In March 2020 Ethical Consumer viewed Kao Corporation's website for the company's supply chain management policy. The company's website and Sustainability Data Book 2019 was viewed.
Supply chain policy (poor)
In a document called Guidelines for Supplier's Assessment (https://www.kao.com/global/en/sustainability/procurement/supplier-guide…) it stated that it would consider suppliers who prioritised certain social and environmental measures including: implementation of measures to eliminate all forms of discrimination; implementation of measures to ban forced labor, child labor and illegal labor; and respect for freedom to form or join a labor union. No mention could be found of working hours or payment of a living wage. The clause on child labour was considered not to be adequate due to the fact it was not defined in line with the ILO convention. Overall Kao Corporation was considered to have a poor supply chain policy.
Stakeholder engagement (rudimentary)
Ethical Consumer deemed it necessary for companies to demonstrate stakeholder engagement, such as through membership of the Ethical Trade Initiative, Fair Labour Association or Social Accountability International. Companies were also expected to engage with Trade Unions, NGOs and/or not-for-profit organisations which could systematically verify the company's supply chain audits, and for workers to have access to an anonymous complaints system, free of charge and in their own language.
Kao Corporation stated in its Sustainability Data Book 2019 that it had an independent compliance hotline. this had been set up by The Integrity Lines, which were external compliance hotlines, and had been successively set up at Group companies in countries outside of Japan. It was available in the caller’s own language 24 hours a day, 365 days a year. Anonymous inquiries were accepted. No other information about stakeholder engagement could be found. Kao Corporation was considered to have a rudimentary approach to stakeholder engagement.
Auditing and reporting (poor)
Kao Corporation's Sustainability Data Book 2019 stated that it annually surveyed group companies using the Human Rights Checklist (50 companies completed it in 2018)and surveyed group production sites (40 plants) using the SEDEX self assessment questionnaire. It encouraged suppliers to regiser with SEDEX.
"Kao requires suppliers to conduct self-assessment based on Kao’s Guidelines for Suppliers’ Assessment and monitors the results." Where suppliers don't meet the required standard, Kao personnel visit the supplier to talk about the problems. In 2018 Kao began to expand this approach to other parners that they outsource to, like production, logistics and waste disposal outsourcing partners.
However neither its website nor its report detailed a schedule of audit, audit result or a commitment to audit its whole supply chain. It didn't explain who paid for the costs of the audits nor did it present a remediation strategy for dealing with non-compliance. Overall it received a poor rating for auditing and reporting.
Difficult issues (rudimentary)
Kao Corporation stated in its report that it had educated new Procurement Division employees "in our basic approach to procurement such as fairness and equity, adherence to laws and ethics, and social responsibilities. Through such training, we strive to encourage our employees in understanding of global social issues such as human rights and labor which are required ISO26000 and United Nations Global Compact (UNGC) principles.
Ethical Consumer considered this to be adddressing a difficult issue.
Overall Kao Corporation received Ethical Consumer's worst rating for Supply Chain Management and lost a whole mark in this category.
http://www.kao.com (February 2020)