Human Rights Due Diligence

Due Diligence process

Based on the " UN Guiding Principles on Business and Human Rights" (UNGPs), SHIONOGI conducts human rights due diligence

Human Rights Due Diligence

Human Rights Risk Assessment

At SHIONOGI, we recognize "employees", "patients", "study participants, "consumers", "medical professionals", "suppliers", "civil society" and "governments" as the main rights holders that we can influence through our business. In addition, based on various human rights risk guides, we categorized global risks related to SHIONOGI into the 30 items shown in the table below. We further conducted an interview with NGO and refined the risks by interviewing departments about practical human rights risks. As a result, we have identified important human rights issues within SHIONOGI and are working to address them.

Safety in clinical trials
Access to healthcare
Fair price
Development costs/Development risks
Drug safety, side effects, and health hazards
Prevention of counterfeit medicines
Adequate and appropriate explanations to patients (transparency)
Improper disposal of pharmaceuticals and medical supplies
Ethical marketing
Contribution to health outcomes
Public health/Pandemic response
Securing and developing human resources
Supply chain management
Corporate ethics and compliance with laws
Protection of privacy and personal data

Anti-corruption
Relationship with government
Forced labor
Migrant workers
Child labor
Discrimination/equal opportunity
Fair wages
Working time
Freedom of association
Occupational health and safety
Grievance mechanism
Environmental burden reduction/Environmental impact
Management of hazardous substances and chemical sub stances
Use of natural resources
Community support (social contribution activities)

Important Human Rights issues

The SHIONOGI group recognizes the following items are our Human Rights issues. These may be revised when necessary, because of future risk assesment.

Strict prohibition of discrimination

SHIONOGI prohibits all forms of discrimination in employment and at work. SHIONOGI will work for early discovery and prevention of harassment by setting up contact points for internal consultation and notification, and providing consultation staff members and employees with education on harassment.

Prohibition of child labor and forced labor

SHIONOGI will never allow child labor, forced labor, slave labor, human trafficking and any other conduct that goes against the maintenance of human dignity and respect.

Respecting basic labor rights

SHIONOGI guarantees freedom of association, respects the labor right to organize and the right of collective bargaining, and observes local laws.

Providing safe and healthy working conditions

SHIONOGI ensures a safe, healthy and comfortable workplace environment, and properly manages wage payment and working hours. It endeavors to prevent overwork by setting up a consultation service.

Improving diversity

SHIONOGI respects diverse values and will endeavor to improve diversity so that all people can grow and play active roles regardless of their race, religion, nationality, gender, sexual orientation, gender identity and disabilities.

Ensuring compliance

In accordance with the SHIONOGI Group Compliance Policy, SHIONOGI will endeavor to ensure compliance by all officers and employees of the SHIONOGI Group for the purpose of assuring compliance with laws and ethical behavior in its business activities.

Human Rights impact Assessment

Ensuring stable supply and safety of products and services, as well as respecting and considering the human rights of patients, healthcare professionals, and group employees, are our significant responsibilities. To continuously respond to these themes, we have already established dedicated organizations within the group and are addressing risks based on appropriate management cycles. We have also recognized the potential existence of important human rights issues in the following two areas of our supply chain for the SHIONOGI Group and are working on impact assessments.

①Labor conditions of workers in regions producing materials for our products

Based on PSCI*3 reports and a desktop survey by the CRT Japan Committee, we have identified cellulose, glass, ethanol, and aluminum as important items, and are conducting human rights risk assessments. For these important items, we are working to understand human rights risks through communication with primary suppliers. The survey methods and progress have been evaluated by the external expert. And we will continue to communicate with our primary suppliers and closely monitor the situation in order to understand human rights risks in the entire supply chain including the regions where raw materials are procured. When a negative impact becomes apparent, we will cooperate with the external expert to implement countermeasures and relief.

*3 Pharmaceutical Supply Chain Initiative

Forced labor in rubber glove manufacturing in Malaysia

On August 19, 2022, we received information about forced labor in Malaysian rubber glove manufacturing from CRT Japan. And we immediately conducted a questionnaire survey of our tier1 suppliers of rubber gloves and investigated the situation within our group.

・Obtaining information: From an external expert, we obtained the information of forced labor in Malaysian rubber glove manufacturing and lawsuit against two major business partners of the manufacturing company (2022/8)

・Start of the investigation: We conducted investigation of the use of rubber gloves within our group. We conduct questionnaire survey through our tier1 suppliers to confirm whether the product we purchase was manufactured by the company in trouble. (2022/8)

・We found that one product that had been purchased in the past was manufactured by the company in trouble, but we have not purchased any more since then (September 2022).

・Reporting to the external expert: We reported to the external expert that the relevant product had been purchased. Through interviewing the external expert, we confirmed that there was no problem because of no purchase or no use at the time of the survey. (October 2022).

・Completion of the investigation: Survey responses were obtained from all direct suppliers, and it was confirmed that we did not purchased any rubber gloves manufactured by the relevant companies at the time of survey (October 2022).

Although we had purchased the relevant product in the past, we confirmed that it was not purchased or used at the time of the problem recognition. We will continue to monitor the improvement of forced labor at the relevant company.

Initiative	Y2022	FY2023	FY2024	Future Activitie
【Labor conditions of workers in regions producing materials for our products 】 Survey items（cellulose, glass, ethanol, aluminum	・Survey of human rights risks in the supply chain for glass, ethanol, and aluminum suppliers, and sharing of past case studies on cellulose ・Confirmed that the cellulose we purchase is not produced in high-risk countries such as China and India	・Direct communication with the major suppliers for glass, ethanol and aluminum ・Confirmed that there is no evident negative impact in the glass, aluminum, and ethanol that we purchase.	・Direct communication with the major suppliers for glass, ethanol and aluminum ・Confirmed that there is no evident negative impact in the glass, aluminum, and ethanol that we purchase.	・Continuous information sharing with suppliers ・In the event that negative human rights impacts become apparent in our supply chain, we will collaborate with suppliers to address them
【Labor conditions of workers in regions producing materials for our products】 Forced labor in rubber glove manufacturing in Malaysia	・Recognizing past purchasing records ・Confirmed that none of the products we currently purchase and use are applicable	ー	ー	・Continue to check that there are no problems ・In the event that negative impacts become apparent, we will promptly conduct investigations and implement corrective measures.

Initiative

Y2022

FY2023

FY2024

Future Activitie

【Labor conditions of workers in regions producing materials for our products 】

Survey items（cellulose, glass, ethanol, aluminum

・Survey of human rights risks in the supply chain for glass, ethanol, and aluminum suppliers, and sharing of past case studies on cellulose

・Confirmed that the cellulose we purchase is not produced in high-risk countries such as China and India

・Direct communication with the major suppliers for glass, ethanol and aluminum

・Confirmed that there is no evident negative impact in the glass, aluminum, and ethanol that we purchase.

・Direct communication with the major suppliers for glass, ethanol and aluminum

・Confirmed that there is no evident negative impact in the glass, aluminum, and ethanol that we purchase.

・Continuous information sharing with suppliers

・In the event that negative human rights impacts become apparent in our supply chain, we will collaborate with suppliers to address them

【Labor conditions of workers in regions producing materials for our products】

Forced labor in rubber glove manufacturing in Malaysia

・Recognizing past purchasing records

・Confirmed that none of the products we currently purchase and use are applicable

ー

・Continue to check that there are no problems

・In the event that negative impacts become apparent, we will promptly conduct investigations and implement corrective measures.

②Labor situation foreign workers

In response to the problem of technical intern trainees in Japan, we conducted a survey within our own group and a questionnaire survey of major suppliers of the therapeutic drugs and preventive vaccines for COVID-19. We confirmed that there are no technical intern trainees in our own group and major suppliers. The results are evaluated by the external expert. Based on the advice, we will consider expanding the scope of the survey to include subcontractors, as our group has a major responsibility for the therapeutic drugs and preventive vaccines for COVID-19.

Presence of foreign technical interns among resident and visiting contractors at factories in SHIONOGI.

Company	Acceptance of technical intern trainees	Human Rights Policy	Interview
Cleaning Company A	none	none	none
Cleaning Company B	none	none	none
Cleaning Company C	none	none	none
Security Company D	none	none	none
Cafeteria Company E	none	none	none
Greening Company F	none	none	none
Cleaning Company G	none	none	conducted
Cleaning Company H	none	none	conducted
Cleaning Company I	none	none	conducted
Logistics Company J	none	available	none

Presence of foreign technical interns in suppliers of COVID-19 related products.

Company	Acceptance of technical intern trainees	Human Rights Policy	Interview
Therapeutic drug-related companies	0%	50%	None of them implemented
Vaccine-related companies	0%	50%	None of them implemented

Based on the results of the 2023 assessment, no risks were identified, and therefore, no mitigation, corrective, or remedial actions were taken.

Comment from the external expert

Through the human rights due diligence process based on the UNGPs that SHIONOGI has been implementing, when human rights concerns arise in the manufacturing regions of raw materials and materials or in the labor conditions of foreign workers in Japan, SHIONOGI has established a management system that can implement initiatives from an external perspective reflecting requests from rights holders, NGOs, and experts. SHIONOGI

conducted a survey on technical intern trainees at its factories and COVID-19 related companies and confirmed that they are not accepting such trainees. We expect SHIONOGI to continue conducting regular surveys on the employment situation at suppliers and others to confirm whether they are newly hiring foreign workers, and to create a system for routine engagement with rights holders.

March 22, 2024

Hiroshi Ishida

Executive Director, CRT-Japan

Engagement with External Stakeholders

Dialogue with experts on Human Rights

SHIONOGI holds dialogues with experts to exchange views on SHIONOGI’s business and its efforts to respect human rights in order to strengthen its human rights initiatives.

We participated in the Stakeholder Engagement Program organized by the Nippon CSR Consortium, and through engagement with civil society such as NGOs and NPOs, we discussed "important human rights issues specific to each industry."

※ Stakeholder Engagement Program ｜CAUX ROUND TABLE　JAPAN（crt-japan.jp）（External Sites）

Based on the results of the Human Rights Impact Assessment for the FY 2021, we conducted a dialogue with overseas human rights experts in October 2021.

・Hiroshi Ishida（Caux Round Table Japan）

・Neill Wilkins （Institute for Human Rights and Business）

・Camille Le Pors （Lead, Corporate Human Rights Benchmark, World Benchmarking Alliance）

※ Stakeholder Engagement Program ｜CAUX ROUND TABLE　JAPAN（crt-japan.jp）（External Sites）

Dialogue in 2021

In FY2020, to enhance our activities to respect for Human Rights, we held a dialogue with overseas experts on Human Rights in October 2020.

・Hiroshi Ishida（Caux Round Table Japan）

・Neill Wilkins （Institute for Human Rights and Business）

・Camille Le Pors （Lead, Corporate Human Rights Benchmark, World Benchmarking Alliance）

※ Stakeholder Engagement Program ｜CAUX ROUND TABLE　JAPAN（crt-japan.jp）（External Sites）

Remedy

Inquiry Desk

Based on the SHIONOGI Group Human Rights Policy, SHIONOGI group respects Human Rights of all business partners.

We prohibit forced labor, including any forms of discrimination and child labor, and respect the rights of workers.

We have established a consultation and reporting hotline for all individuals, including employees and business partners, to seek advice and report any concerns. For details on consultations and reports received through this hotline, please refer to the " Consultation and Reporting hotline for Compliance" page.

Furthermore, SHIONOGI will work for early discovery and prevention of harassment by setting up contact points for internal consultation and notification, and providing consultation staff members and employees with education on harassment.

Education

Human Rights education

SHIONOGI conduct Regular Human Rights education to employees.

Business and Human Rights education training

In fiscal 2024, we conducted human rights education training for employees via e-learning. This time, employees learned about "Due diligence for responsible corporate behavior" and "Human rights and environment" (attendance rate 93.1% (4,234 out of 4,549 people)). In addition, in the post-event survey, more than 80% of employees had positive opinions.

Business and Human Rights education training

In fiscal 2023, we conducted human rights education training for employees via e-learning. Using materials created by the United Nations Global Network Japan Human Rights Education Subcommittee, employees learned about human rights violation cases (attendance rate 89.6% (3,721 out of 4,153 people)). In addition, in the post-event survey, more than 80% had positive opinions.

[Training topics]

・Why "Business and Human Rights"?

・UN Guiding Principles on Business and Human Rights (UNGPs)

・Status of human rights legislation

・Introduction of examples of human rights issues in Japan

Training on business and Human Rights

In fiscal 2021, we conducted human rights training for employees via e-learning, and they learned about the following. (Attendance rate: 89.6% (4,759 out of /5,311 people))

[Training topics]

・What are Human Rights?

・Why "Business and Human Rights"?

・Examples of human rights violations in the supply chain

・Status of human rights legislation

・Human Rights Issues in Japan

・SHIONOGI Group Human Rights Policy

・SHIONOGI's Human Rights Risk Assessment

・My own work and human rights

Workshop

In 2020, SHIONOGI Group held workshops on Business and Human Rights for our officers and employees in cooperation with CRT Japan. They learned about "United Nations Guiding Principles on Business and Human Rights" and listed up our Human Rights issues by themselves. This risk map is used effectively for our human rights due diligence process.

Human Rights Due Diligence

Due Diligence process