"Nearly 75% of Japan Inc. is lax on supply chain rights abuses: survey" 17 November 2022

Less than a third of Japanese companies are rolling out mechanisms to address human rights abuses in their supply chains, according to a Nikkei survey, demonstrating how much ground needs to be covered in running sustainable businesses.

This year's Nikkei Sustainable Development Goals Management Survey found that 660 out of 886 companies queried, or 74.5%, are setting up procedures for reporting and resolving human rights violations that occur within their organizations.

For most of those businesses, the measures will be applicable to the parent as well as global subsidiaries. But only 269 companies, or 30.4% of the total, will go further in applying those steps across their supply chains.

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In April, Mitsubishi UFJ Financial Group, Japan's largest bank, toughened funding standards for projects with a potentially negative impact on the environment and human rights. For the palm oil industry, for example, MUFG now requests financing recipients produce certification that operations are compliant with strict international sustainability standards.

Drinks maker Asahi Group Holdings offers a "clean line" that fields whistleblower reports from suppliers. The company is also screening suppliers of coffee beans and other raw material locally in their countries of origin, with more countries and materials to be subject to such checks in the future.

But companies that have fully implemented such compliance measures are few and far between. Only 256 companies in the survey, or 28.9%, say they regularly audit human right conditions on the ground at overseas suppliers. Just 7%, or 62 companies, delegate the work to third-party inspectors.

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The Japanese government released in September its Guidelines on Respecting Human Rights in Responsible Supply Chains, and officials are encouraging businesses to actively adopt the measures.

When it comes to composite SDG ratings, Sompo Holdings, Omron and Shiseido moved into the top tier for the first time. Sompo in particular won credit for supporting employees companywide who become involved in activities that contribute to local communities.

The Nikkei SDGs survey, now in its fourth year, rates initiatives in four categories: SDGs strategy and economic value, environmental value, social value, and governance. [...]

The survey received responses to questionnaires from 886 Japanese companies. The contingent included 824 listed companies, and the unlisted businesses employ at least 100 persons.