Sustainable Supply Chain

KIOXIA Group procures a variety of raw materials and resources from suppliers in different countries and regions. In FY2021, we had relationships with approximately 700 suppliers, and overseas suppliers*¹ accounted for 49% of our total procurement.

KIOXIA Group strives to manage our supply chains and promote sustainable procurement activities throughout these by complying with the procurement-related laws and regulations of each country or region and with social norms, as well as by building sound relationships with suppliers based on mutual understanding and trust.
We require our suppliers to comply with and implement the KIOXIA Group Procurement Policy, and we call for responsible business practices throughout our supply chain. In our efforts to manage our supply chains appropriately, where necessary we review procurement policies in response to changes in the social environment and in business conditions. We revised the KIOXIA Group Procurement Policy and published a new KIOXIA Group Supply Chain Code of Conduct in August 2021, which sets forth our requirements for companies in our supply chain.
Furthermore, we have formulated KIOXIA Group Green Procurement Guidelines that are applicable to environmental issues, and the KIOXIA Group Responsible Minerals Sourcing Policy governing the sourcing of minerals, and have made all relevant suppliers aware of these.

KIOXIA Group has set up a dedicated planning organization within the procurement department at KIOXIA's Head Office. It promotes appropriate transactions with all our suppliers and is responsible for management of our supply chains. To this end, it coordinates with related divisions within KIOXIA such as the Sustainability Division, the Environment group, and the Human Resources and Administration Division.

KIOXIA Group joined the Responsible Business Alliance (RBA) in 2021 to fulfill our social responsibilities across our global supply chains in such areas as labor practices, occupational health and safety, environmental protection, and ethics. As a regular member of the Alliance, we carry out business responsibly in accordance with the RBA Code of Conduct by implementing our own sustainability initiatives and requiring our suppliers to do the same.

In addition, KIOXIA Group promotes the responsible procurement of minerals under the umbrella of the RBA through our participation in the Responsible Minerals Initiative (RMI) and the Responsible Mineral Procurement Study Group of the Japan Electronics and Information Technology Industries Association (JEITA).

When commencing business with a new supplier, we make them aware of our policies governing sustainable procurement, including our Group's overall procurement policies and our Supply Chain Code of Conduct. We first confirm whether the supplier's occupational health and safety measures, environmental and process management structures, legal compliance standards, management standards, etc., meet the transaction standards of KIOXIA Group before we conduct any business with them.

Prior to continuing business with an existing supplier, we use references such as the current scale of our business with them, and ask suppliers to conduct a self-assessment survey using a format provided by the RBA (RBA-SAQ).*² This enables us to confirm the status of the supplier's compliance with the RBA Code of Conduct and facilitates rigorous management of our supply chain. Interviews by procurement managers are conducted with suppliers determined by the RBA-SAQ to be of high risk, and where necessary, suppliers are required to implement corrective measures, such as undergoing an RBA third-party audit. In addition, we check the management status of suppliers’ manufacturing sites by means of quality audits, requesting improvements and providing support for the implementation of these where necessary.

Given KIOXIA Group's role in the supply chain of companies listed on U.S. stock exchanges, following the enactment of Section 1502 of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) in 2010, we ensured smelters in our own supply chain were investigated by our suppliers to confirm that proceeds from the sales of tin, tantalum, tungsten, and gold (commonly known as 3TG) from the Democratic Republic of the Congo or neighboring countries are not being used as a source of funds for anti-social forces.

Since March 2021 KIOXIA Group has been promoting the responsible procurement of minerals from other countries and regions as well; our KIOXIA Group Responsible Minerals Sourcing Policy stipulates that KIOXIA will not use as raw materials 3TG or cobalt obtained from other conflict-afflicted and high-risk areas (commonly known as CAHRAs) where inhumane acts such as human trafficking, slavery, forced labor, child labor, abuse, or war crimes are suspected.

Our Responsible Minerals Sourcing Working Group, which consists of members from relevant corporate divisions such as the Head Office Procurement, and Sales, Technology, and IT groups, promotes activities on behalf of KIOXIA Group in accordance with the KIOXIA Group Responsible Minerals Sourcing Policy, and reports as necessary to the Sustainability Committee.

KIOXIA Group investigates the use by mineral smelters in our supply chain of minerals they deliver to our company, such as 3TG and cobalt. We require that suppliers procure all materials from Responsible Minerals Assurance Process (RMAP) smelters certified by the RMI, and also request that suppliers identify applicable smelters in the supply chain if 3TG mineral procurement is conducted in the Democratic Republic of Congo, neighboring areas or other conflict-or high-risk areas.
In FY2021, we requested the 75 suppliers that may have used 3TG minerals to conduct a smelter survey using the Conflict Minerals Reporting Template (CMRT) produced by the RMI. However, in FY2021, a large number of RMAP-certified smelters were excluded from RMI accreditation at the end of the annual survey during February 2022. Due to this, the percentage of minerals procured from smelters that were RMAP-certified or currently under audit temporarily fell below 100% (to 78% as of the end of March 2022, recovering to 93% at the end of May*⁴). We continue to work towards the achievement of our goal of 100% procurement from RMAP-certified smelters.

Following requests from our stakeholders, we added cobalt to the list of minerals surveyed, and conducted smelter surveys at 30 suppliers using the RMI Extended Minerals Reporting Template (EMRT) for FY2021.

As stated in the KIOXIA Group Environmental Policy, we have established a Green Procurement Working Group under the auspices of our Environment, Quality Control, and Procurement divisions, to work on green procurement, with the aim of contributing to the realization of a sustainable society. We have also formulated Green Procurement Guidelines, which outline our management standards and contain specific requirements for suppliers regarding the selection of materials with a low environmental impact and the management of chemical substances. We periodically update the guidelines to reflect issues such as changes in the laws and regulations of individual countries or regions, or customer requests.
We also conduct a thorough assessment of the environmental impact of chemical substances from the design and development stage, and use materials with a low environmental impact as part of our efforts to reduce our environmental footprint.

Through these initiatives, we will continue to share issues and collaborate with our suppliers on issues affecting environmental conservation, aiming to contribute to the realization of a better global environment.

In FY2021, training sessions covering social trends, KIOXIA's approach to sustainable procurement, and the RBA Code of Conduct were conducted primarily for employees in our Procurement, Sales, the Human Resources and Administration Division. These sessions took place online and all members of the Procurement division participated.

KIOXIA Group requires suppliers to make improvements if they are found to have violated our procurement policies or Supply Chain Code of Conduct, or if sustainability-related risks are identified in the operations of a supplier or supply chain, or if there is a new law or regulation or social requirement necessitating a response, or if there is some other reason. In such cases we will require suppliers to respond, for example by making improvements to the processes in question, and we will offer corrective guidance and support. However, in cases where corrective measures are judged to be difficult to implement, we will suspend business with them.

In FY2021, there were no cases where business with a supplier was suspended due to risks related to sustainability.

KIOXIA Group strives to engage multiple suppliers and works closely with them in order to avoid interruptions to business in the event of emergencies such as earthquakes, other natural disasters, accidents, or pandemics. Specifically, under our business continuity plan (BCP) policy,  ensuring we are fully aware of the status of our supply chains during normal times will allow us to swiftly grasp any impact in the event of an emergency. We have also established a framework for cooperation aimed at achieving the early recovery of services. Additionally, we will strive to cultivate our business continuity plan through BCP assessments at major suppliers.