Supply Chain Management

Approach and Policies

Group Policy (Governance)

Under the Group Policy, the Nomura Real Estate Group conducts its business in cooperation with various suppliers, including design and construction companies and construction contractors in all business areas. Because of this, the Group believes that initiatives throughout the supply chain are essential for implementing effective measures to address social and environmental issues and established the Nomura Real Estate Group Procurement Guidelines (Procurement Guidelines). The guidelines apply to all suppliers involved in the procurement of products, materials, raw materials, and services by the Nomura Real Estate Group. They also apply to the entire supply chain, including indirect suppliers (subcontractors and suppliers of the target suppliers).We request that suppliers apply these guidelines to their business activities with regard to eight topics: compliance, respect for human rights, fair business activities, consideration for the environment, ensuring and improving quality, ensuring information security, whistleblowing systems, and creating business continuity plans.
Moreover, the guidelines state that suppliers shall “carefully manage health and safety and prevent industrial accidents, endeavor to maintain physical and mental health, and create well-ordered workplaces,” and we also require that they implement comprehensive health and safety management by stakeholders in all business areas, including suppliers.
Going forward, we will continue to improve supplier management in accordance with the guidelines.


Management (Governance)

In fiscal 2020, the Group began conducting supplier questionnaires on the status of compliance with the Procurement Guidelines as well as risk assessment trials and monitoring the status of corrective actions based on the results of the questionnaires. The Sustainability Committee (chaired by the Nomura Real Estate Holdings president and Group CEO) regularly reviews the status of the trials and monitors the progress of supplier management throughout the Group.


Targets and Results

Targets, KPIs, and Performance Data

2030 Unit FY2020 FY2021 FY2022
Procurement Guideline survey implementation rate*1 80 % 37 51

The implementation rate is calculated using the overall procurement amount of the relevant Group companies as the denominator and the procurement amount (transaction amount) of the companies responding to the survey as the numerator.

Other Results

Unit FY2020 FY2021 FY2022
Procurement Guideline survey (number of respondents) Companies 89 154
Number of legal and regulatory violations 0 0 0

ESG Data (Governance)

Results of Procurement Guidelines Engagement

Eligibility Criteria FY2020 FY2021 FY2022
Determination of important suppliers Suppliers with high procurement value Top 191 companies Top 300 companies
Web-based questionnaire(Response rate*) Important suppliers 89 companies
154 companies
Improvement guidance through feedback to web-based questionnaire Low-risk suppliers 79 companies
Direct engagement in risk Suppliers with some concerns 10 companies 10 companies 10 companies
Major concerns identified Some companies have not yet established a system to ensure compliance with item 28 of our procurement guidelines. Regarding the employment of foreign technical intern trainees in the supply chain of suppliers and business partners, some companies could not confirm whether they are employed or they are responding to the situation. In addition to the FY2021 matters, the actual status of expenses prior to travel, such as brokerage fees other than those stipulated by law, was not confirmed.
Number of legal and regulatory violations 0 0 0

The response rate is calculated using the overall procurement amount of the relevant Group companies as the denominator and the procurement amount (transaction amount) of the companies responding to the survey as the numerator.



Nomura Real Estate Group Procurement Guidelines

The Group formulated the Procurement Guidelines (Japanese and English versions) in September 2018 and since then has been applying them at all suppliers and requiring compliance. In addition, business consignment agreements and purchase orders (including those for new contractors and renewed suppliers) include a compliance provision. As of March 2022, we have included the provision in the agreements and purchase orders for almost all of our suppliers, approximately 4,600 companies, and they had already been informed of the provision. We also confirm awareness of the guidelines among suppliers through internal audits.

Nomura Real Estate Group Procurement Guidelines

I. Establishment of Compliance
II. Respect for Human Rights
III. Fair Business Activities
IV. Consideration for the Environment
V. Ensuring and Improving Quality
VI. Ensuring Information Security
VII. Whistleblowing Systems
VIII. Creating Business Continuity Plans

Nomura Real Estate Group Procurement Guidelines

Supply Chain Risk Assessment Flow

The Group identifies social and environmental risks, including those related to human rights, throughout its supply chain and conducts risk assessments to avoid or mitigate such risks. Depending on the characteristics of the Group’s businesses and suppliers, we established a system for identifying high risk areas of the supply chain and conduct supplier engagement, including risk assessments according to the level of risk. Specifically, we conduct risk assessments based on business characteristics to avoid supply chain risks, such as those related to human rights when employing foreign technical intern trainees, and particularly the risk of human rights violations in developing areas when participating in overseas projects.

Initiatives for New Suppliers

Before starting business with new suppliers, the Group has the corporate department conduct credit checks and has each department and office review appropriateness in terms of quality, price, and delivery time and office (implemented 100%). Contracts are only concluded with suppliers whose risk concerns have been eliminated.
When signing contracts, the Group requires compliance with the Procurement Guidelines and concludes agreements and purchase orders for all new deals that include a provision on compliance with the guidelines.

Promoting Engagement According to Risk Level

In fiscal 2020, we began surveying our supply chain on the level of supplier awareness of and compliance with the Procurement Guidelines. Based on the results of monitoring interviews conducted on a trial basis with ten major suppliers in fiscal 2020, we requested that companies identified as important suppliers of the Group in fiscal 2021 complete a web-based questionnaire. In fiscal 2022, we expanded the target group of important suppliers to 300 companies, accounting for approximately 70% of the top suppliers, and requested that they complete a web-based questionnaire, and we received responses from 154 of them. In light of the fact that we were unable to confirm the employment status of foreign technical interns at some of the business partners and their supply chains in the fiscal 2021 survey, we designed a questionnaire under the supervision of a consulting firm to deepen our understanding of the acceptance status of foreign technical interns.
For suppliers among responding companies that have minor issues, we provide guidance for improvement in the form of feedback materials showing the overall trend of the questions to encourage them to make improvements. In addition, we directly engage with suppliers selected from responding companies to reduce environmental and human rights risks, and we engaged with ten companies in fiscal 2022. Direct engagement is mainly through in-person visits and online interviews, with consultant firms present in some cases.
In fiscal 2022, through a series of investigations, no suppliers were found to be in violation of laws or regulations.

Disseminating the Procurement Guidelines throughout the Group

The Group is working to instill the Procurement Guidelines throughout the Group to ensure full compliance. To strengthen the effort effectively by taking into consideration the actual conditions in each company, based on the results of a survey on the dissemination status of the guidelines, in January 2021 the Group conducted an online questionnaire survey of 433 compliance promotion staff at Group companies to inform them of the guidelines. It also reminded the Group Legal Affairs Liaison Committee, which is mainly composed of legal personnel from the Group, to ensure that the draft clauses for compliance with the guidelines are included in outsourcing contracts and order forms.

Improving Supplier Capabilities and Enhancing Quality

The Group works to enhance quality throughout the supply chain and raise awareness of the environment by holding Safety Conferences and annual training courses for suppliers. These efforts address concerns related to quality and the environment to encourage suppliers to also disseminate the Procurement Guidelines to their employees and respond accordingly.
To achieve safety and security through appropriate quality control, Nomura Real Estate Development distributes the Design and Construction Standards and quality manuals to construction companies and designers to ensure that they know about and completely understand them.
In addition, Nomura Real Estate Partners holds annual East Japan Supplier Council Meetings on Health & Safety and West Japan Supplier Council Meetings on Health & Safety.