At Ƶlogo, we recognize that companies bear responsibility for promoting socially and environmentally conscious business activities throughout the entire supply chain. To maintain a stable supply of products, it is essential to continuously identify, assess, and mitigate sustainability risks within the supply chain. Guided by the spirit of coexistence and co-prosperity, we are strengthening collaboration with our business partners—including raw material suppliers, contract manufacturers, subcontractors, trading companies and wholesalers— with the aim of contributing to the realization of a sustainable society and enhancing corporate value for both Ƶlogo and our business partners. Under this policy, the Corporate Officer in charge is responsible for the execution of our “Sustainable Procurement” initiatives.
Sustainable Procurement of Direct Materials
Sustainable Procurement Program
To enhance sustainability throughout the entire supply chain, our Sustainable Procurement Program consists of the following four steps
(1) Policy and Program Communication – We explain our sustainability policy and sustainable procurement initiatives to suppliers*1
(2) Agreement to the "Ƶlogo Global Code of Conduct"– Suppliers are required to sign an agreement to comply with the Ƶlogo Global Code of Conduct for Business Partners
(3) Third-Party Sustainability Evaluation – We monitor and evaluate supplier sustainability performance using EcoVadis third-party evaluation platform*2
(4) Continuous Improvement through Engagement – Based on EcoVadis assessment results, we conduct interviews to provide feedback and support suppliers in strengthening their sustainability practices.
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*1
We hold briefing sessions for key domestic suppliers of direct materials to explain our sustainability policy, requirements, and initiatives related to sustainable procurement. Through lectures by external experts and information sharing, we aim to enhance our suppliers' understanding of sustainability and build their capacity. We also provide information on addressing human rights, environmental, and ethical issues in the supply chain, as well as on decarbonization, thereby supporting our suppliers in advancing sustainable procurement activities.
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*2
EcoVadis SAS provides a comprehensive corporate social responsibility (CSR) assessment platform covering environment, labor and human rights, ethics, and sustainable procurement, aligned with the items in our Code of Conduct. Suppliers complete self-assessments using the EcoVadis evaluation platform, and Ƶlogo continuously monitors their sustainability improvement and assesses the level of risk based on their EcoVadis scores.
Membership in PSCI (Pharmaceutical Supply Chain Initiative)
Since sustainability challenges in the supply chain are best addressed at an industry-wide level through shared knowledge and results, in January 2021, our company joined the Pharmaceutical Supply Chain Initiative (PSCI), a global non-profit organization that promotes responsible supply chain management across the pharmaceutical sector.
Ƶlogo Global Code of Conduct for Business Partners
The Ƶlogo Global Code of Conduct for Business Partners ("Code of Conduct") sets forth minimum requirements for business partners, including compliance with law, ethics, human rights and labor standards, health and safety, environmental protection, and management systems. The Code of Conduct aligns with the PSCI Principles (Pharmaceutical Industry Principles for Responsible Supply Chain Management). To further strengthen sustainability within our supply chain, we revised our Code of Conduct in June 2024, following the update of the PSCI Principles in May 2023. Ƶlogo considers understanding and compliance with the Code of Conduct to be one of the key elements of responsible supply chain management. If any event inconsistent with the intent of the Code of Conduct is identified, we engage in dialogue with the relevant business partner to understand the situation, taking into account the nature and impact of the event, and request improvement measures as necessary.
Promoting Sustainable Procurement
Supply Chain of Production Sites in Japan
Results from FY2020-FY2025
Since FY2020, Ƶlogo has been implementing sustainable procurement initiatives for the supply chain of its production sites in Japan. The scope covers major Tier-1 suppliers of direct materials in Japan and overseas, including pharmaceutical raw material manufacturers, contract manufacturers, service providers, suppliers of purchased goods, wholesalers, and trading companies. Where the Tier-1 supplier is a wholesaler or trading company, the scope also extends to upstream Tier-2 suppliers, namely raw material manufacturers. Over the six-year period through FY2025, Ƶlogo held a total of eight supplier briefing sessions, attended by a cumulative total of 234 domestic suppliers, excluding duplicates.
To date, Ƶlogo has received written agreements to comply with the Code of Conduct from 174 Tier-1 suppliers, representing 99.2% of total trading volume. In addition, of the 123 Tier-2 suppliers targeted, 100 have submitted agreements to comply with the Code of Conduct.
To date, 168 suppliers have participated in the EcoVadis sustainability assessment, covering 63.0% of total trading volume on a Tier-1 supplier basis. Based on the assessment results, no suppliers were classified by Ƶlogo as high risk in terms of the overall score or the individual scores for human rights, environment, and ethics.
Ƶlogo utilizes EcoVadis scores to enhance sustainability throughout the supply chain. For suppliers scoring below a certain threshold, Ƶlogo shares the issues and improvement recommendations identified through the EcoVadis assessment and discusses measures to address these issues. Through individual meetings, Ƶlogo also continuously follows up on progress and, where necessary, provides recommendations on response measures and advice on corrective actions. In addition, suppliers are requested to undergo periodic reassessment by EcoVadis to confirm their progress, with suppliers classified as low risk being reassessed every three years.
Furthermore, to enable suppliers to objectively understand their own sustainability performance, Ƶlogo shares aggregated information such as the average scores and risk distribution across its supplier base, helping suppliers identify opportunities for improvement and continuously enhance their performance. These assessment results and the status of improvement efforts are also used as one of the reference points when considering future contract renewals, new business opportunities, and expansion of business relationships.
Over the six-year period from FY2020 to FY2025, Ƶlogo conducted individual meetings with 40 suppliers.
As part of its response to climate change, Ƶlogo also engages in dialogue with suppliers through meetings focused on reducing GHG emissions. During these discussions, Ƶlogo explains its greenhouse gas reduction targets and related initiatives, while also exchanging information and sharing examples with suppliers to enhance knowledge and practices related to decarbonization. In FY2025, Ƶlogo held such discussions with two suppliers, promoting collaboration toward decarbonization across the entire supply chain.
Since FY2024, Ƶlogo has begun introducing ESG clauses into new contracts in order to strengthen responses to human rights, environmental, and ethical issues throughout the supply chain and to address growing international expectations regarding human rights and sustainability.
FY2026 Initiative Plans
We will continue holding supplier briefing sessions to deepen our suppliers’ understanding of the importance of sustainability and Ƶlogo’s policies. Ƶlogo will explain international expectations regarding sustainability and developments in environmental and human rights legislation, while external experts will provide lectures introducing practical approaches to ESG activities and examples aimed at improving assessment performance, with the goal of building capacity together with our suppliers.
We will also engage individually with suppliers that have not yet undergone EcoVadis assessments to help them understand the importance of ESG activities, with the aim of increasing the number of participating companies in FY2026. In addition, we will strengthen engagement with suppliers and promote the identification of sustainability risks and improvement activities, thereby advancing the development of a sustainable supply chain.
Supply Chain of Overseas Production Sites
FY2022-FY2025 Initiatives
Ƶlogo has introduced sustainable procurement for major Tier-1 suppliers of direct materials at its overseas production sites, including the Vizag plant in India, the Suzhou plant in China, and the Bogor plant in Indonesia. To date, Ƶlogo has received agreements to comply with the Code of Conduct from 60 suppliers of the Vizag plant, 56 suppliers of the Suzhou plant, and 21 suppliers of the Bogor plant. These suppliers represent approximately 100% of total trading volume at the Vizag plant, approximately 100% at the Suzhou plant, and 98% at the Bogor plant, excluding intra-group transactions.
With regard to EcoVadis assessments, 47 suppliers of the Vizag plant, 22 suppliers of the Suzhou plant, and 5 suppliers of the Bogor plant have completed the assessment. In addition, the Hatfield plant in the U.K. implements the same Sustainable Procurement Program for its Tier-1 suppliers of direct materials as the other overseas production sites.
FY2026 Plans
Beginning in FY2026, Ƶlogo will also introduce ESG clauses at overseas group companies, further strengthening initiatives related to human rights, the environment, and ethics throughout the supply chain on a global basis.
In addition, Ƶlogo will promote broader participation in EcoVadis assessments among overseas suppliers and expand the number of suppliers providing agreements to comply with the Code of Conduct.
Supplier Selection and Collaboration Framework
To build a sustainable supply chain, Ƶlogo evaluates suppliers of raw materials and contract manufacturers—critical to ensuring a stable supply of high-quality products—based on technology, quality, manufacturing capacity, regulatory compliance, financial condition, compliance, geopolitical risks, industry-specific risks, and product-specific risks.
When entering into contracts with new suppliers, Ƶlogo considers their understanding of our approach to sustainable procurement, their agreement to comply with the Code of Conduct, and their cooperation with assessments using EcoVadis and other tools as important factors. Suppliers are selected based on a comprehensive assessment that takes these factors into account.
Following the conclusion of supply agreements, Ƶlogo conducts regular review meetings with major suppliers at their manufacturing sites. Based on items specified in the Global Procurement Regulations, these meetings include reviews and discussions regarding quality, stable supply, EHS, and other relevant initiatives. Through ongoing dialogue with suppliers, Ƶlogo works to ensure stable supply and enhance sustainability throughout the supply chain.
Identification of Significant Suppliers
Ƶlogo identifies suppliers that provide direct materials having a significant impact on the quality, manufacturing, or stable supply of key products, as well as suppliers with a significant impact on its business, as “Significant Suppliers” and manages them with particular attention.
In managing Significant Suppliers, Ƶlogo conducts comprehensive assessments based on business-related factors such as the importance of raw materials and the availability of alternatives, as well as geopolitical risks, industry-specific risks, and risks specific to products and raw materials.
Based on the results of these assessments, Ƶlogo continuously works to identify and mitigate risks related to stable procurement, thereby promoting the development of a sustainable supply chain.
| Progress from FY2020 to FY2026 (as of the end of July 2026) | |
| Number of Significant Suppliers | 50 |
| Number of Significant Suppliers that Participated in Risk Assessments |
38 |
| Number of Significant Suppliers that Received Support for ESG Activities | 36 |
| Number of Significant Suppliers Assessed for Risk where Significant ESG Risks or Negative Impacts were Identified | 0 |
| Number of Significant Suppliers Assessed for Risk where Significant ESG Risks or Negative Impacts were Identified and Corrective Actions were Taken | 0 |
| Number of Significant Suppliers Assessed for Risk where Significant ESG Risks or Negative Impacts were Identified and Contracts were Terminated | 0 |
Technical Intern Training Program
Japan’s Technical Intern Training Program has been associated with human rights risks, including issues related to wages, working hours, and sexual harassment, and has also been identified by the U.S. Department of State as involving risks of forced labor.
Ƶlogo recognizes this as one of the important human rights issues in Japan. During feedback meetings on sustainability assessments with our business partners, we confirm whether they employ technical intern trainees and request information on their employment conditions.
ESG Training and Capacity Building
Ƶlogo provides ESG training for procurement personnel to promote sustainability management and the practice of responsible procurement.
CSR Procurement Training for the Procurement Department
The Procurement Department continuously provides training on responsible procurement, referring to the principles of the United Nations Global Compact, CSR procurement guidelines, and other relevant frameworks. Through training on key supply chain issues such as human rights, labor, health and safety, the environment, and business ethics, we seek to enhance procurement personnel’s awareness of ESG risks.
Talent Development Using ESG Assessment Tools
We have established an environment in which procurement personnel can review the ESG performance and risk information of the suppliers they are responsible for. Training is provided so that, during meetings with suppliers, they can confirm the progress of ESG initiatives, identify potential risks, and engage in dialogue.
Through these initiatives, we seek to enhance sustainability throughout the supply chain and promote responsible procurement practices.
Sustainable Procurement of Indirect Materials
We promote procurement activities in accordance with the ENW Global Procurement Standard, which was established in fiscal 2022.
For indirect materials as well, when the transaction value exceeds a certain threshold, we ask our business partners to agree to the Code of Conduct
when entering into a new contract or renewing an existing one. We will continue our efforts to enhance the effectiveness of compliance with the requirements set forth in the Procurement Standard.
Supplier Compliance Hotline
Ƶlogo has established a Compliance Hotline that allows business partners, their executives, and employees to consult or report any misconduct or legal violations by Ƶlogo-related personnel, as well as any misconduct or violations within suppliers’ operations related to our business.
Ƶlogo has established a Compliance Hotline that allows business partners, their executives, and employees to consult or report any misconduct or legal violations by Ƶlogo-related personnel, as well as any misconduct or violations within suppliers’ operations related to our business.