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Human Rights Due Diligence
Based on the United Nations Guiding Principles on Business and Human Rights (UNGPs), National Action Plans (NAPs) have been formulated in various countries, mainly in the EU, and many NAPs include a statement on human rights due diligence.
In 2020, we established a human rights due diligence process to promptly identify, prevent and mitigate potential human rights issues.
The human rights due diligence process begins with a human rights risk assessment to assess and identify human rights risks for all stakeholders. Next, improvement activities are promoted to stop, prevent or mitigate the negative impacts of the identified human rights risks. The promotion of these activities is checked and activities to further reduce human rights risks are continued, as well as progress reporting and disclosure.
In addition to the visible human rights risks, potential negative impacts on human rights are regularly identified and risk mitigation measures are taken to prevent serious damage. Progress and findings are reported to the Sustainability Committee, a management meeting focused on the deliberation of sustainability and human rights-related issues. Significant achievements and concerns related to human rights are reported and proposed to the Board of Directors each year.
The scope of the risk identification process in Shiseido’s human rights due diligence not only includes our operations but is also extensively expanded into those of our suppliers. In any new business relationship, such as mergers and acquisitions, respect for human rights (compliance with personnel and labor issues, employee and customer safety, etc.) is part of the due diligence process for all investment decisions. Our human rights risk assessment focuses on issues such as forced labor and child labor, clearly regarding employees of suppliers as those in a vulnerable group. The risk mapping of both potential and visible impact on human rights is reviewed on a regular basis.
Human Rights Risk Assessment
Step1: Identification of human rights issues
In cooperation with external human rights experts and by referencing international codes on human rights, standards on non-financial disclosures, and the Corporate Human Rights Benchmark (CHRB), we have developed a list of human rights issues to address including modern slavery issues and other wider-ranging issues. Throughout the value chain, we have identified the risks of targets relevant to the Company and organized the areas and targets of our due diligence in this field.
- - Affected parties: business partners, employees, consumers, and members of society. Specifically, contractors, suppliers’ employees, our own employees (employed both directly and indirectly), women, children, indigenous peoples, local residents, and immigrants.
- - Human rights issues to be considered: 25 listed items including respect for human rights and non-compliance with abuses, harassment and abuse, child labor (right to education), discriminatory actions and expressions, forced labor (including human trafficking), restrictions on the right to association and collective bargaining, and disadvantages on the basis of gender (including gender equality and equal pay for equal work), etc.
- - The state of the cosmetics and personal products industry.
- - International norms on human rights and corporate human rights benchmarks: The Ten Principles of the UN Global Compact, the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, the ILO Core Labor Standards, the Universal Declaration of Human Rights, the Global Reporting Initiative (GRI), the CHRB, the Dow Jones Sustainability Indices (DJSI), and the FTSE4Good Index Series (FTSE).
Step2: Assessment of human rights risks
We assessed the status of our activities against the human rights issues identified above. This was done by interviewing stakeholders in Japan and overseas, and investigating internal documents such as surveys and reports — while also referring to external documents for any potential impact on human rights. Based on our findings, we determined the severity and likelihood of both potential and visible risks to human rights, as well as the status of our preventive and corrective measures.
- - Third-party evaluations: A third-party organization specializing in human rights risk assessment was commissioned to conduct the assessment. Based on various materials and records related to Shiseido's human rights activities as well as information obtained through interviews with Shiseido Group employees in Japan and overseas, the assessment sought to determine the existence or absence of human rights risks (potential and visible risks) in the entire value chain. The organization evaluated Shiseido's human rights risk management system, including the status of our preventive and corrective measures.
- - Investigation of impact on human rights: Country-specific human rights risks were extracted from materials such as the International Labor Organization’s (ILO) survey on discrimination, World Bank surveys on training and education and consumer rights, WIN World Survey research materials on gender equality, and UNICEF surveys on child labor.
- - Status of preventive and corrective measures: We created a checklist of preventive and corrective measures related to human rights from items that international organizations, such as the CHRB, DJSI, FTSE, and GRI, require to be addressed and disclosed. We evaluated whether or not Shiseido has taken these preventive and corrective measures.
Important Areas of Human Rights
Our human rights risk assessment identified the areas that are assumed to be relatively at high risk in Shiseido’s value chain as follows: “discriminatory actions/expressions”, “violation of compliance/fair competition”, “personal/confidential information leakages”, “employees’ personal data and privacy”, “incomplete supplier management”, “occupational safety and health issues (work-related accidents)", “breach of working hours, breaks, and rest period (overtime-work)”, and “harassment and abuse”.*
On the other hand, forced labor and child labor, which are closely related to modern slavery and human trafficking, were assessed as low human rights risks compared to other areas. Going forward, we will prioritize the human rights issues and risks discovered in our activities in 2020. We will take measures to reduce both manifest and latent risks, and strive to further enhance preventive and corrective measures and promote improvement efforts.
- *In no particular order
Measures for Mitigating and Correcting Human Rights Risks
The eight areas identified through the human rights risk assessment have been consolidated into six categories and assigned as an area of responsibility to an executive officer. In no particular order, the six categories are:
- - Violation of compliance/fair competition
- - Harassment and discrimination
- - Breach of working hours, breaks, and rest periods (overtime work)
- - Privacy invasion and personal/confidential information leaks
- - Occupational safety and health issues (work-related accidents)
- - Incomplete supplier management
By assigning each category to an executive officer, we help ensure the active implementation of activities to stop, prevent and mitigate negative impacts on human rights.
In Shiseido, human rights issues concerning employees are managed by the Human Resources and Risk Management departments, while human rights issues concerning suppliers and contracted manufacturers are handled by the Supply Network Division.
In order to deepen our employees’ understanding of human rights and strengthen our work to reduce human rights risks, we provide training on harassment and ethics for employees in managerial positions. This includes regular training and education on the Shiseido Code of Conduct and Ethics, as well as related policies and rules, according to the employee’s position and job type. Training sessions are delivered to top-level employees, including executive officers at our global headquarters and department directors in Japan; division/department heads of domestic and overseas offices; employees in various divisions/departments; and new employees.
If improper acts or the like are revealed, we stop such acts immediately and implement corrective measures and reoccurrence prevention measures rapidly in cooperation with the relevant companies, offices, and divisions/departments. We also take disciplinary action against employees who have been involved in such acts in accordance with employment regulations and internal rules. If any cases of disadvantageous treatment, harassment, etc. toward whistleblowers or consulters are identified, we take appropriate relief/restoration measures immediately in cooperation with the relevant companies, offices, and divisions/departments, and take strict measures including any disciplinary punishment against the persons who have engaged in such disadvantageous treatment or harassment.
If the case may pose a risk to our business management, it is promptly reported to management from the divisions/departments. Any serious compliance-related concern is reported to management of the Global Risk Management & Compliance Committee and/or HQ/SJ Compliance Committee, and we work to eliminate the concern immediately and implement corrective measures and reoccurrence prevention measures rapidly in cooperation with the relevant companies, offices, and divisions/departments.
At the time when a supplier becomes aware of any violation of Shiseido Group Supplier Code of Conduct, it shall immediately inform the Shiseido Group thereof. If any violation is acknowledged, the supplier must formulate a plan to correct such violation and conduct suitable corrective measures, as well as reporting the status of such correction to the Shiseido Group on each occasion. An agreement entered into with the Shiseido Group may be cancelled depending on the contents of the violation.
Suppliers shall accept whistle-blowing and complaints from their employees, shall make sure to protect their employees from possible retaliation from the suppliers and persons against whom the relevant whistle-blowing was made, and shall take appropriate measures to rectify the status and conditions against which such complaints are made, while always taking the privacy of whistle-blowers into consideration.
Risk Mitigation Measures for Each Human Rights Issue
| Human Rights Issues* | Risk Mitigation Measures (2021-2022) |
|---|---|
| Violation of compliance/fair competition |
|
| Harassment and discrimination |
Shiseido Group in Japan
|
| Breach of working hours, breaks, and rest period (overtime-work) | Shiseido Group in Japan
|
| Privacy invasion and personal/confidential information leakages |
Shiseido Group in Japan |
| Occupational safety and health issues (work-related accidents) |
All offices of Shiseido Group in Japan
|
| Incomplete supplier management |
- *In no particular order
Please refer to "Social Data" for the results.
Grievance mechanisms
We offer whistleblowing and consultation hotlines for the purpose of detecting and correcting violations against the laws and regulations, the Articles of Incorporation, and rules within the Shiseido Group. The whistleblowing and consultation hotlines are operated according to internal rules that specify confidentiality, prohibition of disadvantageous treatment or reprisals against whistleblowers/consulters, elimination of conflicts of interest, and the process for handling whistleblowing and consultations, etc. These internal rules are disclosed via the internal intranet so that employees can view them at any time.
Globally, we have established whistleblowing and consultation hotlines at each regional affiliate for employees to voice their concerns about or report on words and/or actions which are or may be unethical or in violation of laws in the relevant countries/regions, the internal rules, and the Shiseido Code of Conduct and Ethics. At Company headquarters, the Shiseido Global Hotline has been established to receive reports directly from any employee in the Shiseido Group.
The hotline system in Japan consists of the Sodan Room (an in-house Shiseido Hotline) and an external Shiseido Hotline that deals with general workplace issues and whistleblowing, as well as the Compliance Committee Hotline dedicated to certain cases of whistleblowing, and the Shiseido Group Whistleblowing Desk to Audit and Supervisory Board Members for reports from Japan and overseas relating to directors, executive officers, and hotline staff members*. All these hotlines accept anonymous whistleblowing and consultations.
Shiseido also has a Business Partner Hotline for suppliers and business partners in Japan to voice any concerns on violations of human rights and compliance by Shiseido Group companies and employees.
- *The hotlines in Japan accept whistleblowing and consultations from all persons working for Shiseido Group companies in Japan (directors, auditors, executive officers, employees, contract employees, temporary employees, former employees within one (1) year of their retirement, and other protected parties as stipulated in the Whistleblower Protection Act).
Living Wages
Shiseido considers wages to be the amount of monetary compensation necessary for our employees and their families to be able to lead fruitful lives.
In addition, for employees with children in the Shiseido Group in Japan, we provide monthly allowances to cover childcare and education in addition to base salary. (Subsidies for childcare and education expenses are available through the Cafeteria Plan.)
In 2022, in the case of employees of Shiseido Co., Ltd. and Shiseido Japan Co., Ltd. a self-assessment confirms that the basic salary is designed to exceed the living wage in comparison with the 2021 RENGO Living Wage Report issued by the Japanese Trade Union Confederation.
Furthermore, the Shiseido Group Supplier Code of Conduct stipulates that suppliers need to take into consideration their wage levels to ensure that wages paid are at a level necessary for their employees and their family members to live with human dignity.
In 2022, through the EcoVadis* questionnaire, we checked if some of our suppliers made the commitment to paying a living wage or have conducted an assessment as to whether their employees were being paid a living wage. As a result, we confirmed that five of them made the commitment or conducted an assessment.
- *Measure the quality of a company’s ESG management system through its policies, actions and results.
The assessment focuses on sustainability criteria that are grouped into four themes: Environment, Labor & Human Rights, Ethics and Sustainable Procurement.
Dialogues with stakeholders
In order to ensure sustainable and responsible procurement and respect for human rights in the course of our business activities, Shiseido works with various stakeholders to discuss both the environment and society and share and resolve issues. In dialogues with human rights experts, we received advice on how to proceed with human rights due diligence and reflect it in our activities.
In 2022, dialogues with ten human rights bodies and experts were set up under the following themes.
- ・Forced labor or human trafficking in supply chains
- ・Privacy protection
- ・Water risks and human rights
- ・Gender gap
Important matters of concerns and improvements gained through the dialogues with stakeholders are reported in the Sustainability Committee held annually.
Report/Disclosure Concerning Human Rights
Shiseido reports progresses concerning human rights issues in our sustainability reports and “Sustainability” on our corporate website. The report includes updated due diligence, risk assessment activities, and if applicable, incidents relating to human rights and remedial actions/plans. Shiseido also discloses a declaration concerning the UK Modern Slavery Act on our corporate website. Through these communications, we review and improve the assessment processes.
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