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Support for CSR Initiatives of Business Partners

Our business partners, who are suppliers of materials, parts, and components, are important partners that support Komatsu's manufacturing. Komatsu believes that engaging in CSR procurement will contribute to our business partners' expansion and therefore endeavors to do so in cooperation with our partners.

Approach and Policy

Komatsu's Procurement Policy

Komatsu's basic policy is to produce a product in the area where there is demand for it. Out of the 39 plants that manufacture construction and mining machinery, 27 are located outside of Japan. In following with the manufacturing of machinery at an overseas plant, we are actively working on procuring parts and materials from the same area. Aside from engines and main components that are shipped everywhere in the world from Japan, and a few specific parts that are only supplied by specialized manufacturers, the overseas plants are on their own in terms of procurement, to promote local and optimal procurement for parts such as sheet metal.

CSR Procurement Guidelines

In 2011 we formulated the CSR Procurement Guidelines, which lay out key compliance and CSR information for all our business partners. We have posted the guidelines on our Japanese and English websites and are now making sure that our partners are aware of this information.

Coverage of the CSR Procurement Guidelines

Coverage of the CSR Procurement Guidelines

The Guidelines are available at:

Midori-kai and the State of Our Support of the Organization in FY2015

Komatsu Midori-kai

Komatsu Midori-kai is an organization made up of our business partners, with 164 member companies in Japan, out of which the procurement amount is approximately 75% of domestic purchasing goods. At the regular meetings, where the management members of each company are present, such as the general assembly, general meetings and New Years' special meetings, Komatsu's top executives explain our policies, emphasize the importance of CSR management and request that awareness be raised in regard to CSR management.
Midori-kai companies have been divided into 5 groups by production item, to promote improvement activities along with Komatsu for each one of the shared improvement themes of safety, environment and cutting-edge element technologies. The case examples of improvement are shared within the companies of the group which is set up for lateral dissemination of information.
In North America, Europe and China, there are Midori-kai organizations made up of Komatsu's major business partners.
These chapters are making the most of the characteristics of their respective region in furthering their activities.

Support to Member Companies

Komatsu supports Midori-Kai member companies in a variety of ways, and making effective use of the initiatives of each group while promoting improvement activities. Support activities during FY2015 are described below.

Safety

As part of the effort to strengthen safety and health activities, we are conducting safety patrols continually and sharing information on labor accidents, as well as lateral sharing of safety measures through the safety activities presentation meetings, in order to support each company in increasing their level of safety.
As a part of each group’s initiatives, there is some friendly competition as they patrol each other’s companies within the group to provide findings and look for areas of improvement as part of promoting such activities.
In addition, we opened safety training centers in each Komatsu plant that our business partners can use so that their employees can also experience simulated workplace hazards and be trained to anticipate dangerous situations.

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Example of conducting safety patrols for each other. Activity involving friendly competition of patrolling each others’ company to point out and make improvements based on findings.

Environment

We made certain certifications, such as ISO14001 and Eco Stage mandatory, and as a result of our directing and supporting efforts to obtain these certifications, all 164 companies within the Midori-kai are now certified. In our efforts to reduce electricity consumption, we set a target for reducing electricity consumption by at least 15% from 2010 levels. We are also working to reduce the energy consumption of 97 companies of our business partners, focusing on implementing Komatsu's initiative (as part of our production system reforms) to reduce electricity consumption by 50% across our business partners.

Personnel Development

To develop young top management at our business partners, we hold “Management Salons” as occasions for Komatsu management and young top management to exchange views. With this approach we intend to develop “win-win” relationships with our business partners while aligning our respective management policies and implementing PDCA cycles.
Furthermore, we select model companies as part of our efforts to support our business partners in overall improvement and advance their technological resources by capitalizing on Komatsu expertise toward strengthening their organizational capabilities.
As a new initiative in FY2015, we held a CSR study group for young management.

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The study group for business partners held in February 2016. Using Komatsu’s CSR activities as an example, each company worked on the CSR Materiality identifying process for their own company.

Management System

Checking System for New Business Transactions and Agreements

Komatsu uses a check sheet before it starts doing business with a new supplier, not only to confirm basic conditions related to quality, cost and delivery, but also to verify their efforts in environmental protection and employee education.
To conduct a business transaction in accordance with the CSR Procurement Policy, our basic agreement includes clauses pertaining to environmental protection and compliance.

Risk Management Prepared for Occurrence of Natural Disasters

Komatsu is strengthening its risk management system for procurement. Since FY2012, we have conducted assessments in Japan so that we can quickly determine the status of partner companies in the event of a disaster such as an earthquake or tsunami, and be able to continue procurement activities without delay, to minimize the effect on production. We input the location and production content for each of the over 20,000 sites of all our partner companies to create a database for “visualization,” and assessed the degree of risk. In addition to considering prevention measures for each partner company that have higher levels of risk, the procurement staff will be able to consider risks from this aspect when considering new agreements, so that we can heighten the accuracy of the information.
In the event of an emergency, we will dispatch security maintenance personnel from our plant to our partner companies—as we did following the Great East Japan Earthquake—to help support speedy production recovery.

Policy and Actions Regarding Conflict Minerals

Komatsu has adopted a policy of not using conflict minerals produced by the Democratic Republic of Congo (DRC) or its neighbors (Angola, Central African Republic, Republic of the Congo, Rwanda, Southern Sudan, Tanzania, Uganda and Zambia) from our corporate social responsibility perspective.
During the regular meetings we hold with our suppliers at each Komatsu plant in Japan, we explained this policy as well as Komatsu's response to the conflict minerals issue and related requests to our suppliers. With the cooperation of suppliers, we conducted a country-of-origin survey to determine the location of origin of the conflict minerals we use.
Looking ahead, we will continue taking steps to prevent the use of conflict minerals from the DRC and its neighbors and thereby restrict funding for military groups. We will immediately discontinue any use of conflict materials that we discover.

Other Initiatives

Awareness Campaign for CSR Procurement

As an ongoing effort to raise awareness of CSR, Komatsu has been introducing CSR case studies since May 2011 through its bimonthly CSR newsletter on its website, which is available for all suppliers for the Komatsu Group in Japan.

Procurement Education in Human Resource Development

Komatsu conducts employee training at every level, from new employees to managers, in the forms of group learning and e-learning, with a strong emphasis on safety, the environment and compliance.

DATA

Business Partner Association Midori-Kai

 Number of CompaniesProcurement Coverage
Japan16475%
North America3950%
Europe4735%
China6190%

FY2015 Record of Support to Midori-kai (Japan)

ItemContentResults
Human resources
development and edification
Participation in Komatsu’s Executive Development Education (selected each year)2 companies
Participation in All Komatsu QC Convention and Technology Olympics19 companies in total
Publishing “CSR Communication” (FY2011-)118 issues in all
CSR study groups held23 companies
Support in Management Salon13 companies
Held an Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors Education181 companies in total (312 people)
Occupational Safety
and Health
Safety PatrolAll 97 companies
Held a Special Committee on Safety22 times
EnvironmentSupport of reduction activities for electricity useAll 97 companies
Held a Special Committee on Environment8 times