Achieving a Sustainable Supply Chain

We understand that our Group’s activities affect many others, given that we and our major overseas production facilities have direct business relationships with approximately 800 companies, including suppliers of materials and parts, as well as companies that provide services, advertising, and logistics, and even more Tier 2 and other suppliers. We also recognize that through collaboration throughout the supply chain and local procurement, we can achieve carbon neutrality, improve quality, and contribute to local community development.
Based on this understanding, we believe that for all processes, from the procurement of raw materials to the manufacture and delivery of parts and products, it is important not only to comply with laws and regulations but also to act responsibly, taking into account such factors as the environment and human rights.
We have formulated “Supplier CSR Guidelines” and “Green Procurement Guidelines” and work together with all our business partners to achieve sustainable growth throughout the supply chain. As compliance with both guidelines is a priority in our Group’s procurement activities, our procurement division executives take advantage of opportunities such as supplier briefings to request that the entire supply chain thoroughly comply with the guidelines

The “Supplier CSR Guidelines,” which are based on our Human Rights Policy, include provisions on respect for human rights, including the elimination of discrimination and the prohibition of child labor and forced labor. They require that suppliers take human rights into consideration, that they undergo CSR assessments by third-party organizations, and that they clearly indicate measures taken in response to compliance violations. We promote collaborative activities with all of our suppliers from the same point of view. The scope of these activities includes labor practices, environment management, and compliance.
In addition, to comply with domestic and international laws and requirements related to environmental and human rights risks throughout our value chain, we are considering revisions to our guidelines with input from outside experts.

Our suppliers cooperate with us in various initiatives, such as those indicated below, including meeting the requirements of our “Green Procurement Guidelines.” In addition to Japan, we have introduced the guidelines in overseas production bases, adjusting the guidelines to account for actual conditions in each country and operational details at each location. These production bases are also applying the guidelines to their business partners.

For all material issues, including achieving a sustainable supply chain, the Group confirms the risks and opportunities identified from a long-term perspective by those responsible for each materiality initiative. Our Sustainability Committee deliberates and decides on initiative targets based on the external environment and stakeholder needs and expectations from a medium-term perspective, and uses the PDCA cycle by checking progress.
We have a structure in which important matters such as reviewing material issues and the overall status of sustainability activities are deliberated and reported at Board of Directors meetings

“Conflict minerals” (tin, tantalum, tungsten, and gold) and cobalt have become a source of funding for armed groups, resulting in serious violations of human rights.
To ensure that we are not complicit in human rights abuses through the procurement of these conflict minerals, the Group promotes responsible procurement by clearly specifying in our “Supplier CSR Guidelines” the prohibition of child labor, forced labor, and the nonuse of conflict minerals as raw materials. To achieve sustainable mineral sourcing, we are considering the formulation of new policies, including environmental and human rights due diligence, with input from outside experts. We ensure the transparency of our raw material procurement along with our suppliers and live up to our social responsibilities.

A large-scale natural disaster, major outbreak of infectious disease, or production shortage of specific parts or materials (such as semiconductors), could interrupt the flow of parts from our suppliers. We might then run the risk of business being suspended. To avoid or mitigate such risks, as part of our business continuity plans (BCPs) in the supply chain, we are taking measures to identify risks and impacts early on and to find alternative suppliers and substitute components.
Specifically, we have established a Supply Chain Risk Management System and ask suppliers to register Tier 2 to Tier N suppliers, including their factories and overseas suppliers, so that target suppliers can be rapidly narrowed down. In addition, we have a system in place that allows us and our business partners to share information about the status of damage caused by disasters, the impact of production shortages for specific parts and materials, and our response to production plans so that we can take countermeasures.

The Company conducts transactions in an appropriate manner, which includes not violating human rights. We determine transaction prices and delivery dates following thorough consultation with individual suppliers.
To ensure that suppliers thoroughly comply with our “Supplier CSR Guidelines” and “Green Procurement Guidelines,” we have them submit “Supplier Commitments” and “Declarations of Conformity to Regulations on Substances of Concern.” We ensure the effectiveness of our business partnerships by having new business partners submit these documents before commencing transactions, and by continuously confirming the status of the agreement afterwards.
We have expanded these efforts to include our major overseas bases-Mitsubishi Motors (Thailand) Co., Ltd. (MMTh), PT Mitsubishi Motors Krama Yudha Indonesia (MMKI), Mitsubishi Motors Philippines Corp. (MMPC)-and received Supplier Commitment agreements from suppliers at our major overseas production bases.

As part of MITSUBISHI MOTORS’ efforts to adhere to the METI guidelines, we have established a Business Partner Helpline for the suppliers of our procurement division. The helpline receives opinions and comments from business partners, quickly identifies compliance issues or concerns, such as legal or regulatory infractions, unfair practices or human rights violations in our procurement activities, and promptly rectifies them, striving to achieve even fairer business transactions.

Providing suppliers with appropriate information and two-way communication is essential for supply chain management.
At the end of every fiscal year, we hold a Suppliers Meeting to explain our procurement policies for the next fiscal year, attended by approximately 300 companies. Small-scale meetings between the management teams of suppliers and our management team are held every year to help foster closer communication at the management level. These meetings, each of which involves approximately 20 companies, are conducted by the MITSUBISHI MOTORS Council, a voluntary organization of around 180 supplier companies. A total of nine small-scale meetings were held in FY2024.

The Company conducts third-party CSR evaluations in the four areas of the environment, labor and human rights, ethics, and sustainable procurement, with the aim of raising the level of CSR activities at our suppliers.
In FY2024, many business partners underwent third-party evaluations. MITSUBISHI MOTORS plans to continue expanding the number of business partners who undergo evaluations in FY2025, and we will focus on improving the scores of those partners who have already been evaluated (approximately 90% of all orders based on order value).

The Group regularly conducts quality audits and assists with quality self-checks by suppliers to improve quality along the entire supply chain.
In FY2024, we conducted process audits for 92 suppliers at 104 plants, and indicated items were generally improved within three months. Process audits are conducted every one to three years, with the audit cycle set according to the results of the previous audit. Quality self-checks are performed by 310 business partners. Each company is working to improve the weak points found in the self-check. In addition, we are actively working to improve communication with suppliers and enhance quality by, for example, promoting improvements by disseminating the results of our self-check trend analysis to all suppliers.
We issue monthly Supplier Score Cards, which numerically represent suppliers’ quality results. This approach has clarified issues for each company, assisting in the fast and accurate implementation of improvement measures. In cases of particularly serious defects, we analyze the causes and examine the appropriateness of countermeasures in collaboration with business partners to prevent recurrence. MITSUBISHI MOTORS cooperates on defect prevention activities to keep defective parts from being delivered and ensure we are able to provide customers new models with confidence.