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MM 2019
Global Compact Network Japan Supply Chain Working Group
XXXX Group CSR/Sustainable Procurement Training

1

CSR Activities“Contribute to sustainable development”
People began to place on corporations the great expectation that they would
contribute to sustainable development, and tobuilding a sustainable society has become part of corporate social
responsibility (CSR).
Meanwhile, by the current globalization of corporate activities, the supplychains have been expanding throughout the world for the procurement ofproducts, raw materials, and other materials. There are limits to what can beachieved through the CSR activities of a single corporation.
Therefore, corporations are required to deploy CSR activities throughout
their entire supply chain.

2Source: GCNJ, A Vision of Desirable CSR Activity in the Supply Chain,” p. 4

CSR/ Sustainable procurement
CSR/ Sustainable procurement is the activities that a buyer incollaboration with suppliers attempts to fulfill corporatesocial responsibility through the entire supply chain byplacing emphasis on the factors including the environment,labor conditions, human rights, and anti-corruption to theconventional elements of quality, performance, price and delivery
time while a buyer (corporation) procures materials or rawmaterials, etc.

3Source: GCNJ, “An Introduction to CSR/ Sustainable Procurement” p. 4

Supply Chain Risks & Impacts
Typical social challenges = supply chain risksSocialchallenges

Public awareness of these challenges is increasing, andif companies respond inappropriately, stakeholders will often engage in protests, boycotts, etc.,
which will have a significant adverse impact on business activities.
Example 1: Human rights/Labor

Example 2: Environment

ＷａｌｍａｒｔUNIQLOChild labor

Contamination byhazardous chemicals

Example 3: Corruption

FIFACorruption and bribery
4

Source: GCNJ, “An Introduction to Sustainable Procurement,” p. 5

Game of Choice•

The Game of Choice helps you comprehend the importance ofCSR/ sustainable procurement by understanding the social andenvironmental risks in the supply chain and becoming aware of
the values and ethics of various stakeholders.

•Faced with a particular social or environmental risk...
If you were the president of the company, what would you do?
If you were a stakeholder in the supply chain of the company,
what would you do?

•Through the Game of Choice, each of you will become a characterin the supply chain, choose a course of action against a particularrisk, and discuss the reasons for your selection.
5Set Characters

How the Game of Choice proceeds[Set Characters] In each group, a "ghost leg" lottery is used toassign each member to one of the seven character roles.

Announce
Incident
Select andAnnounce
Company Action
Select and Announce
Stakeholder Actions
Discussion①②③⑤⑥④⑦6

Set Characters

How the Game of Choice proceeds
1. Announce Incident
The incident card indicates social and environmental problem
that the company faces.

AnnounceIncident
Select and Announce
Company Action

Select and Announce
Stakeholder Actions
Discussion

An incident has occurred!!
Incident 1: XXXXXX•••••XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

The company has scheduled a press conference to explain how it will respond.
7

Set Characters

How the Game of Choice proceeds
2. Announce incident
The card indicates a social and environmental problem

Announce
Incident
Select and Announce
Company Action

Select and Announce
Stakeholder Actions
Discussionthat the company faces.
· HINT: When choosing actions, consider the 10 principles of the UN GlobalCompact.
HumanRights

Principle 1: Businesses should support and respect the protection ofinternationally proclaimed human rights; andPrinciple 2: make sure that they are not complicit in human rights abuses.

Laborer

Principle 3: Businesses should uphold the freedom of association and theeffective recognition of the right to collective bargaining;Principle 4: the elimination of all forms of forced and compulsory laborer;
Principle 5: the effective abolition of child laborer; andPrinciple 6: the elimination of discrimination in respect of employment andoccupation.

Environment

Principle 7: Businesses should support a precautionary approach toenvironmental challenges;
Principle 8: undertake initiatives to promote greater environmental
responsibility; andPrinciple 9: encourage the development and diffusion of environmentallyfriendly technologies.

AntiCorruption

Principle 10: Businesses should work against corruption in all its forms,
including extortion and bribery.

8Source: http://www.ungcjn.org/gc/principles/How the Game of Choice proceeds

Set Characters
Announce
Incident
Select and Announce
Company Action

3. Selection and announcement of company actions
・ After deliberating no more than three minutes, the company selects
one action from the six choice cards and places the card next to thecompany on the supply chain diagram.
· Explain the reason for the choice in no more than 3 minutes(like a press conference).
· The facilitator acts as the host of the "press conference" and offers
commentary afterwards, playing the role of a news commentator.

Select and Announce
Stakeholder Actions
Discussion

Let's see thecompany'schoice!

9Set Characters

How the Game of Choice proceeds

Announce
Incident
Select and Announce
Company Action

Select and Announce
Stakeholder Actions

4. Selection and announcement of stakeholders' actions
Discussion· Each stakeholder chooses one action from the three choice cards
and places the selected card next to the corresponding character on thesupply chain diagram.
· Explain the reason for the choice in no more than 2 minutes.
(The company is not allowed to respond each time to these announcements)10

Set Characters

How the Game of Choice proceeds
5. The company makes a final decision and announces its action
・ If the company decides to change its final choice, it places the new cardon the supply chain diagram.
· Explain the reason for the choice in no more than 2 minutes.
(Including its response to each stakeholder)

Announce
Incident
Select and Announce
Company Action

Select and Announce
Stakeholder Actions
Discussion11

Before the game starts...
Let's introduce ourselves!
(You can also exchange business cards!)
No more than 1 minute each
Share your company, department, daily work,hobbies, interests, etc.
(The facilitator will keep track of the time.)
12OK, let the game begin!

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Start of gameAn incident has occurred!!

The company will
announce its response
at a press conference.

Incident 1: Child Labor
・ When the company visits a supplier's factory, there are several children in thefactory.
・ When asked what they are doing there, the children say “bringing tea to ourparents working in the factory.”
・ It is later discovered that the children work full-time in the factory and do notattend elementary school.
・ The factory manager says that the children come from very poor families, andif left unattended, they would have to beg or prostitute themselves.

From UNGC 10 principles:
Labor - Principle 5: Labor Businesses should uphold the effective
abolition of child labor
Reference: Estimate of time required for one round1) Choose company’s action (after up to 3 minutes of reflection, make a 3-minute announcement) (46 minutes)
Source: http://www.ungcjn.org/gc/principles/2) Announcement of each stakeholder (no more than 2 minutes each) (7-14 minutes)143) Final response from the company (no more than 2 minutes) (total 13-22 minutes)

Final message:
It's important to have the mindset from multi-viewpoint and ask
yourself, "What would you do in other’s place?"
Part of fulfilling your social responsibility across the supply chain isdealing with the challenges that arise by putting yourself
in the position of each stakeholder, and asking, "What would I do inthat role?"
There is no correct answer!!
Step out of your usual role, such as a company employee, and into
someone else's1) Company chooses action (up to 3 minutes of deliberation followed by an announcementof 3 minutes)2) Announcements of each stakeholder (no more than 2 minutes each)3) Final response from the company (no more than 2 minutes), total 22 minutes
15Change characters and play again!
Each group rotates characters and plays again.
Give your role to the person on your right.
Play again with the same incident!
Human rights/Labor
・Elimination of forced labor(labor by free will)
・Elimination of child labor
・Elimination of long working hours
・Elimination of wage paid below thelegal minimum wages
・Elimination of inhumane treatment
・Prohibition of discrimination
・Guarantee of right to collective
bargaining (Freedom of association)
・Realization of workplace safety and ahealthy environment

Environment
・Securing environmental permits
・Prevention of pollution
・Management of harmful substances
・Management of waste products(wastewater, etc.)
・Management of substances causing
air pollution
・Management of substances included
in products
・Consideration of biodiversity

Anti-corruption
・Elimination of unethical businesspractices
・Prohibition of bribery and corruption
・Prohibition of abuse of dominantbargaining position
・Prohibition of granting or receiving
inappropriate profits
・Prohibition of anticompetitive practices
・Provision of accurate information
regarding products and services

16Source: GCNJ, “An Introduction to Sustainable Procurement,” p. 5

Set Characters

Finally, let's exchange opinions within
the team!
Team members exchange reflections in a debriefing session
This is an opportunity for the company and the supply chain
stakeholders to reflect on their choices.

Announce
Incident
Select andAnnounce
Company Action
Select and Announce
Stakeholder Actions
Discussion

・ This choice had this result, but how would a different choice affect thesupply chain?
・ Did your remarks and feelings change when your role changed?
・ Were there any remarks or events that significantly changed the flow ofthe event?
・ What did you learn?
Etc...

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Set Characters

Let's hear an overall summary!
Let's hear an overall summary!
The facilitator or team representative willreport how the team discussions went
and what opinions and comments were
helpful for everyone.

Announce
Incident
Select and Announce
Company Action

Select and Announce
Stakeholder Actions
Discussion

Take about 1 or 2 minutes per team18

The following slides are for the facilitators
and are not to be projected.

19

Time management diagram for the facilitator (90-minute version)

08 minutes
05 minutes
05 minutes
02 minutes
08 minutes
22 minutes
02 minutes
22 minutes
08 minutes
05 minutes

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to
to
to
to
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to
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03 minutes
90 minutes:

to:・ Explanation of purpose and overview of the game p. 1-5
・ Role descriptions and assignments p. 6
・ Explanation of game flow, rules, etc. p. 7-11
・ Explanation of incident
・ Self-introductions (up to 1 minute per person, including facilitator)
・ Round 1 (company 3+3+2 minutes, stakeholders 2 minutes x 7 people)
・ Facilitator comments, participants' opinions, etc.
・ Round 2 (company 3+3+2 minutes, stakeholders 2 minutes x 7 people)
・ Reflection within the group (goal)・ Facilitator or team representative reports on each team's discussions(5 teams x 1 minute)・ Closing remarks and backlog

20

Time management diagram for the facilitator (60-minute version)
06 minutes
04 minutes
04 minutes
02 minutes
06 minutes
13 minutes
02 minutes
13 minutes07 minutes
04 minutes

:::
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totototo
to
to
to
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01 minutes
60 minutes:

to:・ Explanation of purpose and overview of the game p. 1-5
・ Role descriptions and assignments p. 6
・ Explanation of game flow, rules, etc. p. 7-11
・ Explanation of incident
・ Self-introductions (1 minute per person, including facilitator)
・ Round 1 (company 2+3+1 minutes, stakeholders 1 minute x 7 people)
・ Facilitator comments, participants' opinions, etc.
・ Round 2 (company 2+3+1 minutes, stakeholders 1 minute x 7 people)
・ Reflection within the group (goal)・ Facilitator or team representative reports on each team's discussions(5 teams x 1 minute)・ Closing remarks and backlog

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Tips on being a good facilitator 1:
Tips for creating a fun environment:
・It is important to enliven the space, have fun, relax and learn.
・If you have a person who is not vocal, help them. They don't have to speak the whole time. You canencourage and acknowledge their remarks ("yes, exactly!") and then encourage them to speak further by
noting that point XX is also important. (Especially when a person who can’t express him/herself well isplaying the role of the company president, you may have to actively intervene and say something like, "Iguess you also have to consider XX." It is also important not to embarrass them.)
・If someone speaks too long, warn them in your role as the timekeeper.
・Reproach people who find fault with the opinions of others.

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Tips on being a good facilitator 2:
Tips for improving the quality of the discussion:
・The company president tends to make vague statements. In your role as a media reporter at the end, you can clarify thecompany's statement by making a comment like the ones listed below. Once the company realizes that it has to be concrete,
the discussion can suddenly turn livelier. "That was a pretty vague statement." "When you say XX, do you mean you will bear
the entire cost burden of that?" "When you say 'accept burdens other than costs,' what does that mean?" "When you say you
want to work with the government and community to solve this problem, does that mean that the company will not pay forit?" “Crowd-funding? Does this mean that the company does not pay for it?"・To prod the players to dig deeper, you can interject one of the probing questions below. To make your prodding more
subtle, you can begin by saying something to the effect that nobody has mentioned it today, but at other meetings you hearda remark like the following.
"Won't consumers be worried about higher prices?""As a shareholder, you're worried about a downturn in business results, right?""As an NGO, you're wondering if this company has violated other similar human rights issues. How does the company reallyknow about such a possibility?” etc.
“As a Tier 1 supplier, it seems like what the company just announced will place a considerable burden on you. Will that beOK?""Retailers will not only stop selling products from the company, but they'll also file lots of claims against it, right?""It's a very idealistic thing for the company to do, but you must want to know if it is possible to put into practice, right?

・The table on the next slide gives examples of comments from stakeholders in response to each answer by the company.
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<Reference> Sample questions after company's answer
First remark from facilitator

Consumer

Retail store

NGO

Shareholder

Community

Tier 1 supplierThat's not a choice befitting the times.

· I don't want to buy products fromcompanies that do not protect
human rights.
· This kind of terrible response will
spread over social networks.

· If there's a boycott,how will you compensate me formy lost sales?
· If there's a boycott,I'll stop carrying your product.

How does yourcompany view its
socialresponsibility?

Will
you
takemanagement
responsibility
ifthe stock pricefalls?

<No comment>

If there's a boycott, who'll be liable for the decrease inorders?

It would be a shame if protests
erupted in the area of the Tier 2factory.

· I don't want to buy products fromcompanies that do not protect
human rights.
· This kind of cruel response will
spread over social networks.

· Who's responsible for the supply?
· What kind of measures will betaken if protests erupt in the areaof the Tier 2 factory?
· If there's a boycott,I'll stop carrying your product.

· How does yourcompany view its
socialresponsibility?
·Whoisresponsible
forfinancialcompensation,including of Tier1?

· Will you takemanagement
responsibility
ifthe stock pricefalls?

We will protest because it affects
the community.

Who will compensate us for the lost profits?

Company response

①

Claim
relation

nodirect①
Fail to acknowledge(cut off Tier 2)①

Resolve at the cost ofthe Tier 1 supplierThat's terrible for Tier 1.

If the price of the product goes up,
I might not be able to buy itanymore.

I'm worried about the increase in
the purchase price.

How does yourcompany view its
socialresponsibility?

Is Tier 1 reallywilling to accept
the costs? (I'mconcerned about
the impact of astalemateon
profit and loss.)

If Tier 2 is cut off, we willprotest because it affects thecommunity.

· We can't do that unless you accept a price increase.
· This is your fault for haggling a low price.
· If you respond this way, we'll stop supplying you.

①

Partially bear cost ofimprovement

How much do you have to pay?

If the price of the product goes up,
I might not be able to buy it
anymore.

I'm worried about the increase in
the purchase price.

· If there isanything
youneed, we will helpyou.
· Can you do thisinpartnershipwithothercompanies?

Don't
waste
money on suchthings.
(Iamworried about adecreaseindividends.)· I worry about the economic
impact on the region.
· I'm worried about the burden
on our community (for example,
the cost of school expansion
when child labor is eliminated).

Will the burden also fall on our company?
Will you accept the price increase?

24Start of game

Spare incident

An incident has occurred!! Pattern 2Incident 2: illegal wages, long working hours, freedom of association
・An NGO investigation reveals that one of the supplier's sub-contractors (a Tier 2 supplier)does not pay the minimum wage.
・They also use a 12-hour shift system with only two 10-minute breaks.
・There are rumors of several employees being fired for trying to collective bargaining.

From UNGC 10 principles:
Labor - Principle 3: Businesses should uphold the freedom of associationand the effective recognition of the right to collective bargaining.
Typical social challenges:Sources: 1) http://www.ungcjn.org/gc/principles/2) GCNJ, “An Introduction to CSR/Sustainable Procurement,” p. 525