances,and other relevant laws and ordinances, as well as RoHS directives,*1 REACH regulations,*2
and other environment-related regulations in the regions in which your corporate activities takeplace.
*1 RoHS: Restrictions on Hazardous Substances. European Union directives restricting the useof specified hazardous substances in electrical and electronic equipment.
*2 REACH: Registration, Evaluation, Authorization and Restriction of Chemicals. Regulations
that require corporations to provide proof of the safety of chemical substances used within theEuropean Union.
(2) Development of Environmental Management Systems
You are asked to build, maintain, and improve management systems designed to control
environmental footprints arising from your corporate activities.

9(3) Reduction and Elimination of Environmental Substances of Concern
You are asked to properly manage environmental load substances arising from your corporate
activities and strive to reduce their emission, with the aim of addressing environmental concerns
in the course of business operations on an ongoing basis.
(4) Pollution Prevention and Environmental Protection
You are asked to institute measures required to prevent air pollution, water pollution, soil
pollution and noise pollution as well as vibration, ground subsidence, offensive odors, and otherforms of pollution arising from your corporate activities, and to strive to preserve theenvironment.
(5) Efficient Use of Resources
You are asked to actively engage in the efficient use of resources via, for example, recycling, inaddition to properly handling industrial waste discharged in the course of your corporate
activities in conformity with recycling-related laws and regulations.
(6) Contribution to Global Environmental Protection
You are asked to recognize that your involvement in global environmental protection efforts is
an important indicator of your corporate value. At the same time, you are asked to implement
measures to reduce emissions of CO2, methane, chlorofluorocarbons, and other greenhousegases, as well as to cut back on the use of packaging materials, with the aim of contributing to
global environmental protection.

8. Harmonious Coexistence with Society(1) Social Contribution
You are asked to voluntarily and actively engage in social contribution activities and otherwise
contribute to the sustainable development of the international community and regional
communities through your corporate activities.

Our Call for CSR Activities Penetrating the Entire Supply Chain
Our business partners are asked to develop corporate structures for promoting CSR activities withreference to these guidelines and, similarly, to ask their procurement sources to do the same toensure the widespread penetration of CSR activities throughout the supply c

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Published by: Kawasaki Heavy Industries, Ltd.
Date of Publication: August 2020