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Responsible Procurement

Basic Concept

The JAL Group aims to build a sustainable supply chain together with our business partners so that we can provide the best service to our customers on the premise of "safety" and "security".We recognize that the day-to-day operation of aircraft and the products and services we provide to our customers depend on the cooperation and support of our business partners, and we believe that it is extremely important to tackle issues such as legal compliance, global environmental protection, respect for human rights, proper labor practices, and fair business practices in the supply chain.To that end, we will promote the dissemination and compliance with the JAL Group Supplier Code of Conduct by utilizing fair and open procurement and good partnerships based on mutual trust that we have cultivated so far. We will continue to improve the soundness and sustainability of the supply chain connected to the JAL Group.

The JAL Group has established the JAL Group Supplier Code of Conduct as an item that we would like our suppliers to understand and comply with. Together with our suppliers, we aim to build a sound supply chain that gives consideration to sustainability.

JAL Group Supply Chain

The JAL Group conducts business with approximately 10,000 companies around the world with a purchase amount totaling approximately 700 billion yen (as of March 2022). We aim to build good partnerships based on mutual trust in collaboration with business partners.

Main Initiatives

JAL Group Supplier Assessment

The JAL Group conducts supplier assessments every year with the aim of building a sustainable supply chain and complying with the JAL Group Supplier Code of Conduct. If it is deemed that there are sustainability risks, we will request improvements, and if any serious issues are identified, we will conduct supplier audits and further realize sustainable procurement through interviews and dialogue with experts and NPOs. We plan to complete all critical suppliers soundness checks by the end of fiscal 2023.

Assessment Flow

(1) Dissemination of Supplier Code of Conduct and request for compliance

The JAL Group launched the JAL Group Supplier Code of Conduct in April 2016. In response to the global situation, which emphasizes supply chain management, the JAL Group significantly revised the framework in July 2019. The sections also provide explanations of social backgrounds and specific examples of initiatives. As in the past, we will continue to ask all of our business partners for their understanding and compliance, and aim to build a sound supply chain that gives consideration to sustainability in order to achieve SDGs through ESG management.

Key items of the JAL Group Supplier Code of Conduct

  • Quality Assurance
  • Human Rights and Labor
  • Safety and Sanitation of Work Environment
  • Global environment
  • Business Management
  • Expansion to Suppliers
  • Contribution to Regions and Society
  • Establishment of Internal Promotion Systems

In order to ask our business partners for their understanding and compliance, we regularly hold the "Business Partner Liaison Meeting" as a place to share information and exchange opinions. In fiscal 2019, outside lecturers were invited to conduct awareness raising activities related to ESG/SDGs. Since fiscal 2020, JAL has held online briefings on ESG/SDGs to improve the understanding of JAL Group initiatives and its business partners.In the future, we will continue to collaborate with business partners through contact meetings, exchanges with individual companies, and daily communication.

(2) Identification of critical suppliers

The JAL Group identifies critical suppliers based on the value and volume of funds procured, as well as the importance and non substitutability of products such as aircraft and fuel, which are essential for air transport services, in-flight meal for consumption, and cabin service supplies used on board. In addition, We are prioritizing initiatives from products that are judged to have a higher ESG risk.

Critical Supplier Specific Process

As of March 31, 2022

(3) Cooperation and monitoring with suppliers

The compliance status of the JAL Group Supplier Code of Conduct is checked by utilizing Sedex Information Exchange Limited (Sedex *1), which JAL joined in 2015, and by using the CSR information platform provided by Sedex. We ask suppliers to respond to the Sedex Self-Assessment Questionnaire. In addition, since fiscal 2019, our company has been sending its own Self-Assessment Questionnaire (JAL questionnaire) and confirming compliance through responses to the JAL questionnaire. Also, in fiscal 2021, we introduced a new procurement system SAP Ariba to check the awareness of the JAL Group Supplier Code of Conduct.

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Number of suppliers assessed in the last 3years Number of critical suppliers
Tier 1 1224 467
Non-Tier 1 18 18
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As of March 31, 2022

※1 Sedex, the Supplier Ethical Data Exchange, is a non-profit organization established in the U.K. in 2004 that provides a platform for managing and sharing corporate ethical information with the aim of ensuring responsible business practices on supply chains.

Suppliers categorized as needing further improvement were requested for improvement.

(4) Request for improvement to suppliers

After evaluating suppliers' responses to the JAL questionnaire and Sedex Self-Assessment Questionnaire, our company communicates with suppliers whose evaluation does not meet our company's standards (considered to be a sustainability high-risk) and requests that they meet the JAL Group Supplier Code of Conduct standards. Depending on the business style of the business partner, it is an essential requirement to improve the business partners to meet the standard by the fixed deadline or submit a corrective action plan for improvement through face-to-face, telephone, email, and visits.

Response to High-Risk Suppliers in fiscal 2021

Through such requests for improvement, the soundness of 62% of critical suppliers were confirmed by the end of fiscal 2021.

(5) Auditing suppliers

As part of the assessment flow, the JAL Group conducts audits whenever necessary, taking into account the need for improvement, such as when no improvement is expected. In fiscal 2019, SMETA audit was conducted through a third-party organization for suppliers in preparation for the uniform reform scheduled for April 2020. Based on the audit results, we requested improvements in items that needed immediate improvement, and in cooperation with our suppliers, we confirmed that all the requested improvements had been made. For certain products that are deemed to have sustainability high-risks, on-site inspections are conducted periodically (once every three years for some products).

※2 SMETA (Sedex Members Ethical Trade Audit) is an auditing scheme designed to improve corporate ethics in global supply chains and is widely accepted as an international standard. It enables strengths and weaknesses (non-conformities) of companies to be identified against international standards and clarifies necessary actions for further improvement. For further details, please visit the official Sedex website.

Supplier Selection Considering ESG Management

In order to achieve the SDGs through ESG management, the JAL Group aims to build a sound supply chain that considers sustainability. We ask all our business partners to understand and comply with the JAL Group Supplier Code of Conduct in the Terms and Conditions that are a prerequisite for business transactions. Furthermore, suppliers classified as important suppliers are evaluated not only on quality, price, and delivery, but also on safety, hygiene, human rights, labor, the environment, and anti-corruption efforts by Self-Assessment Questionnaire.

In recent years, there has been a growing demand in responsible procurement for environmentally and socially conscious products. In September 2018, the company started to adopt internationally certified wood and paper products that are friendly to forest resources, and in June 2019, it started to adopt MSC*3 and ASC*4 certified products. We are continuing our efforts to increase the use of certified products.

※3 MSC(Marine Stewardship Council):Marine Stewardship Council Management of certification system for natural marine products sustainable fishing in consideration of the environment and society and caught by such fishery.

※4 ASC(Aquaculture Stewardship Council):Aquaculture Stewardship Council Management of certification systems for marine products produced at aquaculture farms in consideration of the environment and society.

Target and Achievement(KPIs in Supply Chain Management)

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Key Measures (KPI) Implementation Period Target Year Target Achievement
FY21
Monitoring completion rate for critical supplier FY19-FY23 FY23 100% 62%
Health confirmation rate of Tier 1 critical suppliers FY19-FY23 FY23 100% 62%
Audit implementation rate for suppliers requiring audits FY19-FY23 Yearly 100% No object
Complaint handling rate Yearly Yearly 100% FY22~
Implementation rate of sustainability training for procurement staff Yearly Yearly 100% 100%
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JAL Supplier Hotline

The JAL Group, together with its business partners, strives to build a sustainable supply chain through legal compliance, global environmental protection, respect for human rights, proper labor practices, and fair business practices. The JAL Supplier Hotline provides consultation and reporting from suppliers and their employees, in addition to assessments conducted through Self-Assessment Questionnaire. The hotline provides a mechanism for suppliers' employees to directly send consultations and reports to the JAL Group.

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