Supply Chain Management and Sustainable Procurement

The Cosmo Energy Group recognizes the importance of all of its suppliers as business partners and works with them to achieve mutual sustainable development. By communicating effectively and building healthy relationships with suppliers, we pursue mutual prosperity while helping to build a sustainable world.

To fulfill the Cosmo Energy Group Management Vision, we believe we must deliver on our social responsibilities across the entire supply chain by ensuring legal compliance, fair transactions, respect for human rights, and environmentally responsible operations. Accordingly, we established the CSR Procurement Policy in October 2019, and later revised it to create the Sustainable Procurement Policy in February 2022.

It is based on our Management Vision and Code of Conduct and outlines our basic approach to fulfilling our social responsibilities across supply chains.

Sustainable Procurement Policy

Sustainable Procurement Policy (Excerpt)

1. When procuring products and services, we maintain awareness of the Group’s corporate social responsibilities at all supply chain levels. Specifically, we focus on the following:
   • Measures to ensure safety such as quality and accident prevention
   • Measures to respect human rights, ensure occupational health and safety, and improve working environment
   • Measures of environmental conservation and consideration
2. We select business partners via comprehensive and rational assessments based not only on criteria including quality, delivery timeframe, price, technical capabilities, management stability, but also sustainability activities. We take steps to suspend business transactions with business partners if they engage in legal violations that have a major impact on society and fail to rectify the situation.

Based on the Sustainable Procurement Policy, the Group has created the Sustainable Procurement Guidelines, which outline more specific measures in nine areas: (1) Fair trade and ethics, (2) Human rights and labor, (3) Disaster prevention and safety sanitation, (4) environmental conservation, (5) Quality and product safety, (6) Information security, (7) Contribution to society, (8) Business continuity plan, and (9) Supplier management. We ask every supplier to understand and agree to the details of these guidelines, and to work in accordance with them.

All of the Group’s suppliers are asked to fully understand and comply with the Sustainable Procurement Policy and Sustainable Procurement Guidelines.

Cosmo Energy Group Sustainable Procurement Guidelines (PDF/313K)

The Sustainable Procurement Policy and Sustainable Procurement Guidelines will be reviewed periodically in light of evolving social requirements or the addition or revision of other sustainability-related policies.

To put the Group Management Vision into practice, the Group has established the Sustainability Strategy Council and the Sustainability Committee as part of its organizational framework for overseeing sustainability and internal control activities.

These bodies deliberate on policies relating to sustainability activities, including sustainable procurement. They also monitor and evaluate performance, and report significant matters to the Executive Officers’ Committee and the Board of Directors. These functions all help ensure that our sustainability initiatives are focused and proactive.

For more information on the implementation structure, please refer to the following webpage.

Sustainability Management Promotion System| Sustainability at the Cosmo Energy Group |Cosmo Energy Holdings Co., Ltd.

The Group promotes initiatives related to sustainable procurement at 13 group companies that have purchasing functions and make direct material purchases. As a basic rule, a status report on these initiatives is submitted to the Sustainability Strategy Council once a year.

In addition, we have set up the Corporate Ethics Consultation Helpline, which can be contacted by partner companies and suppliers from within or outside the Group to report violations of laws and regulations and other matters.

The Group confirms risks using external information and evaluates suppliers using its own evaluation form based on the nine categories set out in the Group’s Sustainable Procurement Policy and Sustainable Procurement Guidelines. Key suppliers subject to evaluation are identified by a screening process that considers not only procurement spend but also country-specific and other relevant risks.

Cosmo Oil, a core operating company, surveys 100% of its suppliers of equipment, parts, construction materials and services, chemicals, and other products used by its refineries. In fiscal 2025, 13 group companies requested surveys from 912 suppliers.

Note: For suppliers receiving an A or B rating, the evaluation results are considered valid for two years.