(Published in January 2023)
We assessed risks based on the results of the business partner self-evaluation questionnaire (Note) conducted in FY2021.

• We identified high-risk business partners with respect to both environmental and social aspects.
• We informed the identified companies of the areas that need to be strengthened and asked them to make improvements.
• We will continue this activity every year and conduct it on a regular basis.

Note: Please refer to the "SDGs Supply Chain Annual Report" for the results of the business partner self-evaluation questionnaire.

(Published in January 2024)
Since FY2022 the azbil Group has been working on measures to comprehensively encourage all its business partners in a variety of areas, including human rights due diligence and CO2 emissions reductions. In FY2023, the azbil Group conducted more visits and face-to-face interviews with individual business partners than ever, with the aim of matching the policies of the azbil Group with the needs of business partners, and the effectiveness of the measures that it is promoting. Through this process, we have been working to understand the environmental and social intentions and initiatives of each of our business partners, and to build consensus on the future direction of our activities.

The results of interviews and exchanges of opinions during visits, etc. to individual business partners:
Environmental aspects:
Interviews and actual inspections during visits to business partners (including some remote meetings) on environmental aspects to reduce environmental impact have been conducted with 50 companies.
The survey covered five areas: climate change response（CO2 reduction), pollution and resources, water security and water risk, biodiversity, and environmental management. Actual status checks have been conducted for each of the sub-categories in the table of the CSR Procurement Guidelines below.
https://www.azbil.com/corporate/procurement/policy/csr_guideline/index.html
For example, under "Pollution and Resources", we conducted actual status checks from the perspective of green procurement and management of chemical substances contained in products.

1. Correction of legal violations
   When verifying the status of each company's environmental efforts, we also conducted legal compliance checks.
   As a result, we found business partners with a risk of legal violations due to inadequate industrial wastewater treatment, and we requested that they correct the situation by asking for confirmation and guidance from the government.
2. Exchange of opinions with business partners on reducing CO2 emissions
   We explained and shared with each of our business partners the following four steps to reduce CO2 emissions.
   • Business partners are to understand the amount of energy they use (Grasping Scope 1 and 2)
   • Business partners are to identify the items they purchase, as well as the cost and quantity of their purchases (Grasping Scope 3)
   • Based on an understanding of the current status, set targets for reducing CO2 emissions
   • Implement reduction measures in accordance with the set targets.

   Additionally, during the information and Q&A session, we also conducted an assessment to check which stages our business partners are currently in, and discussed the challenges they face in moving on to the next step.

Social aspects:
Interviews and actual inspections during visits to business partners (including some remote meetings) on social aspects have been conducted with 32 companies.
The survey covered five areas: labor practices, health and safety, human rights, community, quality/customers.
Actual status checks have been conducted for each of the sub-categories in the table of the CSR Procurement Guidelines below.
https://www.azbil.com/corporate/procurement/policy/csr_guideline/index.html
For example, under "Labor Practices", we conducted actual status checks from the perspective of reducing excessive working hours, prohibiting discrimination, and promoting diversity.

1. Correction of legal violations
   When verifying the status of each company's social initiatives, we also conducted legal compliance checks.
   As a result, we identified the following instances of legal violations.
   - Although required by the Occupational Safety and Health Act,
   • Safety and health promoter is not appointed at workplaces with 10 or more employees : 14 cases
   • Safety and health training is not conducted : 8 cases
   • Stress checks are not conducted at workplaces with 50 or more employees : 2 cases

   We have requested the following corrective actions from these business partners.

   • Appointment of a health and safety promoter, and implementation of training for the promoter : In progress/Completed 8 cases
   • Conducting appropriate safety and health training when hiring personnel and during job reassignments, and keeping records of it : In progress/Completed 5 cases
   • Conducting stress checks as a part of mental health care for employees : In progress/Completed 1 case

   (The number of “In progress /Completed" cases is as of December 2023.)

2. Correction of azbil Group CSR Procurement Guidelines violations
   While not legal violations, we have identified cases that are in violation of the azbil Group CSR Procurement Guidelines.
   • Emergency response manuals, etc. are not in place as a measure against occupational accidents : 11 cases
   • Measures to prevent recurrence or prevention of occupational accidents are not implemented : 6 cases

   We have requested corrective actions from these business partners.

We are currently verifying whether corrective actions have been completed by our business partners for both legal violations and violations of the CSR Procurement Guidelines.

As the interviews and inspections conducted during these visits were very fruitful, we will continue to conduct individual company visits on an ongoing basis. By combining these with comprehensive measures, we aim to maximize the effectiveness of the azbil Group's initiatives and contribute to enhancing the added value at our business partners.

Capacity building for our business partners

1. Activities up to FY2022
   Training and education for business partners has been conducted at each azbil Group company using the CSR Procurement Guidelines, which outlines the initiatives required for business partners to address social issues such as environmental conservation and respect for human rights. During these briefing sessions, we explained initiatives aimed at promoting environmentally friendly business practices, and efforts to respect human rights, as well as conveying our expectations regarding human rights.
2. Activities for FY2023
   Capacity building, including the sharing of best practices, was also conducted during visits to 50 business partners.
   From the interviews during the visits, we learned that many of our business partners find it difficult to devise their own environmental and social initiatives, and they are interested in learning about examples of initiatives in the same industry and on the same scale as theirs.
   Therefore, we have compiled a list of the cases collected during the hearings, and we have provided feedback to all the business partners we interviewed, which serves as a reference for each company to use when considering their own initiatives. Since the practices are being implemented by business partners of the azbil Group, they are broadly compatible, and by showing how many of our business partners are involved, it serves as a barometer of the difficulty level of the initiatives, and it supports the voluntary efforts of our business partners.

Examples of SDGs Initiatives by Business Partners

◎:40% or higher 〇:20% or more but less than 40% △:Less than 20%