Activities on Procurement

TAIYO YUDEN Group CSR Charter

TAIYO YUDEN Group has established a charter related to Corporate Social Responsibility (CSR Charter) and the CSR Code of Conduct, a specific Code of Conduct for the employees of TAIYO YUDEN Group to abide by.
Our suppliers are requested to check the TAIYO YUDEN Group CSR Charter / CSR Code of Conduct and to support our practice.

CSR Charter

CSR Code of Conduct

Management

1. Suppliers are requested to conduct training for executives and employees and to comply with laws and regulations and the requirements stated in "CSR Procurement Guidelines".
2. Suppliers are requested to comply with the RBA Code of Conduct and to create the management system to promote continuous improvements.
3. Suppliers are requested to comply with the RBA Code of Conduct in your upstream supply chain (at least your tier 1 supplier) and to check the current compliance status.

Compliance with Laws, Regulations and Social Norms

TAIYO YUDEN Group requests all suppliers to comply with the laws, regulations and the social norms of the country and the area where supplier conducts its business (hereinafter referred to as "regulations").
Followings are the list of some major Regulations.

1. Labor related laws, health and safety related laws, environment related laws, laws related to subcontractors, Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, laws related to intellectual property, export and import security related laws, laws related to protection and disclosure of the personal information, laws related to product safety, laws related to elimination of the anti-social force, the company laws and the like.
2. Regulations to prohibit the child labor and the forced labor and to protect the freely chosen employment.
3. Regulations related to all wages and welfare benefits including minimum wages and overtime hours.
4. Regulations related to maintaining the work environment free from maltreatment, harassment and inhumane treatment.
5. Regulations related to prohibit racial and sexual discrimination, and honor dignity of individual employees.
6. Regulations related to maintain safe and clean work environment.
7. Regulations related to the prevention, control and an emergency response to work-related accidents and work-related illness.
8. Regulations to prohibit the corruption and unfair trading.
9. Regulation related to detecting and preventing the wrongful acts through the application of the system.
10. Regulations to eliminate the relation with the anti-social force (individual/group).
11. Regulations to respect the freedom of the employee association and the right of collective bargaining.

For the compliance with the Regulations of the items above, suppliers will establish internal rules accordingly: The information shall be disseminated to all employees. If the need for a meeting with employees and/or a labor union arises, suppliers will correspond to it accordingly.

Human Rights and Labor

1. Suppliers are requested to ascertain the number of foreign workers by employment form, such as employees, temporary dispatched workers, and contract workers.
2. Regardless of employment form, suppliers are requested to confirm that the relevant worker does not pay any fees or other expenses to the local agent.
3. Suppliers are requested to establish and maintain the communication process that enables employees to express their concerns in the promotion of CSR activities without feeling any fear of retaliation.

<Examples of Specific Efforts>

Working Hours

• Working hours are not to exceed the maximum set by local law. Further, a workweek should not be more than 60 hours per week, including overtime, except in emergency or unusual situations.
• Workers shall be allowed at least one day off every seven days.

Wages and Benefits

• Compensation paid to workers shall comply with all applicable wage laws, including those relating to minimum wages, overtime hours and legally mandated benefits.
  In compliance with local laws, workers shall be compensated for overtime at pay rates greater than regular hourly rates.
• Deductions from wages as a disciplinary measure shall not be permitted.
• For each pay period, workers shall be provided with a timely and understandable wage statement that includes sufficient information to verify accurate compensation for work performed. All use of temporary, dispatch and outsourced labor will be within the limits of the local law.

Information Management

1. The provided information to the supplier from TAIYO YUDEN Group contains confidential information. Suppliers will ensure to handle the provided information with appropriate precautions to prevent the confidential information from leaking.
2. Suppliers will ensure the security measure on defense against the threat to computer network security.
3. Suppliers will handle personal information related to the business under the privacy and information security laws and regulation.

Promotion of Sound Business Management and Disclosure of Information

1. To build a business partnership with TAIYO YUDEN Group, it is necessary to promote sound business management. All transactions made in the operation must be transparent and the entry to the financial book and record shall be recorded correctly.
2. Suppliers will provide us with accurate information on the procured material of the supplier and disclose information in accordance with the laws and regulations. (e.g. Conflict minerals, REACH, Act on the Evaluation of Chemical Substances and Regulation of Their Manufacture, etc. and social requirements etc.)
3. Suppliers will disclose the information regarding the business condition (Financial Report etc.) and the business outline on regular basis to us.

Export Control

TAIYO YUDEN Group may export purchased goods delivered from our suppliers to various TAIYO YUDEN Group subsidiaries.
In order to comply with applicable regulations and laws of trade or security related such as Foreign Exchange and Foreign Trade Act ("Foreign Exchange Act") in Japan, TAIYO YUDEN Group will arrange required procedures such as classification under Foreign Exchange Act and obtain necessary permission of governmental agency, if so required.
If Materials delivered from our suppliers need classification under Ordinance of the Ministry Specifying Goods and Technologies Pursuant to Provisions of the Appended Table 1 of the Export Control Order, Ordinance of the Ministry Specifying Goods and Technologies Pursuant to Provisions of the Appended Table 2 of the Export Control Order, Appended Table of the Foreign Exchange Order, or Export Administration Regulation of USA (EAR) for products or product utilizing technology of USA, suppliers shall so inform us, regardless whether Material falls under the categories of "Applicable" or "Non-Applicable".
If Material falls under the category of "Applicable", suppliers shall submit data designated by us, including but not limited to, Non-Application Certificate and parameter sheet.

Environmental Preservation

Suppliers will take an initiative to promote the Environmental Preservation activities and Environmental Management to supply environment-friendly materials.

TAIYO YUDEN Group assesses suppliers' "Green Procurement Activities" annually, promoting study of alternatives for suppliers that are high risk.
Suppliers will take an initiative to promote the Environmental Preservation Activities and Environmental Management, supply environment-friendly materials and take following actions based upon understanding of TAIYO YUDEN Group Environment Charter and Fundamental Principle of Environment.

1. Cooperation for environmental conservation activities compliant with "ISO14001" TAIYO YUDEN Group consolidated management system and obtained international standard "ISO14001". And TAIYO YUDEN Group works to environmental conservation activities based upon a consensus among Group. TAIYO YUDEN Group requests suppliers to consolidate management system compliant with "ISO14001" and to promote environmental conservation activities.
2. Request for Cooperation in Green Procurement One of the most important purposes in TAIYO YUDEN Group's environmental conservation activity is to promote "Environmentally Friendly Products". To attain the purpose, TAIYO YUDEN Group must procure the materials and parts, or anything in the production process to have lower environmental impact.
   Therefore, TAIYO YUDEN Group has policy to procure Materials with lower environmental impact preferentially from suppliers with high environmental consciousness.
   In relation to the Material procurement in TAIYO YUDEN Group, "Green Purchase Standard" is established separately to indicate the minimum items for suppliers to comply with.
   Supplier will check and comply with the content of the Green Purchase Standard.
   Moreover, When starting a new transaction with a supplier and on a regular basis, we are checking the compliance status of the standard and doing necessary actions. Suppliers will submit the required documents on the Materials supplied to TAIYO YUDEN Group in accordance with the Green Purchase Standard. Green Purchase Standard
3. Chemical Substance Management of the Materials Some of the Materials procured from our supplier or TAIYO YUDEN Group's product which contains the portion of the Material are sometimes exported from procured county by TAIYO YUDEN Group. Supplier will comply with the regulation on the chemical substance management in the country of origin and export destination.
   If necessary, supplier will conduct following matters.

   ①

   Attachment of GHS Label in a language of export destination.

   ②

   Checking of new and existing chemical substance control list of hazardous material and submission of the “Certification of the presence of new chemical substances” in country of the export destination.

   ③

   For the custom requirement of the country of export destination, provide the CAS No. with SDS or the certification of the non-use of the banned substance.

   Appropriate Management of Chemical Substances
4. Biological Diversity Suppliers will consider the biological diversity in business activities, such as conservation of resources, energy and re-forestation activities. Resource Recycling Efforts
5. Environmental Permits and Reporting Supplier will obtain, maintain, and keep all required environmental permits, approvals, and registrations current and follow their operational and reporting requirements.
6. Pollution Prevention and Resource Reduction Emissions and discharges of pollutants and generation of waste are to be minimized or eliminated at the source or by practices such as adding pollution control equipment; modifying production, maintenance, and facility processes; or by other means. Supplier will conserve the use of natural resources, including water, fossil fuels, minerals, and virgin forest products by practices such as modifying production, maintenance and facility processes, materials substitution, re-use, conservation, recycling, or other means.

Establishment of Stable Supply System

Suppliers will provide us with a plan, system and its structure to achieve the business continuity activity against calamity or accidents.
In case the supplier is affected by the calamity or accident, such a situation will not only affect the supplier but TAIYO YUDEN Group, its client and its stakeholders.
Suppliers will establish contingency plan in preparation of calamity such as earthquake, flood and other pandemics. Suppliers will indicate the estimated damage and its restoration plan, downsizing the affected risk etc.

Optimum Quality

Suppliers will create a quality control system in order to comply with the quality assurance provisions indicated in Master Purchase Agreement.

1. Promote IATF16949(TS16949) quality control level TAIYO YUDEN Group is implementing quality activities which aim for IATF16949(TS16949) level quality control system.
   Suppliers will promote quality control with the same target as well.
2. Basic Requirements for suppliers

   ①

   Establish quality policy and target and, enforce it to all departments.

   ②

   Select Quality Assurance representative and notify information on the selected person to TAIYO YUDEN Group.

   ③

   Clarify and standardized the product standards, work procedures, etc. and implement these thoroughly within the company.

   ④

   Create QC process diagram appropriately.

   ⑤

   Establish control items for material supplier and outsourcing company, conduct regular audit and purchase materials with stable quality and supply.

   ⑥

   Implement process quality control such as 5S thoroughly and conduct quality control education to employees.

   ⑦

   Establish a mechanism that prevents discharge of Non-Conformities. Implement receiving, intermediate and shipment inspection accurately.

   ⑧

   Inspection and test devices that need calibration must be calibrated accurately and regularly and those devices that are within the effective period must be used.

   ⑨

   Establish mechanism for prompt notification to concerned departments and prompt countermeasure and investigation on the causes of Non-Conformities.

   ⑩

   If there will be changes on the production site and 5M (material, machine, method, man and measurement) of Materials, supplier will file change request beforehand using the format specified by TAIYO YUDEN Group and obtain prior approval from TAIYO YUDEN Group.

3. Report on occurrence of premium freight TAIYO YUDEN Group is asking all suppliers to report to TAIYO YUDEN Group upon occurrence of premium freight.

Request on Business entertainment and Gifts

Business entertainment and Gifts that supplier provides to TAIYO YUDEN Group shall be within the bounds of socially accepted limits.

Audit and Self-check

There may be cases that process audit for supplier will be conducted by TAIYO YUDEN Group's QA department for material process control and delivery compliance. TAIYO YUDEN Group may also conduct audit supplier's office and production site and request submission of self-check sheet designated by Procurement Department of TAIYO YUDEN Group in order to check supplier's performance on CSR and business continuity.
In this regard, supplier will understand the necessity of audit and cooperate with the audit.

TAIYO YUDEN Group requests existing suppliers and new suppliers to comply with the above requirements.

Responsible Minerals Procurement

With respect to Responsible Minerals Procurement, TAIYO YUDEN Group is asking all suppliers the followings.

1. Understanding of the efforts based upon "TAIYO YUDEN Group Responsible Minerals Procurement Policy"
2. Cooperation for survey on sourcing of conflict minerals* or other minerals causing social problems such as violations of human rights, forced labor or non-humanitarian acts.
3. Procurement from refiners/smelters certified as ones without involvement in conflicts, human rights violation or labor issues by reliable internationally frameworks such as RMI (Responsible Minerals Initiative)

Specified requirements are as follows.

• Risk identification and evaluation in the supply-chain by using internationally standardized survey program such as the latest CMRT.
• Disclosure of survey result upon request from TAIYO YUDEN Group
• Suspension of procurement upon non-corrective minerals detection and immediate corrective actions.

Survey results disclosed by supplier may be disclosed to our customers upon the customers' request.

*Conflict minerals
Minerals originating from the Democratic Republic of Congo or adjoining countries and financing armed groups (tantalum and tungsten, tin, gold or their derivatives)