CSR Management in the Supply Chain

Supply Chain Checks and Audits

Supplier audit in Indonesia

In order to enable customers to use Toshiba products safely as well as to fulfill CSR in regards to human rights, labor, and the environment in cooperation with suppliers, Toshiba Group continues to ensure that its suppliers are also committed to improving working conditions and reducing their environmental impact.

We also believe that in addition to proper management of working hours and wages, ensuring improved communication between workers and managers, as well as paying attention to occupational health and safety and to the environment in areas around factories will boost employee morale and contribute to improved work efficiency.

Accordingly, Toshiba Group will continue to share its management know-how acquired through experience with suppliers worldwide, particularly those in emerging economies. In addition to problems regarding the use of conflict-free minerals, there are increasingly diversified concerns about CSR among stakeholders, including laws on human trafficking and slavery, such as the California Transparency Act and the UK Bribery Act, and environmental issues. With a view to resolving these issues, Toshiba Group will focus its efforts on programs for CSR in the supply chain.

Toshiba distributes to suppliers worldwide the Toshiba Group Procurement Policy and the Supplier Expectations to promote understanding of our stance on CSR in procurement.

We also monitor the status of CSR management of our ongoing suppliers at manufacturing sites at the time of quality audits and request improvements and provide guidance as necessary. For new procurement transactions, we confirm conformity with Toshiba Group's procurement and selection policies not only with respect to the goods and services procured, but also suppliers' manufacturing sites, management systems and the state of their operations.

CSR Survey of suppliers

FY2006	Conducted surveys of 100 suppliers whose transactions with Toshiba accounted for a significant proportion. New survey categories such as human rights, labor conditions, and occupational health and safety were included in addition to the previous categories such as quality, the environment and information security.
FY2007	Conducted surveys of 265 principal ongoing suppliers in Asia covering human rights, labor conditions, occupational health and safety, and environmental protection.
FY2008	Conducted on-site audits of some suppliers in Thailand jointly by the internal team of relevant divisions such as CSR, human resources, environment and procurement. While no serious non-compliances were identified, provided instructions with regard to improving H&S management structure and controlling oil leakages at the factory.
FY2009	Conducted on-site audits of some suppliers in Southern China, Indonesia and Malaysia jointly by the internal team of relevant divisions such as CSR, human resources, environment and procurement. While no serious non-compliances were identified, provided instructions with regard to improving H&S management structure and controlling oil leakages at the factory.
FY2010	Conducted CSR-related audits of 17 manufacturing bases of 16 China-based companies to which Toshiba outsources the assembly of finished products under the Toshiba brand. At each site, we performed audit by interacting directly with the employees. With regard to labor conditions, we provided guidance for improving employee welfare. With regard to environmental management, we examined third-party environmental certifications. We also surveyed the companies with regard to their supply chain management.
FY2011	Conducted pilot survey to 300 suppliers procuring certain products on the use of conflict minerals

Items covered by the CSR Survey

Category	Items
Human rights and labor conditions	Prohibition of forced labor Prohibition of inhumane treatment Prohibition of child labor Prohibition of discrimination Appropriate wages Working hours Workers' freedom of association
Occupational health and safety Equipment safety measures	Equipment safety measures Workplace safety Workplace sanitation Occupational accidents and occupational diseases Emergency response Consideration concerning work that is physically onerous Facilities safety and sanitation Employee health management

Major survey items during the audit of outsourced Toshiba-brand manufacturers

Category	survey items
Status of CSR management at the companies audited	Labor disputes Communication with employees, Labor agreements and working hours, Workplace safety, Employee health conditions, Environmental initiatives such as the acquisition of ISO14001certification
Status of CSR management with regard to the supply chain of the companies audited	Adoption of CSR policy that encompasses consideration for human rights, labor conditions, and the environment; Communication of the CSR policy to suppliers and their status of compliance with the policy; and compliance with laws Regulations concerning plant wastewater and air emissions

CSR Awareness in the Supply Chain

CSR Guidebook Published

We urge our suppliers to promote their CSR and provide necessary support for the same. In November 2011, we held seminars, inviting the managers from 81 key suppliers to explain our management philosophy and procurement policy.

In addition, in order to guide the suppliers in incorporating CSR into their operations, we developed the Toshiba Group Supply Chain CSR Implementation Guidebook* to introduce our policies on management of health and safety and the environment in four languages - Japanese, English, Chinese and Thai. The Guidebook is also available on our corporate website.

* The Toshiba version of the supplier CSR promotion guidebook complying with the Supply-Chain CSR Deployment Guidebook published by Japan Electronics and Information Technology Industries Association (JEITA)

• TOSHIBA Group Supply-Chain CSR Deployment Guidebook (Japanese)(PDF:418KB)
• TOSHIBA Group Supply-Chain CSR Deployment Guidebook (English)(PDF:149KB)
• TOSHIBA Group Supply-Chain CSR Deployment Guidebook (Chinese)(PDF:260KB)
• TOSHIBA Group Supply-Chain CSR Deployment Guidebook (Thai)(PDF:219KB)

Status Survey

Toshiba Group holds seminars on environmental measures, human rights, and occupational health and safety, and conducts a survey on the situation regarding the procurement policy (including self-inspection).

Suppliers participating in seminars and those covered by the survey

Topic	Seminars	Surveys	Field Audit
Human rights and safety	7,800	5,106	1,028
Environment	18,861	17,743	4,536

(Cumulative data for FY2007-2011) (Unit : No. of supplier companies)

Actions on Suppliers in the Event of Breach of the Procurement Policy

If a supplier violates the procurement policy, first of all, we request the supplier to implement remedial measures and provide guidance and support, as necessary. If the remedial measure is deemed to be unsatisfactory, we suspend transactions with the supplier.

Suppliers subject to guidance & support and suspension of transactions

Topic	Support	Suspension of transactions
Human rights and safety	1,085	8
Environment	3,873	38

(Cumulative data for FY2007-2011) (Unit:No. of supplier companies)

Examples of supplier guidance and instructions (FY2011)

Guidance on Environmental Activities	Compliance with water discharge standards from the water outlet facilities Proper management of substances that lead to environmental pollution Segregation of storage with regard to hazardous and non-hazardous substances, establishment of rules for the environmental management of storage facilities
Guidance on Human Rights and Occupational Health & Safety	Workplace climate Compliance with safe operating practices, dealing with emergencies, education on health maintenance Complying with safe and proper methods at the time of unloading of goods

EICC Membership

In June 2011, Toshiba Group joined the Electronic Industry Citizenship Coalition (EICC), the electronics industry’s CSR promotion organization. In order to fulfill CSR for labor, occupational health and safety, the environment, and ethical standards throughout the supply chain in accordance with the spirit of the EICC’s code of conduct, we provided education on the EICC’s code of conduct for those working in semiconductor manufacturing plants in Japan and overseas.

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Support for the Use of Conflict-Free Minerals

For humanitarian reasons, Toshiba Group’s policy stipulates that raw materials such as gold, tantalum, tungsten, and tin mined in the Democratic Republic of the Congo and adjoining countries experiencing armed conflicts must not be used. In October 2011, we built an internal system for conflict minerals and established the Toshiba Group Conflict Mineral Policy and publicized it on our website.

As a part of our efforts to carry out due diligence, we conduct surveys with the suppliers of our semiconductor department and other departments regarding the use of conflict minerals and the smelter verification using the EICC-GeSI* reporting templates.

We are also a participant in the Public-Private Alliance for Responsible Minerals Trade (PPA), which is a privatepublic project advocated by the US Government. We hope to eliminate the fund sources of armed groups and provide economic support to the Democratic Republic of the Congo and adjoining countries. In February 2012, we exchanged opinions with a US NGO (Enough Project) and A SEED JAPAN, which are working on issues related to conflict minerals.

In 2011, we conducted a pilot survey of 300 suppliers in the semiconductor and other sectors using the “EICC-GeSI(*6) Conflict Minerals Reporting Template” to identify their use, and to single out smelters of conflict minerals.
In 2012, we surveyed a total of about 10,000 suppliers on their understanding of the issue of conflict minerals, and what initiatives the suppliers had in place.
From 2013 on, the Group plans to continue surveying suppliers about any potential use of conflict minerals or implicated smelters, using the “EICC-GeSI Conflict Minerals Reporting Template.”

• 　Toshiba Group Conflict Minerals Initiatives (PDF:49K)

*

Global e-Sustainability Initiative

Green Procurement

Adhering to its Basic Policy for the Environment, Toshiba Group is implementing environmentally conscious approaches in all business processes and products, focusing on creation of new value in harmony with the Earth.

It is necessary to perform comprehensive assessment of environmental impacts of our products throughout their life cycles from production and usage through to recycling and final disposal. Toshiba Group is promoting green procurement as a measure to minimize environmental impacts in the production phase.

The objective of the Green Procurement Guidelines established in 1999 is to prioritize procurement of products, parts and materials with minimal environmental impacts from suppliers who are proactively promoting environmental protection. In order to promote business such that that environmental impacts and risks are reduced, such as through reduction in the use of hazardous chemical substances, initiatives throughout the entire supply chain are necessary. For that purpose, the cooperation of suppliers and our business partners is indispensable.

Toshiba thoroughly revised the Green Procurement Guidelines in 2011 to address emerging needs.

In our endeavor to contribute to the emergence of a sustainable society, we request our suppliers' cooperation in the promotion of green procurement. Also, we assess suppliers' environmental performance and conduct surveys on the presence of chemical substances in procured items.

• Green Procurement Guidelines (English, Japanese and Chinese)

Selection/Evaluation of Suppliers based on the Level of Greenness

With regard to the environmental performance, we conduct a voluntary assessment of the level of greenness of suppliers (Toshiba standards) based on the environmental standard ISO 14001. In selecting suppliers, we accord priority based on the ranks of the suppliers and also urge them to improve their level of greenness.

The level of greenness of suppliers during FY2011 was 97.2%
(includes Rank S and Rank A)

• Rank S (excellent)
• Rank A (good)
• Rank B (requires guidance)
• Below Rank B (requires guidance)

For Stationery and Other Office Supplies

With regard to procurement of stationery and other office supplies, Group-wide companies strive to select procurement items that have lower environmental impacts. For example, environmentally conscious products such as Eco Mark certified products, products made of recycled materials, recyclable products, and products that can be separated for collection are registered as environmentally recommended products for procurement by Toshiba Group.

We are implementing green procurement for personal computers, copiers, copier paper, stationery and other office supplies.