Kawasaki Group
Sustainable Procurement
Guidelines
Procurement Division
Kawasaki Heavy Industries, Ltd.

Contents
I.

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

II.

A Request to Our Business Partners (Detailed Rules)
1. Compliance・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・3(1) Regulatory Compliance(2) Fair and Impartial Competition(3) Export-Import Control(4) Exclusion of Anti-Social Forces(5) Confidential Information(6) Protection of Intellectual Property(7) Fair and Impartial Relationships(8) Compliance Whistle-Blowing System(9) Insider Trading(10) Acts Involving Conflicts of Interest(11) Responsible Sourcing of Minerals
2. Consideration for Human Rights, Labor, and Occupational Safety and Health・・・6
2-1 Human Rights and Labor Practices(1) Labor-Related Laws and Ordinances(2) Human Rights(3) Forced Labor and Young Workers(4) Working Hours and Wages(5) Freedom of Association and Right to Collective Bargaining(6) Exclusion of Transactions with Companies that Benefit from Inhumane Labor
Practices(7) Approach to Respect for Human Rights
2-2 Safety and Health Management(1) Occupational Safety and Health(2) Machine Safeguarding(3) Sanitation(4) Safety and Health Communication

3. Ensuring Quality and Safety ・・・・・・・・・・・・・・・・・・・・・・・・・・・9(1) Quality Assurance(2) Quality Control Systems(3) Responsibility for Third Parties(4) Appropriate Response to Product Accident and/or the Distribution of Defective
Products(5) Traceability
4. Reinforcing Competitiveness・・・・・・・・・・・・・・・・・・・・・・・・・・10(1) Enhancement of Competitiveness and Creation of Added Value(2) Provision of Information on New Materials, New Technologies, New
Manufacturing Methods, Etc.
(3) Promotion of Cost Reductions
5. Stable Supply ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・10(1) Stable Supply(2) Observance of Delivery Schedules(3) Development of BCPs
6. Information Disclosure・・・・・・・・・・・・・・・・・・・・・・・・・・・・・11(1) Information Disclosure to Stakeholders
7. Consideration for the Global Environment ・・・・・・・・・・・・・・・・・・・11(1) Environment-Related Laws, Ordinances, and Regulations(2) Environmental Management Systems(3) Environmental Substances of Concern(4) Pollution Prevention and Environmental Protection(5) Efficient Use of Resources(6) Global Environmental Protection
8. Harmonious Coexistence with Society ・・・・・・・・・・・・・・・・・・・・・ 12(1) Social Contribution
Our Call for Promotion of Sustainability Initiatives for the Entire Supply Chain ・・・13

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

Kawasaki Group Policies for Material Procurement

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

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



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

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

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

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

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

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

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II.

A Request to Our Suppliers(Detailed Rules)

A corporation must fulfill its social responsibilities by complying with laws and ordinances and by
showing consideration for human rights and other concerns. We ask that our business partners also
engage in the planning, implementation, and improvement of initiatives to promote the practices
described in items “1. Compliance,” which prescribes the observation of laws and ordinances, and“2. Consideration for Human Rights, Labor, and Occupational Safety and Health,” which deals withthe treatment of employees.
1. Compliance(1) Regulatory Compliance
You must observe the laws and ordinances enforced in the countries and regions in which yourcorporate activities take place and to respect international norms of behavior to the greatest
possible extent.
(2) Fair and Impartial Competition
You must adhere with the competition laws in each country and region in which you operate,
recognize the importance of free competition in the market and refrain from behavior that limits
or obstructs fair and impartial competition.
(3) Export-Import Control
In addition to creating systems for appropriate export-import control, you must engage inexport-import procedures in accordance with the laws, regulations, and other practices of eachcountry and region in which you operate.
(4) Exclusion of Anti-Social Forces
You must declare and warrant that you are not an organized crime group, a member of anorganized crime group, a quasi-member of an organized crime group, or a party affiliated withsuch a group, or any other entity constituting an anti-social force (hereafter collectively referred
to as “anti-social forces”). You must also declare and warrant that you never use violence, force,threatening language, or fraudulent means to make improper demands, and that you have no
relationship of any kind with anti-social forces.

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

4(9) Insider Trading
You must refrain from buying or selling the stock of your company or other companies in a waythat leverages unpublished critical information that may influence the stock price. You mustalso refrain from encouraging others to engage in stock trading that leverages such informationor provide them with such information.
(10) Acts Involving Conflicts of Interest
You must prohibit your employees from acquiring benefits for themselves or a third party bysacrificing the interest of the company.
(11) Responsible Sourcing of MineralsYou should prevent the purchase and use of conflict minerals (gold, tantalum, tungsten, tin,etc.) that serve as a source of finance for local armed groups involved in inhumane behavior in
the Democratic Republic of the Congo and its surrounding countries.



For the purpose of responsible minerals procurement, you should cooperate with us when we
conduct surveys, etc. using the RMI*1 survey form.
*1 RMI (Responsible Minerals Initiative)
International organization that plays a leading role in guiding approaches to conflict minerals.

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2. Consideration for Human Rights, Labor, and Occupational Safety and Health2-1 Human Rights, Labor Practices(1) Labor-Related Laws and Ordinances
You must comply with the labor-related laws and ordinances enforced in the countries andregions in which your corporate activities take place. You must also pay the greatest possible
respect to international norms of behavior and engage in thoroughgoing occupational safety
and health management.
(2) Human Rights


You must treat all people with equal dignity and respect regardless of race, color, gender, age,nationality, social or family origin, sexual orientation, gender identity, marital status, religion,
political beliefs, mental or physical disabilities, or health status, and not to engage in inhumane
acts such as unfair labor practices, discrimination, and harassment.

You should strive to create a workplace culture that respects individual diversity regardless ofgender, age, nationality, or disability.

(3) Forced Labor and Young Workers


You must warrant that labor should never be forced by anyone else, but rather should bevoluntarily carried out in accordance with the person’s own will, and that procedures for hiring,dismissal, etc., and decision-making on working conditions are made in compliance with thelaws and ordinances enforced in the countries or regions in which your corporate activities takeplace.

You must not use labor that is subject to modern slavery, such as forced labor, slavely or
trafficking of persons.

You must prohibit labor by children under the minimum age stipulated by international
conventions and national laws.

You should not use workers under 18 years (Young Workers) of age for labor that may be
harmful to their health, safety, or morals.

(4) Working Hours and Wages
Regarding employee (including non-regular employee) working hours, wages and benefits, youmust comply with the laws and ordinances enforced in the countries and regions in which yourcorporate activities take place.

You should strive to restrict excessively long working hours by stipulating standards for directing
overtime work, and by properly managing working hours.

6When you employ workers through outsourcing providers, you should request that suchoutsourcing providers comply with the laws and ordinances enforced in the countries and regionsin which your corporate activities take place.

(5) Freedom of Association and Right to Collective Bargaining
You must respect employees’ freedom to associate, join a labor union, and engage in protests
without being subject to retaliation, intimidation, or harassment. You must also provide
opportunities for dialogue between labor unions and management.
(6) Exclusion of Transactions with Companies that Benefit from Inhumane Labor Practices
You should investigate your suppliers to confirm they are not benefitting from inhuman labor
practices, including unfair labor agreements, working regulations, or wage regulations.
(7) Approach to Respect for Human Rights
You should strive to establish a framework for human rights due diligence to implement ongoingprocess to prevent and mitigate negative impacts on human rights.
2-2 Safety and Health Management(1) Occupational Safety and HealthAs a business operator, you should establish disaster prevention standards, exert the utmost
efforts to prevent workplace accidents, and take a thoroughgoing approach to occupationalsafety management. In addition, you should engage in conscientious occupational healthmanagement, including employee health management.
(2) Safety Measures for MachineryYou should conduct safety evaluation of equipment, machinery, etc., and take necessary
measures to ensure safety and prevent health hazards, etc.

You should perform necessary inspections and maintenance, including daily inspections, inaddition to inspections required by the laws and ordinances.



You should take necessary measures to ensure safety and prevent health hazards, etc. in theevent of an abnormality.

(3) Sanitation
With regard to sanitary facilities such as restrooms and cafeterias provided by business
operators, you should strive to maintain a safe and clean working environment by paying
attention to hygiene.

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(4) Safety and Health Communication
You should inform employees of the work manual or emergency instructions regarding safetyassurance and prevention of health hazards.

8

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

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

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

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

7. Consideration for the Global Environment(1) Environment-Related Laws, Ordinances, and Regulations
You must comply with Japan’s Basic Environment Law, local government ordinances, and otherrelevant laws and ordinances, as well as RoHS directives,*1 REACH regulations,*2 and otherenvironment-related regulations in the regions in which your corporate activities take place.
*1 RoHS: The Restriction of the use of certain Hazardous Substances in electrical and electronicequipment. European Union directives restricting the use of specified hazardous substances inelectrical and electronic equipment.
*2 REACH: Registration Evaluation Authorisation and Restriction of Chemicals. Regulations that
require corporations to provide proof of the safety of chemical substances used within theEuropean Union.
(2) Environmental Management Systems
You should build, maintain, and improve management systems designed to control
environmental footprints arising from your corporate activities.

11(3) Environmental Substances of Concern
You should properly manage environmental load substances arising from your corporate
activities and strive to reduce their emission, with the aim of addressing environmental concerns
in the course of business operations on an ongoing basis.
(4) Pollution Prevention and Environmental Protection
You should institute measures required to prevent air pollution, water pollution, soil pollution
and noise pollution as well as vibration, ground subsidence, offensive odors, and other forms ofpollution arising from your corporate activities, and strive to preserve the environment.
(5) Efficient Use of Resources

You should reduce final waste emissions by properly disposing of waste in conformity withrecycling-related laws and regulations.

You should minimize the use of natural resources such as water, fossil fuels, minerals, and virginforest products by practicing process changes, material substitution, reuse, conservation, andrecycling related to production and other activities.

(6) Global Environmental ProtectionWith the goal of achieving a decarbonized society, you should promote the reduction ofgreenhouse gas emissions such as CO2, methane, and fluorocarbons generated by yourcorporate activities, as well as the improvement of energy efficiency, in order to protect the
global environment.

You should set targets for greenhouse gas emissions reduction activities and strive to manage
emissions.

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

12Our Call for Promotion of Sustainability Initiatives for the Entire Supply Chain
Our business partners are asked to develop corporate structures for promoting sustainable activities
with reference to these guidelines and, similarly, to ask their procurement sources to do the same
to ensure the widespread promotion of sustainability initiatives throughout the supply chain.
You may be requested to provide information or visit our business partners' factories to check thestatus of their sustainable activities.
If the results of the check indicate that our business partner's efforts are not satisfactory, we may
ask the partner to submit and implement improvement measures. Your kind cooperation would beappreciated.
If you have any questions regarding these guidelines, please contact us at:
Procurement Planning, Procurement Division, Kawasaki Heavy Industries, Ltd.
E-Mail：khi_honsyachotatsu@khi.co.jp

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Published by: Kawasaki Heavy Industries, Ltd.
Date of Publication: February 2023