CASE STUDIES ON ENVIRONMENTAL DUE DILIGENCE:
EXAMPLES FROM JAPANESE BUSINESSESOVERVIEW
The six case studies enclosed in this series provide examples of corporate efforts to conduct environmental due
diligence, drawing on the experience of Japanese companies. The case studies aim to support business in thepractical implementation of environmental due diligence across supply chains. The OECD Guidelines forMultinational Enterprises (OECD Guidelines) and related OECD Due Diligence Guidance for Responsible BusinessConduct (OECD Due Diligence Guidance) lay out the expectation that business contribute to sustainable
development, while avoiding and addressing adverse impacts of their activities, including throughout their
supply chains.
Risk-based supply chain due diligence to identify and address their adverse impacts on people and the planet isa means to implement the Responsible Business Conduct expectations outlined in the OECD Guidelines. This
collection of case studies draws on the experiences of six Japanese businesses and organisations operating invarious sectors and representing varying positions across the value chain, including: electronics and IT
manufacturing; office supplies distribution; auto parts manufacturing; food ingredient manufacturing; financial
services; and mega sports events organisation.
The case studies provide examples of actions taken to implement the OECD due diligence process andsupporting measures as outlined in the OECD Due Diligence Guidance (see Figure 1 below), and in response tosalient environmental risks or adverse impacts relating to climate change, biodiversity loss, use of plastics anddeforestation. Not all six steps of the due diligence process are covered in each case study.
This series of case studies has been developed further to the OECD Centre for RBC’s collaboration with theJapanese Ministry of Environment on the implementation of the Ministry’s new Introductory Guide on
Environmental Due Diligence along the Value Chain – Referring to the OECD Due Diligence Guidance for
Responsible Business Conduct (August 2020). 1
Figure 1: OECD DUE DILIGENCE PROCESS & SUPPORTING MEASURES

Source: OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm

1CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
EXAMPLES FROM JAPANESE BUSINESSESNOTESThe Introductory Guide aligns with and references OECD RBC instruments and focuses on environmental aspects of supply
chain due diligence. See: https://www.env.go.jp/press/108293.html
1

RESOURCES
OECD (2019), Due Diligence for Responsible Corporate Lending and Securities Underwriting: Key considerations for banks
implementing the OECD Guidelines for Multinational Enterprises
http://mneguidelines.oecd.org/due-diligence-for-responsible-corporate-lending-and-securities-underwriting.pdf
OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm
OECD (2011), OECD Guidelines for Multinational Enterprises. Available in multiple languages athttps://mneguidelines.oecd.org/mneguidelines/

DISCLAIMER
The case studies are based on the information shared by a select group of companies for the purposes of providing real life,
illustrative examples. The OECD does not endorse any of the organisations or specific practices highlighted in these casestudies. This work is published under the responsibility of the Secretary-General of the OECD. Any opinions expressed orarguments employed herein do not necessarily reflect the official views of OECD member countries. This document, as well as
any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitationof international frontiers and boundaries and to the name of any territory, city or area.

RESPONSIBLE SUPPLY CHAINS IN ASIA
The Responsible Supply Chains in Asia (RCSA) programme is being implemented by the International Labour Organization (ILO)
and the Organisation for Economic Co-operation and Development (OECD) with funding from the European Union. The RSCA
programme aims to promote respect for human rights, including labour rights, and responsible business standards in global
supply chains. This programme is carried out in partnership with Japan (an OECD member) and five partner economies, namely
China, Thailand, Viet Nam, Philippines, and Myanmar.

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CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
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These case studies provide examples of salient environmental risks and how companies are working to mitigate
these risks through supply chain due diligence. They are designed to assist companies and other stakeholders inunderstanding how key processes outlined in the OECD Due Diligence Guidance for Responsible BusinessConduct can be implemented in avoiding and addressing adverse environmental impacts associated withcompany operations, supply chains and other business relationships.
Each case study provides examples of company actions that relate to the six recommended due diligenceprocesses set out in the OECD Due Diligence Guidance (see cover note). Not each case study includes examples
across all six processes, rather, they draw on the relevant practical experiences of Japanese companies.

OVERVIEWThe organisation: The Company is a business-to-business food ingredients manufacturer, and specializes in:1) vegetable oils and fats, 2) industrial chocolate, 3) emulsified and fermented ingredients, and 4) soy-based
ingredients. It engages in the research and development, production, and sale of industrial use food ingredients,
and procures palm oil, mainly from plantations in Malaysia and Indonesia, for the vegetable fats and oils usedin its products.
The Challenge: The challenges associated with theconventional cultivation of palm oil are
multidimensional and entrenched within complex
supply chains.1

Sector: Food ingredients
Position in the supply chain: Manufacturing(mid-stream)
Scope of operations: Asia
Ownership form: Publicly listed company
Size: 5,874 employees (2020)

Investors, customers and stakeholders continue
to express strong concerns about adverse
environmental and social impacts in the palm oil
supply chain including: deforestation, loss of
biodiversity, and human rights abuses such as forced labour and child labour.2 In response to these social andenvironmental risks, and to meet rising expectations of clients and investors, the Company is promoting
sustainable procurement of palm oil.
This case study provides examples of how the Company is implementing supply chain due diligence into theCompany’s policies and management systems in order to address actual and potential adverse impacts on theenvironment. It focuses on two environmental risks commonly identified in the procurement of palm oil:deforestation and biodiversity loss.

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CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & BIODIVERSITY LOSSEMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES AND
MANAGEMENT SYSTEMSAs set out in the OECD Due Diligence Guidance for
Responsible Business Conduct (OECD Due Diligence
Guidance),3 embedding RBC into policies andmanagement
systems
andcommunicating
expectations to suppliers and other business
relationships is the first step of due diligence for RBC.
It enables companies to articulate their company-wide
vision and strategy, assign responsibility, support
relevant business units in implementation and ensureaccountability. It can also help ensure suppliers areaware of and commit to integrating their business
partner’s policies and support implementation andmonitoring of due diligence practices in supply chains.
The Company appointed a Chief ESG (Environmental,
Social and Governance) Officer who chairs an ESG
committee which serves as an advisory body to theBoard of Directors.
The committee meets at least twice a year to review progress, and reports to the Board. The committee has
elevated sustainable procurement of palm oil as one of the Company’s top priorities. This is part of theCompany’s broader efforts to ensure sound management of environmental and social issues. It also provides
training to employees and group companies to help them integrate ESG considerations as part of regularbusiness processes and management activities. The Company incentivises such actions through an annual
awards programme aimed at recognising effective management of ESG issues.
The Company became a member of the Roundtable on Sustainable Palm Oil (RSPO) in 2004,4 and reports
annually on its sustainable and responsible sourcing practices. In 2016, the Company introduced its own
Responsible Palm Oil Sourcing Policy, which refers to the RSPO manual, the United Nation Guiding Principles on
Business and Human Rights (UNGPs), International labour Organization (ILO) Conventions, and the Voluntary
Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National
Food Security (VGGT). Through this Policy, the Company reinforced its commitment to engaging with business
partners and relevant stakeholders on environmental and human rights issues related to its procurement ofpalm oil. The promotion of sustainability has attracted new businesses partners including consumer food
manufacturers, retailers, and investors who focus on ESG.
For examples of practical actions to develop RBC policies and to embed them into management systems, seepages 22-23, items 1.1 and 1.2, pages 57-59, Q16, and Table 5 “Example of departments and functions
potentially relevant to implementation of due diligence” of the OECD Due Diligence Guidance. For information
on developing RBC policies, see page 56, Q15. Information on the role of the board and management inembedding RBC can be found on page 59, Q17. Information on how companies collaborate at an industry level
and with relevant stakeholders can be found on pages 51-53, Q12 and Box 3 on “Good governance for due
diligence collaborative initiatives”.

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CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & BIODIVERSITY LOSSIDENTIFY AND ASSESS ACTUAL AND POTENTIAL ADVERSE IMPACTS
ASSOCIATED WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICES
INCREASING VISIBILITY OVER SUPPLY CHAINS

Supply chain mapping is a critical part ofthe due diligence process. It helps
companies develop a complete picture of
their supply chain and business
relationships and understand where therisks are.
This enables effective risk assessment andprioritisation based on severity andlikelihood.

In 2020, the Company reported that it achieved its
target of delivering full traceability of oil mills.
It mapped its suppliers by tier, region and productand product type, and published details on its
webpage together with a list of nearly 1,400 oil mills
in its supply chain. See Figure 1 for an overview ofthe palm oil supply chain.
The Company procures part of its supply of palm oilfrom its own group companies operating refineries(primary refineries) in Malaysia. These refineries area control point in the palm oil supply chain,
operating at a key point of transformation in the
supply chain with good visibility and leverage overtheir suppliers, including oil mills and plantations.

The Company engages with these primary refineries to increase its own understanding and visibility of the palm
oil supply chain to identify and address environmental risks. In collaboration with an environmental nongovernmental organisations (NGO), the Company and these primary refineries have requested oil mills tocomplete self-assessment questionnaires to help identify risks further up the supply chain.
The Company also conducts on-site visits to the oil mills associated with high environmental and social risks andsupports these sub-suppliers in mitigating these risks.
Figure 1. SIMPLIFIED PALM OIL SUPPLY CHAIN

The Company has also engaged with its external (non-company group) primary refineries and is supportingthese suppliers' understanding of the Company’s Sourcing Policy. These external primary refineries are also
asked to complete a self-assessment questionnaire relating to environmental and social risks, enabling theCompany to understand and monitor progress of each supplier's risk management process.

5CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & BIODIVERSITY LOSSThe Company also encouraged external primary refineries to develop grievance mechanisms with their
suppliers, to facilitate information gathering on negative impacts.
For examples of practical steps that companies can take to identify and assess high-risk operations and business
relationships, see pages 66-67, Q24-Q25 of the OECD Due Diligence Guidance. For examples of actions to engage
with suppliers beyond Tier 1, see pages 68-69, Q27-28.
To better understand supply chain mapping and control points in the supply chain, see pages 61-62, Box 4“Where does supply chain mapping fit into the scoping and assessment process?” and page 69, Box 5“Engagement with business relationships operating at control points in the supply chain”.

CEASE, PREVENT AND MITIGATE ADVERSE IMPACTS
While companies always remain responsible for ensuringthat their due diligence is effective, collaboration can bebeneficial in pooling knowledge on sector risks, increasing
leverage with shared business relationships, finding
solutions and making due diligence more efficient for all.
Collaboration can help companies prevent and mitigate
specific risks.
Research on oil mills in Sumatra, Indonesia revealed thatnatural areas rich in biodiversity have been exposed todeforestation. Since 2018, the Company has financially
supported the Areas for Priority Transformation
programme (APT)5 to help prevent and mitigate suchrisks.
The APT is a multi-stakeholder initiative in which local
governments, NGOs, companies and farms work together
to tackle deforestation in two tropical rainforest regions(Aceh Tamiang and Southern Aceh).
This initiative has adopted a “landscape approach”, whichaims to support the entire community across sectors.
The goal of this programme is to reduce deforestation anddemonstrate the feasibility of balancing commodity production, conservation and good social and labour
practices at scale.
To accomplish this, the programme focuses on three mutually reinforcing areas of work: integrated land use
planning with government, NDPE (No Deforestation, Peat, and Exploitation) support and training for industry,
and intensive capacity-building for communities on the forest frontier.
For information on how companies can increase their leverage to effect change, see page 19, Box 2“Collaboration in carrying out due diligence” and pages 78-80 Q36-Q38 of the OECD Due Diligence Guidance.

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CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & BIODIVERSITY LOSSCOMMUNICATE HOW IMPACTS ARE ADDRESSEDThe Company reports on its management of ESG issues andsustainability-related actions through its website. It reports
on initiatives to strengthen Company capacity forsustainable palm oil procurement, as well as the results of
its supply chain mapping including details on the supply
chain structure and the list of oil mills associated with theCompany.
In addition, the Company also reports on the risks identified
in its supply chain and the measures taken, in co-operation
with suppliers, to identify and address these risks such as
through the implementation of a grievance process. The
Company also shares information on collective efforts topromote sustainable palm oil supply chains across theindustry.

Reporting publicly on company RBC
policies, due diligence processes andactivities conducted to identify andaddress risks, including the findings andoutcomes of those activities, is part ofthe due diligence process itself.
It enables companies to build trust in
their actions and decision-making, anddemonstrate good faith.

Finally, the Company sets specific targets related to sustainable palm oil procurement each year and reports
publicly on the results and next steps. It aggregates performance data and publishes progress reports on the
Company’s Supply Chain Data Base webpage.
For examples of appropriate forms of public communication of information related to due diligence for RBC, seepage 33, item 5.1 and pages 85-87, Q46-Q47 of the OECD Due Diligence Guidance.

6

PROVIDE FOR OR COOPERATE IN REMEDIATION

Grievance and remediation processes
interact with and support due
diligence by providing channels
through which companies canbecome aware of and respond toadverse impacts of their activities.

Effective implementation of grievance mechanisms canhelp companies enhance risk-based due diligence acrossall issues related to RBC.
As part of its Responsible Palm Oil Sourcing Policy, theCompany established a grievance mechanism in 2018 toreceive and handle complaints on environmental andhuman rights issues related to operations and its palm
oil supply chain.

To improve the effectiveness of its grievancemechanism in line with the UNGPs effectiveness criteria
for non-judicial grievance mechanisms,6 the Company published its Grievance Procedure which describes theworkflow process, timelines and other information of the grievance mechanism such as the templates forreporting and action-planning on grievances.
To increase transparency, the Company publishes a list of grievances received with an update on progress on
its webpage every quarter. This quarterly grievance list includes information on who has raised a grievance (at7CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & BIODIVERSITY LOSSan organisation level only), dates, issues (i.e. deforestation, illegal sourcing), alleged upstream suppliers
potentially involved, supply chain linkages with the Company and the progress and status of the complaint.
As of March 2021, the company had received 228 cases. As a result of the grievance procedure, the Company
has decided in certain cases to stop sourcing from a specific supplier. In other cases, the Company worked withthe supplier to develop a solution such as enhancing traceability or engaging with communities to prevent
deforestation.
To better understand on-going supply chain risks and develop solutions, the Company has also been
participating in a multi-stakeholder initiative led by the Global Compact Network Japan and the Japan Businessand Human Rights Lawyers Network. Through this engagement, the Company is collaborating with othercompanies and stakeholders to solve issues through facilitated dialogue between business and NGOs.
For examples of practical actions that companies can take to cooperate with legitimate remediation mechanisms
and enable remediation, see pages 34-35, items 6.1 and 6.2 and pages 90-91, Q52-Q54 of the OECD Due
Diligence Guidance.

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NOTES
1See for instance: Understanding the Journey: Shared experiences from companies on their transition to 100% sustainablepalm oil. WWF (2020).
https://wwf.panda.org/discover/our_focus/food_practice/sustainable_production/palm_oil/news_updates/?950941/Tacklin
g-sustainability-issues-in-the-palm-oil-sector-Major-brands-and-retailers-share-their-experiences-with-WWF
2

See for instance: Study on the environmental impact of palm oil consumption and on existing sustainability standards. For
the European Commission, DG Environment. 2018 (07.0201/2016/743217/ETU/ENV.F3).
https://ec.europa.eu/environment/forests/pdf/palm_oil_study_kh0218208enn_new.pdf. Or Rainforest Alliance Network“Conflict Palm Oil: How U.S. Snack Food Brands are Contributing to Orangutan Extinction, Climate Change and Human Rights
Violations” https://www.ran.org/wp-content/uploads/2018/06/conflict_palm_oil_lowres_(1)..pdf
3OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm
4

The Roundtable on Sustainable Palm Oil (RSPO). See: https://rspo.org/

5

The Earthworm Foundation. https://www.earthworm.org/our-work/projects/aceh-tamiang-sumatra-indonesia

6

The OECD Guidelines recommend when the enterprise identifies that it has caused or contributed to actual adverse
impacts, it addresses such impacts by providing for or cooperating in their remediation. The OECD Guidelines provides core
criteria for operational-level grievance mechanisms in line with the UNGPs. See pages 34-35. OECD Due Diligence Guidancefor Responsible Business Conduct. 2018: https://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-businessconduct.htm. The UN Guiding Principles on Business and Human Rights also provides eight effectiveness criteria for company
grievance mechanisms. These effectiveness criteria provide a benchmark for designing, revising or assessing a non-judicial
grievance mechanism to help ensure that it is effective in practice. Poorly designed or implemented grievance mechanisms
can risk compounding a sense of grievance amongst affected stakeholders by heightening their sense of disempowerment
and disrespect by the process. See the Commentary to Guiding Principle 31, UN Guiding Principles on Business and Human
Rights (2011): https://www.ohchr.org/documents/publications/guidingprinciplesbusinesshr_en.pdf

REFERENCES
OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm
OECD (2011), OECD Guidelines for Multinational Enterprises. Available in multiple languages athttps://mneguidelines.oecd.org/mneguidelines/

This case study documents actions related to some but not all of the six due diligence processes and supporting measures set out in the OECD
Due Diligence Guidance. These actions are outlined under the corresponding process and step number included in the OECD Due Diligence
Guidance.
The case study is based on the information shared by the company and it is outside the scope of this case study to confirm or evaluate theinformation provided. The OECD does not endorse any of the organisations or specific practices highlighted in these case studies. This work
is published under the responsibility of the Secretary-General of the OECD. Any opinions expressed or arguments employed herein do notnecessarily reflect the official views of OECD member countries. This document, as well as any data and map included herein, are without
prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name ofany territory, city or area.

9CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & BIODIVERSITY LOSS

These case studies provide examples of salient environmental risks and how organisations are working to mitigate
these risks through supply chain due diligence. They are designed to assist companies and other stakeholders inunderstanding how key processes outlined in the OECD Due Diligence Guidance for Responsible Business Conduct
can be implemented in avoiding and addressing adverse environmental impacts associated with company
operations, supply chains and other business relationships.
Each case study provides examples of organisational actions that relate to the six recommended due diligenceprocesses set out in the OECD Due Diligence Guidance (see cover note). Not each case study includes examples
across all six processes, rather, they draw on the relevant practical experiences of Japanese organisations.

OVERVIEWThe organisation: The Tokyo Organising Committee of the Olympic and Paralympic Games (the Committee) wasestablished in 2014 to deliver the 2020 Olympic and Paralympic Games in Tokyo, due to be held in 2021. Its
Executive Board members are from various stakeholders including the Japanese Olympic Committee, theJapanese Paralympic Committee, the Tokyo Metropolitan Government (TMG) and the national government. As
part of its wide ranging responsibilities, the organisation is responsible for procuring various goods and services
across the globe; the Committee’s total procurement budget for 2014 to 2019 was more than JPY 490
billion (Japanese Yen).
The Challenge: Demands from stakeholders for
major events to be delivered responsibly and inline with international standards on responsible
business conduct (RBC) are increasing. Specificconcerns have been raised relating to theCommittee’s procurement practices and risks ofdeforestation and biodiversity loss linked to its
international supply chains. 1

Sector: Mega Sporting Events
Position in the supply chain: Buyer of goods andservices
Scope of operations: Global
Ownership form: Public interest incorporated
foundation
Size: 3,800 employees (2020)

In response to these challenges, the Committee
has worked to implement supply chain due
diligence expectations into its policies and has established an operational-level grievance mechanism (OLGM)
to address negative impacts. The Committee has publicly committed to promoting environmental standards aspart of its Sustainability Plan, 2 building on the good practices from the London 2012 games 3 and Rio 2016
games.

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CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
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This case study provides examples of how the Committee is implementing supply chain due diligence, witha focus on two environmental risks commonly identified with large infrastructure projects of this nature,
specifically deforestation and biodiversity loss.

EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES AND
MANAGEMENT SYSTEMSAs set out in the OECD Due Diligence Guidance for
Responsible Business Conduct (OECD Due Diligence
Guidance), 4 embedding responsible business conduct(RBC) into policies and management systems andcommunicating expectations to suppliers and otherbusiness relationships is the first step of due diligencefor RBC.
It enables companies and organisations to articulate
their company-wide vision and strategy, assign
responsibility, support relevant business units in
implementation and ensure accountability. It can also
help ensure suppliers are aware of and commit tointegrating their business partner’s policies andsupport implementation and monitoring of due
diligence practices along the supply chain.
INCLUDING RBC EXPECTATIONS IN CONTRACTS OR OTHER FORMS OF WRITTEN AGREEMENTS
Stakeholders have urged the Committee to address adverse impacts on people, the environment and society
stemming from procurement practices, and to contribute to achieving the Sustainable Development Goals(SDGs). 5 In response, the Committee adopted a Sustainable Sourcing Code (the Code) in 2017. 6 The Coderequires suppliers and licensees to ensure compliance with sustainability standards throughout their supply
chains, and clarifies procurement criteria and operating methods for products and services.
Box 1: ENVIRONMENTAL STANDARDS INCLUDED IN THE CODE FOCUS ON:
i. Energy savings
ii. Use of low carbon / carbon-free energyiii. Reduction of greenhouse gas emissions by other means
iv. Promotion of the 3 Rs (“Reduce, Reuse, and Recycle”)
v. Reduced use of containers, packaging, etc
vi. Prevention of contamination, management of chemicals, and waste disposalvii. Collection of raw materials with consideration for resource conservation
viii. Conservation of biodiversity

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CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & BIODIVERSITY LOSSThe Code was produced through a broad scoping exercise involving a multi-stakeholder working group. 7 It
includes environmental, human rights, labour, and economic sustainability standards and provides for specificenvironmental standards to be applied in the procurement of particular products, including timber, agricultural
products, livestock products, fishery products, paper, and palm oil (see Box 1).
The Committee requires all suppliers to express their commitment to comply with the Code in writing as partof its contractual arrangement. The Code’s commentary clarifies the expectation that suppliers should take arisk-based approach to due diligence. 8 The Committee also mandates that suppliers fill out a questionnaire toreview their practices and efforts to address environment, human rights, and labour-related issues in supply
chains to comply with the Code.
The Code’s commentary provides model contractual clauses on sustainability for suppliers to include in theirown contractual arrangements with their suppliers. The Committee has also sought to continually improve theCode and has revised it twice since 2018.
For examples of practical actions to incorporate RBC expectations and policies into engagement with suppliers
and other business relationships can be found on page 24, item 1.3 and page 60, Q18 of the OECD Due Diligence
Guidance.
DEVELOPING SPECIFIC POLICIES ON AN ENTERPRISE’S MOST SIGNIFICANT RISKS

Illegal and unsustainable logging cancontribute to deforestation, forest
degradation and biodiversity loss, as wellas other adverse environmental and social
impacts.

In 2017, environmental NGOs raised concerns
relating to degradation of tropical forests andpotential human rights violations connected totimber supply chains associated with the Tokyo
2020 Olympics. 9 Preventing and mitigating risks
associated with deforestation and biodiversity loss
are central to establishing responsible timber
supply chains.

In addition to the Sustainable Sourcing Code (the Code), the Committee developed criteria under a Sustainable
Sourcing Code for Timber (Timber Code), which provides suppliers with a detailed framework for theBox 2: ADDITIONAL CONDITIONS FOR SUSTAINABLE PROCUREMENT OF TIMBER (EXCERPT)
i.
ii.
iii.
iv.
v.

Timber that is harvested through an appropriate procedure with reference to relevant laws,
ordinances, etc. of timber-producing countries or territories.
Timber that derives from forests maintained and managed based on mid- to long term plans or
policies and does not derive from conversion of forest to non-forest area such as farmland.
Timber that is harvested through logging activity that is considerate toward conservation of
the ecosystem.
Timber that is harvested through logging activity that is considerate toward the rights ofindigenous people and other local residents.
Timber that is harvested by workers who are protected through appropriate safety measures.

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procurement of timber. 10 The Timber Code includes forestry-related certification programmes and aims toaddress specific risks linked to deforestation and biodiversity loss, as well as impacts to the rights of indigenous
people (see Box 2). The Committee requires its suppliers to demonstrate adherence to these standards which
extend beyond requirements in existing domestic regulations. 11
Concerns were also raised by stakeholders about the suitability of an early version of the Timber Code. 12 In
revising the Timber Code, the Committee held meetings with a multi-stakeholder working group and conductedinterviews with environmental NGOs, research institutes, certification programmes and timber importers.
Discussions fed into a revision published in 2019. 13
The revised Code requires suppliers to confirm in writing that timber is not derived from the conversion offorests to agricultural land. It also includes recommendations for suppliers to collect information relating to thetraceability and source of timber and production sites, to improve visibility of supply chains.
For information on risk-based due diligence approaches and the prioritisation of risks, see pages 42-45, Q3-Q5,
including Table 3 “Examples of indicators of scale, scope and irremediable character” of the OECD Due Diligence
Guidance.
For information on developing RBC policies, see page 56, Q15. Information on how companies collaborate at anindustry level and with relevant stakeholders can be found on pages 51-53, Q12 and Box 3 on “Good governancefor due diligence collaborative initiatives”.

4

TRACK IMPLEMENTATION AND RESULTS

Tracking the implementation and effectiveness of due diligence activities may help improve these processes in
the future.
The Committee undertook a number of steps toaddress challenges in monitoring and engaging with
suppliers in order to improve compliance with its
sustainability standards.
Working with the Tokyo Metropolitan Government, theCommittee organised field surveys at plywood logging
and processing sites in Indonesia and Malaysia
exporting plywood procured by the Committee.

Verifying effectiveness of due diligencepractices can help ensure that companies
have adequately identified, prevented or
mitigated risks, and where appropriate,
supported remediation of impacts,
including through business relationships.

These survey findings were published in the Sustainability Pre-Games Report in 2020 14.
For examples of practical actions to track implementation and results of due diligence, see page 32, item 4.1 andpages 82-84, Q41-Q45 of the OECD Due Diligence Guidance.

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CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
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6

PROVIDE FOR OR COOPERATE IN REMEDIATION

Grievance and remediation processes support due diligenceby providing channels through which companies canbecome aware of and respond to adverse impacts of theiractivities. Effective implementation of grievancemechanisms can help companies enhance risk-based due
diligence across all issues related to RBC. 15
Building on the London 2012 Grievance and Complaints
Mechanism model set up by the London Organising
Committee (LOGOC), the Committee established its own
grievance mechanism to handle alleged cases of noncompliance with the Sustainable Sourcing Code (theCode). 16
The Committee took steps to address and boost trust ingrievance mechanisms by establishing an external advisory
panel comprised of experts in human rights, environmental
issues and conflict resolution. 17
The advisory panel supervises the engagement process andprovides independent opinions on each case within thegrievance mechanism’s scope.
For examples of practical actions that companies can take to cooperate with legitimate remediation mechanisms
and enable remediation, see pages 34-35, items 6.1 and 6.2 and pages 90-91, Q52-Q54 of the OECD Due
Diligence Guidance.

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CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & BIODIVERSITY LOSSNOTES
See for example: Joint NGO Statement on Tokyo 2020 Olympics’ “Fake Sustainability”.
https://www.ran.org/press-releases/olympics-fake-sustainability/
1

2

The Sustainability Concept of the Tokyo 2020 Games. See: https://tokyo2020.org/en/games/sustainability/

https://library.olympic.org/Default/doc/SYRACUSE/47420/locog-sustainable-sourcing-code-london-organizing-committeefor-the-olympic-and-paralympic-games?_lg=en-GB
3

OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm

4

See for instance Public Consultation on Draft Sustainable Sourcing Policy for Tokyo 2020. IHRB. 2015.
https://www.ihrb.org/focus-areas/mega-sporting-events/public-consultation-draft-sustainable-sourcing-policy-tokyo-2020
and High-Level Sustainability Plan and Sourcing Code for Tokyo 2020 Olympics Submission. IHRB. 2016:
https://www.ihrb.org/focus-areas/mega-sporting-events/submission-high-level-sustainability-plan-sourcing-code-tokyo2020-olympics
5

Tokyo 2020 Olympic and Paralympic Games Sustainable Sourcing Code.
See: https://tokyo2020.org/en/games/sustainability/sus-code

6

This including members from international environmental and human rights non-governmental organisations (NGOs), in
consultation with lawyers and other experts.

7

Tokyo 2020 Olympic and Paralympic Games Sustainable Sourcing Code (3rd edition). Page 3.
https://gtimg.tokyo2020.org/image/upload/production/c7upgxneht8jclnxygp8.pdf
8

An Open Letter to Tokyo 2020 Olympic Authorities. Friends of the Earth. 2017.
https://www.foejapan.org/forest/library/pdf/20170911_Letter_to_Tokyo2020_authorities_e.pdf

9Sustainable Sourcing Code for Timber. Tokyo 2020 Organising Committee.
https://gtimg.tokyo2020.org/image/upload/production/ionsexo2hw0bvhjcollc.pdf
10

The Act on Promotion of Use and Distribution of Legally-harvested Wood and Wood Products (the Clean Wood Act) went
into force in May 2017. It aims to promote the use and distribution of wood and wood products made from trees harvested
in compliance with the laws and regulations of Japan or the countries of origin.
https://www.rinya.maff.go.jp/j/riyou/goho/english/english-index.html

11

An Open Letter to Tokyo 2020 Olympic Authorities. Friends of the Earth. 2017.
https://www.foejapan.org/forest/library/pdf/20170911_Letter_to_Tokyo2020_authorities_e.pdf

12

Revision of procurement code in consideration of sustainability. The Tokyo Organizing Committee for the Olympic andParalympic Games. 2019. https://tokyo2020.org/ja/games/sustainability/si-20190118-01

13

Sustainability Report. The Tokyo Organizing Committee for the Olympic and Paralympic Games. 2020.
https://tokyo2020.org/en/games/sustainability/report
14

The OECD Guidelines recommend when the enterprise identifies that it has caused or contributed to actual adverse
impacts, it addresses such impacts by providing for or cooperating in their remediation. The OECD Guidelines provides core
criteria for operational-level grievance mechanisms in line with the UNGPs. See pages 34-35. OECD Due Diligence Guidancefor Responsible Business Conduct. 2018. https://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-businessconduct.htm.
1515

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & BIODIVERSITY LOSS
Establishment of a Grievance Mechanism to handle reports of non-compliance with the Tokyo 2020 Sustainable Sourcing
Code. Tokyo 2020 Olympic and Paralympic Games Sustainable Sourcing Code.
https://olympics.com/tokyo-2020/en/games/sustainability/sus-code#01. See also: Tokyo 2020 Olympic and Paralympic
Games Sustainable Sourcing Code (3rd edition) [Commentary. See Page 50 on Grievance Mechanisms.
https://gtimg.tokyo2020.org/image/upload/production/c7upgxneht8jclnxygp8.pdf
16Regarding the establishment and operation of Advisory Panel in the Grievance Mechanism for the Tokyo 2020 Sustainable
Sourcing Code. 2018. See: https://gtimg.tokyo2020.org/image/upload/production/jpsbnkfk7eymeenlmyyx.pdf

17

REFERENCES
OECD (2019), Due Diligence for Responsible Corporate Lending and Securities Underwriting: Key considerations for banks
implementing the OECD Guidelines for Multinational Enterprises
http://mneguidelines.oecd.org/due-diligence-for-responsible-corporate-lending-and-securities-underwriting.pdf
OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm
OECD (2011), OECD Guidelines for Multinational Enterprises. Available in multiple languages athttps://mneguidelines.oecd.org/mneguidelines/

This case study documents actions related to some but not all of the six due diligence processes and supporting measures set out in the OECD
Due Diligence Guidance. These actions are outlined under the corresponding process and step number included in the OECD Due Diligence
Guidance.
The case study is based on the information shared by the organisation and it is outside the scope of this case study to confirm or evaluate
the information provided. The OECD does not endorse any of the organisations or specific practices highlighted in these case studies. This
work is published under the responsibility of the Secretary-General of the OECD. Any opinions expressed or arguments employed herein do
not necessarily reflect the official views of OECD member countries. This document, as well as any data and map included herein, are without
prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name ofany territory, city or area.

16

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & CLIMATE CHANGE

These case studies provide examples of salient environmental risks and how companies are working to mitigate
these risks through supply chain due diligence. They are designed to assist companies and other stakeholders inunderstanding how key processes outlined in the OECD Due Diligence Guidance for Responsible BusinessConduct can be implemented in avoiding and addressing adverse environmental impacts associated withcompany operations, supply chains and other business relationships.
Each case study provides examples of company actions that relate to the six recommended due diligenceprocesses set out in the OECD Due Diligence Guidance (see cover note). Not each case study includes examples
across all six processes, rather, they draw on the relevant practical experiences of Japanese companies.

OVERVIEWThe organisation: The Company is one of the largest commercial banking groups in Japan. It provides banking
and lending services to both individual and corporate clients, and manages assets for pension funds and otherasset owners as an institutional investor through its asset management division. As of 2020, the Company held
approximately JPY 28 trillion (Japanese yen) in assets under management.
The Challenge: Financial institutions have a keyrole to play in driving sustainability by directing
financing towards projects and businesses that Sector: Financial Sector
support the Sustainable Development Goals Scope of operations: Asia
(SDGs) and the goals of the Paris Climate Ownership form: Publicly listed company
Agreement. To contribute to sustainability goals, Size: 20,760 employees (2020)
financial
institutions
shouldaddress
environmental and social risks associated with
their own activities and embed responsible business conduct (RBC) processes into their activities and value
chains in line with the OECD Guidelines for Multinational Enterprises 1 and the related OECD Guidance on Due
Diligence for Responsible Corporate Lending and Securities Underwriting and Responsible Business Conduct for
Institutional Investors paper. 2
Financial institutions can be a positive driving force in changing attitudes and practices in the management of
supply chains. However, the inherent complexities in the financial sector such as extensive and complex
business relationships or the rapidity of transactions can make practical application of effective due diligencesystems challenging. In response to these challenges, the Company has developed responsible investment
policies and strategies, and works to support its investees in identifying, preventing, and mitigating
environmental and social risks.
This case study provides examples of how the Company is implementing supply chain due diligence, and inparticular, its efforts to promote responsible investing in line with the Principles for Responsible Investment

3

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & CLIMATE CHANGE(PRI) 3 and the Principles for Responsible Institutional Investors (Japan’s Stewardship Code). 4 It focuses on two
key environmental risks - deforestation and climate change, identified as key priorities by the Company throughinteraction with various stakeholders including non-governmental organisations (NGOs).

EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES AND MANAGEMENTSYSTEMSBy carrying out due diligence in line with the OECD Due
Diligence Guidance for Responsible Business Conduct(OECD Guidance), banks can ensure that financing flows
to projects and companies that behave responsibly,
prevent negative impacts and ultimately benefit people
and the planet. Due diligence can help banks identify,
prevent or address adverse environmental impacts
associated with their clients, as well as avoid financial
and reputational risks.
Embedding RBC into policies and management systems
and communicating expectations to clients andbusiness partners is the first step of due diligence forRBC. It enables companies to articulate their companywide vision and strategy, assign responsibility, support
relevant business units in implementation and ensureaccountability.
EMBEDDING RBC IN INVESTOR POLICIESThe Company is a signatory to the PRI since 2008. It promotes responsible investing policies and practices andsupports investees in managing their environmental, social and governance (ESG) risks in line with its
commitments under the PRI. 5 In 2014, the Company’s asset management division adopted a policy on
responsible investment. The policy clarifies the Company’s commitment to social responsibility and achieving
sustainable socioeconomic growth in the corporate value of investee companies as well as developing solutions
to social challenges. It seeks to incorporate ESG factors into its investment decisions and to promote value
creation and sustainable growth of investee companies over the medium to long-term. Box 1 outlines why there
may be some difference in scope between ESG and RBC risks. 6
Box 1: “RBC” and “ESG” criteria both relate to environmental, social and governance considerations,however, there may be some differences. RBC risk refers specifically to the risk of adverse impacts withrespect to the issues covered by the OECD Guidelines — in other words, the risks to society and theenvironment, not to the company itself. Figure 1 illustrates the scope of RBC impacts and the difference
to traditional Environmental & Social (E&S) risk management.

4

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & CLIMATE CHANGE
The Company has also signed Japan’s Stewardship Code, published by the Financial Services Agency of Japan 7.
The Code encourages institutional investors and asset managers to monitor and engage with investees
regarding the sustainable growth of their companies. The Company now monitors the ESG risks of investee
companies and engages on ESG issues through stewardship activities.
For examples of practical actions that companies can take to build RBC expectations into business relationships,
see page 60, Q18 of the OECD Guidance. See also the OECD report on RBC for Institutional Investors: Keyconsiderations for due diligence under the OECD Guidelines. Pages 21-25 detail how investors can integrate RBC
into existing risk management frameworks, including ESG criteria.
Figure 1. DUE DILIGENCE FOR RBC: AN OUTWARD FACING APPROACH

Source: OECD (2019), Due Diligence for Responsible Corporate Lending and Securities Underwriting.
https://mneguidelines.oecd.org/due-diligence-for-responsible-corporate-lending-and-securities-underwriting.pdf

COMMUNICATING RBC EXPECTATIONS IN BANKING TRANSACTIONS WITH CLIENTSThe OECD Guidance for Responsible Corporate Lending and Securities Underwriting recommends that the firststep in communicating RBC expectations is to ensure that a bank’s RBC policies are publicly available and are
actively communicated to the client. Banks should articulate their RBC expectations in a way that can beunderstood by the companies the bank engages with.
As corporate lending and underwriting transactions represent the vast majority of the Company’s banking
activities, it promotes responsible lending through its banking division. The Company’s lending policy publicly
communicates its commitment relating to transactions in sectors that may negatively affect communities andthe environment. It has said it will not engage in project finance activities for projects that may have serious
adverse impacts on the environment or society. (see Box 2 for excerpts).

5

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & CLIMATE CHANGE
The Company has also set out additional lending policies for specific businesses and sectors that are categorised
as high-risk such as: a) Coal-fired thermal power generation; b) Large-scale hydroelectric power generation; c)
Coal mining; d) Palm oil farm development; e) Oil and gas extraction and pipeline construction; and f) Woodand paper pulp production and timber harvesting.
Box 2: EXCERPT OF THE BANK´S RESPONSIBLE LENDING POLICY●

We will not lend to businesses that exert a seriously negative impact on wetland sites
designated by the Ramsar Convention or the World Heritage Sites designated by UNESCO,
neither will we provide lending to businesses in violation of the Washington Convention.
● We will take a cautious stance towards lending to businesses that negatively affectindigenous local communities and other areas of high conservation value and also exercise
caution in lending to businesses that entail the involuntary resettlement of residents. To
this end, we will give due consideration to their social, environmental, and other impacts
and confirm the status of dealing to mitigate risks prior to lending.
For examples of practical actions to develop RBC policies and to embed them into management systems, seepages 22-23, items 1.1 and 1.2, and pages 56-59, Q14-Q17, including Table 5 “Example of departments andfunctions potentially relevant to implementation of due diligence” of the OECD Due Diligence Guidance.
Detailed recommendations can also be found in the OECD report on Due Diligence for Responsible Corporate
Lending and Securities Underwriting: Key considerations for banks implementing the OECD Guidelines. See pages
27-34 on embedding RBC into bank’s policies and management systems.

CEASE, PREVENT AND MITIGATE ADVERSE IMPACTS

Once a company gathers information from risk assessments and prioritizes risks across its different portfolios,
it can design and implement a risk management strategy to prevent and mitigate adverse impacts. Taking
proactive measures to address risks facilitates progress towards meeting RBC expectations in a systematic way.
This may include a conditioning provision on financing based on RBC performance, temporary divestment or areduction in exposure to companies that do not demonstrate progress on RBC, and moving portfolio allocation
towards responsible companies.
Adverse impacts caused by a client or an investee company of a bank would, in the majority of cases, be “directly
linked” to the financing, underwriting or investment services of the bank, which has a business relationship withthe client. In these situations, the bank is expected to use its leverage to influence the entity causing the adverse
impact to prevent or mitigate, and where relevant, remedy the impact. 8 In cases where an enterprise iscontributing to adverse impacts or risks caused by another entity, it should take the necessary steps to cease or
prevent its contribution, and look to build and use its leverage to mitigate any remaining impacts to the greatest
extent possible.

6CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & CLIMATE CHANGECARRYING OUT MEASURES TO ADDRESS DEFORESTATION RISKS IN PALM OIL SUPPLY CHAINSAdverse environmental, social, and human rights
impacts have been linked to palm oil supply chains.
The palm oil industry has been linked toThrough engagement with its investee companies
several adverse environmental, social, andand by evaluating reports on their businesshuman rights impacts including
practices, the Company has identified a number of
deforestation.
investees that are potentially linked to negative
impacts through palm oil supply chains. In
response, the Company organised a task force on palm oil in 2016 which engaged experts and stakeholders,
including environmental NGOs, to help shape the Company’s strategy to address deforestation risks.
The Company also created and is maintaining a list of investees associated with palm oil supply chains. It
conducted meetings with 52 of these investees between August 2017 and June 2019. The investees included
18 companies operating in the retail, restaurant, and service industries; 6 toiletry manufacturers; 18 food
manufacturers; 5 oil and chemical companies; and 5 general trading companies. As part of these meetings, theCompany shared information relating to environmental and human rights risks inherent in palm oil supply
chains, highlighted progress made on investee initiatives for sustainable palm oil, and profiled examples ofactions companies can take to address specific risks.
Between January 2018 and March 2019, the Company
identified seven major high risk palm oil plantation operators
in Malaysia and Singapore. The Company reviewed theoperators’ procurement practices and efforts to comply withNo Deforestation, No Peat, No Exploitation (NDPE) policies, 9and encouraged them to extend traceability efforts to thelevel of small independent plantation operators.
In October 2018, the Company participated in a working
group at the PRI which contacted nine regional banks thatprovide funding to small and medium sized palm oil
operators. The working group engaged directly with four ofthese banks to help improve frameworks for managementand disclosure of ESG risks related to palm oil supply chains.
For information on addressing systemic issues, please see
Box 6 “Addressing systemic issues” on page 76 of the OECD
Due Diligence Guidance. Examples of practical actions todevelop a company’s leverage to prevent or mitigate risks
can be found on pages 78-79, Q36-Q37.

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CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & CLIMATE CHANGE
USING LEVERAGE TO ADDRESS CLIMATE CHANGE
Based on an assessment of relevant ESG issues, including interaction with NGOs, the Company identified climatechange and marine plastic pollution as significant and common risks among its investees. To prevent andmitigate these risks, the Company is working to increase its leverage in order to influence investee actions
through investor-led collective initiatives and tailored support to SMEs (see Box X below).
The Company participates in Climate Action 100+, 10 an investor-led initiative that aims to facilitate collaboration
with companies to transition to net-zero emissions and address climate issues at scale. The initiative identified
industries producing high volumes of greenhouse gas (GHG) emissions such as the automobile, electronics, andoil & gas sectors, and targets engagement with companies with large market capitalization, which includes ten
Japanese businesses.
Working in partnership other investors, the Company has engaged with these ten businesses to reduce CO2
emissions throughout their value chains, and to enhance climate-related financial disclosures in line with the
Task Force on Climate-related Financial Disclosures (TCFD). 11 The Company monitored the progress of the target
companies’ CO2 emission reductions as well as governance and disclosure practices over five years. The
Company also engaged with 20 investee companies on their use of plastics and the adverse impacts of plastics
on marine life.
The majority of these investee companies are retailers that rely heavily on the use of polyethylene bags andbeverage manufacturers that produce and sell drinks packaged in polyethylene terephthalate (PET) bottles. The
Company conducted interviews to verify progress to reduce the use of plastic bags, single-use plastic straws
and food containers, and promote a shift to using biomass plastic.
Box 3: PROVIDING SUPPORT TO SME’S FOR INCREASING THE UPTAKE OF DUE DILIGENCE FOR RBC
Most of the Company’s borrowers are small and medium-sized enterprises (SMEs), with limited capacity
and resources to address environmental and social impacts beyond direct (Tier 1) suppliers.
The Company’s consulting division has developed tools and services to support SMEs in their supply chain
due diligence processes. As part of its awareness raising of sustainability issues among SMEs, the Company
developed a loan product for SMEs coupled with a free consulting service related to the Sustainable
Development Goals (SDGs). When providing these services, the Company requests that their client SMEs
assess their sustainability practices by using the common Supplier Assurance Questionnaires (SAQ)
developed by the Global Compact Network Japan (GCNJ).
The SAQ covers questions related to RBC-related issues and supports companies in conducting broad
scoping exercises to identify social and environmental risks in their supply chains. Based on this assessment,
the Company provides their SME clients with tailored advice on preventing and mitigating RBC-related risks
in the supply chain.
For examples of actions that companies can take to support business partners in their implementation of risk
prevention and mitigation measures, see page 80, Q38 of the OECD Due Diligence Guidance.

8CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & CLIMATE CHANGE
For information on how companies can increase their leverage to effect change, see page 19, Box 2“Collaboration in carrying out due diligence” and pages 78-80 Q36-Q38 of the OECD Due Diligence Guidance.

6

PROVIDE FOR OR COOPERATE IN REMEDIATION

Grievance and remediation processes
support due diligence by providing channels
through which companies can becomeaware of and respond to adverse impactsof their activities.

Effective implementation of grievance mechanisms
can help companies enhance risk-based due
diligence across all issues related to RBC. In 2019,
the Company supported the UN Global Compact
Network Japan and the Business and Human Rights
Lawyers Network Japan in formulating theEngagement and Remedy Guidelines for Promotionof Responsible Business Conduct and Supply
Chains. 12

The Remedy Guidelines provide information to Japanese business on how to enhance their capacity to handle
complaints raised by communities or workers along supply chains, for instance in setting up operationalgrievance mechanisms (OLGMs) to receive complaints from workers at plantations and oil extractors. The
Company has been encouraging its investee companies to develop such operational-level grievancemechanisms (OLGM).
For examples of practical actions that companies can take to cooperate with legitimate remediation mechanisms
and enable remediation, see pages 34-35, items 6.1 and 6.2 and pages 90-91, Q52-Q54 of the OECD Due
Diligence Guidance.
Companies may carry out due diligence processes and supporting measures, including the raising of grievances,in collaboration with others, such as other industry actors and in partnership with trade unions or through multistakeholder initiatives. For information on determining whether a collaborative initiative is credible, see p.52 Box
3 “Good governance for due diligence collaborative initiatives”.

9CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & CLIMATE CHANGENOTESOECD (2011), OECD Guidelines for Multinational Enterprises, Chapter VI. Environment, pages 42-46.
http://dx.doi.org/10.1787/9789264115415-en

1

2

Responsible business conduct in the financial sector. See: https://www.oecd.org/industry/inv/mne/rbc-financial-sector.htm

3

The Principles for Responsible Investment. See: https://www.unpri.org/

Principles for Responsible Institutional Investors. Japan’s Stewardship Code. 2020. See:
https://www.fsa.go.jp/en/refer/councils/stewardship/index.html

4

Japan’s Government Pension Investment Fund (GPIF), the largest asset owners in Japan, also became a signatory to the PRI
in 2015. The GPIF has requested that the company promote responsible investing.
https://www.gpif.go.jp/en/investment/esg/gpif_publishes_the_fy2019_esg_report.html

5

There may be some difference in scope between ESG and RBC risks, so investors should seek to understand the content of
Guidelines and assess the differences to ensure they understand the overlaps and differences. See OECD Responsible
business conduct for institutional investors. 2017. https://mneguidelines.oecd.org/RBC-for-Institutional-Investors.pdfv
7
https://www.fsa.go.jp/en/refer/councils/stewardship/index.html
6OECD (2019), Due Diligence for Responsible Corporate Lending and Securities Underwriting.
http://mneguidelines.oecd.org/due-diligence-for-responsible-corporate-lending-and-securities-underwriting.pdf

8

The NDPE policies were created in 2013, aiming to ensure sustainable palm oil supply chains. Many palm oil traders andrefiners have NDPE policies in place to address risks beyond legal or certification requirements. Yet they are not controlled bya standard body, and the scope vary between companies or many company’s policies are not consistently verified by anindependent body.
9

10

Climate Action 100+. See: https://www.climateaction100.org

11

Task Force on Climate-related Financial Disclosures. See: https://www.fsb-tcfd.org/

The Engagement and Remedy Guidelines for Promotion of Responsible Business Conduct and Responsible Supply Chains.
2019. https://www.bhrlawyers.org/en-erguidelines
12

REFERENCES
OECD (2019), Due Diligence for Responsible Corporate Lending and Securities Underwriting: Key considerations for banks
implementing the OECD Guidelines for Multinational Enterprises
http://mneguidelines.oecd.org/due-diligence-for-responsible-corporate-lending-and-securities-underwriting.pdf
OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm
OECD (2011), OECD Guidelines for Multinational Enterprises. Available in multiple languages athttps://mneguidelines.oecd.org/mneguidelines/
This case study documents actions related to some but not all of the six due diligence processes and supporting measures set out in the OECD
Due Diligence Guidance. These actions are outlined under the corresponding process and step number included in the OECD Due Diligence
Guidance. The case study is based on the information shared by the company and it is outside the scope of this case study to confirm or
evaluate the information provided. The OECD does not endorse any of the organisations or specific practices highlighted in these case studies.
This work is published under the responsibility of the Secretary-General of the OECD. Any opinions expressed or arguments employed herein
do not necessarily reflect the official views of OECD member countries. This document, as well as any data and map included herein, arewithout prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to thename of any territory, city or area.

10CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & USE OF PLASTICS

These case studies provide examples of salient environmental risks and how companies are working to mitigate
these risks through supply chain due diligence. They are designed to assist companies and other stakeholders inunderstanding how key processes outlined in the OECD Due Diligence Guidance for Responsible BusinessConduct can be implemented in avoiding and addressing adverse environmental impacts associated withcompany operations, supply chains and other business relationships.
Each case study provides examples of company actions that relate to the six recommended due diligenceprocesses set out in the OECD Due Diligence Guidance (see cover note). Not each case study includes examples
across all six processes, rather, they draw on the relevant practical experiences of Japanese companies.

OVERVIEWThe organisation: The Company is one of the largest mail order businesses in Japan and delivers office supplies
to businesses and individual customers across the country. Its key products include paper and plastic files. The
annual turnover of the company in 2020 was approximately JPY 400 billion (Japanese Yen).
The Challenge: Pulp and paper supply chains areoften long, complex, and multi-faceted. Manybusinesses are working to increase their visibility Sector: Office Supplies Distribution
over the supply chain to meet legal standards and Position in the supply chain: Manufacturing,rising public demands to address deforestation, distribution
biodiversity loss and plastic waste. Recent Scope of operations: Asia
regulatory initiatives to address environmental Ownership form: Publicly listed company
challenges include the Japan Clean Wood Act, 1 Size: 3,550 employees (2020)
the EU Timber Regulation and the US Lacey Act,
which seek to tackle production or trade in illegal timber.
The EU also adopted a Directive on single-use plastics in 2019, 2 whilst the Japanese Government introduced theBill for the Act on Promotion of Resource Circulation for Plastics in March 2021. 3 New certification programmes
and eco-labels have also emerged 4 to help companies improve their environmental performance, and consumer
demand for sustainably sourced wood and paper products is increasing. 5
In 2002, environmental non-governmental organisations (NGOs) reported that the Company’s procurementof paper products was contributing to deforestation in tropical rainforests. The Company was alsopreviously
found to be displaying environmental labels incorrectly on its products. In response to these challenges, theCompany is increasing efforts to address environmental impacts and to scale-up risk prevention and mitigation
measures. This case study provides examples of how the Company is implementing supply chain due
diligence, with a focus on two key environmental risks commonly identified in paper and plastic productlifecycles – deforestation and plastic waste.

3

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & USE OF PLASTICS
EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES AND
MANAGEMENT SYSTEMSINCORPORATING RBC EXPECTATIONS AND POLICIES INTO ENGAGEMENT WITH SUPPLIERS
AND OTHER BUSINESS RELATIONSHIPSAs set out in the OECD Due Diligence Guidance for Responsible Business Conduct (OECD Due Diligence
Guidance),6 embedding RBC into policies and management systems and communicating expectations to
suppliers and other business relationships is the first step of due diligence for RBC.
It enables companies to articulate their company-wide vision and strategy, assign responsibility, support
relevant business units in implementation and ensure accountability. It can also help ensure suppliers are awareof and commit to integrating their business partner’s policies and support implementation and monitoring ofdue diligence practices along the supply chain.
The Company has developed specific environmental activity plans for each stage of its business activities in its
supply chain. Figure 1 maps these five stages. The Company identified three environmental risks (climatechange; circular economy; and biodiversity) to prioritise and address at each of the five stages.
The Company has formulated specific action plans for each priority risk and reviews progress through its
environmental management system. The company feeds learnings from the review into the following year’s
action plans, with a view to progressively improving its systems and processes to address existing or emerging
environmental risks. This enables the company to embed ongoing and responsive due diligence practices into
its management processes.
Figure 1: THE COMPANY´S SUPPLY CHAIN IN FIVE STAGESFor examples of practical actions to develop RBC policies and to embed them into management systems, seepages 22-23, items 1.1 and 1.2, and pages 56-59, Q14-Q17, including Table 5 “Example of departments andfunctions potentially relevant to implementation of due diligence” of the OECD Due Diligence Guidance.

4CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & USE OF PLASTICSIDENTIFY AND ASSESS ACTUAL AND POTENTIAL ADVERSE IMPACTS
ASSOCIATED WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICES
INCREASING VISIBILITY OVER SUPPLY CHAINS
Supply chain mapping is a critical part of the due
diligence process. It helps companies develop acomplete picture of their supply chain and business
relationships and understand where the risks are. This
enables effective risk assessment and prioritisation
based on severity and likelihood.
In 2002, environmental NGOs communicated concerns
about the Company’s procurement of paper fromIndonesia potentially contributing to adverse
environmental impacts; specifically, illegal logging
leading to deforestation and biodiversity loss.
In response to these concerns and in order to promotesustainable procurement, the Company published aprocurement policy for paper products and began
conducting raw material traceability surveys with its
Tier 1 suppliers every quarter.
These surveys aim to improve visibility of the supply chain beyond Tier 1, and to identify and drive engagementwith high-risk business relationships.
For examples of practical actions to assess company’s business relationships along the supply chain, see pages
68-69, Q28 and Box 5 on “Engagement with business relationships operating at control points in the supply
chain” of the OECD Due Diligence Guidance.

CEASE, PREVENT AND MITIGATE ADVERSE IMPACTSThe OECD Due Diligence Guidance
recommends that a risk management
strategy should be designed andimplemented based on an assessment andprioritisation of risks, and be underpinned
by stakeholder engagement.

Businesses should develop and implement plansthat are fit-for-purpose to prevent and mitigate
potential (future) adverse impacts.
The company should also detail the actions it will
take, as well as its expectations of suppliers,
customers and other business relationships.

5

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & USE OF PLASTICSSTAKEHOLDER ENGAGEMENT AND ADDRESSING SYSTEMIC RISKS
Through its stakeholder engagement, the Company learned
that illegal and unsustainable logging occuring in Indonesia
is in part due to the limited sources of income available tolocal communities. This has accelerated deforestation. The
Company decided to encourage its suppliers to grow fastgrowing trees with local communities to reduce
unsustainable logging practices.
In addition, in 2018, the Company and its Indonesian
supplier began an initiative to support local communities indeveloping professional skills to develop alternatives tologging, such as fish farming. Company representatives
regularly visit sourcing sites to track how industrial tree
planting is progressing, to assess other risks and challenges,
and to evaluate how it can further support this work.
In an effort to mitigate identified deforestation risks, theCompany launched an initiative in 2010 in collaboration
with Tier 1 suppliers to ensure that two trees are planted
for every box of paper sold. In 2019, the Company reported
that as a result of the initiative, approximately 149 million
trees had been planted and that the total area ofplantations amounted to 104,200 hectares.
Through close engagement, the Company supported a Tier 1 supplier in Indonesia to develop a forest
conservation policy and a declaration of zero natural deforestation in 2013 for instance. This supplier also
endorsed the New York Declaration on Forests in 2014. 7
For examples of how a company can engage with stakeholders to inform its due diligence, see pages 48-51, Q8Q11 of the OECD Due Diligence Guidance.
For information on addressing systemic issues, please see Box 6 “Addressing systemic issues” on page 76.
Examples of practical actions to develop a company’s leverage to prevent or mitigate risks can be found on pages
78-79, Q36-Q37.
ADDRESSING THE ENVIRONMENTAL IMPACT THROUGHOUT THE LIFECYCLE OF PLASTIC PRODUCTS

The impact of plastic waste andpollution on the environment, healthand the economy is an important
global issue.

Consumers are paying attention to steps taken bycompanies to address these risks, and an increasing
number of regulations related to plastic use, waste andpollution have been introduced in recent years. 8

The OECD Guidelines for Multinational Enterprises
underlines the importance of companies assessing andaddressing impacts related to the environment
throughout the lifecycle of operations, including consumption, use and disposal of goods and services. 9 OECD

6

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & USE OF PLASTICS
due diligence tools provide a supportive framework to meet RBC expectations as well as examples of risks insupply chains relating to climate change, biodiversity and circular economy.
Through dialogue with its employees, customers and suppliers, the Company has identified how its plastic
products may be contributing to adverse environmental impacts. Products such as plastic folders have nocollection or recycle scheme and are often simply discarded after use.
To address this issue, the Company launched a project with the support of the Ministry of the Environment ofJapan and in collaboration with a waste management company to build a recycling process for used plastics. It
also consulted with an environmental law expert on developing an effective recycling scheme that complies
with existing waste management rules. The Company now asks its customers to cooperate in the collection ofused plastic folders through a collection scheme. It plans to manufacture and sell new products with the plastics
collected.
For examples of actions that companies can take to respond to identified risks and to support business partners
in implementing risk prevention and mitigation measures, see pages 30-31, item 3.2, and page 80, Q38, of theOECD Due Diligence Guidance.

7

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & USE OF PLASTICSNOTESThe Act on Promoting the Distribution and Use of Legally-harvested Wood and Wood Products (2016). Ministry ofAgriculture, Forestry and Fisheries, the Ministry of Economy, Trade and Industry, and the Ministry of Land, Infrastructure,
Transport and Tourism. Government of Japan. See:
http://www.japaneselawtranslation.go.jp/law/detail/?re=02&dn=1&x=0&y=0&co=1&ia=03&ja=04&yo=&gn=&sy=&ht=&no=&bu=&ta=&ky=wood&page=14
1

Directive (EU) 2019/904 of the European Parliament and of the Council of 5 June 2019 on the reduction of the impact ofcertain plastic products on the environment. https://eur-lex.europa.eu/eli/dir/2019/904/oj

2

Cabinet Decision on the Bill for the Act on Promotion of Resource Circulation for Plastics. Ministry of Economy, Trade andIndustry (2021). Government of Japan. https://www.meti.go.jp/english/press/2021/0309_001.html

3

For examples of new certification programmes and eco-labels, see:https://www.env.go.jp/policy/hozen/green/ecolabel/f01.html

4

Estimated Market Size of Japan’s Environmental Industries of 2011 & Report of Japan’s Environmental Industry GrowthEngine. Ministry of the Environment (2013), Government of Japan. https://www.env.go.jp/press/files/en/533.pdf. Economic
Survey of Environmental Industries in December 2013. Ministry of the Environment (2014), Government of Japan.:https://www.env.go.jp/press/files/en/566.pdf

5OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm

6

The New York Declaration on Forests (NYDF) is a voluntary and non-binding international declaration to take action to halt
global deforestation. See: https://forestdeclaration.org/

7

See for instance The Price of Plastic Waste and Solutions to Turn the Tide. United Nations Economic and Social Commission
for Asia and the Pacific. 2021. https://www.unescap.org/blog/price-plastic-waste-and-solutions-turn-tide

8

OECD (2011), OECD Guidelines for Multinational Enterprises, Chapter VI. Environment, pages 42-46.
http://dx.doi.org/10.1787/9789264115415-en

9

REFERENCES
OECD (2019), Due Diligence for Responsible Corporate Lending and Securities Underwriting: Key considerations
for banks implementing the OECD Guidelines for Multinational Enterprises
http://mneguidelines.oecd.org/due-diligence-for-responsible-corporate-lending-and-securities-underwriting.pdf
OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm

OECD (2011), OECD Guidelines for Multinational Enterprises. Available in multiple languages athttps://mneguidelines.oecd.org/mneguidelines/

This case study documents actions related to some but not all of the six due diligence processes and supporting measures set out in the OECD
Due Diligence Guidance. These actions are outlined under the corresponding process and step number included in the OECD Due Diligence
Guidance.
The case study is based on the information shared by the company and it is outside the scope of this case study to confirm or evaluate theinformation provided. The OECD does not endorse any of the organisations or specific practices highlighted in these case studies. This work
is published under the responsibility of the Secretary-General of the OECD. Any opinions expressed or arguments employed herein do notnecessarily reflect the official views of OECD member countries. This document, as well as any data and map included herein, are without
prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name ofany territory, city or area.

9CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & USE OF PLASTICS

These case studies provide examples of salient environmental risks and how companies are working to mitigate
these risks through supply chain due diligence. They are designed to assist companies and other stakeholders inunderstanding how key processes outlined in the OECD Due Diligence Guidance for Responsible BusinessConduct can be implemented in avoiding and addressing adverse environmental impacts associated withcompany operations, supply chains and other business relationships.
Each case study provides examples of company actions that relate to the six recommended due diligenceprocesses set out in the OECD Due Diligence Guidance (see cover note). Not each case study includes examples
across all six processes, rather, they draw on the relevant practical experiences of Japanese companies.

OVERVIEWThe organisation: The Company is an auto parts manufacturer and the world's top supplier of rubber productsthat reduce vibration and noise caused by engines and road surfaces. It produces automotive hoses, products
for sound control and insulation, and interior equipment for vehicles such as engine covers and seats.
Annual sales in 2020 were approximately JPY 445,148 million (Japanese Yen). Japan is its largest customer
market (42%), followed by the rest of Asia (27%), the Americas (20%), and Europe and other regions (11%).
The Challenge: The automotive industry has highly
complex global supply chains. One vehicle canconsist of approximately 30,000 individual parts
sourced from different suppliers.

Sector: Auto parts
Position in the supply chain: Manufacturing(mid-stream)
Scope of operations: Global
Ownership form: Publicly listed company
Size: 26,109 employees (2020)

Car manufacturers are facing increasing demands
to carry out due diligence beyond direct (Tier 1)
suppliers and to address adverse environmental
and social impacts in their supply chains.
Environmental and human rights risks such as deforestation, biodiversity loss, and forced labour are commonly
found in different sectors including natural rubber supply chains.
Auto parts manufacturers are typically positioned in the middle of the supply chain and are frequently requested
by car manufacturing clients to collaborate on due diligence to address environmental impacts and scale-up
risk prevention and mitigation measures. This case study provides examples of how the Company isimplementing supply chain due diligence, with a focus on key environmental risks commonly identified in
automotive supply chains, including chemical contamination, climate change, water use and risks related tonatural rubber procurement such as deforestation and biodiversity loss.

10

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & USE OF PLASTICS
EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES AND
MANAGEMENT SYSTEMSASSIGNING OVERSIGHT AND RESPONSIBILITY FOR THE IMPLEMENTATION OF DUE DILIGENCE
As set out in the OECD Due Diligence Guidance for
Responsible Business Conduct (OECD Due Diligence
As set out in the OECD Due Diligence
Guidance),1 embedding RBC into policies andGuidance for Responsible BusinessConduct (OECD Due Diligence Guidance), management systems and communicating
expectations to suppliers and other businessassigning oversight and responsibility for
relationships is the first step of due diligence fordue diligence to relevant senior
RBC. It enables companies to articulate their
management is a critical step of due
company-wide vision and strategy, assign
diligence for RBC.
responsibility, support relevant business units in
implementation and ensure accountability. It canalso help ensure suppliers are aware of and commit to integrating their business partner’s policies and support
implementation and monitoring of due diligence practices along the supply chain.
In 2014, the Company established a sub-committee to oversee corporate actions to promote responsible supply
chains and responsible procurement in line with its Supplier Guidelines and other relevant policies. This subcommittee sits under the CSR committee which is currently chaired by a managing executive officer.
COMMUNICATING RBC EXPECTATIONS WITH SUPPLIERS
The Company launched its Supplier Corporate Social
Responsibility Guidelines (Supplier Guidelines) in 2011 andrevised them in 2014 and 2019. The 2014 revision included
the addition of expectations for suppliers on the use ofminerals from conflict-affected and high-risk areas.
The 2019 revision included its updated Group Corporate
Action Charter, which incorporated the company’s mid-term
vision towards 2022 and referred to the Charter of Corporate
Behaviour, published in 2017 by the Japan Business
Federation (Keidanren). 2 The Action Charter sets out ten
principles, six of which relate to the environment and whichhighlight measures to address risks commonly identified in
automotive supply chains (See Box 1).
The Supplier Guidelines also call for co-operation fromsuppliers to support responsible procurement practices inorder to meet the goals set out in the Action Charter.

11

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & USE OF PLASTICS
Through its “Green Procurement Standards for Suppliers”, the Company identifies "prohibited substances" and"substances subject to monitoring" throughout its supply chains, including those prohibited under applicablelaws and regulations as well as additional substances specified by business partners.
The Company aims to adhere to regulatory initiatives including the EU’s Restriction of Hazardous Substances(RoHS) Directive, 3 the EU’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH)
Regulation, 4 the EU's Directive on end-of-life vehicles, 5 and other chemical control regulations. In order to raiseawareness of new standards, the Company also holds regular meetings with suppliers to share updates onregulatory developments.
Box 1: COMPANY GROUP CORPORATE ACTION CHARTER – GLOBAL ENVIRONMENT
Recognizing that global environmental issues pose challenges to all humankind, and that it is an integral
part of our existence and activities, we shall proactively tackle these issues. We shall:
1. implement measures to mitigate global warming and work to establish a recycling-based society;2. comply with laws and regulations of countries and regions concerning prevention of pollution of air,water, and soil, etc. and prevent environmental contamination through continuous monitoring andreduction of pollutants;
3. manage potentially environmentally harmful chemical substances to ensure safety;
4. ensure that our products of each country and region do not contain chemical substances prohibited bylaws and regulations of that country and region;
5. not use prohibited chemical substances in manufacturing processes, and regarding chemical
substances that are specified by laws and regulations of countries and regions, monitor their emission
volumes and report to governmental agencies; and6. engage in nature conservancy activities, including conservation of biodiversity.

For examples of practical actions to develop RBC policies and to embed them into management systems, seepages 22-23, items 1.1 and 1.2, and pages 56-59, Q14-Q17, including Table 5 “Example of departments andfunctions potentially relevant to implementation of due diligence” of the OECD Due Diligence Guidance.

IDENTIFY AND ASSESS ACTUAL AND POTENTIAL ADVERSE IMPACTS
ASSOCIATED WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICES

Starting with significant areas of risk
identified, businesses should carry out
iterative and increasingly in-depth
assessments of prioritised operations,
suppliers, and other business relationships
in order to identify and assess specificactual and potential adverse RBC impacts.

Numerous reports such as the Global Risks Reportpublished by the World Economic Forum (WEF) havehighlighted significant environmental and social risks
associated with water scarcity. 6
Due to the large quantity of water used in its
production processes, the Company uses
AQUEDUCT, 7 an international water risk assessment
tool, to identify and evaluate water-related risks in
the regions where production sites are located.

12

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & USE OF PLASTICS
In 2018, the Company carried out a water risk survey, including interviews with all of its production plants inJapan and overseas. These in-depth assessments reportedly enabled the Company to mitigate the risk of water
shortages in local communities by introducing technology designed to support cost-effective recycling of waste
water discharged through the production processes.
For examples of practical actions to identify risks, see pages 62-64, Q20-Q21 and Table 6 “Example ofdepartments and functions potentially relevant to implementation of due diligence” of the OECD Due Diligence
Guidance. For information on assessing significant risks, see pages 65-66, Q23-Q24.

4

TRACK IMPLEMENTATION AND RESULTS

The OECD Due Diligence Guidance recommends that a risk management strategy should be designed andimplemented based on an assessment and prioritisation of risks, and be underpinned by stakeholder
engagement.
Businesses should develop and implement plans that are fit-for-purpose to prevent and mitigate potential(future) adverse impacts. The company should also detail the actions it will take, as well as its expectations ofsuppliers, customers and other business relationships.
TRACKING THE IMPLEMENTATION OF THE COMPANY’S DUE DILIGENCE ACTIONS
To monitor implementation of its Supplier Guidelines,
the Company has conducted surveys with suppliers on
environmental and social risks since 2016. This helps
suppliers assess practices against Company expectations
and can help suppliers identify areas for improvement.
The Company uses the survey to reinforce its
communications on RBC expectations and to improve its
own responsible procurement strategies.

The Company sources the majority of its
natural rubber from Southeast Asia. It has
started in-depth assessments on actions
taken by secondary and tertiary suppliers,
which include natural rubber farms andprocessors, to verify that they meet the
expectations set out in its Supplier
Guidelines.

In response to concerns raised by non-governmentalorganisations (NGOs) and evolving expectations of
manufacturing partners relating to sustainableprocurement, the Company has taken several steps to address these risks.

From 2016 to 2019, responsible procurement officers, including Executive level representatives, carried out onsite visits to natural rubber farms and processors (secondary and tertiary suppliers) in Thailand, Indonesia,
Malaysia, and Viet Nam. The Company also carried out interviews related to labour and human rights risks.
For examples of tracking implementation and results an enterprise’s due diligence activities, see pages 82-84,
Q41-Q45 of the OECD Due Diligence Guidance.

13

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
ADDRESSING DEFORESTATION & USE OF PLASTICSNOTESOECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm

1Charter of Corporate Behavior. Keidanren (Japan Business Federation). 2017. See:
https://www.keidanren.or.jp/en/policy/csr/

2

3

Directive 2011/65/EU Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical Equipment

Regulation (EC) No 1907/2006 of the European Parliament and of the Council on the Registration, Evaluation, Authorisation
and Restriction of Chemicals (REACH).

4

5

Directive 2000/53/EC on end-of life vehicles https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32000L0053

World Economic Forum “The Global Risks Report 2021”
http://www3.weforum.org/docs/WEF_The_Global_Risks_Report_2021.pdf

6

7

Aquaduct Alliance and tools, see: Aqueduct | World Resources Institute (wri.org)

REFEENCES
OECD (2019), Due Diligence for Responsible Corporate Lending and Securities Underwriting: Key considerations for banks
implementing the OECD Guidelines for Multinational Enterprises
http://mneguidelines.oecd.org/due-diligence-for-responsible-corporate-lending-and-securities-underwriting.pdf
OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm
OECD (2011), OECD Guidelines for Multinational Enterprises. Available in multiple languages athttps://mneguidelines.oecd.org/mneguidelines/

This case study documents actions related to some but not all of the six due diligence processes and supporting measures set out in the OECD
Due Diligence Guidance. These actions are outlined under the corresponding process and step number included in the OECD Due Diligence
Guidance.
The case study is based on the information shared by the company and it is outside the scope of this case study to confirm or evaluate theinformation provided. The OECD does not endorse any of the organisations or specific practices highlighted in these case studies. This work
is published under the responsibility of the Secretary-General of the OECD. Any opinions expressed or arguments employed herein do notnecessarily reflect the official views of OECD member countries. This document, as well as any data and map included herein, are without
prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name ofany territory, city or area.

14CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
CLIMATE CHANGE MITIGATION & ADAPTATION

These case studies provide examples of salient environmental risks and how companies are working to mitigate
these risks through supply chain due diligence. They are designed to assist companies and other stakeholders inunderstanding how key processes outlined in the OECD Due Diligence Guidance for Responsible BusinessConduct can be implemented in avoiding and addressing adverse environmental impacts associated withcompany operations, supply chains and other business relationships.
Each case study provides examples of company actions that relate to the six recommended due diligenceprocesses set out in the OECD Due Diligence Guidance (see cover note). Not each case study includes examples
across all six processes, rather, they draw on the relevant practical experiences of Japanese companies.

OVERVIEWThe organisation: The Company is one of the largest electronics and information technology (IT) enterprises inJapan, with consolidated revenue of JPY 3,095 billion (Japanese Yen) in 2020. The majority of its revenue is fromselling IT, network and other relevant systems, solutions and services to public and private sector customers.
It has a global supply chain network. The majority of its procurement is from Japan ( 72% of total procurement),
with Asia accounting for 13%, North America 12%, EMEA (Europe, Middle East, and Africa) 2% and Central andSouth America 1%.
The Challenge: Supply chains in the electronics
and IT industry are typically long, complex andstretch across multiple international borders. 1
See Figure 1 for an overview of the different
processes in an electronics supply chain.

Sector: Electronics and Information Technology
Position in the supply chain: Manufacturing
Scope of operations: Global
Ownership form: Publicly listed company
Size: 112,638 employees (2020)

Concerns about climate change adaptation andpollution are on the rise, and new legal standards
have been developed to meet specificenvironmental challenges. Regulatory initiatives include the European Union (EU) Restriction of Hazardous
Substances (RoHS) Directive, 2 and the EU Registration, Evaluation, Authorization and Restriction of Chemicals(REACH) Regulation. 3
In responding to increasing expectations around preventing and addressing adverse environmental and social
impacts, the Company has taken various measures to reduce carbon emissions in its operations and value
chains. It is also working to communicate sustainability expectations and to build leverage with its suppliers
through on-site assessments, meetings and training.

3

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
CLIMATE CHANGE MITIGATION & ADAPTATION
Figure 1: SIMPLIFIED ILLUSTRATION OF AN ELECTRONICS SUPPLY CHAIN 4This case study provides examples of how the Company is implementing supply chain due diligence and is
working to embed OECD standards on Responsible Business Conduct (RBC) into its policies and management
systems. It focuses on two environmental risks commonly identified across the electronics sector – climatechange and chemical pollution.

EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES AND
MANAGEMENT SYSTEMSAs set out in the OECD Due Diligence Guidance for Responsible Business Conduct (OECD Due Diligence
Guidance), 5 embedding RBC into policies and management systems and communicating expectations to
suppliers and other business relationships is the first step of due diligence for RBC.
It enables companies to articulate their company-wide vision and strategy, assign responsibility, support
relevant business units in implementation and ensure accountability. It can also help ensure suppliers are awareof and commit to integrating their business partner’s policies and support implementation and monitoring ofdue diligence practices along global supply chains.
INCREASING VISIBILITY OF SUPPLY CHAINS
To promote sustainable procurement in its supply chains, the Company appointed a Chief Supply Chain Officer
in 2011, responsible for sustainable procurement activities across the Company, who reports to the CEO. It also
assigned oversight and responsibility for climate change mitigation and adaption to senior management toensure accountability.
The Company updated its Corporate Social Responsibility Procurement Guidelines and created Guidelines for
Responsible Business Conduct in Supply Chains (Company RBC Guidelines) in 2020, which reference the OECD
Guidelines for Multinational Enterprises 6 and the OECD Due Diligence Guidance. The Code of Conduct, set out
in the Company RBC Guidelines, requires suppliers to take proactive steps to prevent and address various RBCrelated environmental issues, including the depletion of natural resources, climate change and pollution.
The Company RBC Guidelines call for strong management systems and for due diligence to be conducted in linewith the OECD Due Diligence Guidance and the OECD Due Diligence Guidance for Responsible Supply Chains of4

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
CLIMATE CHANGE MITIGATION & ADAPTATION
Minerals from Conflict-Affected and High-Risk Areas. The Company RBC Guidelines were developed to align with
the Japan Electronics and Information Technology Industries Association (JEITA) “Responsible Business Conduct
Guidelines”, published in March 2020.7 The Company requires supplier adherence to the Code of Conduct.
To promote effective implementation and continued improvement, the Company engages with external experts
such as non-governmental organisations (NGOs), investors, international organizations and consultants
specialised in RBC issues, on a regular basis.
COMMUNICATING RBC EXPECTATIONS WITH SUPPLIERS
The Company set out its expectations for suppliers in its
Green Procurement Guidelines to strengthen efforts toaddress environmental risks in its supply chain.
A number of environmental expectations (such as thecreation of an Environmental Management System;
appropriate management of substances withenvironmental impacts used in manufacturing processes;
and providing information on the use of chemical
substances) are framed as “essential requirements.”
The most recent revision of the Guidelines in 2018
included an additional request for suppliers to take on
board climate change mitigation and adaptation
measures. Mitigation includes a reduction in greenhousegas emissions, whereas adaptation calls for improved
preparation for the effects of climate change.
In response to industrial regulations, such as the EU’s RoHS Directive and REACH Regulation, the Company
developed a set of “Environmental Specifications Pertaining to Procurement Restrictions for the Inclusion ofChemical Substances in Products”, to supplement the Green Procurement Guidelines and to meet requirements
in export markets such as the EU.
For examples of practical actions to develop RBC policies and to embed them into management systems, seepages 22-24, items1.2 and 1.3 and pages 56-60, Q14-Q18 including Table 5 “Example of departments andfunctions potentially relevant to implementation of due diligence” of the OECD Due Diligence Guidance.

5CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
CLIMATE CHANGE MITIGATION & ADAPTATIONIDENTIFY AND ASSESS ACTUAL AND POTENTIAL ADVERSE IMPACTS
ASSOCIATED WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICES
INCREASING VISIBILITY OVER SUPPLY CHAINSStarting with the significant areas of risk
identified, iterative and increasingly indepth assessments should be undertakenof prioritised operations, suppliers, andother business relationships in order to
identify and assess specific actual andpotential adverse RBC impacts.

Supplier assessments can help companies
understand actual and potential adverse impacts intheir supply chain, prioritise risks and determine
appropriate responses.
The Company’s procurement division carries out onsite assessments of suppliers to monitor adherence
to the Company RBC Guidelines. The Company began
on-site assessments in 2019 and has started to selectsuppliers based on human rights, occupational healthand safety, and environmental risks.

For examples of practical actions to asses company’s business relationships, see pages 68-69, Q28 and Box 5 on
“Engagement with business relationships operating at control points in the supply chain” of the OECD Due
Diligence Guidance.

CEASE, PREVENT AND MITIGATE ADVERSE IMPACTSThe OECD Due Diligence Guidance recommends that a risk management strategy should be designed andimplemented based on an assessment and prioritisation of risks, and be underpinned by stakeholder
engagement. Businesses should develop and implement plans that are fit-for-purpose to prevent and mitigate
potential (future) adverse impacts. The company should also detail the actions it will take, as well as its
expectations of suppliers, customers and other business relationships.
TRAINING EMPLOYEES AND SUPPORTING SUPPLIERS IN IMPLEMENTING RISK MANAGEMENT MEASURESAs part of its risk prevention andmitigation measures, the Company
provided online training to all employees
across 40 countries in multiple languages
to increase awareness of specificenvironmental risks.

The Company conducts environmental auditor
training with employees in relevant business units
to improve the quality of audits. This helps theCompany respond to identified risks more
effectively.
To provide suppliers with support on chemical
substance control, the Company has developed an
IT solution to measure the amount of chemical
substances contained in each product analysing

6

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
CLIMATE CHANGE MITIGATION & ADAPTATION
product composition and the product bill of materials (BOM). It requests suppliers to provide this information
via questionnaires and evaluates the response data. The Company has also established a system to train
evaluators to assess suppliers’ maturity of chemical substance control and to recommend actions for
improvement.
The Company holds annual meetings with its key suppliers to facilitate co-operation in sustainable procurement
activities and to develop stronger relationships. The 2020 meeting brought together 444 members of suppliers’
management teams from 188 suppliers across the world. In these annual meetings, the Company reports on
its reviews of human rights and environmental impacts, and presents awards to recognise suppliers that havemade significant contributions to preventing and mitigating environmental risks.
For examples of proactive measures on preventing and mitigating risks in supply chains, see page 75, Q33 andpage 80, Q38 of the OECD Due Diligence Guidance. For examples of actions that a company may take to use andincrease its leverage, see page 19, Box 2 “Collaboration in carrying out due diligence”, page 69, Box 5“Engagement with business relationships operating at control points in the supply chain”, and pages 78-79, Q36Q37.
DEVELOP AND IMPLEMENT PLANS TO MITIGATE ADVERSE IMPACTS ON CLIMATE CHANGE
The Company recognises that an increase in climaterelated disasters poses risks in its supply chains.
Expectations of stakeholders to address climatechange, are growing. For example, in October 2020, theJapanese government pledged to achieve net carbon
neutrality by 2050. 8 In response, the Company has
been promoting climate change mitigation andadaptation measures.
Since its endorsement of the Task Force on Climaterelated Financial Disclosures (TCFD) in 2018, theCompany has disclosed risks and opportunities
associated with climate change in line with the
Recommendations of the TCFD. The TCFD
Recommendations cover four thematic areas:
governance, strategy, risk management, and metrics
and targets.
The Company has developed a risk management plan
to mitigate risks and to measure change, andcommunicates progress publicly.
For example, the Company has set a goal of reducing CO2 emissions linked to business operations (Scope 1 9
and Scope 2 10) to zero by 2050, including specific reduction targets to be achieved by 2030. To accomplish these7

CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
CLIMATE CHANGE MITIGATION & ADAPTATION
milestones, the Company is implementing rigorous energy saving plans, shifting to renewable energy sourcesand offsetting its final CO2 emissions.
The Company has also been disclosing its Scope 3 emissions (often referred to as value chain emissions) 11 since2014. Among the 15 Categories of Scope 3 emissions, 12 the Company identified Category 11 "Use of soldproducts" as the most significant contributor to emissions, followed by Category 1 “Purchased goods andservices”. The Company is accelerating efforts to improve the energy efficiency of products to decrease
Category 11 emissions and is collaborating with suppliers to reduce Category 1 emissions through promotion of
its Green Procurement Guidelines.
To build on and improve its climate change mitigation and adaptation measures, the Company is developing
information and communication technology (ICT) and artificial intelligence (AI) solutions for its customers.
These solutions can help customers increase the efficiency of their business operations, reduce movement ofpeople and goods, cut diesel fuel consumption and energy costs, and support the transition to digital operations.
These measures enable customers to reduce their overall CO2 emissions and mitigate climate change.
The Company is also focusing on developing its social infrastructure business, and has developed ICT solutions
aimed at climate change adaptation, including a variety of sensor technologies that monitor and forecast
climate change. For example, the Company has developed technology to improve crop quality and to increase
the efficiency of agricultural operations by collecting data from farms. It then accumulates and analyses thedata which contributes to eliminating the risk of food shortages resulting from climate change.
For examples of recommended actions that a company can take to modify its operations or activities to preventand mitigate adverse impacts linked to its operations, products or services, including climate change, see pages
30-31, item 3.2 and pages 77-78, Q34-35 of the OECD Due Diligence Guidance

8CASE STUDY ON ENVIRONMENTAL DUE DILIGENCE
CLIMATE CHANGE MITIGATION & ADAPTATIONNOTES
See Guidelines on Promoting Responsible Corporate Behavior in the Supply Chain. Japan Electronics and Information
Technology Industries Association (JEITA). 2020. https://www.jeita.or.jp/cgi-bin/public/detail.cgi?id=769&cateid=1

1

2

Directive 2011/65/EU Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical Equipment

Regulation (EC) No 1907/2006 of the European Parliament and of the Council on the Registration, Evaluation, Authorisation
and Restriction of Chemicals (REACH).

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For electronics supply chains, the relevant OECD tools are the Minerals Guidance (for addressing risks related to minerals
and metals sourcing) and the Due Diligence Guidance for RBC (for addressing a broader set of risks, including those
associated with the manufacturing process). Companies should first refer to the Minerals Guidance and complement theprocess using the Due Diligence Guidance for RBC. https://mneguidelines.oecd.org/oecd-electronics-supply-chain.pdf

4OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm

5OECD (2011), OECD Guidelines for Multinational Enterprises, Chapter VI. Environment, pages 42-46.
http://dx.doi.org/10.1787/9789264115415-en

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See Guidelines on Promoting Responsible Corporate Behavior in the Supply Chain. Japan Electronics and Information
Technology Industries Association (JEITA). 2020. https://www.jeita.or.jp/cgi-bin/public/detail.cgi?id=769&cateid=1.

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Toward the 2050 carbon-neutral realization. Ministry of Environment, Japan. 環境省_2050年カーボンニュートラルの実現に向けて(env.go.jp)
89Direct emissions from owned or controlled sources.

Indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting
company10

See the Corporate Value Chain (Scope 3) Accounting and Reporting Standard, published by the GHG Protocol to enable
companies to assess their entire value chain CO2 emissions. https://ghgprotocol.org/standards/scope-3-standard

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Scope 3 emissions are comprised GHG emissions through 15 categories of such as purchased goods and services,transportation and distribution, and use of sold products https://ghgprotocol.org/scope-3-technical-calculation-guidance

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REFERENCES
OECD (2016) OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk
Areas (OECD Minerals Guidance). Available in multiple languages at https://www.oecd.org/daf/inv/mne/mining.htm
OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct. Available in multiple languages athttps://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm
OECD (2011), OECD Guidelines for Multinational Enterprises. Available in multiple languages athttps://mneguidelines.oecd.org/mneguidelines/
This case study documents actions related to some but not all of the six due diligence processes and supporting measures set out in the OECD Due
Diligence Guidance. These actions are outlined under the corresponding process and step number included in the OECD Due Diligence Guidance. The
case study is based on the information shared by the company and it is outside the scope of this case study to confirm or evaluate the information
provided. The OECD does not endorse any of the organisations or specific practices highlighted in these case studies. This work is published under
the responsibility of the Secretary-General of the OECD. Any opinions expressed or arguments employed herein do not necessarily reflect the official
views of OECD member countries. This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty
over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

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CONTACTOECD Centre for Responsible Business Conduct
RBC@oecd.org
http://mneguidelines.oecd.org/

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