CSR Report > CSR Report 2016 - Working With Our Business Partners

CSR Report

Working With Our Business Partners / We build good relationships with our production, development and sales partners, and work hard to build partnerships that can provide better products for our consumers.

Working With Our Business Partners

We build good relationships with our production, development and sales partners, and work hard to build partnerships that can provide better products for our consumers.

Working With Our Production Partners

Working With Our Production Partners

 Nintendo employs a fabless production model, meaning we do not own the facilities that manufacture our products. We work with production partners*1 around the world to manage and improve the quality, safety, technical capability, and efficiency of the entire production process.
 By sharing ideas and best practices with our production partners, we strengthen our working relationships with them as we aim to bring smiles to the faces of the consumers who use our products. We require our production partners to maintain healthy corporate cultures that respect human rights and promote environmental conservation, which in turn helps us to achieve our CSR goals.

CSR Procurement Guidelines

 With an emphasis on building trust and deepening mutual understanding, Nintendo Co., Ltd. implements and refines good business practices in its procurement processes through the Nintendo Procurement Policy and Nintendo Production Partner Selection Policy.
 In addition, we issue the Nintendo CSR Procurement Guidelines for our production partners to provide a specific guide regarding the adoption of socially responsible procurement practices. We have distributed the Nintendo CSR Procurement Guidelines to each of the approximately 300 production partners with whom we work closely to help ensure compliance in every phase of production.
 These guidelines are based on relevant laws and international standards that focus on protecting human rights and prohibiting the use of illegally mined materials, commonly known as conflict minerals*2.

*1 Production Partners
These partners include the manufacturing factories to which Nintendo outsources assembly and the suppliers of component parts and materials.
*2 Conflict Minerals
Conflict minerals are the gold, tantalum, tin and tungsten extracted from the conflict-affected regions of the Democratic Republic of the Congo or its nine adjoining countries, and are used as a financial source for armed groups or rebel forces who commit crimes against humanity.

Production Partner Inspections

 Nintendo Co., Ltd. works with production partners according to the Procurement Policy and Production Partner Selection Policy to ensure CSR compliance in our supply chain.
 We require our production partners to regularly report an overview of their current situation, including CSR compliance, by way of a Business Status Survey. Based on factors such as the content of the Business Status Survey, the importance of the business transaction, and social environmental changes, we evaluate responses and deploy personnel to conduct on-site inspections of selected production partners to ascertain the current on-site situation and improvement status.
 In fiscal year 2015, we carried out on-site inspections at 16 production partners (including 13 new partners) and requested them to make improvements deemed necessary per our CSR Procurement Guidelines in areas such as young worker protection and improving worker safety. Moreover, the facilities inspected to date constitute approximately 80 percent of our total production expenditure.
 While the main purpose of these inspections is to give us a first-hand look at on-site conditions, they also provide an ideal opportunity to clearly communicate the Nintendo CSR procurement requirements directly to our production partners.
 In fiscal year 2015, the representatives of our overseas subsidiaries also visited the factories of our major production partners, conducting hearings on the work environment, benefits, and industrial health and safety of the workplace. The comments and feedback of our overseas subsidiaries have been shared with Nintendo Co., Ltd., and were used for enhancing future on-site inspections.

 In addition to the on-site inspections, we have been adopted a third-party monitoring process since fiscal year 2013 to enhance transparency in CSR procurement. In fiscal year 2015, we placed the emphasis on human rights and labor practices, as stipulated in the Nintendo CSR Procurement Guidelines. We visited four major production partners selected on the basis of the results of past on-site inspections and the results of past third-party monitoring, as well as the status of business transactions.
 During third-party monitoring, the monitoring team interviewed managers and employees working on the production site, reviewed relevant documents, and inspected production facilities and employee dormitories. The team used a sampling method to validate compliance on the respect for human rights, employment contracts, prohibition of child labor and forced labor, legal minimum wages, management of working hours, and workplace health and safety. As a result, we requested our production partners to work on certain areas that should be improved, such as labor management.
 The subject of the on-site inspections and of the third-party monitoring includes suppliers upstream of 1st tier suppliers.

 Also, starting in fiscal year 2015, in response to advice from external CSR expert on Nintendo's CSR procurement systems, we started to improve our partner evaluation procedure to make it more effective as a CSR related cross-departmental efforts. From fiscal year 2015 to fiscal year 2016, our improvements will mainly focus on the following areas:


  • Considering to add CSR-related requirement to our Basic Partner Agreement
  • A revision of the Partner Evaluation Procedure (including a revision of the Business Status Survey)
  • Improvement of on-site inspection procedures
  • Training of new members who conduct on-site inspection
  • Strengthening follow-up process

 We will continue to promote CSR procurement as we work to strengthen the relationships with our production partners.

 Please refer to CSR Report 2014 Feature 2: CSR Procurement With Production Partners to see our past initiatives on CSR procurement.

On-Site Inspections
FY 2008 7 companies (5 new)
FY 2009 14 companies (7 new)
FY 2010 13 companies (5 new)
FY 2011 9 companies (2 new)
FY 2012 13 companies (7 new)
FY 2013 11 companies (6 new)
FY 2014 14 companies (6 new)
FY 2015 16 companies (13 new)
Nintendo Procurement Policy
  1. (1) Provide all production partners, both domestic and overseas, with equal opportunities and fair evaluations
  2. (2) Conduct procurement activities that comply with laws and social norms, with an emphasis on human rights and environmental considerations
  3. (3) Purchase goods from validated production partners that are in good standing at fair prices and that provide appropriate delivery times
  4. (4) Collaborate with production partners to build mutual trust and fulfill corporate social responsibility goals through procurement practices
  5. (5) Comply with the Nintendo Conflict Minerals Policy in the procurement of products and component parts
Nintendo Production Partner Selection Policy

When selecting production partners and continuous transactions for the procurement of products and component parts, priority shall be given to companies that satisfy the following criteria:

  1. (1) Comply with laws and social norms, with an emphasis on human rights and environmental considerations.
  2. (2) Sound business operations
  3. (3) Quality, price and delivery time are of an appropriate standard
  4. (4) Capable of providing stable supply and adapting to fluctuations in demand
  5. (5) Possess advanced technological capabilities that contribute to Nintendo products
  6. (6) Sound information management system
  7. (7) Capable of providing continuous supply in the event of unexpected natural disasters
CSR Procurement Process
Establish Guidelines
&
Share With Production Partners
Nintendo CSR Procurement Guidelines
Confirmation by Survey
Business Status Survey*3
Conflict Minerals Survey
*3
Production partners annually submit the Business Status Survey, which covers topics related to business conditions and CSR efforts.
Site Visits to Understand Current Status
One-Site Inspections
Third-Party Monitoring
Conflict Minerals Interviews
Follow Up
Nintendo CSR Procurement Guidelines
Guideline Sections Examples of Section Contents

1.Promoting respect for and compliance with human rights

  • ・Respect for human rights
  • ・Prohibition of discrimination
  • ・Prohibition of child/forced labor
  • ・Compliance with related laws (decent wages, working hours, right to organize)

2.Ensuring occupational health and safety

  • ・Compliance with health and safety related laws
  • ・Prevention of work-related accidents
  • ・Creation of a safe, clean workplace environment
  • ・Protection of young workers

3.Practicing corporate ethics and fair trade

  • ・Prohibition of inappropriate payoffs or receipts
  • ・Prohibition of abuse of dominant bargaining position
  • ・Prohibition of acts that restrict competition
  • ・The appropriate management of exports
  • ・Prohibition of the use of conflict minerals
  • ・The building of a management system of compliance
  • ・Prevention and early detection of illegal actions and misconduct
  • ・Respect for intellectual property

4.Maintaining the global environment

  • ・Environmental management system
  • ・Minimizing the environmental impact
  • ・Compliance with Nintendo Green Procurement

5.Product safety guarantee and quality assurance

  • ・Quality assurance system
  • ・The guarantee of product safety

6.Complete information management

  • ・Information management
  • ・Prevention of disclosure of confidential client and third-party information

7.Establishing crisis management systems

  • ・Risk evaluation and risk management
  • ・The creation of a business continuity plan

8.Contributing to the community

  • ・Contributions to the local communities

Nintendo's Approach to Conflict Minerals

 It has become a global concern that companies using minerals from conflict-affected regions could be playing a role in the conflicts by financing armed groups.
 In the U.S., Section 1502 of the Dodd-Frank Act, effective January 2013, requires companies listed in the U.S. disclose the use of any of the four conflict minerals (gold, tantalum, tin and tungsten) which are extracted from the Democratic Republic of the Congo or its adjoining countries and become a funding source for armed groups, are used in those companies' products, and if so, those companies must disclose, among other matters, the measures taken to exercise due diligence on the sourcing of those minerals.
 Although Nintendo is not subject to the law since we are not publicly listed in the U.S., Nintendo has an unequivocal policy banning the use of conflict minerals that support armed groups. As a result, Nintendo has carried out the following activities.

Nintendo Conflict Minerals Policy

Nintendo is committed to socially responsible procurement practices and works closely with production partners to ensure conflict minerals are not used in Nintendo products. Conflict minerals (tin, tantalum, tungsten and gold) are mined in the Democratic Republic of the Congo or its adjoining countries, and become a finding source for armed groups associated with environmental destruction and human rights violations.

  1. 1. We investigate the source of raw materials used in our products.
  2. 2. We ensure a clear understanding of the Nintendo Conflict Minerals Policy with production partners through distribution of the Nintendo CSR Procurement Guidelines, training and education and visits to factories and corporate offices and require them to conduct business accordingly.
  3. 3. We require production partners to establish a policy that prohibits the use of conflict minerals in their respective supply chains.
  4. 4. We require production partners to use a validated supply chain once a conflict-free supply chain is established through initiatives such as the EICC-GeSI Conflict-Free Smelter program.
Nintendo's Progress
FY 2011 We revised the Nintendo CSR Procurement Guidelines (Ver.1), and incorporated and received consent on a provision on non-use of conflict minerals from each production partner. In addition, our Manufacturing Division explained the conflict minerals issue and Nintendo's policy on conflict minerals during on-site inspections.
FY 2012 Established an internal structure to address the conflict minerals issue and conducted a conflict minerals survey of all production partners to ascertain the progress made on their supply chain investigation and to understand whether policies on conflict minerals had been established.
FY 2013 Nintendo reorganized its internal structure and established a cross-functional conflict minerals team, consisting of members from legal, procurement and manufacturing to enhance Nintendo's approach on conflict minerals.
We used the internationally recognized CFSI*4 Conflict Minerals Reporting Template to conduct our supply chain survey.
Moreover, we reviewed all results to ensure there were no inconsistencies and no questions remained unanswered, carrying out follow-up requests with production partners when necessary. We also used the CFS (Conflict-Free Smelter)*5list to verify smelters and refiners in our survey.
We sent feedback to production partners regarding their individual survey results, and asked for their continued cooperation with Nintendo's efforts based on our risk assessment of their status.
In addition to conducting the supply chain survey, we worked with an external expert to interview our priority production partners and further examine both the progress made on their supply chain investigations and the challenges they currently faced.
FY 2014 Our cross-functional team continued to advance efforts regarding conflict minerals. We updated the Nintendo CSR Procurement Guidelines to include our conflict minerals policy and added language requiring production partners to cooperate with our supply chain survey, using a reporting template developed by CFSI, and to put into place a conflict minerals policy of their own. At the July 2014 Green Procurement briefing, we again used this time to explain Nintendo's policy on conflict minerals and to request that production partners to participate in our supply chain investigation.
We achieved a 100 percent response rate to our fiscal year 2014 investigation, which used the CFSI Conflict Minerals Reporting Template, and as in the past, we reviewed all results and carried out follow-up requests when necessary.
According to the results, Nintendo's supply chain consists of 355 smelters and refiners, including some that have not yet been identified by CFSI. We compared them against the list of smelters and refiners prepared by CFSI to ascertain the status of each mineral. As a result, from the smelters and refiners reported, 247 were on the CFSI Standard Smelter List, and among them 168 were certified as conflict free by CFSI.
To promote further efficiency in our investigation, we carried out a risk assessment of our production partners' supply chain survey results and their overall importance to Nintendo's business. We also worked with an external CSR expert to interview selected production partners, to further examine the progress made on their supply chain investigations and the challenges they faced and their overall CSR initiatives.
The results of our conflict minerals survey and interviews with suppliers have been reported to Nintendo's Executive Management Committee. Nintendo will continue to refrain from using any conflict minerals in our products, and we will further refine our conflict minerals investigation process.
FY 2015 Progress

 To promote our initiatives according to the OECD Due Diligence Guidance for Conflict Minerals*6, we continued our cross-departmental efforts to investigate conflict minerals based on our conflict mineral investigation manual defining responsibility and authority, and investigation procedure.
 Within the survey conducted in fiscal year 2015, which used the CFSI Conflict Minerals Reporting Template, we identified examples of the mistakes our production partners often made on the survey in the previous fiscal year, such as incorrect recording of smelter information, and asked our production partners to pay special attention to such issues. The response rate to the written surveys was again 100 percent.
 We examined the responses in the same way as the past, and where there were clear contradictions, such as when a mineral is marked as not being in use, but a refiner is listed for that mineral, we asked all applicable production partners to review and resubmit their responses to ensure answers were consistent and correct.
 According to our investigation, Nintendo's supply chain consists of 309 smelters and refiners (including some that could not be identified as smelters or refiners by CFSI). We compared these against the CFSI Standard Smelter list, to analyze how smelters and refiners are specified for each mineral. As a result, from the smelters and refiners reported, 294 were on the CFSI Standard Smelter List, and among them, 223 were certified as conflict-free by CFSI and 23 are on the Active list*7. The remaining CFSI standard smelters were not validated as CFS or engaged in the audit process, but as far as we have reviewed the provided information from production partners, our surveys revealed no evidence of conflict mineral use by those smelters either.
 In addition to our survey activities, we have been conducting interviews with our productions partners since fiscal year 2013 with the belief that communicating directly with our production partners, and having an in-depth understanding of the framework and the procedures used in their supply chain investigation, can eventually lead to a higher level of involvement.
 In fiscal year 2015, we selected production partners on the basis of risk assessments, taking into account their survey responses and the importance of the business relationship, and interviewed them on the status and challenges of their conflict minerals supply chain investigations, as well as their overall CSR initiatives.
 The results of our surveys and interviews with production partners have been reported to the management of Nintendo Co., Ltd., who will use that information to define steps to further reduce the risk of using conflict minerals that support armed groups.
 We will continue to advance our efforts on the issue of conflict minerals by continuing to communicate with our production partners, requiring them to set conflict minerals policies, use CFS smelters, and endeavor to reduce overall risks in our supply chain.

Number of Smelters and Refiners on the CFSI Standard Smelter List

  Gold Tantalum Tin Tungsten Total
Smelters and Refiners 124 46 81 43 294
Conflict-Free Smelters
(Including smelters and refiners on the Active list*7)
95 45 67 39 246

*Reference documents: The CFS list and Active list prepared by CFSI as of June 6th, 2016
*Smelters and refiners on the Active list have committed to undergo a Conflict-Free Smelter Program audit or are participating in one of the cross-recognized certification programs

*4 CFSI: Conflict-Free Sourcing Initiative
Founded by Electronic Industry Citizenship Coalition (www.eiccoalition.org) and Global e-Sustainability Initiative (www.gesi.org)in 2008 in order to develop tools and resources such as the Conflict Minerals Reporting Template.

http://www.conflictfreesourcing.org/

*5 CFS: Conflict-Free Smelter
Smelters or refiners that have no relationship with the conflict in the Covered Countries and have been found to be compliant with the Conflict-Free Smelter program assessment protocols established by CFSI.
*6 OECD Due Diligence Guidance for Conflict Minerals
“OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas”
This Guidance provides recommendations for responsible minerals supply chain management concerning conflict-affected or high-risk regions.
*7 Active List
The list of smelters and refiners that have committed to undergo a CFSP audit or are participating in one of the cross-recognized certification programs

Working With Our Development Partners

Working With Our Development Partners

 Nintendo develops game systems and software both independently and in collaboration with a wide range of development partners. We identified the key essentials in designing attractive products with our development partners as the following: sharing values regarding collaborative product development, maintaining mutual respect for the roles and abilities of those involved, and creating a strong sense of appreciation for the contribution of each individual in the process.

Development Partner's Comments

Yusuke Hashimoto

Yusuke Hashimoto

Game Designer
Creative Production Group

Platinum Games Inc.

 My company has worked with Nintendo ever since The Wonderful 101 and Bayonetta 2. Nintendo has supported us in many ways right from the development stage.
 We at Platinum Games are committed to creating products that are exhilarating in a unique way, with strong visual and situational impact. In Star Fox Zero, our latest Wii U software, we melded our expertise with Nintendo's innovative two-screen concept, their exploration of new ways to play, and their utmost consideration for the player. The two companies worked as one to pursue games with new sensations that maximize the two-screen set-up of the Wii U.
 Nintendo is an important partner that respects our commitment. We look forward to continuing our partnership in developing games that take customers by surprise.

Working With Our Sales Partners

Working With Our Sales Partners

 To expand our consumer base, we must cooperate with our sales partners in effectively conveying the appeal of our products to consumers around the world. Nintendo continues to build these relationships and encourages open communication with its sales partners.

New Product Information Sessions

 For newly released products, Nintendo Co., Ltd. holds new product information sessions twice a year, before the holiday sales season, during which our sales staff directly explains the products' appeal and special features to our sales partners. In addition to these bi-annual sessions, we hold other smaller meetings as needed.
 During our information sessions, our sales partners gain knowledge and experience by playing with each product, which helps them to understand the product's appeal and aids them in selling it.
 Many sales partners attended these sessions in fiscal year 2015, which provided valuable opportunities for candid exchanges of opinions.
 Our overseas subsidiaries also create various opportunities to share the appeal of new products with their respective sales partners. For example, to help sales partners better understand our products, Nintendo of America and Nintendo Australia have a space at their headquarters where partners can come to try new products at any time.

New product information session

Cooperation With On-Site Sales Promotion

 Nintendo Co., Ltd.'s sales staff always considers what kind of selling space, including promotional tools or displays, is effective to communicate product appeal and information to consumers, and supports individual retailers in making a comfortable environment that enables consumers to find products easily.
 We have also installed in-store demo units, which act as information hubs and enable us to distribute a variety of video content in a timely manner.
 Our overseas subsidiaries are also committed to strengthening their retail support programs, with some sending employees with a strong technical background and a thorough understanding of the technology used in Nintendo products to work with and support store staff.

New Product Display ShelvesAmiibo Display Shelves

demo unitdemo unit
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