Survey on Supply Chain CSR (Year ended March 31, 2013)

 Human rights
 Labor practices
 The environment
 Fair operating practices
 Consumer issues

Survey on Supply Chain CSR

Marubeni representatives survey the compliance status of suppliers by using a checklist prepared in accordance with the Basic Supply Chain CSR Policy, interviewing responsible managers and inspecting manufacturing sites.
In January 2013, we performed an on-site inspection of two agricultural product suppliers.

(1) PT. Sarimakmur Tunggal Mandiri (Lampung City, Sumatera, Indonesia) Lampung Plant

  • A visiting inspection was conducted on PT. Sarimakmur Tunggal Mandiri, an Indonesia-based supplier of coffee beans and spice products that the company harvests, dries, sorts and sells. A site inspection was performed on a plant in Lampung, which included an interview with the plant manager.

  • Our survey confirmed that the company had established a personnel and employment department that handles administration work to meet the requirements stated by applicable laws and regulations, and has an appropriate system in place to check on legal compliance with those laws and regulations. For instance, for recruitment, official identification is used to identify the age of new employees to ensure that no one below 17 is hired. Regarding working conditions such as wage and work environment, negotiations are held between the management and employee representatives collectively, as well as with individual workers.

  • These sound labor-management relationships have helped the company to achieve a high employee retention rate, with many employees exceeding 10 years of continuous service. Regarding workplace amenities and facilities, individual lockers and a company cafeteria, among others, have been introduced to enhance comfort and satisfaction relating to the work place.

  • Measures to secure safety and health in the work site include a total of 50 workers systematically assigned to clean the working area within the plant to keep it clean and tidy at all times. As a way of addressing possible risks of work-related injuries and diseases, the company pays for relevant social insurance programs that cover its employees, including non-regular staff. Also, the company makes adequate environmental conservation efforts, which are subject to a periodic on-site inspection conducted by the local authorities. No serious issues have thus far been detected.

(2) Simexico Daklak, Ltd. (Buon Ma Thuot City, Daklak Province, Vietnam)

  • A visiting inspection was conducted on Simexico Daklak, Ltd., a Vietnam-based coffee beans supplier that engages in a range of related processes from harvesting and sorting/grading to export. A plant inspection was performed together with interviews conducted with four management representatives (the president, vice-president, deputy manager of export/import marketing and the business planning manager).

  • Simexico Daklak has been commended by the Vietnamese President, which is the nation’s highest honor, in recognition of its superior business activities, particularly in terms of legal compliance. Our survey confirmed that an appropriate system has been developed to check on compliance with local laws and regulations, including those related to labor standards, which are subject to an on-site inspection conducted periodically by the local authorities. One major exemplary practice the company engages in is setting the minimum recruitment age at 20, which is above the legal requirement, and ensuring that no one below that voluntary standard is employed. Currently, the youngest worker is 23 years old. Regarding working conditions such as wage and work environment, collective bargaining is conducted based on proper labor-management negotiations.

  • In order to confirm and improve workplace safety and hygiene, a dedicated department has been established to address related issues, and takes a number of appropriate measures. Specifically, workers are instructed to wear masks while engaged in line operations, and written safety and hygiene principles and precautions are posted at proper locations within the plant to raise employee awareness. Also, the company pays for a social insurance program for its employees.

  • Simexico Daklak’s CSR efforts are highly evaluated and have received a number of international recognitions(*), including UTZ Certified Good Inside, Rain Forest Alliance, Common Code for Coffee Community (4C), and Good Agriculture Practice (GAP), among others. Also, as part of its social contribution activities, the company donates coffee seedlings to local farmers every year in a bid to help enhance coffee growing technology and environmental conservation. This fiscal year, approximately 30,000 plants were donated.

    * There are a number of accreditation bodies that assess the management performance and capabilities of business and other organizations in areas such as the environment (protection/preservation/restoration of the natural environment, including biodiversity and rainforest ecosystems), employment (guaranteed minimum wages, employee welfare, work training), and product/service safety (traceability). Using their own criteria, each of these bodies reviews a broad spectrum of relevant efforts made by applicant organizations, including producers and suppliers, and certifies them for appropriate activities that meet required standards.

(3) Conclusion

The result of the inspection showed that the two suppliers were complying correctly with all matters, including those covered by the Basic Supply Chain CSR Policy. We will continue to conduct regular on-site inspections.

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