Dealing with the Issue of Conflict Minerals
The problem of conflict minerals in the Democratic Republic of Congo and its neighboring countries has become one of the most serious social issues the world faces. According to article 1502 of the US Dodd-Frank Wall Street Reform and Consumer Protection Act, companies listed on US stock exchanges are required to conduct and disclose investigations into the subject. The law went into effect in January 2013. While this law does not pertain to Nikon, we have established the basic policy of not using conflict minerals mined or intermediated by armed forces violating the human rights in the area, and have been conducting surveys in our supply chain since 2011 in order to cut off funding to such groups.
Usage of conflict minerals was not discovered within verifiable areas in our 2014 investigation. We will continue to advance these efforts along with our procurement partners in 2015 and beyond to achieve “conflict-free” Nikon products.
Policy on Conflict Minerals
In November 2011, we established the Policy on Conflict Minerals and determined to make efforts to avoid the use of conflict minerals mined or intermediated by armed forces. In July 2014, we revised the policy with more specific details as outlined below in order to reinforce our activities.
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- Policy on Conflict Minerals
- Established November 2011, revised February 2013, and July 2014
- In view of the situation that four minerals (conflict minerals: tantalum, tin, tungsten and gold) mined in the Democratic Republic of the Congo and its neighboring countries are used to finance armed groups, aggravating conflicts, human rights abuses and environmental destruction, Nikon shall not, with the cooperation of our Procurement Partners, use conflict minerals mined or intermediated by armed groups.
- Operation Policy
- Nikon will conduct and continue surveys in line with the OECD Due Diligence Guidance* for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
We request our Procurement Partners to understand and agree to cooperate with our Policy on Conflict Minerals. Our Procurement Partners are also encouraged to cooperate with the surveys and audits conducted by Nikon and to perform responsible procurement of mineral resources within its supply chain.
- *“OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas”
Execution of Due Diligence
1. Establish strong company management systems
Internal promotion framework
Based on our Policy on Conflict Minerals, we formed in January 2013 a cross-departmental project team in the company led by a Director, Member of the Board.
In order to make addressing conflict minerals to be continuous activities, we established a standing Conference for Conflict Minerals in 2014. The Conference is composed of the members in procurement and CSR-related divisions and is an organization-crossing structure under the CSR Committee, which decides policies for all CSR activities.
Significant matters deliberated and decided in the Conference for Conflict Minerals are approved by the Directors in the Executive Committee.
Announcement of Nikon's policy
Our Policy is listed in the “Nikon Procurement Partner's CSR Guidelines.”
In February 2014, we held explanatory meetings for the presidents of our procurement partners to ask them for understanding the policy and for cooperation in investigation.
From March through June of 2014, we also held the same meetings for staff in procurement partners both in domestic and overseas, explaining Nikon policies, asking cooperation to policies, and providing instruction on filling out CFSI conflict minerals report template*(CFSI template). Additionally, we did explanatory sessions for the members in procurement –related divisions both within and outside Japan in Nikon.
Conflict Mineral Hotline
For actions that violate our Policy on Conflict Minerals, Nikon is preparing Conflict Mineral Hotline to allow reporting by all of our stakeholders.
2. Identify and assess risk in the supply chain
Reasonable country of origin inquiry and risk assessment
Almost all Nikon products have electronic components and circuits, and tantalum, tin, tungsten, or gold may be contained in them. The subjects of our 2014 survey were, following 2013 survey, core products of Nikon and components incorporated into products of SEC listed companies. We conducted the survey using the CFSI template, which is regarded as the international standard.
Risks identified and assessed through survey
Examples of major risks
- Procurement Partners' risks
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- No response
- No conflict minerals policy
- Smelters' risks
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- Smelter name not listed
- Smelter does not match any CFSI-acknowledged smelters
- Smelter is CFSI-acknowledged, but is not CFSP-compliant
Major survey results
| |
Total |
Imaging Business Unit |
Glass Business Unit |
| Responce Rate (%)*1 |
99.9%
(1,014/1,015 companies) |
100%
(828/828 companies) |
100%
(10/10 companies) |
| CFSI-acknowledged*2 |
221 |
220 |
12 |
| CFSP-compliant |
129 |
128 |
11 |
- *1Calculations in our 2013 investigation treated some group companies as 1st tier procurement sources. However, as this was not done in our 2014 investigation, and all Nikon Group procurement sources were included in calculation of initial procurement sources, the number of surveyed companies was increased.
- *2Smelters acknowledged by CFSI (as of April 2015). As of April 2015, 279 smelters were CFSI-acknowledged and 150 smelters were CFSP-compliant.
- Procurement partners who did not respond are managed by chart and sent periodic reminders to improve response rates. Additionally, responses were inspected carefully and procurement partners whose responses were found insufficient were given additional training to improve the reliability of responses.
- 828 smelters answered in our 2014 survey however some of their names could not be specified as smelters.
- All 12 smelters whose locations were confirmed to be in Democratic Republic of Congo and neighboring countries were CFSP-compliant.
- In Glass Business Unit, all smelters specified in the 2014 survey were either CFSP-compliant or CFSI-acknowledged (under switching to CFSP-compliant smelters), and we are making continuous efforts to achieve conflict free status.
3. Design and implement a strategy to respond to identified risks
Response to identified risks in 2014 survey
Identified risks are to be addressed by priority. And, strategies decided were reported to the Executive Committee and approved.
Major examples of response to risks
- Procurement Partners' risks
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- Asking for cooperation in investigation and setting of policies to procurement partners by visiting or in writing
- Smelters' risks
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- Visiting smelter and facilitating actions towards CFSP-compliant
- Asking procurement partner for identifying smelter
With the cooperation of our procurement partners, we keep collecting accurate information on smelters, and also spur designated smelters to take action toward receiving CFS registration.
4. Carry out independent third-party audit of supply chain due diligence at identified points in the supply chain.
CFS (Conflict Free Smelter) Promotion
Nikon is tackling this issue in cooperation with industry organizations and others. In November 2012, we participated in the study group "Responsible Minerals Trade Working Group" established by the Japan Electronics and Information Technology Industries Association (JEITA) to collect more information. We have engaged in industry group activities since then.
One of the essential steps in promoting conflict-free products is to increase the number of smelters around the world that are confirmed as having no connection with armed forces. That is why we joined in April 2014 the Conflict-Free Sourcing Initiative (CFSI; headquartered in Washington, D.C.), which is establishing the CFS Program.
5. Report on supply chain due diligence
We disclose our supply chain due diligence both on our website and the NIKON REPORT.
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Dialog with Citizens' Groups
At Nikon, we don't just comply with government wishes in the form of regulations. We value dialog and collaboration with NGOs and citizens' groups in order to have various opinions among people. For example, in February 2014, we joined a mission to the US organized by the Council for Better Corporate Citizenship (CBCC; organization affiliated with the Japan Business Foundation (KEIDANREN)). We played our part in exchanging opinions with the human rights NGO Responsible Sourcing Network (RSN) and learned directly about RSN's position on this issue. And, in March 2015, we participated in “The Ethical Keitai Campaign*” seminar as a panelist, explained how we deal with the conflict mineral and exchanged opinions of ethical mineral/metal procurement with other attendees.
We will endeavor to engage in dialog and collaboration with NGOs, as we strive to procure mineral resources in a responsible manner and tackle human rights issues in the Democratic Republic of Congo and its neighboring countries.
- *The Ethical Keitai Campaign is operated by an executive committee consisting of international environmental youth organization A SEED JAPAN, FLAT SPACE, international environmental NGO FoE Japan, and Amnesty International Japan.
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Tin Mining in Indonesia
Serious issues concerning environmental destruction, human-rights infringements and inappropriate working conditions at tin mining sites in the Indonesian islands of Bangka and Belitung have been the subject of a report published by an international environmental NGO.
As stated in the Nikon CSR Charter and the Nikon Procurement Partners' CSR Guidelines, we have an on-going commitment to responsible procurement throughout our supply chain. As a general measure to address the issue of conflict minerals, we have been conducting a supply chain survey with reference to OECD guidance, and have been supporting the CFSI's programs to verify conflict-free smelters.
Even though Nikon does not procure tin directly from suppliers in this region, our 2013 survey result showed us that some Nikon products may incorporate tin that has been smelted or refined in Indonesia. The possibility that some of this tin might have originated in the Bangka-Belitung region is of great concern to us, and we consider this to be a serious matter. In March, 2015, we introduced this issue at “The Ethical Keitai Campaign” as described above, for announcement, together with international environment NGO. We will make concerted efforts to improve the situation in Indonesia through our various activities in cooperation with industry groups, NGOs, suppliers or other relevant organizations.
