Sony Global - Supply Chain Management

http://www.sony.net/SonyInfo/csr/quality/code/index.html

Top > About Sony Group > CSR > Product Responsibility > Supply Chain Management

1 of 7

09/02/2012 6:00 PM

Sony Global - Supply Chain Management

http://www.sony.net/SonyInfo/csr/quality/code/index.html

Special Project CSR Report Management Message Support for Recovery Efforts of the Great East Japan Earthquake Corporate Governance Compliance
For information about Sony's procurement policy, please visit the following website:

Supply Chain Management

Underlying Philosophy
(Updated on September 15, 2011) Sony approaches CSR in procurement from two perspectives. One relates to materials procurement procedures and involves creating and maintaining sound business partnerships with suppliers, regarded as Sony's stakeholders, in line not only with relevant laws and regulations but also with internal policies. The other relates to production processes and involves providing the necessary support to realize CSR from such standpoints as the environment, human rights and labor conditions.

Product Responsibility Philosophy and Policy for Product Quality and Services Product Quality and Quality Management Responsiveness and Customer Service Usability Supply Chain Management Employees Social Contribution Activities Environment Innovation for Sustainability Stakeholder Engagement and Partnership CSR Enlightenment Communication / Publications Contact Us Topics JAPANESE CSR Site Map Supplier Hotlines Sony Corporation has also installed a hotline for suppliers to report compliance violations on the part of Sony Group company employees or executives. Appropriate actions are taken in response to such reports once veracity has been confirmed.

CSR in Procurement
(Updated on September 15, 2011) Procurement Activities, Education and Training Sony is committed to undertaking procurement activities based on fair business practices, transparency and equal opportunity. Sony's procurement agents are not permitted to form personal ties or relationships based on potential personal gain with any supplier. In Japan, procurement division in the electronics business provides e-learning programs designed to ensure a thorough understanding of the company's handbook, "Working Principles for Procurement Personnel." The content of these programs is translated into English and Chinese to help train overseas procurement agents, thereby ensuring the highest ethical standards on a global basis. Training programs employing case studies illustrating acceptable and prohibited behaviors and other approaches are used to enhance the business capabilities of newly appointed procurement agents.

Basic Approach to CSR in the Supply Chain

(Updated on September 15, 2011) In addition to the quality of the products it delivers to consumers, Sony also ensures appropriate standards throughout its production processes from such standpoints as the environment, human rights and labor conditions. As a part of policy for product quality, Sony views appropriates standards in environment, human rights and labor condition this as a vital issue in relation to its CSR activities. In particular, as supply chains have expanded to include developing countries, this interest has broadened to encompass not only the company's own production lines, but also those of the companies that supply it with parts and materials and the companies to which it subcontracts work.

While working together with other companies in the industry to develop a common framework, Sony is seeking to introduce "CSR procurement," namely, CSR management programs through our supply chain that include legal compliance, employment, occupational health and safety, and environmental protection. Basic Structure of the Supply Chain

2 of 7

09/02/2012 6:00 PM

Sony Global - Supply Chain Management

http://www.sony.net/SonyInfo/csr/quality/code/index.html

Policy for CSR in the Supply Chain

(Updated on September 15, 2011) Sony's expectations of its suppliers include compliance with laws, regulations and social standards and an environmental program.

Given the global nature of its suppliers, Sony has led the industry by introducing our own global standards for management of chemical substances, called "Management regulations for environment-related substances to be controlled which are included in parts and materials" (SS-00259). Sony has also established the Green Partner Environmental Quality Approval Program for Sony suppliers. Sony maintains a common global quality standard for parts by purchasing electronic parts only from suppliers who have passed an audit and have been certified as Green Partners.

Stakeholders's interests have risen sharply in companies' overall responsibility for their products, including such issues as human rights, labor conditions and environmental protection of OEM/ODM companies and parts suppliers. In response, we established the Sony Supplier Code of Conduct, which is based on the Electronic Industry Citizenship Coalition (EICC) Code of Conduct and is centered on the premise that since suppliers are engaged in the manufacture of Sony products, they should adhere to the Code and address such issues, and thus comply with Sony's standards.

Sony's basic procurement contract with material suppliers lays down observing related laws and regulations and the Sony Supplier Code of Conduct. Sony requests all potential new suppliers to comply with the Code, as well as to conduct assessments as a part of requirements of a preliminary examination.

It is Sony's basic policy to reconsider its business relationship with the supplier in the event that an existing supplier is confirmed to have committed a major violation of the Sony Supplier Code of Conduct, or not exhibit an appropriate level of cooperation to studies and audits. In the event that a violation of the Sony Supplier Code of Conduct is reported by a third party and a violation be confirmed, Sony will ask the supplier to take corrective actions and report back on the progress. If the violation has been committed by a secondary supplier, Sony will work in cooperation with the relevant primary supplier to urge corrective action.

3 of 7

09/02/2012 6:00 PM

Sony Global - Supply Chain Management

http://www.sony.net/SonyInfo/csr/quality/code/index.html

Sony Supplier Code of Conduct

Basic Framework
(Updated on September 15, 2011) Participation in the Electronic Industry Citizenship Coalition (EICC) Supply chain overlap considerably in the electronics industry, with multiple manufacturers of finished products sharing the same subcontractors and parts suppliers. Accordingly, there are fears that the introduction of independent, company-specific standards for socially responsible management will cause confusion and constitute a significant burden on companies in the supply chain.

With the aim of improving processes in the electronics industry supply chain, Sony, as one of the member companies, participate in the establishment of the Electronic Industry Citizenship Coalition (EICC) in 2004. The EICC formulated a basic code of conduct based on industry best practices and is working to develop the tools and Web-based system, as well as the skills development programs for suppliers, necessary to create a framework for ensuring the code is upheld. As of June 2010, the EICC consisted of 48 participating companies from Europe, the Americas and Asia. Members include manufacturers, OEM companies. In cooperation with the Global e-Sustainability Initiative (GeSI) Supply Chain Working Group, consisting mainly of the

4 of 7

09/02/2012 6:00 PM

Sony Global - Supply Chain Management

http://www.sony.net/SonyInfo/csr/quality/code/index.html

European telecoms sector and other electronics industry organizations, the EICC is currently promoting social responsibility across the global supply chain.

The EICC continues to address a number of crucial issues. As part of this effort, Sony is participating in Environmental Sustainability working group of the coalition that promotes the awareness and reporting of CO2 emissions.

Principal EICC Activities Formulation and revision of the EICC code of conduct Development of common implementation tools Risk assessment tool A tool designed to help companies identify areas of risk and prioritize activities Supplier self-assessment questionnaire A self-administered survey for suppliers to provide information on their CSR efforts and management systems Audits Standardization of audit procedures Identification of qualified third-party firms to conduct audits Development and administration of a Web-based system A Web-based information system for collecting, managing and analyzing CSR data provided by individual suppliers Education and training Stakeholder engagement Work groups relating particular subjects Environmental Sustainability work group Extractive work group Asia Program

Electronic Industry Citizenship Coalition (EICC) Website:

Sony's Structure for Promoting Supply Chain Management

(Updated on September 15, 2011) Sony's head office division, CSR, procurement operations and manufacturing operations groups, are mainly promoting supply chain management in CSR initiative, in cooperation with other head office-related groups, business groups and manufacturing sites. The head office's CSR group keeps abreast of external trends and communicates with stakeholders, drawing on both to formulate company-wide basic supply chain management policies. The procurement group is responsible for implementation to suppliers,

5 of 7

09/02/2012 6:00 PM

Sony Global - Supply Chain Management

http://www.sony.net/SonyInfo/csr/quality/code/index.html

ensuring that suppliers comply with the Sony Supplier Code of Conduct by requesting compliance to the code, conducting necessary studies and audits, analyzing the results thereof and implementing necessary measures.

Implementation Framework
(Updated on September 15, 2011) Formulation of the Sony Supplier Code of Conduct In 2005, Sony established the Sony Supplier Code of Conduct, based on industry best practices as highlighted in the EICC Code of Conduct, to ensure that suppliers understand Sony's expectations in more detail and that the code is observed by suppliers of products and materials around the world.

Promoting Initiatives by Suppliers As part of its effort to assess supplier compliance with the Sony Supplier Code of Conduct, Sony has introduced assessment questionnaires and explanatory meetings for its approximately 1,200* suppliers worldwide.

As of the end of fiscal year 2008, Sony had conducted 30 of these explanatory sessions to suppliers in Japan, Mainland China, Pan-Asia and the United States. Sony continues to support efforts for suppliers to conduct their business in a socially responsible manner by conducting assessments and further inquires of follow-up measures.

As of March 31, 2011, assessments had been conducted in all but a few of areas where Sony has suppliers and Sony had received the results of assessments from almost all of its suppliers worldwide. The results of these assessments indicate several overall trends, including that organizational development, i.e., the establishment of labor and ethical management systems, remains at a transitional stage. Sony will continue to support the efforts of suppliers to improve their activities.

The EICC has also established a framework for third-party supplier audits based on the EICC Code of Conduct. This framework encompasses the certification of third-party auditors, as well as the provision of necessary auditing tools, including manuals and audit checklists. Up to and including 2010, these audits focused on suppliers in regions where member companies consider the risk of violation to be high. Sony's suppliers have also undergone audits based on EICC standards through the EICC's shared audit program. The results of these audits identified a comparatively substantial number of non-conformance issues in the categories of labor and ethical management systems, health and safety, and labor.

*Corporate group unit(as of June 2011)

Stakeholder Engagement
(Updated on September 15, 2011) With the aim of developing a framework for promoting effective supply chain management, the EICC holds discussions periodically with NGOs, socially responsible investors and other stakeholders, in which Sony is also participating. Such discussions were held, in Mexico, the United States, Switzerland, Mainland China and the Netherlands.

Addressing Issues Related to the Environment, Labor, Human Rights and Conflicts in the Procurement of Raw Materials
(Updated on September 15, 2011) There has been increasing stakeholders' concern on such issues as environmental degradation, human rights violation and labors issue related to the extraction of metals essential in the manufacture of electronics products. Also, there has been raising concern of those metals relating to financing armed group and which is potentially seen as relating to conflict in the Democratic Republic of the Congo and its adjoining countries. To address these concerns, in July 2010, the United States passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, one section of which required the certain companies to report the status of their use of "conflict minerals," that is, minerals sourced from those countries, to the U.S. Securities and Exchange Commission.

In 2008, the EICC and the GeSI (Global e-Sustainability Initiative) established a working group to address such issues and are exploring options for action by the electronics industry. As of the end of 2010, the working group had completed a study for the current status of use of metals in the electronics industry and measures to be taken by the industry to support these issues effectively. Through this study, the working group succeeded in identifying certain metals used in significant quantities in electronics products. The working group also conducted a study aimed at tracing procurement routes for these particular metals up to and including the mining process. As a

6 of 7

09/02/2012 6:00 PM

Sony Global - Supply Chain Management

http://www.sony.net/SonyInfo/csr/quality/code/index.html

member company of EICC, Sony will continue participating the working group and support establishing industry framework.

Sony is taking steps in response to the issue of conflict minerals, working first to identify certain minerals used in Sony products, as well as the respective supply chains thereof. Utilizing this information, Sony will review a framework and measures to be included in its fundamental policy to establish systems and implement measures necessary to eliminate such conflict minerals - to the greatest possible - from its supply chain. Recognizing that such issues are common across the electronics industry, Sony is utilizing an industry-wide framework, spearheaded by the EICC/GeSI, in this process. Under its conflict free smelter program, EICC/GeSI has issued the conflict minerals reporting template for the industry-wide supplier survey and several smelters are certified for conflict free smelters. Please refer to below EICC/GeSI press release for the details of the conflict free smelters program.

EICC/GeSI launched Conflict Mineral Reporting T emplate (Press release) EICC/GeSI Conflict Free Smelter Program Complaint Smelter List

In August 2011, Sony has started supply chain survey to suppliers for selected categories using EICC/GeSI's "Conflict Mineral Reporting Template."

As tin has been identified as one of the metals under the scope of the US Dodd-Frank Act, in March 2010, the ITRI, a tin industry organization, launched a traceability project for tin. The goal of this project is to identify the mine sites supplying tin for export from the Democratic Republic of Congo, thereby facilitating source verification and industry responsibility. Recognizing the importance of this initiative, Sony has supported the project, as have other members of the EICC.

Sony is also acknowledging to increasing concern regarding the environmental impact of illegal logging by incorporating such considerations into its procurement policies for wood and paper products and will take steps necessary to respond this concern.

For these issues, Sony, with the EICC, promotes ongoing, active dialogue with NGOs, industry associations and other external stakeholders. Looking ahead, Sony will continue to address issues of corporate social responsibility through cooperation with the wider electronics industry.

7 of 7

09/02/2012 6:00 PM