Yokogawa has focused on developing a supply chain that considers environmental protection and human rights. We will actively identify risks that impede sustainable procurement, embark on a path to improvement with our business partners, and strengthen activities aimed at achieving our sustainability goals "Three Goals".
Summary of Activities
1) Activity Policy
We are identifying risks that impede sustainable procurement with our suppliers, focusing on revealing the actual conditions of the following 4 areas(defined in Yokogawa Group Sustainable Procurement Guidelines for Suppliers) : "Labor and Human rights" "Health and safety" "Environment" and "Ethics". In case a risk is realized, we work with our suppliers to take measures against it. We also develop educational programs on sustainable procurement both inside and outside the company. We set KPIs to manage and measure the progress of sustainable procurement activities.
2) Activity System
Yokogawa Electric Corporation Global Business Service Headquarters has established a sustainable procurement policy that incorporates human rights due diligence (DD) in the supply chain. We are actively implementing sustainable procurement activities in collaboration with our Controlling Product-related Laws and Regulations function, group affiliates Product and Business Divisions.
The Global Business Service Headquarters has established common rules for the group, such as items to be checked when initiating transactions, and each affiliate/Business Divisions is monitored through the procurement process. We gather various types of information, including transactional details and suppliers' (Tier1 and Non tier1) information, from our affiliates who directly interact with suppliers. In addition, concerning transaction information, we use integrated systems and other product business information among group affiliates for data analysis as a view of Yokogawa group.
Overview of Suppliers
1) About our Suppliers
The Yokogawa Group deals with more than 10,000 suppliers in 70 countries annually. Before sending out the SAQ for FY24, we conducted a desktop survey of all procurement records for FY23. Below are the number of suppliers and transaction amount breakdowns by country:
These suppliers agreed to follow Yokogawa's Sustainable Procurement Guidelines when signing the contract.
2) Communication and Education with Suppliers
We are actively engaging with key suppliers in each region by interacting with their management and key personnel, aiming to enhance our partnerships.
For example, we regularly hold "Partners' Day" events to provide explanations on our management policies, business plans, and procurement strategies. These events also serve as educational platforms where we promote the understanding of environmental policies and legal regulations related to the supply chain, using the "Sustainable Procurement Guidelines" Booklet.
In addition, we organize "Component Exhibitions" and "Technical Seminars" by our providers where we offer a platform to showcase their products, market trends, and component updates to our product development teams.
We also use the Booklet during individual meetings with suppliers to explain the importance of key topics such as human rights and labor, health and safety, environment, and ethics.
SAQ Activity Report (FY2024)
Yokogawa is committed to enhancing sustainability throughout its supply chain. As part of this effort, we continuously evaluate and improve CSR risks by utilizing the Self-Assessment Questionnaire (SAQ) with our suppliers.
This initiative is structured in two phases:
Phase 1 (FY2020–FY2022): Focused on reducing CSR risks, particularly through human rights due diligence.
Phase 2 (From FY2023): Expanding the scope to include environmental risks and promoting sustainable procurement from a broader ESG perspective.
1）PDCA Cycle of Activities
Yokogawa Group conducts annual desktop research based on all transaction records, evaluating ESG risks for each business partner from four key perspectives:
- Transaction value
- Country-specific risks (e.g., Corruption Perceptions Index)
- Supply chain risks based on product characteristics
- Business importance in each country
Based on this assessment, we identify 600 high-risk suppliers and send them a Self-Assessment Questionnaire (SAQ) over a three-year period.
We analyze the responses and, when necessary, request improvements and conduct interviews to promote continuous improvement through a PDCA cycle.
The following diagram illustrates the cycle for promoting sustainable procurement using this SAQ.
2）SAQ Implementation Process
In accordance with the PDCA cycle illustrated above, we carry out the distribution, collection, and feedback of the SAQ (Self-Assessment Questionnaire). When necessary, we also conduct follow-up assessments in the following year. Each step of the process is outlined below:
SAQ Distribution (Sending SAQ):
Excluding suppliers who completed the second round of the SAQ in the previous year, we send the SAQ to 200 suppliers identified as having high ESG risk scores based on desktop research. This process will be continued over a three-year period from 2023 to 2025, with the goal of reaching a total of 600* key Tier-1 suppliers.
SAQ Collection (Sending SAQ):
Suppliers are requested to complete the SAQ based on the conditions at the facilities that manufacture products delivered to the Yokogawa Group.
SAQ Analysis:
All responses are thoroughly reviewed and analyzed to identify risks and assess the supplier’s alignment with YOKOGAWA Group’s sustainability initiatives.
Feedback and Requests for Improvement:
The analysis results are returned to suppliers as feedback, including scores by category (e.g., human rights and labor, occupational health and safety, environment), average scores, and areas for improvement. For critical facilities, on-site interviews by third-party organizations are conducted to identify issues and propose corrective actions.
An excerpt of the feedback document is shown in the diagram below.
Follow-Up Assessment：
For suppliers identified as requiring improvement, we request a follow-up SAQ in the following year to monitor progress.
FY2024 Implementation Results:
The implementation results summary for FY2024 are as follows.
- Desktop Assessment: Conducted for 100% of Tier-1 suppliers.
- Total Number of Tier-1 Suppliers: 11,937 companies*.
- SAQ Distributed: Sent to 203 suppliers.
- SAQ Responses Received: 153 responses (130 from Tier-1 suppliers, 23 from non-Tier-1 suppliers*).
- On-Site Assessment: Conducted at a company through third-party interviews.
- Direct Dialogue Based on SAQ Results: Held with a company.
- Follow-Up SAQ Requests: Sent to 16 facilities, with a 100% response rate.
Note: Data marked with asterisks (*) have been verified by an independent third-party assurance provider. For details, please refer to the statement below.
3）KPI Monitoring
We continue to record the responses to the SAQ from 2020 (Stage 1) and our requests, and analyze changes in the responses of individual suppliers and trends in the overall average score.
In Stage 2, we place emphasis on engagement with business partners, and compare the average percentile values of business sites that responded to the SAQ as critical suppliers in both Stage 1 and Stage 2 for the items "human rights and labor" and "occupational health and safety" that are common to Stage 1 and Stage 2. (Since the questions are different, we cannot compare the scores themselves, so we compare the percentile values.).
The percentile indicates the ranking of the responding companies and whether there are any other facilities that have a lower score than the one in question; a higher number can be inferred to mean that there has been improvement.
Improvement in Scores Through Follow-Up Assessments：
Based on the results from 2023, follow-up SAQs were conducted for 16 facilities in 2024, with a 100% response rate. The average scores across various categories in the SAQ responses showed measurable improvement.
About Risk Analysis
We conduct risk analysis based on the answers to the SAQ and other information.
1）SAQ score analysis
We conduct detailed analysis of responses to the SAQ and attitudes regarding response submission, and instead of just calculating averages, we continually record the score distribution for each field, such as "human rights and labor," "occupational health and safety," and "environment," and analyze responses to our requests to analyze changes in individual supplier responses, trends by category, and overall average scores. The distribution of overall scores is shown below.
The histogram of overall scores for the submitted issues is shown below. In addition, although we do not make the results public, we identify trends by item and response and conduct risk assessments.
In FY2024, 19 suppliers were identified as high-risk based on our comprehensive evaluation. Follow-up assessments will be conducted in August 2025.
Additionally, we are engaging with suppliers who reported initiatives to reduce GHG emissions, aiming to collect primary data to support Scope 3 reduction efforts.
2）Other Investigations apart from SAQ
As part of our ongoing compliance efforts, Yokogawa Group regularly conducts screenings of key regulatory entity lists to ensure that our suppliers are not listed. Based on the latest review, no Yokogawa Group suppliers were found on any of the relevant entity lists.
Education for Implementing Sustainable Procurement
1）Strategic Procurement Excellence Program
Yokogawa Group its procurement organization and has established a structured talent development framework. We have defined 130 knowledge areas across various domains and regularly assess the proficiency levels of procurement personnel across all affiliated companies, both domestic and international. This enables us to track annual progress in knowledge development.
The comparative data for 2023 and 2024 is shown below.
2）Confirmation of Sustainable Procurement Policy for Yokogawa Procurement Members
Yokogawa Group holds an annual meeting with key representatives from its global procurement headquarters. At the May 2025 meeting, a workshop was conducted to address challenges in sustainable procurement, and participants shared initiatives and best practices from their respective countries.
3）Subcontracting SME Promotion Act
In response to recent and upcoming regulatory changes in Japan—such as the revision of operational standards under the Subcontracting SME Promotion Act in November 2024 and the amendment to the Subcontract Act scheduled for January 2026—Yokogawa Group has established a dedicated task force within its domestic affiliates to ensure timely and effective compliance.
To promote understanding of the Subcontract Act, we offer annual training programs that include both live-streamed sessions with updated themes and on-demand access. This year’s program focuses on the revised legal framework and includes practical training tailored to real-world procurement operations. These initiatives aim to raise awareness and prevent unintended legal violations.
Additionally, each department and group company has appointed a procurement compliance officer to facilitate information sharing and build a robust compliance structure across the organization.
4）Encouraging Suppliers to Promote Sustainable Procurement
In addition to Yokogawa Group’s internal initiatives to advance sustainable procurement, we actively participate in industry-wide efforts led by organizations such as JEITA (Japan Electronics and Information Technology Industries Association) and GCNJ (Global Compact Network Japan). Through these collaborations, we contribute to the development of practical tools and engage in awareness-raising activities to promote responsible procurement practices across the supply chain.
5）Supporting SMEs in Sustainable Procurement and Human Rights Due Diligence
As part of our commitment to promoting sustainable procurement across the supply chain, Yokogawa Group actively participates in the Sustainable Procurement Partnership Task Force under the CSR Committee of JEITA (Japan Electronics and Information Technology Industries Association).
In fiscal year 2024, Yokogawa contributed to the SSP Trial Program, an initiative designed to support small and medium-sized enterprises (SMEs) in developing human rights policies. This program included executive-level awareness sessions, practitioner training, and individual consultations, aiming to empower SMEs to implement human rights due diligence in alignment with global standards.
Through this collaboration, we help build capacity among suppliers and foster responsible business practices throughout the industry.