Sustainable Supply Chain

Kioxia Group procures a variety of raw materials and resources from suppliers in different countries and regions. In FY2022, we had relationships with approximately 700 suppliers, and overseas suppliers accounted for 50% of our total procurement. ¹

Kioxia Group strives to manage our supply chains and promote sustainable procurement throughout these by complying with the procurement-related laws and regulations of each country or region and with social norms, as well as by building sound relationships with suppliers based on mutual understanding and trust.
We require our suppliers to comply with and implement the Kioxia Group Procurement Policy, and we call for responsible business practices throughout our supply chains.

In addition to the Kioxia Group Supply Chain Code of Conduct governing the promotion of responsible business, we have established Kioxia Group Green Procurement Guidelines covering the use of chemical substances, and the Kioxia Group Responsible Minerals Sourcing Policy which references mineral sourcing. We have informed all relevant suppliers of these policies and instructed them to take appropriate action in order to comply with them.

Kioxia Group is committed to conducting appropriate transactions with its suppliers and to robust supply chain management. Kioxia Corporation has set up a dedicated planning organization within the procurement department at its Head Office. It coordinates with relevant divisions within Kioxia, such as the Sustainability Division, Environment Divisions, the Human Resources and Administration Division and Group companies in order to address issues regarding human rights, labor, safety, the environment, and other business risks, including those of suppliers. Important issues are submitted to the Sustainability Committee for consideration as needed.

Kioxia Holdings Corporation joined the Responsible Business Alliance (RBA) in 2021 in order to fulfill our social responsibilities across our global supply chains in such areas as labor practices, occupational health and safety, environmental protection, and ethics. As a regular member of the Alliance, we conduct business responsibly in accordance with the RBA Code of Conduct by implementing our own sustainability initiatives and requiring our suppliers to do the same.

In addition, Kioxia Group promotes the responsible procurement of minerals across the Group. Under the umbrella of the RBA, Kioxia Holdings Corporation participates in the Responsible Minerals Initiative (RMI) and Kioxia Corporation has joined the Responsible Mineral Procurement Study Group of the Japan Electronics and Information Technology Industries Association (JEITA).

When commencing business with a new supplier, we make them aware of our policies governing sustainable procurement, as well as our Group's overall procurement policies and our Supply Chain Code of Conduct. Before conducting any business with them, we first confirm that the supplier's occupational health and safety measures, environmental and process management structures, legal compliance standards, and management standards, etc., meet the standards of Kioxia Group.

Prior to continuing business with an existing supplier, we use references such as the current scale of our business with them, and ask them to conduct a self-assessment survey using a format provided by the RBA (RBA-SAQ).² This enables us to confirm the status of the supplier's compliance with the RBA Code of Conduct and facilitates rigorous management of our supply chain. Interviews by our procurement managers are conducted with suppliers determined by the RBA-SAQ to be of high risk, and where necessary, suppliers are required to implement corrective measures, such as undergoing an RBA third-party audit. In addition, we check the management status of suppliers’ manufacturing sites by means of quality audits, requesting improvements and providing support for the implementation of these where necessary.

Given Kioxia Group's role in the supply chain of its client companies listed on U.S. stock exchanges, following the enactment of Section 1502 of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) in 2010, we ensured smelters in our own supply chain were investigated by our suppliers to confirm that proceeds from the sales of tin, tantalum, tungsten, and gold (commonly known as 3TG) from the Democratic Republic of the Congo or neighboring countries are not being used as a source of funds for anti-social forces.

Since March 2021 Kioxia Group has been promoting the responsible procurement of minerals from other countries and regions as well; our Kioxia Group Responsible Minerals Sourcing Policy stipulates that Kioxia Group will prohibit use as raw materials 3TG or cobalt obtained from other conflict-afflicted and high-risk areas (commonly known as CAHRAs) where inhumane acts such as human trafficking, slavery, forced labor, child labor, abuse, or war crimes are suspected.

Kioxia Corporation has established a Task Force for Procurement of Specific Materials consisting of members from relevant departments such as our Head Office Procurement, Sales, Technology, and IT Departments. The Task Force pursues procurement activities in accordance with the Kioxia Group Responsible Minerals Sourcing Policy, and raises issues to the Sustainability Committee for discussion as necessary.

Kioxia Group investigates the use by mineral smelters in our supply chain of minerals they deliver to our company, such as 3TG and cobalt. We require that suppliers procure all materials from Responsible Minerals Assurance Process (RMAP) smelters certified by the RMI, and also request that suppliers identify applicable smelters in the supply chain if 3TG mineral procurement is conducted in the Democratic Republic of Congo, neighboring areas or other conflict or high-risk areas.

In FY2022, Kioxia Group in Japan requested the 69 suppliers that may have used 3TG minerals to conduct a smelter survey using the Conflict Minerals Reporting Template produced by the RMI. However, in FY2022, a large number of RMAP-certified smelters were excluded from RMI accreditation at the end of the annual survey during January 2023. Due to this, the percentage of minerals procured from smelters that were RMAP-certified or currently under audit temporarily fell below 100% (to 71% as of the end of March 2023).⁴ While continuing to conduct RMI smelter surveys, Kioxia Group in Japan has engaged in discussions with our suppliers with the goal of achieving conflict-free procurement. Following requests from our stakeholders, we added cobalt to the list of minerals surveyed, and conducted smelter surveys at 30 suppliers using the RMI Extended Minerals Reporting Template in FY2022.

The Kioxia Group’s Environmental Policy outlines our environmental contribution to the realization of a sustainable society.

Kioxia Corporation has established a Green Procurement Working Group under the auspices of our Environment, Quality Control, and Procurement divisions, to work on green procurement, with the aim of contributing to the realization of a sustainable society. The company has also formulated Green Procurement Guidelines, which outline our management standards and contain specific requirements for suppliers regarding the selection of materials with a low environmental impact and the use of chemical substances. We periodically update the guidelines to reflect issues such as changes in the laws and regulations of individual countries or regions, or in response to customer requests.

We also conduct a thorough assessment of the environmental impact of chemical substances from the design and development stage, and use materials with a low environmental impact as part of our efforts to reduce our own environmental footprint.

Through these initiatives, we will continue to collaborate with our suppliers on issues affecting environmental conservation, aiming to contribute to the realization of a better global environment.

To ensure compliance with our procurement processes, Kioxia Group in Japan provides basic training to all executives and staff on the country’s Subcontract Act and related laws. In addition, the Procurement Department provides specialized training on compliance with relevant laws, regulations and rules to employees.

In addition, with the aim of realizing a sustainable supply chain, the Procurement, Sales, and Technology departments regularly conduct training on global social issues in the supply chain such as human rights and labor, the RBA Code of Conduct, and the sustainable procurement activities of the Group.

Kioxia Group requires suppliers to make improvements and take appropriate measures if
 

• they are found to have violated our procurement policies or Supply Chain Code of Conduct
• sustainability-related risks are identified in the operations of a supplier or supply chain
• there is a new law or regulation or social requirement necessitating a response
• there is some other reason.
   

While we will offer corrective guidance and support in such cases, we will suspend business with them in cases where corrective measures are judged to be difficult to implement.

In FY2022, there were no cases where business with a supplier was suspended due to risks related to sustainability.

Kioxia Group strives to engage multiple suppliers and works closely with them in order to avoid interruptions to business in the event of emergencies such as earthquakes, other natural disasters, accidents, or pandemics. Under our business continuity management (BCM) management regulations,⁶ Kioxia Corporation and Kioxia Group’s affiliated companies⁷ ensure they are fully aware of the status of their supply chains during normal times, allowing them to swiftly grasp the impact in the event of an emergency. We have also established a framework for cooperation aimed at achieving the early recovery of services. Additionally, we will strive to develop our business continuity planning through BCP assessments at major suppliers.