Group Policy (Management Structure)

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 we established the Nomura Real Estate Group Procurement Guidelines (the "Procurement Guidelines"). We request that suppliers apply the 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.
Going forward, we will continue to improve supplier management in accordance with the Guidelines.

Management (Management Structure)

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

The Group seeks to improve procurement and supplier management in accordance with the Procurement Guidelines.

Results

As a monitoring trial with regard to the Procurement Guidelines, in fiscal 2020 we held interviews with 10 major suppliers (6 construction companies, 2 building maintenance companies, 1 goods rental company, and 1 security company) to monitor their awareness and operation of the Procurement Guidelines. As a result of the interviews, no risks were found from any suppliers. On the other hand, a number of suppliers raised concerns about whether they would be able to secure a compliance system for Provision No. 20 of the Procurement Guidelines, so the Group will consider providing support for building a compliance system for this provision going forward.

Nomura Real Estate Group Procurement Guidelines

The Group formulated the Procurement Guidelines (Japanese and English versions) in September 2018 and started implementation of the guidelines to all suppliers from November that year, asking them to comply with the guidelines.
In addition, business consignment agreements and purchase orders (including those for new contractors and renewed suppliers) include a provision on compliance with the guidelines. As of January 2021, we have included this provision in the agreements and purchase orders for almost all of our suppliers, approximately 4,600 companies. 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

Supplier Engagement

As a trial for monitoring, in fiscal 2020 the Group selected 10 out of approximately 4,600 suppliers who had received the Procurement Guidelines, based on criteria such as the likelihood of risks to human rights and procurement and the extent of their relationships with the Group. The Group then conducted monitoring interviews for performing risk assessment and analysis of the status of supplier awareness and compliance with the guidelines.
Based on the results, the Group established a policy for full-scale operation, and in fiscal 2021 it plans to increase the number of target companies to approximately 400 (an estimated 50% of the total transaction value) and conduct an online questionnaire based on the guidelines. The Group will conduct a risk assessment and analysis based on the results of the questionnaire and perform onsite audits of suppliers that are deemed to have concerns. The Legal Liaison Committee will monitor the status of corrective actions to address any concerns.

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 study groups for suppliers that address issues such as quality and the environment to encourage suppliers to operate their business in accordance with the Procurement Guidelines.
To achieve safety and security through appropriate quality control, Nomura Real Estate Development distributes Design and Construction Standards and Quality Manuals to construction companies and designers to ensure that they are fully aware of these standards and manuals.
In addition, Nomura Real Estate Partners holds annual meetings of the East Japan Supplier Council Meetings on Health & Safety and West Japan Supplier Council Meetings on Health & Safety where it presents commendations to excellent companies and conducts training on health and safety.

Initiatives for New Suppliers

When starting business with new suppliers, the Group requests compliance with the Procurement Guidelines and works to conclude agreements and purchase orders in all new deals that include a provision on compliance with the guidelines.

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, the Group conducted an online questionnaire survey in January 2021 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.