Supply chain managementMateriality
In all of our business activities we must fulfill our social responsibilities as a corporate citizen by complying with laws, respecting human rights, considering the global environment and managing information securely.
To support the stable production and sale of products beneficial for health and activities toward a sustainable society, we view sustainable procurement as a key theme for our CSR activities. We select our suppliers according to procurement cost criteria, raw material criteria and qualitative criteria, and promote risk management at these suppliers.
As sustainable procurement requires collective action with our business partners, we will communicate proactively and work together with partners, mitigating risks and considering social and environmental impact throughout the supply chain and improving the sustainability of society.
Message from the chief officer
Director and Senior Managing Executive Officer
Divisional General Manager of Production Division
Understanding global trends and making responsible business decisions
Amid rising prices for raw materials due to international turbulence, sudden exchange rate fluctuations and other persistent issues related to raw material procurement, the international community has formulated a number of visions and goals for the future, including the Glasgow Climate Pact, the Glasgow Leaders’ Declaration on Forests and Land Use, and the Kunming-Montreal Global Biodiversity Framework.
We recognize that companies are expected to understand the negative impacts that their business activities and supply chains have on the environment and society, and to disclose information about these impacts while working to reduce them to zero. The Yakult Group, which upholds supply chain management as one of our material themes, believes in the importance of understanding global trends and taking actions that increase environmental and social sustainability.
A deforestation and conversion free supply chain is the goal
The Yakult Group believes that everything on the Earth must be healthy—from the water, soil, air, plants and animals to humans—in order for people to be able to live healthily and to build a sound society. Based on this belief and our Group’s sense of social responsibility, we chose March 22, 2023, the day after the International Day of Forests, to establish a Deforestation and Conversion Free (DCF) Commitment to Responsible Sourcing, which aims to eliminate deforestation from the supply chain.
We regard deforestation as an important business risk and threat that must be addressed for the sustainability of the Yakult Group, which is supported by natural capital and local communities, and we aim to achieve zero deforestation in our supply chains for raw materials associated with a high risk of deforestation. We have determined the scope and type of raw materials to address and set targets and KPIs, and are promoting responsible procurement in our supply chain.
One of the specific goals of this commitment is establishing traceability that allows us to identify risks by detailing the production of raw materials all the way to their source and to implement approaches to resolving any issues. Traceability improves transparency within the supply chain, but collaboration with our suppliers remains essential.
For this reason, we hold briefings for suppliers on CSR Procurement Policy as we seek their understanding and cooperation regarding our commitment. At the same time, we continue to promote an understanding of relevant risks and impacts to society and the environment, and are working toward responsible procurement throughout the entire supply chain.
From commitment to action
Throughout the world, environmental issues are becoming more widespread and serious. Human rights issues such as forced labor, child labor, discrimination and inhumane treatment in the supply chain are also important issues requiring resolution. In order for us to address these various issues as a company, we believe it is important to clarify policies and goals internally and externally by stating them as commitments, and to implement calculated, concrete initiatives based on backcasting.
In June 2022, we joined Sedex, a membership organization that provides an international data sharing platform aimed at responsible procurement. Membership in Sedex is one of the Group’s concrete strategies for improving supply chain management, and its platform will allow us to collect and analyze data and take concrete action to reduce risks.
For important raw materials, we are promoting a shift to environmentally friendly products with third-party certification, and have begun traceability surveys.
Moving forward, we will continue to raise the bar for our CSR procurement efforts as we work with our suppliers to build a sustainable supply chain.
Working with our suppliers to promote sustainable procurement
The Yakult Group works with suppliers to promote sustainable procurement throughout the supply chain based on the Yakult Group CSR Procurement Policy, established in 2018, and the Yakult Group Supplier CSR Guidelines, established in 2020.
Since fiscal 2021, we have regularly held CSR Procurement Policy briefings for suppliers. The fiscal 2022 briefing was attended by approximately 400 people from some 160 suppliers. The event resulted in a shared recognition of various issues among our suppliers.
Basic policy on
Yakult Group CSR Procurement Policy
Recognizing the importance of sustainable procurement that takes into consideration issues such as human rights, labor, the environment, and anti-corruption, the Yakult Group will promote sustainable procurement throughout the supply chain, in cooperation with our business partners.
1 Respect regulatory compliance and international codes of conduct
We will comply with national and local laws and regulations, respect international codes of conduct, and promote fair and equitable procurement activities.
2Consider human rights, labor, safety and health
We will prohibit the use of child labor and forced labor, respect fundamental human rights, and promote procurement activities that take into consideration the work environment, safety and health.
3 Ensure safety and quality
We will promote procurement activities, giving attention to cost and stable supplies, and aim to ensure high quality and safety.
4 Consider the global environment
We will promote procurement activities that comply with the Yakult Basic Policy on the Environment and take into consideration the global environment.
5 Maintain information security
We will strictly control confidential information on procurement transactions and use it only for legitimate purposes.
6Coexist with society
We will promote procurement activities that take into consideration social contributions towards coexistence with society.
(Established in March 2018)
Yakult Group Supplier CSR Guidelines
Based on the CSR Procurement Policy, the Yakult Group Supplier CSR Guidelines were formulated in July 2020 in order to effectively promote sustainable procurement within the Group and help create a sustainable society. The guidelines are a collection of requirements regarding responsible procurement activities for all our business partners in Japan and overseas, including new business partners.
In order to ensure adherence to these guidelines, we hold a briefing for suppliers on our CSR Procurement Policy during which we explain the contents of the guidelines. In addition, for each requirement in the guidelines, we check the status of supplier efforts through surveys and audits, and if any problems are found, we take action aimed at improvement.
Together with using these guidelines, the entire Yakult Group will continue striving to promote sustainable procurement.
Deforestation and Conversion Free (DCF) Commitment to Responsible Sourcing
The planet's environment is at risk due to global warming, environmental pollution, loss of biodiversity and depletion of natural resources. Based on the Commitment, we will pursue our business activities while considering the planet's environment and the lives and human rights of the people supported by the environment, and to create a society where people and the planet can coexist forever.
We have identified raw materials at risk of deforestation in our supply chain and are committed to promoting sustainable procurement of these materials, setting out our basic policy, initiatives and targets.
Initiatives and Targets/KPIs
We identify pulp and paper, palm oil, soy and dairy products (e.g. skim milk powder) as raw materials with a high-risk of deforestation, set Targets and KPIs for their sustainable procurement, and promote responsible procurement in our supply chain.
*The quantitative Targets and KPIs will be reviewed and updated as appropriate to improve ongoing efforts in the Commitment.
|All consolidated sites in Japan and overseas involved in the procurement of raw materials to produce food and beverages, pharmaceuticals and cosmetics for the Yakult Group
|Target fiscal year
|Pulp and paper
|100% of the pulp and paper procured for paper containers and packaging to be switched to internationally certified materials such as FSC® or recycled paper
|100% of palm oil procured to be switched to RSPO-certified products (MB and above)
|100% traceability of palm oil procured as a primary raw material back to the agricultural origin of its production
|100% traceability of soybean procured as a primary raw material back to the agricultural origin of its production
|100% traceability of dairy products (e.g., skim milk powder) back to the source, such as the dairy farmer, in collaboration with suppliers
Progress report on the DCF Commitment
The Yakult Group is taking initiatives to verify Deforestation and Conversion Free in its supply chain.
Current status of internal initiatives to educate and raise awareness about sustainable procurement
We also provide internal CSR procurement training and awareness-raising activities for employees involved in raw material procurement and manufacturing consignment.
|Activity and participants
|Study sessions promoting sustainable procurement (held 7 times)
Participants: Heads of procurementrelated departments and managers in charge (35 persons in total)
|Inviting external lecturers to raise awareness regarding sustainable procurement and supply chain management
|Briefing for those involved in sustainable procurement promotion
Participants: Personnel involved from procurement-related departments (18 persons in total)
|Explanations from an internal lecturer regarding the need for sustainable procurement and various measures for practical implementation
|Sustainable procurement workshops (held 2 times)
Participants: Personnel involved in development and procurement (105 persons in total)
|Sessions and group discussions led by outside experts to introduce and share case studies on social issues related to human rights, labor, the environment and anti-corruption; briefings on risks and opportunities related to our sustainable procurement, as well as on the need for international traceability and certification systems related to raw materials, etc.
|Sustainable procurement workshop
Participants: Overseas business offices and directors and employees of departments in charge of overseas offices at Yakult Honsha (72 persons in total)
|Sessions from outside experts and careful reading of assigned materials to share basic knowledge on sustainability and specific methods of sustainable procurement
|Seminar on deforestation-free commitment in business activities
Participants: Heads of and relevant managers in procurement-related departments and personnel involved in procurement (47 persons in total)
|Inviting Chiaki Furusawa of WWF Japan to discuss specific ways to achieve zero deforestation in business activities under the theme “Deforestation risk and commodities”
Supporting communities with local employment and sourcing
To contribute to the sustainable development of the countries and regions where we operate, we conduct our global business with a local focus based on local production and sales using raw materials that can be stably procured and satisfy our product quality and safety standards.
Yakult currently operates in 40 countries and regions including Japan, with 29 overseas companies. We have established sales offices and production plants with deep ties to local communities, and actively hire local employees.
Percentage of locally sourced raw materials for dairy products（fiscal 2021）
* Results for dairy product raw materials
Note: Raw materials that are imported and undergo final processing in Japan are calculated as local Japanese materials.
Report from the Frontlines
Promoting CSR procurement through collaboration with our suppliers: CSR Promotion Section, Public Relations Department
Promoting CSR procurement through collaboration with our suppliers: CSR Promotion Section, Public Relations Department
We have held CSR Procurement Policy briefings annually for our suppliers since fiscal 2021. These briefing sessions help us promote effective CSR procurement while building stronger communication with our suppliers and developing a shared understanding of issues related to sustainable procurement. In this article, one of our managers explains more about these CSR procurement efforts.
Why does Yakult engage in CSR procurement?
In all of our business activities, we must fulfill our social responsibilities by complying with laws and regulations, considering the global environment, respecting human rights and managing information securely. To ensure that Yakult meets these social expectations, we communicate proactively with suppliers and work together to consider social and environmental impacts and mitigate risks throughout the supply chain in our efforts to improve sustainability of society.
Our suppliers’ understanding and cooperation are particularly essential to our initiatives that contribute to environmental and social sustainability. The Yakult Group sees supply chain management as a material issue, and the promotion of CSR procurement occupies a place of critical importance within our sustainability and CSR activities. We select our suppliers according to procurement cost criteria, raw material criteria and other qualitative criteria, and thereby promote risk management among these suppliers.
For major business partners like raw material suppliers and manufacturing subcontractors, we offer explanatory seminars to explain the Yakult Group CSR Procurement Policy, and have conducted a CSR procurement survey since 2019 to encourage self-evaluation. In an effort to provide all suppliers with more easily understandable explanations of our policies and initiatives, in fiscal 2021 we began holding CSR Procurement Policy briefings for suppliers.
Helping suppliers understand Yakult more deeply through briefings
At our CSR Procurement Policy briefings for suppliers, we share information on supply chain management and initiatives that contribute to sustainability, as well as provide support activities aimed at raising awareness and building capacity related to CSR. As we prepare for these briefings, our greatest concern is finding, compiling and delivering useful information for our suppliers. Our approach to each briefing involves listening to feedback from suppliers and people from related departments within Yakult, and organizing these observations in order to provide information and initiatives that will help resolve on-site concerns and issues.
The third briefing, held in December 2023, was attended by approximately 440 people from 160 companies that supply and sell raw materials to Yakult Honsha. Some 40 people from related departments within Yakult participated as well.
During the briefing we covered topics such as the Yakult Group CSR Procurement Policy and the results of the year’s CSR procurement survey, along with current challenges and how we plan to approach resolving them. After that, a representative from Sedex, a membership organization that provides an international CSR procurement data-sharing platform, gave a presentation on the Sedex organization and the benefits of using the platform. Outside experts and our company’s CSR Promotion Section General Manager also shared information about the creation of promotional systems and specific measures around sustainable procurement, along with advice for resolving the challenges and concerns facing our suppliers. Finally, our Purchasing Department General Manager, our Development Department General Manager and our CSR Promotion Section General Manager took the stage together to answer a series of questions.
Participants remarked that the briefing gave them a deeper understanding of Yakult’s policies and initiatives and the necessity of efforts to respect human rights through the use of the Sedex platform, and that it provided them with information that would be useful for their future initiatives. Our suppliers also expressed concern about the creation of systems for promoting sustainability, noting the difficulty of building awareness throughout the supply chain. Recognizing that these concerns are similar to the ones our own company faces was an extremely important outcome.
The briefing was recorded and posted online so that the day’s events could be reviewed even by suppliers who were unable to attend. Moving forward, we will undertake concrete actions to address issues related to dialogue and support.
At the CSR Procurement Policy briefing for suppliers
Actions throughout the supply chain to realize good health for people and the planet.
We believe there are two reasons why communicating Yakult’s supply chain management initiatives to outside companies is meaningful.
The first reason is the impact this communication has on our suppliers. We view contributing to social and environmental sustainability as beneficial not just for Yakult but also for our suppliers. Since the understanding and cooperation of our suppliers are essential for achieving these goals, we see our sustainability briefings as important opportunities to share information.
The other reason is the effect that this communication has on related departments within Yakult. To communicate our stance to suppliers, naturally we must be unified as a company in our understanding and actions. Through repeated discussions with relevant departments, we are working to foster a sense of solidarity within the company and improve effectiveness as we put our corporate belief that “in order for people to be healthy, everything around them must also be healthy” into practice throughout the supply chain.
Company: CSR Promotion Section, Public Relations Department, Yakult Honsha Co., Ltd.
Title: Assistant Manager
Name: Yuki Kamikubo
I believe that the difficulties with sustainability-related work arise from the need to resolve issues throughout the entire supply chain. Seen another way, this is exactly what makes our work enjoyable and meaningful, since it has such a large impact and places on us such a great amount of responsibility. There are numerous challenges to overcome, but I believe these efforts will bear fruit in the smiling faces of the children of the future.