Responsible Procurement

Skylark Group Procurement Policy

To realize the management philosophy of "Creating Richness with Value to Society", we believe it is important to meet the requirements of laws and regulations, and continuously provide safe and secure products to "provide valuable richness” through “food service” to our customers, which is an important responsibility of Skylark Group.
In order to earn the trust of our stakeholders, we ask our suppliers to understand and practice the following items regarding respect for human rights and global environmental conservation. We aim for coexistence and co-prosperity with our suppliers in our corporate activities and social and environmental responsibilities.

1. Suppliers shall only provide safe products that meet the Food Sanitation Law of Japan and other related laws and regulations, and quality standards of the Company. Also, suppliers shall understand and cooperate with the inspection and audit of their manufacturing process of their products that the Company requests.
2. In addition to providing only those products that pass bacterial tests conducted by our company, suppliers shall cooperate in providing information on food safety and quality required by the Company, including reports from external organizations regarding residual pesticides.
3. Suppliers shall respect the human rights of their employees and will not treat them inhumanely.
4. Suppliers shall prevent forced labor and child labor in their employees, eliminate excessive working hours in violation of laws and regulations, and secure minimum wage.
5. Suppliers shall not engage in employment discrimination.
6. Suppliers shall respect the freedom of association of employees and the right to collective bargaining in order to facilitate smooth discussions between labor and management.
7. Suppliers shall strive to provide employees with a safe, hygienic and healthy working environment.
8. Suppliers shall comply with relevant domestic and foreign laws and regulations. Suppliers shall also ensure compliance to fair transactions and anti-corruption.
9. Suppliers shall emphasize the sustainability of natural resources and strive to conserve resources, and minimize the use of non-renewable resources. Natural resources obtained through illegal trade, extraction, or fishing shall not be used.
10. Suppliers shall endeavor to understand and cooperate with our policy on biodiversity, animal welfare, energy saving, renewable energy, water conservation, food loss reduction, waste reduction, climate change, CO2 / GHG emission reduction, etc. Also, suppliers shall endeavor to understand and cooperate with the Company regarding communication, information provision, training, etc. regarding various issues.
11. Suppliers shall provide and disclose information regarding all items above in a timely and appropriate manner.

January 13, 2021
Approved by Group Sustainability Committee

Cases of Material Breach

In the event of a material breach relating to this policy, we shall, upon verifying the facts, request that the supplier improve the situation. We ask all suppliers and secondary suppliers to be aware of and thoroughly adhere to the CSR Procurement Guidelines. If necessary, we or our designated experts will visit the site and conduct investigation. In addition, if no improvement has been made after a specified period, we will take measures which may include a reconsideration of the contract with the supplier or business partner.

Promoting Responsible Procurement

To fulfill social responsibilities through our business operations, Skylark Group has established purchasing management regulations, through which we ensure the purchase of safe, high-quality ingredients and respond to social issues, in addition to complying with laws and regulations.

When selecting suppliers, we check not only financial reliability and consistency of quality but also employee management by suppliers (ensuring occupational safety and health), consideration for human rights (preventing child labor, forced labor, discrimination and long working hours; right to freedom of association and collective bargaining), consideration for the environment (conserving energy, mitigating climate change, protecting water resources and biodiversity, preventing food loss and using resources efficiently), and other antisocial activities. We prioritize the selection of suppliers who are fulfilling their responsibilities to society.

We also ask suppliers for their understanding and cooperation in providing information relating to our environmental policies, communication with our company and training activities, to engage in joint corporate activities and aim for coexistence and co-prosperity of society and the environment together.

Currently, we have suppliers in 40 countries around the world. We do not judge based on the local laws, customs, and conditions of each region, but rather on whether there are any significant discrepancies when benchmarked against international standards. We strive for responsible procurement by enforcing a strict policy of not initiating transactions if any problems are found.

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1. Supplier Selection

When selecting new suppliers, we conduct the following due diligence on all suppliers prior to the start of transactions in accordance with our "Detailed Rules for Sustainable Procurement Management" for the purpose of risk assessment of environmental and social issues.

In our supplier selection process, we have introduced a methodology to consider and evaluate the following sustainability risks:

• Country-specific risks: We consider the risk of negative ESG impacts related to the political, economic, environmental, and regulatory conditions in the countries and regions where the supplier operates.
• Sector-specific risks: We consider the risk of negative ESG impacts related to labor conditions, emissions, and pollution within the sector to which the supplier belongs.
• Product-specific risks: We consider the risk of negative ESG impacts related to the supply chain structure, labor conditions, energy consumption, emissions, and pollution of the procured products.

Due Diligence Process

1. CSR Agreement: Process to request suppliers to agree to our procurement guidelines before starting business with us.
2. CSR Self-check: Process to assess suppliers' understanding of CSR requirements by asking them to complete a self-assessment.
3. CSR Check: A process where our buyers visit supplier factories directly to assess current conditions in collaboration with suppliers, and utilize the results for improvement activities. Based on a CSR checklist, we mutually check with the supplier on the implementation status of requirements and share best practices.
   *This also applies to secondary suppliers.
   *Supplier evaluations are conducted with reference to the methodology of the Global Compact Network Japan's supply chain subcommittee.

Scope of coverage

Scope of Coverage		1. CSR Agreement	2. CSR Self-Check	3. CSR Check
Tier 1 suppliers	Direct suppliers	●	●	●	※Need to obtain evidence of compliance with CSR checks or procurement policies ・ As defined in the "Livestock Breeding and Management Policies that Address the Concept of Animal Welfare". eg. poultry eggs, pigs, broilers, dairy cattle, beef cattle ・Separately designated by the Company eg. foie gras, shark fin, etc. ・Originated from conflict and high-risk areas （Uighur Autonomous Region of China, Myanmar, etc.） ・PB products that cannot be substituted
Tier 2 suppliers	Indirect suppliers Manufacturing plant Raw material suppliers	ー	ー	●
Tier 3 suppliers and beyond	Raw material suppliers	ー	ー	●（※）

2. Supplier Monitoring and Audit

• We regularly monitor and audit all suppliers, regardless of their location or transaction volume, with the goal of covering each supplier once every two years. Through this process, we identify environmental and social risks and specify suppliers with high-risk profiles. Furthermore, we provide feedback on the results to all suppliers, offering support that includes information sharing and guidance for improvement.
• Under the supervision of the Board of Directors, the status and details of our monitoring and auditing activities are reported quarterly to the Group Sustainability Committee to promote these initiatives. The committee is chaired by the President and COO, and its members include the Chairman and CEO, all Executive Officers, and the presidents of Group companies.
• Since fiscal 2022, in addition to our conventional monitoring of food and product quality and safety, we have conducted monitoring, audits, and training to evaluate risks. This includes evaluating risks related to social issues such as human rights, labor practices, and fair business activities based on our "Procurement Policy" and "Anti-Bribery and Anti-Corruption Policy," as well as evaluating their fundamental stance and risks concerning environmental initiatives based on our "Environmental Policy."
• We hold meetings with our suppliers at least once a year to engage in risk-conscious communication and provide guidance on environmental and social issues based on our "CSR Guidelines."
• Our buyers regularly visit all supplier manufacturing plants—not only at the start of a new transaction but also periodically thereafter—to verify that their food safety processes are operating as intended and to provide evaluation and guidance. The results are documented, stored, and shared with the supplier to facilitate continuous improvement.
• For each supplier, we conduct a quantitative confirmation of changes in transaction volume and the results of food hygiene inspections, sharing this information with our finance and quality management departments.
• Our on-site audits and evaluations go beyond food hygiene inspections to include risk assessments for occupational health, safety, and environmental conservation.
• Buyers are responsible for gathering as much information as possible on supplier practices concerning employee management, respect for human rights, pollution control measures, and any potential involvement in anti-social activities.
• For overseas suppliers, assessments are not based solely on local laws, customs, and conditions. Rather, the responsible manager at our headquarters conducts an evaluation by benchmarking the supplier’s practices against international standards, based on a confirmed report.
• We evaluate the corporate reliability of our suppliers based on documents they provide and publicly available information. This evaluation is conducted against our internal standards and takes into account both industry-specific information and sector-specific risks. Following on from 2022 and 2023, there were no instances of supplier non-conformance with our "Environmental Policy," "Procurement Policy," or "Anti-Bribery and Anti-Corruption Policy" in fiscal 2024. Should non-conformance or a serious violation occur, we will confirm the facts and require the supplier to take corrective action. If necessary, our company or a designated specialist will conduct an on-site investigation. If improvements are not made within the required timeframe, we will take further measures, including a review of our business relationship.



Item	FY2025	FY2026 Target
Total number of suppliers	720	ー
Number of Tier 1 suppliers	277	ー
Number of critical Tier 1 suppliers　※1	30	30
Percentage of procurement value from critical suppliers among Tier 1 suppliers	63.1%	ー
Number of critical suppliers other than Tier 1 suppliers	0	ー
Total number of critical suppliers	30	ー
Percentage of critical suppliers targeted for assessment	87％	ー
Percentage of critical suppliers among assessed suppliers	7.2％	ー
Number of suppliers assessed	415	ー
Percentage of suppliers assessed	57.6%	ー
Number of suppliers assessed as having negative impact	11	ー
Number of suppliers with significant negative impact with whom business was terminated	0	ー
Number of suppliers supported with improvement plans/corrective actions	11	0
Percentage of major suppliers supported with improvement plans/corrective actions	100%	ー
Number of suppliers provided with support to promote sustainable procurement　※2	2	2

1. ※１　Suppliers identified as having an impact on ESG, or having high business relevance and risk.
2. ※２　Suppliers provided with opportunities for knowledge sharing and communication to promote sustainable procurement.

Key Suppliers

Suppliers identified as having ESG impacts or high business relevance and risk.

Item	Definition
Suppliers of major commodities	Products with annual value of 1 billion yen or more and suppliers handling 500 million yen or more
Non-substitutable suppliers	Purchases of 500 million yen or more per item and PB items
Suppliers with high transaction volumes	Business partners with high transaction volume (transaction value of 1 billion yen or more)
Suppliers with low sustainability risk	Suppliers that have been assessed for sustainability risks (including country, region, sector, and product category) and have been determined to have a CSR check score of 95 or higher.

3. Education and Training for Skylark Buyers

• Joint training sessions are held twice a year for all buyers to acquire and update knowledge in line with revisions of laws and regulations and changes in social conditions, and through the guidance of the in-house quality control department, education is provided.
• We also conduct on-the-job verification through "training programs accompanying" existing buyers' quality control staff when they visit suppliers in Japan and overseas.
• At the time of buyer's arrival, "Basic Knowledge Acquisition" including factory and sanitation center training is conducted based on a prescribed curriculum.
• Procurement Department employees comply with laws and regulations, industry agreements and norms, strive to gather information from the relevant ministries, agencies, industry bodies and suppliers; share with related departments within the company, including the Quality Control Department; and establish and revise management methods.
• We are fully aware that our contracts with suppliers are based on "fair, reasonable, and transparent" business relationships and that we are in a "superior position" in the eyes of society, and we strive to avoid any misunderstanding that we are engaged in "unfair" business relationships.
• Training for Skylark buyers on environmental and social issues is conducted at least twice a year.

4. Support for Initiatives and Cooperation with External Organizations

• Skylark actively collects information on advanced efforts from initiatives and consortiums both in Japan and other countries. We also participate in both regular and irregular seminars and study groups and actively disseminate information through exchanges of opinions. Through activities in cooperation with suppliers and companies in other industries, we work to further reduce the Group's environmental impact, resolve social issues, and work toward the creation of a sustainable society.
(Initiatives to reduce environmental impact and tackle societal Issues)
• ISO 20400, the international standard for sustainable procurement
  Foodstuff procurement operations in 18 categories under the jurisdiction of the Foodstuff Purchasing Group, and other operations as per "Details of Compliance with Certification/Registration (Details)".
• Japan Food Service Association Food Procurement and Development Supervisory Committee