Responsible Supply Chain

Since Brother Industries, Ltd. (BIL) joined the Responsible Business Alliance (RBA) in January 2019, we have been strengthening our supply chain risk assessment and the implementation system for corrective actions based on the assessment results in the areas of labor, health and safety, environment, ethics, and management systems as stated by the RBA in its Code of Conduct.
Brother Industries (Vietnam) Ltd. became the first manufacturing facility of the Brother Group to attain RBA Gold certification in 2022 upon undergoing an on-site audit by the RBA. The Brother Group will continue to implement activities in order to "attain RBA Gold certification for three Group manufacturing facilities, " one of the sustainability targets the Group has set to address its materialities.

In FY2022, BIL conducted a self-assessment using the self-assessment tool provided by the RBA for a total of 11 sites: 10 manufacturing facilities^* in its Printing and Solutions (P&S) core business and Machinery business, and BIL's head office. After assessing the status of maintenance in response to RBA requirements and taking corrective actions to address any deficiencies, BIL has confirmed that there are no significant risks at any of its manufacturing facilities. Through these activities, the Brother Group is working toward conforming to RBA requirements at its manufacturing facilities and expanding the number of facilities subject to self-assessment as part of its commitment toward "pursuing a responsible value chain" as stated in the materiality.

• BROTHER INDUSTRIES (VIETNAM) LTD., BROTHER INDUSTRIES (PHILIPPINES), INC., BROTHER TECHNOLOGY (SHENZHEN) LTD., ZHUHAI BROTHER INDUSTRIES, CO., LTD., BROTHER INDUSTRIES (U.K.) LTD., BROTHER INDUSTRIES (SLOVAKIA) s.r.o., BROTHER INDUSTRIES (U.S.A.) INC., MIE BROTHER PRECISION INDUSTRIES, LTD., BROTHER INDUSTRIES, LTD. (Hoshizaki Factory and Kariya Factory)

The Brother Group makes its "Procurement Policy" and "CSR Procurement Standards" publicly available and shares its CSR procurement concept with parts and materials suppliers. The policy and standards cover a wide range of fields, including human rights and labor, the rights to organize and bargain collectively, safety and health, global environmental protection, fair trade and ethics, product quality and safety, raw materials, information security, and social contribution. The Brother Group complies with local laws and regulations and supports workers' collective bargaining rights by conducting collective negotiations and respecting communication between management and employees on working conditions and management practices.

In addition, the Brother Group is also implementing initiatives for the responsible procurement of minerals, such as conducting a mineral procurement survey and establishing a working group to confirm that mineral resources that are mined in conflict-affected and high-risk areas^*, and may be involved in violation of human rights, violation of labor rights, environmental degradation, etc. are not used.

Furthermore, the Brother Group has established and is implementing the "CSR Procurement Level-up Program." We explain the "CSR Procurement Standards" and the "RBA Code of Conduct" to our suppliers, request their compliance with the standards, as well as ask them to sign consent forms. We also request that suppliers regularly cooperate by partaking in our CSR questionnaire and a questionnaire survey on slave (forced) labor with the goal of preventing forced labor, and confirm the status of the shared "Procurement Policy" and "CSR Procurement Standards." We then request suppliers for improvements based on the results of risk assessment using the CSR questionnaire, and audit the progress of the improvements.

• Conflict-affected and high-risk areas: areas with a high risk of armed conflict, violence, and human rights violation

• Japanese version of the procurement policy and standards

• Chinese version of the procurement policy and standards [PDF/480KB]

A part of the minerals (tantalum, tin, gold and tungsten, cobalt, mica, etc.) mined in conflict-affected and high-risk areas, such as the Democratic Republic of the Congo and adjoining countries are some sources of funds for local armed groups, and there are concerns that transactions for such minerals may promote conflicts and involve matters such as human rights violations, labor issues and environmental degradation problems.
In promoting management with an emphasis on sustainability, the Brother Group recognizes the human rights violation, labor rights violation, environmental degradation, etc. in mining and trade of those minerals as important social issues.
To implement responsible procurement of minerals, the Brother Group carries out surveys on the use of aforementioned conflict minerals and will steadily undertake efforts toward ensuring transparency of mineral procurement in the supply chain and avoiding the use of conflict minerals while cooperating with suppliers.

To promote responsible procurement of minerals across the Brother Group's entire supply chain, we are undertaking the following initiatives according to a five-step framework based on the "Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas" issued by the Organisation for Economic Co-operation and Development (OECD).

For the Brother Group's approach to the responsible procurement of minerals, we have examined systems and methods to engage in the responsible procurement of minerals since 2014 and have been carrying out conflict minerals surveys on tantalum, tin, gold, and tungsten (3TG) targeting suppliers since 2016. Starting in 2022, we have also begun conducting a mineral procurement survey for cobalt and mica. Currently, we have established a working group under the Responsible Value Chain Subcommittee overseen by the Executive Officer in charge of CSR, in which related business units including those in charge of purchasing, law, and CSR affairs participate, as well as the "Work Standard" for mineral procurement surveys to practice the responsible procurement of minerals in a comprehensive manner. In addition, training is conducted for members in the working group and staff in the procurement and quality control departments responsible for the survey on the responsible procurement of minerals to improve their understanding of our mineral procurement survey initiatives.

The Brother Group has been carrying out a mineral procurement survey once a year targeting suppliers that supply materials or parts used in the Group's products. In this survey, the Group uses the "Conflict Minerals Reporting Template (CMRT)" as well as "Extended Minerals Reporting Template (EMRT)" provided by the Responsible Minerals Initiative (RMI)^*1 to verify the content of the target minerals, identify smelters or refiners (SOR) in the supply chain of the Brother Group, and confirm the state of efforts made by each supplier toward the responsible procurement of minerals. Based on the information on SORs included in the Brother Group's supply chain identified as a result of the survey and other information, we conduct a risk assessment for each supplier.

Based on the results of risk assessment, we ask suppliers that use SORs expected to be of concern to take appropriate responses, including requiring suppliers to conduct reconfirmation of SOR and avoid use of SORs with concerns.
Furthermore, the Brother Group also requests that suppliers understand the Group’s stances through means such as the CSR Procurement Standards and supplier explanatory meetings, and work on responsible procurement activities for minerals.

As a corporate member of RBA and RMI, Brother Group supports the Responsible Minerals Assurance Process (RMAP) audits conducted by RMI, and cooperates with the industry to improve activities regarding mineral procurement surveys, and promotes responsible mineral procurement on a global basis in its supply chain.

Brother Group's commitment to the responsible procurement of minerals is disclosed annually on our website.

The Brother Group carried out the annual mineral procurement survey in 2022 and obtained answers from more than 97% of the targeted suppliers. The Group will make ongoing efforts to obtain answers from all of such suppliers.
The Group also appropriately answered and dealt with inquiries from customers about the conflict minerals survey by means such as the submission of CMRT and EMRT.

• List of Smelters or Refiners of Conflict Minerals[PDF/684KB]

The Brother Group has undergone Validated Assessment Program (VAP) audits by the RBA at its manufacturing facilities, and the following facilities that underwent VAP audits in 2022 met the required standards based on the RBA Code of Conduct (D. Ethics 7. Responsible Sourcing of Minerals).

1. Responsible Minerals Initiative (RMI): An organization that promotes the responsible procurement of minerals globally in cooperation with companies.
2. Conflict-Free Smelter (CFS): Smelter or refinery that has been certified through audit as not using conflict minerals.

In FY2020, the Brother Group developed our CSR Procurement Level-up Program to improve CSR procurement at our suppliers. This program comprises the three steps given below, and repeatedly conducting these steps helps to improve the level of CSR procurement at each supplier.

Suppliers are requested to understand and comply with Brother's CSR Procurement Standards. Agreement by suppliers to promote activities is confirmed by obtaining their signatures on consent forms.

The state of compliance with the CSR Procurement Standards is confirmed through self-checks using the CSR questionnaire. Risk assessment of suppliers is conducted based on the responses to the CSR questionnaire.

Suppliers that have risks discovered as a result of the evaluation are requested to make improvements while communicating with them such as through meetings. The state of improvement is confirmed, and support for improvement activities are provided through means such as audits and monitoring.

This program is being deployed not only for existing suppliers but also new ones. For existing suppliers, based on the evaluation results about the state of compliance with the CSR Procurement Standards, areas of improvement are clarified for each supplier, the results are given as feedback to the suppliers, and they are requested to make improvements. For new transactions, compliance with the CSR Procurement Standards is confirmed so that CSR procurement is carried out even more steadily in the future. Through this program, the Brother Group seeks to further improve the level of CSR procurement together with suppliers.

STEP1: Understanding and agreement; Activities to promote awareness of the CSR Procurement Standards and the RBA Code of Conduct

CSR Procurement Standards supplementary explanation

In FY2020, we developed a supplementary explanation about the Brother Group's "CSR Procurement Standards" and started activities to get suppliers to sign consent forms. The supplementary explanation gives the background to the formulation of the CSR Procurement Standards, specifically stating clearly that it was developed with reference to the "RBA Code of Conduct," and also states the requests and matters for cooperation being sought from suppliers. The supplementary explanation of the "CSR Procurement Standards as well as consent forms" were sent to suppliers within Japan and overseas to obtain their understanding about the Brother Group's CSR Procurement Standards, from which we received agreement from 630 suppliers in FY2021. In addition, we also explain the CSR Procurement Standards when starting new transactions to obtain understanding and cooperation. These activities were continued, with 650 suppliers giving their consent in FY2022.
In addition, since FY2022, we have been conducting activities to request that suppliers at our manufacturing facilities (P&S Business) understand the RBA Code of Conduct and sign consent forms.

Supplier explanatory meetings

In April 2023, we held an explanatory meeting for suppliers at P&S manufacturing facilities in Japan, Vietnam, the Philippines and China. Due to the impact of COVID-19, the explanatory meeting had been held online since FY2020, but in FY2023, it was held in person for the first time in four years.

At the explanatory meeting for suppliers in FY2023, we explained the results of "CSR procurement activities in FY2022" and our plans for "CSR procurement activities in FY2023," and requested suppliers to complete the "CSR questionnaire survey and forced labor questionnaire survey for FY2023." In addition, we explained the outline and background of the formulation of the "Brother Group Human Rights Global Policy" established in January 2023, as well as the revision of the CSR Procurement Standards and the establishment of the Human Rights Helpline based on the policy, and shared information with suppliers about our efforts throughout the value chain to respect human rights. In FY2023, a total of 840 people from 470 companies participated in the meeting, allowing us the opportunity to engage in lively communication through in-person explanations of continuation and promotion of activities based on the "thorough effort in making the CSR Procurement Standards commonly known," "compliance with the RBA Code of Conduct," and the "CSR Procurement Level-Up Program."

Training sessions with suppliers

Since FY2008, we have been holding training sessions with our suppliers with the aim of informing them of the Brother Group's CSR procurement initiatives.

To further raise the level of CSR procurement, we have started a training session for "CSR procurement personnel^*" in FY2022, with each supplier appointing at least two CSR procurement personnel to serve as representatives.
The training sessions were held at each facility and were attended by a total of more than 1,000 CSR procurement personnel. At the training session, the contents of the RBA Code of Conduct were explained to the CSR procurement personnel of our suppliers. For those who were unable to attend the training session, a recording of the training session was made available for viewing so that as many CSR procurement personnel as possible could gain a better understanding of what was covered in the session.
We will continue to promote the Brother Group's CSR Procurement Standards and RBA Code of Conduct to as many suppliers as possible through training sessions such as this and other efforts.

• For P&S Business manufacturing facilities

STEP2: Confirmation of compliance and assessment; Conduct of CSR questionnaire and risk assessment of suppliers

The Brother Group implements CSR questionnaire activities on a two-year cycle for suppliers in Vietnam, the Philippines and China, where the manufacturing facilities of the P&S are located. In FY2020, we revised our CSR questionnaire to confirm the state of compliance with the CSR Procurement Standards and RBA Code of Conduct at our suppliers. The revised CSR questionnaire comprises questions in the five areas of labor, safety and health, the environment, ethics, and management systems, and the state of efforts at suppliers is confirmed through self-checks. For example, in the area of labor, the items being checked include the absence of forced labor and child labor and compliance with local labor laws and regulations.
In FY2022, we conducted a CSR questionnaire with 85 major suppliers in Vietnam and China to conduct a risk assessment. As a result, we did not detect any high-risk suppliers.
Together with the CSR questionnaire, we also send questions about global environmental conservation to confirm the state of efforts at our suppliers regarding their activities to reduce greenhouse gases. We ask suppliers to provide numerical values, such as the greenhouse gas emissions produced by their company (in terms of CO₂-equivalent emissions) and the amount of water withdrawal. Some suppliers also set their reduction targets in these categories and report on the degree of achievement of the targets.

Evaluation criteria for CSR questionnaire

STEP3: Improvement activities and audits; Conduct of CSR procurement audits

Improvement activities at suppliers

We request improvement and review the results of improvement activities from suppliers that are found to have risks in the CSR questionnaire. In FY2022, we provided feedback on the evaluation results to all suppliers that completed the CSR questionnaire, and conducted individual interviews with suppliers according to the evaluation results, requesting improvement and reviewing the results of improvement activities from suppliers that were found to have risks. For those suppliers that were found to be at risk, we requested them to make improvements and confirmed the results.

CSR Procurement audit activities

Besides requesting improvements from suppliers with risks discovered through the CSR questionnaire, we have also built a system where the Brother Group auditors conduct CSR procurement audits on suppliers' manufacturing facilities and get them to rectify any nonconformities that are discovered.

In FY2022, no suppliers were identified to be subject to audit based on the results of the CSR questionnaire evaluation. Seven suppliers in Vietnam, five in the Philippines, and five in China, all of which we newly conduct business with, were audited online in the areas of labor, ethics, health and safety, and management. For each nonconformity found as a result of the audit, Brother Group auditors explained the causes of the nonconformity and the measures required to become compliant, giving specific examples, and asked suppliers to take corrective actions.
Through these activities, the Brother Group seeks compliance with the Procurement Policy and CSR Procurement Standards together with our suppliers.

Aiming to further promote the CSR activities of its suppliers, the Brother Group has been conducting questionnaire surveys about their CSR efforts and, selecting and honoring excellent ones since 2015 at its two manufacturing factories of the Machinery business, including Kariya Factory and Brother Machinery Xian Co., Ltd.
In FY2020, questionnaire surveys were implemented from August to September 2020 in Japan and responses were received from a total of 63 supplier companies. In the questionnaire survey, emphasis was placed on confirming suppliers' degree of understanding about the SDGs and current conditions with the goal of further improving and reinforcing activities at suppliers going forward.
In China, questionnaire surveys on CSR activities were similarly implemented from September to October 2022. We received responses from 44 companies. Furthermore, we asked suppliers to submit examples of their CSR activities. Of the submissions we received from 21 companies, we selected and awarded four outstanding CSR companies. The award-winning suppliers actively conduct various activities—such as passionate development of employees and development of working environments as well as the promotion of business activities with consideration for the environment and social contribution activities for the local communities—and we shared them as outstanding examples.
The local audits on selected suppliers were not conducted to prevent the spread of COVID-19.

The Brother Group continually strives to develop relations of mutual trust with its business partners and grow together with them to quickly deliver superior value to customers.