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Environmental Management

Green Procurement

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Green Procurement

Daikin Group Requests that Worldwide Suppliers Abide by Green Procurement Guidelines

The Daikin Group established its Green Procurement Guidelines in fiscal 2000 and requires suppliers in Japan and overseas to abide by these in the procurement of materials and parts used in manufacturing.

We mark suppliers on environmental protection activities using a green procurement checklist. In addition, the ErP Directive obligates manufacturers of energy-using and energy-related products (ErP) to reduce their energy consumption. To comply with this directive, Daikin's green procurement survey for suppliers determines energy-induced CO2. To this survey we have added criteria such as biodiversity and water resource protection.

We are discussing individual measures that will remedy the particular problems of suppliers, and those who get a perfect score on the survey are evaluated as 'green suppliers'.

In January 2017, we published a revised version (9th edition) of our Green Procurement Guidelines, which reflects the latest environmental laws and adds prohibited chemical substances to the list of designated chemical substances. In addition, in order to comply with the increasing number of third-party environmental management certification systems, such as the Ministry of the Environment’s Eco-Action 21, the KES Environmental Management System Standard, and ECOSTAGE, the latest Green Procurement Standards are not limited to just ISO 14001 certification but also include efforts aimed at certification for these other systems. And because responses by Daikin’s CSR & Global Environment Center to an external assessment revealed possible shortcomings in Daikin measures for protecting water resources in the supply chain, the Green Procurement Standards include assessment items for biodiversity and water resource protection.

We will continue to revise these guidelines to reflect changing environmental laws and situations.

Calls for Improvement and Guidance at Overseas Bases

We hold meetings for suppliers to explain the importance of green procurement in order to further raise the green procurement rate. At divisions in Japan and at bases overseas, we are striving to make green procurement a firmly rooted part of doing business.

In 2016, our South American bases followed the North American bases in embarking on green procurement activities. In Thailand, China, and Europe, suppliers evaluated at a rank of “B” or lower were requested to make improvements and were given guidance in doing so. Although results of green procurement surveys at overseas bases have been varied, we are continuing to request that suppliers in question take steps to improve.

Green procurement surveys in Japan added points-based criteria on biodiversity and water resource protection, but many suppliers have not conducted surveys and the rate of green suppliers has decreased. In fiscal 2016, the green procurement rate in Japan was 91%.

As a result of these efforts, the green procurement rate in fiscal 2016 was 74%.

The requirements for green procurement have been gradually increasing to include items such as banned chemical substances and protection of biodiversity and water resources, and every year surveys are becoming increasingly strict. Although there are cases in which the green procurement rate, which shows the results of survey, goes down, rather than focus only on such numbers, we believe that it is more important to ensure that surveys lead to suppliers improving based on the latest edition of the green procurement checklist. We will continue holding explanatory meetings at overseas bases and aim to raise the green procurement rate in regions where it is low.

Green Procurement Rate (All world regions)

Green Procurement Rate (All world regions)

Local employees at a green procurement briefing at Daikin McQuay Ar Condicionado Brasil Ltda.Local employees at a green procurement briefing at Daikin McQuay Ar Condicionado Brasil Ltda.

Green Procurement Rate by Region (%)

  FY2012 FY2013 FY2014 FY2015 FY2016
Japan 99 95 94 96 91
China 92 96 97 95 96
Thailand 98 98 98 95 95
Other countries in Asia and Oceania 90 84 76 65 58
Europe 83 86 91 93 93
North America 36 38 39 38 30
South America - - - - 97
All regions 89 84 78 65 74
Green procurement rate =

Value of goods procured from suppliers
who meet our assessment criteria

Value of all goods procured

Overview of Green Procurement Guidelines, 8th Edition

Overview of Green Procurement Guidelines, 9th Edition
Essential conditions for suppliers’ management

  • We request our suppliers build environmental management systems to obtain ISO 14001 certification, or to obtain third-party certification for environmental management systems.
  • Compliance
  • Promotion of voluntary activities of improving environment energy conservation, waste reduction, and improvement of transport means.
  • Provision of information

Essential conditions for products

  • Chemical substance management
    1. Restriction on use of chemical substances
    2. Cooperation to investigation of chemical substances
    3. Voluntary reduction of substances ranked to reduce, and the implementation of adequate management procedures of them
  • Packaging materials
  • When designing work is involved, eco-friendly design must be employed.
  • Biodiversity
  • Protecting water resources
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Compliance with Restrictions on Toxic Chemicals

Establishing Standards for Managing Chemical Substances in Products

The Daikin Group has a list of SVHC (substance of very high concern) based on the RoHS Directive*1 and the REACH Regulation*2 regarding chemicals contained in products. These are stated in our Green Procurement Guidelines, which we require our suppliers to abide by.

In our latest Green Procurement Guidelines (9th edition), we have altered our list of designated chemical substances. In particular, because starting in January 2019 four phthalates esters*3 will be banned in the EU as RoHS 2 restricted substances, under the Green Procurement Guidelines (9th edition) and the requirements for purchasing goods (ASB040004L), these substances, along with BNST (Benzenamine, N-phenyl-, reaction products with styrene and 2,4,4-trimethylpentene)*4, have been newly banned.

Furthermore, in July 2016, the requirements for purchasing goods (ASB040004L) was revised, with EU biocide rules newly added.

*1 The RoHS Directive (Restriction of Hazardous Substances Directive) is a regulation in the EU prohibiting the use of certain hazardous substances in electrical and electronic equipment.

*2 The REACH Regulation on chemical substances went into effect in Europe in June 2007. REACH obligates companies manufacturing or importing at least 1 ton of chemical substances a year in the EU to register with EU authorities. REACH covers almost all chemicals on the market in the EU.

*3 As of March 31, 2015, under the EU Directive EU2015/863, four kinds of phthalate ester were added as controlled substances. These will be restricted under the directive from July 22, 2019, but the Daikin Group will cease using them in production starting on January 1, 2019.

*4 As of March 14, 2015, BNST (Benzenamine, N-phenyl-, reaction products with styrene and 2,4,4-trimethylpentene) is prohibited under the Canadian Environmental Protection Act.

Chemical Substance Management Guidelines (for products)

Control levels Substance name
Prohibited

Cadmium and cadmium compounds

Chromium VI compounds

Lead and lead compounds

Mercury and mercury compounds

Bis (Tributyl tin oxide (TBTO))

Tributyl tins (TBTs) compounds *1

Triphenyl tins (TPTs) compounds *1

Dibutyltin compounds (DBTs) *1

Dioctyltin compounds (DOTs) *1

Polybrominated biphenyls (PBBs)

Polybrominated diphenyl ethers (PBDEs)

Deca-Bromodiphenylether (Deca-BDE)

Polychlorinated biphenyls (PCBs)

Polychlorinated terphenyls (PCTs)

Polychloronated napthalenes (C1=>3)

Short chain chlorinated paraffins

Perfluorooctane sulfonate (PFOSs) *2

F gas (HFC, PFC, SF6) *3

Asbestos

Azocolourants and azodyes which form certain aromatic amines *4

Ozone depleting substances (other than HCFCs) *5

Radioactive substances

Phenol,2-(2H-benzotriazol-2-yl)-4,6-bis(1,1-dimethylethyl)

Dimethly fumarate (DMF) *5

HBCD (Hecabromocyclododecane) *7

PFOA (Perfuluorooctane acid) *8

Di(2-ethylhexyl)phthalate) (DEHP) *9

Butyl benzyl phthalate (BBP) *9

Dibutyl phthalate (DBP) *9

Diisobutyl phthalate (DIBP) *9

(BNST) Benzenamine, N-phenyl-, reaction products with styrene and 2,4,4-trimethylpentene *10

Polycyclic aromatic hydrocarbons (PAHs) *11

Substances covered by biocide regulations *12

Scheduled Prohibition DEHP, DBP, BBP, DIBP
Reduced Polyvinyl chloride (PVC) *13
Ozone depleting substances (only HCFCs)
Managed

Beryllium oxide (BeO)

Perchlorates

Nickel and nickel compounds *14

Brominated flame retardants (other than PBBs, PBDEs, or HBCD)

Formaldehyde

EU REACH Regulation (SVHC: substances of very high concern) group (Prohibited materials specified by this guideline are excluded) *15

*1 The use of TBTs and TPTs is prohibited in the EU. Tin concentration must be 0.1% or less. The use of DBTs is prohibited in the EU. Tin concentration must by 0.1% or less. The use of DOTs is prohibited in the EU. However, only "Commodities that touch the skin" and "Two-component normal temperature cured sealing material" will be prohibited. Tin concentration must by 0.1% or less.

*2 Under the POPs Agreement of May 2009, PFOS was added to Appendix B (prohibited substances). In October 2009, PFOSs were added to the list of class I specific chemical substances under revisions to Japan's Law Concerning the Evaluation of Chemical Substances. Prohibited as of April 2010 under Japan's Law Concerning the Evaluation of Chemical Substances (except for applications in semiconductors, etching, and business photographic film).

*3 The use of F gas (HFC, PFC, etc.) is prohibited in one-component foams (banned in the EU starting on July 4, 2008.) However, the use of F gas (HFC, PFC, etc.) is permitted for refrigerants.

*4 Limited to applications in azo dyes and pigments which constitute the specific amines defined by the German Consumer Goods Ordinance and which come into contact with the human body for long hours (example: out surface of remote controllers).

*5 The use of HCFC for the production of foams shall be prohibited, and the use as refrigerants for Japan and EU models shall also be prohibited.

*6 Under a Commission Decision in March 2009 (2009/251/EC), products containing DMF are banned as of May 2009. DMF is used as an anti-fungal agent and in items such as packaging and leather products.

*7 Under the POPs agreement of May 2013, HBCD was added to Appendix A (prohibited substances). Since November 26, 2014, the Daikin Group has not used HBCD.

*8 Since June 1, 2014 (June 1, 2016 for certain applications) in Norway, it has been illegal to manufacture, import, and export consumer products containing specific PFOA.

*9 Under EU directive (EU) 2015/863 (March 31, 2015), four phthalate esters were added to the list of restricted substances. This goes into effect in the EU on July 22, 2019, but the Daikin Group will begin phasing these out in January 2019 in manufacturing covered by regulations.

*10 As of March 14, 2015, the manufacture, use, sale, distribution, and import of BNST and products containing BNST are prohibited under the Canadian Environmental Protection Act.

*11 Rubber or plastic components that come into direct as well as prolonged or short-term repetitive contact with the human skin or the oral cavity shall not contain more than 1 mg/kg (0.0001 % by weight of this component) of any of the PAHs.

*12 As of March 2, 2017 in the EU, it is illegal to use non-approved biocidal active substances.

*13 PVC substitutes are being reduced.

*14 In cases in which the nickel comes into contact with the human body for long hours.

*15 All SVHC (substances of very high concern) added in future shall be managed. Postscripts do not need to be added in future.

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