CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Supply chain management

Supply chain management
From tackling global environmental problems as well as
problems related to human rights and labor to carbon
neutrality initiatives to combat global warming, risk
management against natural disasters, and the pursuit of asustainable society, companies are now expected to engage
in very different activities than they were in the past.
In response to these changes in the surrounding
environment, we are establishing a Basic Policy on
Procurement and Client CSR Guidelines concurrently with therevision of our Code of Conduct.

Basic Procurement Policy(1) Promotion of global procurement activities(2) Observance of laws, social codes, and internal
regulations(3) Promotion of fair, just, and sincere procurement
activities(4) Consideration for the environment and humanrights in procurement(5) Building partnerships based on trust with ourvalued suppliersSpecific efforts

Seeking sustainability in procurement

We engage in various activities through the INOAC
Partnership Assembly with 67 of our valued suppliers.
Teaming up with our clients, we engage in awareness-raising
activities such as lecture presentations on work-style reformand cybersecurity measures, activities to ascertain problems
at worksites, and activities to improve production processes.
Through participation in the QC Improvement Competition topresent results of improvement efforts and other suchactivities, we work toward mutually raising the levels of ourenterprises and achieving benefits for all sides while at thesame time developing human resources.

In order to offer products that are friendly to the environmentand our daily lives, we avoid the use of environmentallyhazardous substances in our manufacturing based on ourINOAC Green Procurement Standards. We also engage inprocurement geared toward achieving carbon neutrality.
Every year we conduct surveys to avoid the usage of conflictminerals linked to human rights abuses and discrimination as
well as raw materials and other substances obtained throughunethical practices such as forced labor.

Assembly to Address Quality Problems
We engage regularly in activities to decide on the appropriate
level of quality together with our clients while looking at theactual products.

* This Basic Procurement Policy is currently being updated

Strengthening partnerships with our valued
suppliers
In addition to conventional specifications such as quality andprice, it is now increasingly important in procurement activities
to work together with clients on efforts such as improving
labor conditions and making considerations for theenvironment. Once we have established our Client CSR
Guidelines which are currently being revised, we hope thatour partners will be receptive and prepared to engage inactivities that lead to mutual prosperity as partners—based on
greater mutual trust than ever.
CSR REPORT 2022

Observing the Subcontract Act
As part of compliance, we create a list of clients we dobusiness with in order to thoroughly ensure our observance of
the Subcontract Act (Act against Delay in Payment of
Subcontract Proceeds, Etc. to Subcontractors), and wevisualize the conditions of transactions with the clients towhom this act applies. In sections that handle purchasing
work, we establish frameworks to ensure ongoing complianceby having individual employees attend Subcontract Act
workshops and make action plans at periodical in-housetraining as part of their skills planning.
Visualizing transaction conditions
For new clients

Supplier Awards
We present awards to those clients who particularlycontributed throughout the year.

When commencing business transactions, we verify whether theSubcontract Act applies to those transactions. Before beginning
the transaction, we exchange payment conditions (includingoffsetting conditions), basic business agreements, and notices ofunit price determination with those clients. We also create lists toenable centralized management of what notifications have been
exchanged with subcontracting clients.

For existing clients
Since the Subcontract Act could become applicable totransactions when terms and conditions are changed, we manage
our ongoing Subcontract Act observance by regularly checking
transaction conditions and updating our lists accordingly.

18