2020 Progress Report

Progress in Compliance with Sustainable Palm Oil Procurement Guidelines

Goal 1

Kao commits to purchase only sustainable palm oil that is traceable to the mill for use in Kao Group consumer products by the end of 2015.
【Completed traceability to palm oil mills (palm oil crushing plant), disclosure of the palm oil mills location map in 2017, and disclosure of the 2021 mill list.】

Goal 2

Kao commits to zero deforestation at the source of palm oil by the end of 2020, through cooperation with plantations, suppliers (mills and refineries) and third-party organizations. We will not purchase palm oil that contributes to development of any high conservation value (HCV*1 ) forests, high carbon stock (HCS*2 ) forests or peatlands, regardless of depth.
【Completed traceability to palm oil mills and the monitoring of deforestation in their surrounding areas. Continue investigation of high risk mills.】

Goal 3

Kao will purchase only sustainably sourced palm oil that is traceable to the plantation for use in Kao Group consumer products by end of 2020.
【Completed procurement of RSPO certified oil equivalent to the total amount of palm oil used for consumer products in 2020 and will also expand its use for industrial purposes. For traceability, completed tracking to the plantations managed by oil suppliers. Kao will continue to pursue traceability to small and medium-sized farms.】

Goal 4

Kao will work to obtain RSPO*3 SCCS*4 certification of Kao Group factories in order to build a traceable supply chain for the Kao Group by end of 2020.
【Achieved 100% RSPO SCCS Certification of all Kao Group factories (2018).】

Activity Policy for 2021

  1. With the aim of sustainable palm oil procurement, collaborate with NGOs and partner companies to support independent smallholders in Indonesia and engage in direct dialogue.
  2. Reinforce activities to establish traceability to smallholder farms.
  3. Support zero deforestation at the source.
    ・Request suppliers and their group companies to comply with NDPE*5 policy, and track their promotion status.
    ・Prioritize purchases from suppliers that comply with the above NDPE policy and HCSA*6
    ・Execute monitoring of palm oil mills and deforestation of their surrounding areas
  4. Use certified oil (RSPO etc.) which satisfies the above item 2 and 3 in Kao products positively.
  5. Coordinate with various stakeholders, including suppliers, plantations, non-governmental organizations, specialists and third-party organizations to carry out items 1, 2 and 3 above. Kao will not tolerate violence, criminalization or intimidation against human rights defenders in its supply chain.
  6. Inform suppliers of Kao's procurement guidelines and conduct third-party audits (Sedex Members Ethical Trade Audit "SMETA")
  7. Disclose progress of the above goals through the Web and the annual sustainability data book.


  • * 1 HCV : High Conservation Value
  • * 2 HCS : High Carbon Stock
  • * 4 SCCS : Supply Chain Certification System
    A supply chain system designed to meet the strict requirements for biodiversity conservation,
    and to deliver products produced and sold by using sustainable palm oil harvested on RSPO-approved farms.
  • * 5 NDPE : No Deforestation, No Peat, No Exploitation
  • * 6 HCSA : High Carbon Stock Approach

Progress in Compliance with Sustainable Paper and Pulp Procurement Guidelines

By 2020, Kao aims to purchase only recycled paper or sustainably sourced paper for use in its products, including paper, pulp, packaging materials and office paper. When using pulp that is not recycled (i.e., virgin pulp), we aim by 2020 to purchase only pulp traceable to the source of wood fiber for raw materials.
Progress as of December 2020 is as follows.
Traceable paper and pulp: 100%*1
Of this, ratio of certified products: 94%*2

  • * 1 Paper and pulp used in Kao consumer products and packaging (Excluding some products)
  • * 2 The ratio of certified materials among paper / pulp materials is tabulated based on the ratio by weight of certified materials for each procured item.

We have switched over to using sustainable paper (Green Purchasing items) for 99% of the copy paper used within Japan.

Monitoring of Suppliers

We use Sedex in confirming compliance with the Guidelines for Supplier's Assessment, which define initiatives in such areas as the environment, safety, conformance with laws and social norms, and human rights and labor problems, and in risk assessments. After joining in 2014, we began full-scale use in 2016, and we request that all direct materials suppliers worldwide join Sedex, respond to Sedex questionnaires and set up data access rights.
As of the end of 2020, suppliers accounting for 83% of global transactions (on a monetary value basis) were Sedex members (including Kao SAQ, an alternate program*1 ). We will continue to raise the proportion of transactions with Sedex members in the future. We also perform risk assessments using Sedex risk assessment tools of those suppliers that have set access rights on Sedex*2 . We provide feedback of the assessment results to suppliers and request revisions to items that require improvement so that the suppliers can receive an overall evaluation of A or better.

Overall evaluation SAQ response rate*3 SAQ risk
S 80% or more 3.0 or more 17%
A 80% or more 2.0 to less than 3.0 37%
B 80% or more Less than 2.0 27%
C Less than 80% - 19%
  • * 1 EcoVadis and other survey programs used as alternatives to Sedex
  • * 2 The scope of assessment is 656 sites that responded to the Sedex new Self-Assessment Questionnaire (SAQ)
  • * 3 Sedex new SAQ response rate
  • * 4 Management control score values using Sedex assessment tools (ranging from 0 to 5; the higher the score, the better management is)

For suppliers that find it difficult to join Sedex, we also use an original survey form (Kao SAQ) as an evaluation tool to supplement Sedex. We have fully revised the items involving confirmation of corporate social responsibility such as compliance, human rights and business practices, as well as items involving confirmation of environmental protection such as environmental policies, environmental objectives and various categories of environmental management, including pollution prevention (air, water, etc.). In 2018, we began to apply this revised standard to some direct material suppliers to our group companies outside Japan, to domestic machinery suppliers, and to indirect material suppliers (gift item manufacturing and sales companies). In 2019, we expanded the standard to some domestic direct material suppliers.
We are also performing this assessment when onboarding new suppliers.


CDP (Climate Change, Water and Forest)

Kao joined CDP programs for climate change, water and forest. We were evaluated by list A for climate change, A for water and A for forest (Palm:A and Timber:A-) in 2020.

CDP Supply Chain Program

In 2020, we participated in the CDP supply chain programs for climate change, water security and forests, and expanded our participation in the climate change program to include overseas affiliates.
The supplier response rate in 2020 reached 73% for climate change (238 companies responding out of requests to 328 companies), 74% for water (73 companies responding out of requests to 98 companies), and 78% for forests (29 companies responding out of requests to 37 companies).
We will continue these three programs in 2021 as well.

Vendor Summits

In 2020, unfortunately, the meeting was postponed to prevent the spread of COVID-19.

Changes in the number of companies that participated in the vendor summit

(Number of companies)

FY Held by Kao Japan Held by foreign affiliates Total
2016 246 279 525
2017 245 258 503
2018 243 230 473
2019 239 267 506
2020 Suspended Suspended -

Quality Improvement Meetings

In 2020, we hold quality improvement meetings with four packaging materials suppliers for the purpose of reduction of discrepant materials.
When a quality issue occurs, we take a corrective action and discuss a radical quality improvement with supplier in cooperation with our R&D division.

Supplier Satisfaction Surveys

In 2020, we conducted a survey and received valuable feedback from 210 suppliers on topics including vendor selection, quality, ordering, customer service and communication.
We received high evaluations concerning fairness in price negotiations and vendor selection, customer service attitudes and corporate ethics. At the same time, we identified issues concerning changes after an order is placed, disclosure of the reasons for non-selection of vendors and mutual exchanges of information. We are working to improve the situation regarding changes after an order is placed by sharing information with the relevant divisions. With regard to disclosure of the reasons for non-selection of vendors and exchanges of information, we will provide thorough explanations that satisfy suppliers.

(Number of companies)

Year conducted Raw materials Packaging and container materials Machinery and indirect materials Total
2007 48 37 44 129
2010 55 68 44 167
2013 71 59 45 175
2016 78 69 52 199
2020* 105 69 36 210
  • * 2019 was in implementation year under the initial plan, but a decision was made to implement the survey in 2020 due to organizational changes in the Procurement Division.

Employee Training

Procurement Division employees have taken the Certification Test for Environmental Specialists ("Eco Test") as the education to understand the relationship among our business, society and environment, and change their actions. The cumulative passing rate in 2020 for employees in the Procurement Division was 78% for the Eco Test.

Green Purchasing

We place high priority on purchasing environmentally conscious products, and achieved 92% of the levels set in the standards in 2020. We will promote our program with the aim of reaching 100% as soon as possible.

Region share of suppliers (Manufacturers)

Location of Manufacturers Raw Materials Packing Materials Finish Goods Outsourcings Total*4 Share of Amount
Japan Region*1 543 201 231 42 842 62%
Asia Region*2 637 267 65 12 926 23%
EMEA Region*3 426 41 44 5 483 9%
Americas Region 266 20 15 3 293 6%
Total 1,872 529 355 62 2,544 100%
  • * 1 Japan Region consists of only Japan.
  • * 2 Asia Region includes Oceania region.
  • * 3 EMEA Region consists of Europe, Middle East and Africa regions.
  • * 4 Exclude duplicate categories.
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