Sustainability｜GovernanceResponsible Sourcing of Minerals
Our Approach
Based on concerns that minerals mined in the Democratic Republic of the Congo (DRC) and adjoining countries serve as a source of funding for armed groups provisions on conflict minerals were incorporated in the US Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted in July 2010, and its final rule was adopted in August 2012. The TDK Group Policy on Conflict Minerals was formulated in April 2013, to promote initiatives in full compliance with the Due Diligence Guidance of the Organization for Economic Cooperation and Development (OECD).
In order to reduce involvement not only in conflicts but also serious human rights violations and environmental pollution, TDK has expanded the scope of its responsible sourcing of minerals beyond those from conflict-affected and high-risk areas. In January 2019, we revised our policy, which is now entitled the “TDK Group Policy on Responsible Sourcing Minerals.” Under this revised policy, TDK will continue to promote responsible sourcing of minerals throughout the supply chain, including minerals such as tantalum, tin, tungsten, gold and cobalt, which may be sourced from not only conflict areas but also areas with high risks of misconduct, including human rights abuses and environmental destruction. These risks include OECD Annex II risks.
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Governance
We position supply chain management as a field of key issues (materiality) that will form the basis for value creation by TDK, with “responsible sourcing of minerals” as one of the themes within this. The progress status of activities is discussed and reported at monthly briefing and review meetings, and further reported to the corporate planning function.
In terms of practical duties to manage risks and opportunities related to mineral procurement, our headquarters procurement function is responsible for surveying suppliers; our headquarters quality assurance function for responding to customers; and our sustainability promotion function for understanding industry trends, with investigation and response systems established at each Group company.
Education and Awareness Raising
We provide training for team members (employees) newly assigned to the departments responsible for procurement to raise their awareness and help them to develop a more accurate understanding on the responsible sourcing of minerals. Training is also provided to relevant departments, such as the business divisions, as appropriate, and as needs dictate. TDK additionally participates as an organizing member in the Responsible Minerals Trade Working Group, which is convened annually by the Japan Electronics and Information Technology Industries Association (JEITA).
Strategy
In January 2019, we formulated the “TDK Group Policy on Responsible Sourcing Minerals.” The Policy stipulates the promotion of responsible sourcing of minerals throughout the supply chain, including for issues relating to minerals such as tantalum, tin, tungsten, gold, cobalt, and mica, both from conflict areas and those areas which may involve risks, such as the presence of human rights violations or environmental destruction, including OECD Annex II risks, or other injustices.
Under this policy, we will voluntarily and strategically promote initiatives for the responsible sourcing of minerals to enhance our corporate value, centered on the following five-stage framework in line with the OECD guidance.
(1) Establishment of a robust corporate management system
- Formulate a policy on responsible sourcing of minerals
- Retain CMRT*1 for a five-year period
(2) Identification and investigation of risks in the supply chain
- Survey suppliers using CMRT/EMRT*2
- Declare TDK’s expectations (use of RMAP*3-certified smelters) to coincide with survey requests
(3) Establishment and implementation of strategies to address the identified risks
- Request the exclusion of any non-certified smelters on lists
(4) Implementation of independent third-party audits of smelters’/refiners’ due diligence practices
- Encourage smelters to participate in RMAP through industry approaches (affiliated with RMI*4/JEITA)
(5) Issuance of an annual report on supply chain due diligence
- Include annual report on activities on the company website
*1 Conflict Minerals Reporting Template
*2 Extended Minerals Reporting Template
*3 Responsible Minerals Assurance Process; A program that verifies compliance with responsible sourcing of minerals, using an independent third-party organization to evaluate smelters' and refiners' management systems and procurement practices.
*4 Responsible Minerals Initiative; An organization with a membership of over 400 companies and organizations worldwide, and which spearheads efforts relating to responsible mineral procurement
Risk Management
The TDK Group’s Global Common Regulations include a section on “responsible sourcing of minerals” in the regulations of the departments responsible for procurement of these minerals. We furthermore monitor whether these are reflected in the discrete regulations of our respective core subsidiaries.
Metrics and Goals
Goals and Achievements in Fiscal 2024
| Fiscal 2024 Goals | Achievements |
|---|---|
| A ratio of at least 92% of suppliers whose procurement of conflict minerals (3TG: tantalum, tin, tungsten, and gold) is confirmed as being from RMAP-compliant smelters | 90.9% |
Evaluations and Future Activities
In fiscal 2024 as in past years, we requested that suppliers continue to make procurements from RMAP-compliant smelters. We requested maximum efforts from suppliers whose compliance we could not confirm. Unfortunately, however, we narrowly fell short of achieving our target, with 90.9% of suppliers confirmed as procuring from RMAP-compliant smelters. This is attributable to significant changes in societal circumstances including those precipitated by Russia's invasion of Ukraine.
In fiscal 2025, we have set “a ratio of at least 90% of suppliers whose procurement of conflict minerals (3TG) is confirmed as being from RMAP-compliant smelters” as a common KPI for the TDK Group and will become more proactive in promoting Group-wide efforts, specifically those to make continued requests to suppliers while responding to inquiries from customers in a precise and timely manner. Furthermore, since collaboration with industrial organizations is essential to solve the expanding problem of responsible sourcing of minerals, we will continue to participate in such industrial discussions.
| Fiscal 2025 Goals |
|---|
| A ratio of at least 90% of suppliers whose procurement of conflict minerals (3TG) is confirmed as being from RMAP-compliant smelters |
Initiatives
￭Risk Identification Process
-Implementation of surveys in Group companies and promotion of conflict-free sourcing
TDK has been conducting initiatives for risk identification measures in accordance with the OECD’s Due Diligence Guidance. To guarantee the rationality of replies, surveys use the CMRT issued by the RMI to check whether products contain the so-called 3TG conflict minerals (tin, tantalum, tungsten, and gold) and identify smelters. After the retrieval of CMRT surveys, TDK compares them with the RMI’s Smelters Lists and evaluates the risk of conflict minerals included in production materials being used as funding for armed groups and the risk of human rights violations, including child labor.
In fiscal 2024 surveys were implemented at Group companies, and the ratio of suppliers confirmed to be conflict-free was 90.9%, meaning our target of over 92% was unfortunately not achieved.
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-Cobalt / Mica Survey
We are proceeding with the identification of cobalt smelters and mica processors using the Extended Minerals Reporting Template (EMRT) issued by RMI since December 2021.
In addition, we have made a condition of procurement from RMAP-compliant refineries.
￭Correction Process
-Response to identified risks
When we request a survey of suppliers, we clarify to them our policy that they use RMI-conformant smelters, that is, smelters that appear on RMI's Conformant Facilities Lists. In the survey process, if a risk is discovered, TDK requests the supplier to remove the smelter concerned from the supply chain.The status of this response is confirmed in the following year's survey.
￭Promotion of Troubleshooting in Collaboration with Industrial Organizations
In order to solve problems relating to responsible mineral procurement, efforts are necessary in the entire supply chain. TDK has participated in the RMI since February 2020 and in the JEITA's Responsible Minerals Trade Working Group ever since its founding. TDK took part in the following activities in fiscal 2024:
- TDK participated in the Education and PR Team of the JEITA Responsible Minerals Trade Working Group and cooperated in the organization of an in-person and online briefing on responsible mineral procurement aimed at raising awareness of the problem of responsible mineral procurement and deepening understanding of survey methods among secondary suppliers and others. TDK also participated in the capacity of consultants at individual consultation sessions that followed the online briefing.
- TDK participated in a joint working group (the Conflict-Free Sourcing Working Group) with automakers and gave feedback for a survey manual and tools.
- As the leader of JEITA's Data Exchange Standard Development Team, TDK provided feedback on the status and prospects for the reporting template which addressed the expansion of regulated minerals, and followed-up on trends and collated opinions within JEITA on revisions to the IPC-1755 data exchange standard for responsible mineral procurement.
- TDK held opinion exchanges with RBA (RMI).
