Responsible Procurement

In order to build trust from stakeholders and society and contribute to the realization of a sustainable society in the JAL Group's various businesses, including air transport, the Procurement Division conducts procurement in a fair and clear manner. We will promote responsible procurement activities that take into consideration sustainability, such as global environmental conservation, respect for human rights, and proper labor practices, not only in terms of quality, price, and delivery dates, but also in order to achieve a relationship of coexistence and co-prosperity with our business partners.

The JAL Group Supplier Code of Conduct has been established as an item to request understanding and compliance from business partners in order to promote responsible procurement activities that take sustainability into consideration.

In formulating this Code, we pay close attention to the 10 principles in the 4 fields of human rights, labor, environment, and anti-corruption of the United Nations Global Compact, as well as international agreements and norms in each field related to sustainability, and incorporate the following into the Code of Conduct. Through understanding and complying with this Code of Conduct, we will work together with our business partners to build a sound supply chain that takes sustainability into consideration.

The JAL Group businesses, including air transportation, are supported by the supply chains of a wide variety of business partners. Throughout this supply chain, we operate a Supply Chain ESG Program to identify and address material risks and impact from an ESG perspective.

Goals are set by the Board of Directors and Sustainability Promotion Council with the President as chair, and are promoted through progress monitoring and risk management under the supervision of the Senior Vice President of the Procurement division (executive officer).

For the promotion organization, click here

Purchasing practices are conducted in accordance with the status of compliance with the Supplier Code of Conduct. For suppliers, we check compliance status through the supplier assessment described in the following main initiatives and conduct purchasing activities accordingly.

In our company's purchasing practices, we provide advice and support to ensure understanding and compliance with the JAL Group Supplier Code of Conduct. It is a mandatory requirement for us to implement corrective actions or submit a corrective action plan by the specified time limit. If the compliance status is not confirmed, we are considering that suppliers are excluded from contracting and transactions.

We also prioritize the selection of suppliers (products) that have advanced ESG initiatives. At the time of supplier selection and thereafter, we select suppliers based on evaluation of our Supply Chain ESG Program as well as quality, price, and delivery time evaluations. For example, in September 2018, we began to adopt internationally certified wood and paper products that take forest resources into consideration, and in June 2019, we began to adopt MSC^＊1and ASC^＊2certified products as certified products with ESG compliance.

^＊1 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.
^＊2 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.

The Procurement Division manages the progress of its Supply Chain ESG Program, shares ESG information that the JAL Group is working on, reviews issues recognized by the JAL Group as a whole, and educates procurement staff about the content of the program. In fiscal 2022, we provided education to all Procurement Division employees (approx. 120 members). Through these efforts, we are working to develop a sound supply chain.

【An example of educational results】

  - Impacts of climate change
  - About Environmental Management System (EMS)
  - Reduction of single-use plastics
  - Concept of animal welfare and biodiversity conservation

The Supply Chain ESG Program assesses and supports suppliers according to the size of their ESG risks.

We have presented the JAL Group Supplier Code of Conduct and requested its understanding and compliance. In addition, we conduct supplier assessments using external indicators as appropriate.

Significant suppliers refers to suppliers that are judged to be at high risk from the perspective of compliance, business practices, human rights, environmental conditions, and other characteristics specific to the business, sector, and ESG in the country or region. In addition, we have selected items that are highly relevant to our business activities in light of the importance and irreplaceability of commercial materials, such as aircraft and fuel, which are essential to our air transport business, as well as inflight meals and cabin service products used on board.

We conduct the following assessments with significant suppliers to confirm compliance.

To confirm compliance with the JAL Group Supplier Code of Conduct, we use the CSR information platform provided by Sedex Information Exchange Limited (Sedex ^＊3), which we joined in 2015, and ask our suppliers to respond to Sedex's Self-Assessment Questionnaire. In addition, since fiscal 2019, our company has been sending out its own Self-Assessment Questionnaire (JAL questionnaire) to check compliance status through responses to the JAL questionnaire. In addition, through SAP Ariba, which was newly introduced in fiscal 2021, we are promoting the dissemination and confirmation of the Supplier Code of Conduct online. We will continue to check compliance with the Supplier Code of Conduct through surveys to ensure that the standards required by our company (ESG requirements) are not violated.

^＊3 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.

In order to confirm compliance with the JAL Group Supplier Code of Conduct, the buyer in charge visits the actual place to share the results of the Self-Assessment Questionnaire (JAL questionnaire) that has been answered and to check the progress of corrective measures in the actual place.

The JAL Group conducts audits by external organizations as part of its assessment flow. In fiscal 2019, in preparation for the uniform renovation in April 2020, we conducted a SMETA audit^＊4 to suppliers who provided uniforms to outsourcing. Based on the audit results, we made requests for improvement on items that require immediate improvement, and led to improvement of all requested items in cooperation with suppliers.

^＊4 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.

By the end of fiscal 2022, we had confirmed to all 461 significant suppliers that there were no compliance issues.
（See Achievements for more information）

In order to build a sound supply chain, we believe that it is essential not only to deepen the understanding of the JAL Group Supplier Code of Conduct by our suppliers, but also to develop skills of the suppliers themselves. To this end, we are taking the following measures for all suppliers.

All suppliers are notified of this initiative on our company website. In addition, we regularly hold "Business Partner Liaison Meetings" to share information and exchange opinions with business partners. In fiscal 2019, we invited external lecturers to participate in educational activities related to ESG/SDGs. From fiscal 2020 onward, we held online briefings to familiarize employees with the JAL Group Supplier Code of Conduct, ask them to comply with it, and inform them of initiatives being taken by the entire JAL Group, such as SAF procurement to reduce CO2 emissions. In fiscal 2022, 39 suppliers participated. We will work to disseminate the Supply Chain ESG Program to further improve our suppliers' understanding of ESG/SDGs.

In order for suppliers to demonstrate better ESG performance, we believe it is also important to understand the activities against peers. We evaluate the results of the Self-Assessment Questionnaire and provide feedback, including comparisons against peers. In fiscal 2022, we provided benchmarks to suppliers that provide inflight meals, and introduced examples of our efforts at other companies. We will continue to provide suppliers with access to benchmarks.

＜Examples of Benchmark＞

We evaluate the results of the JAL questionnaire and Sedex's Self-Assessment Questionnaire, both of which have been answered by suppliers. For suppliers whose ratings do not meet the standards required by our company (which are considered to be ESG high risk), we communicate from our company and work together to consider improvement measures so that they satisfy the standards of the JAL Group Supplier Code of Conduct. In line with the business patterns of our business partners, we provide support through daily interviews, phone calls, emails, and visits, for example, by providing advice based on our own experience in preparing for the establishment of a promotion system and disclosing information on ESG initiatives.

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.In addition to supplier assessments, we have established the JAL Supplier Hotline to receive consultations and reports from suppliers and their employees, and have developed a system that enables suppliers' employees to directly send consultations and reports to the JAL Group.JAL Supplier Hotline is available in Japanese, English and Chinese.

The JAL Group transacts about 1 trillion yen a year in its global supply chain.

(FY 2022 Results）

■KPIs for Supplier Screening

■KPIs for Supplier Assessment and Development

Coverage and progress of our supplier assessment program

■Coverage and progress of suppliers with corrective action plans

■Coverage and progress of suppliers in capacity building programs