The MOL Group established the "MOL Group Basic Procurement Policy" to fulfill our social responsibility as a corporate group that plays a part in our customers' supply chains. With an eye toward contributing to the realization of a sustainable society, we promote fair and equitable procurement activities, in consideration of compliance with laws and regulations covering supply chains, conservation of the environment and natural resources, respect for human rights, and doing our utmost to ensure safety, while gaining the understanding and cooperation of our business partners.
The policy was established in 2012, and revised in 2022, with the approved of the MOL Board of Directors.
The MOL Group procures products and/or services in accordance with the following basic policy:
We work to build relationships of trust with our business partners so they understand and cooperate with this policy, with the aim of mutual contribution toward the realization of a sustainable society.
Established in March 2012
Revised in March 2022
We believe the cooperation of our business partners is indispensable to enhancing the transparency and sustainability of supply chains, as the MOL Group develops businesses on a global scale. In FY2021, we established the MOL Group Supplier Procurement Guidelines. These cover issues where we seek the understanding and cooperation of our business partners. In the future, we will work to promote the wide adoption of guidelines among our key business partners, and ensure that they understand the intent behind them.
We ask all of our business partners to address the items specified in the guidelines and promote sustainable procurement activities and urge your partners to adopt these standards as well,
In ocean shipping, the core of our group's business activities, we create value chains with various business partners that span everything from procurement and operation to the eventual scrapping of vessels.
In order to realise sustainable business activities, the MOL Group implements value chain management to identify and reduce sustainability-related risks in the value chain, including environmental, human rights, anti-bribery and other anti-corruption risks.
The understanding and cooperation of our business partners in our value chain is essential for building a sustainable value chain, and we hope to further strengthen our partnership with them through this initiative.
By mutually reinforcing our partners' and our sustainability initiatives, we will strive to enhance the value of value chain as a whole and continue to be an essential part of society in the future.
The implementation of these initiatives will be monitored by the Environment and Sustainability Committee, a subordinate organization of the Executive Committee, and the Board of Directors will be responsible for supervising the implementation.
With the aim of ensuring compliance with the MOL Group Supplier Procurement Guidelines, we will introduce and promote the guidelines to our business partners to help them understand the purpose of these initiatives and we will also monitor the status of their initiatives by conducting written surveys covering seven major areas such as the environment, human rights and anti-corruption, including bribery, and detailed interviews and on-site inspections as necessary. If the survey identifies serious issues, we work together with business partners on future countermeasures in cooperation with experts and NGOs, and continue to provide ongoing support.
Basic processes of value chain management
"MOL Group Partnership Initiatives"
We hold briefings and workshops on value chain management for employees who work closely with our suppliers. The objective is to deepen understanding of the significance of this initiative, the concerns of external stakeholders, and the MOL Group Supplier Procurement Guidelines.
Ship procurement is a key element of MOL Group business activities.
When we order the construction of a ship, we not only request that the shipyard, a supplier, follow MOL Safety Standards Specifications, which specify our safety and environmental quality standards, but also ask them to address concerns regarding environmental measures, safe working conditions, and so on in the shipyard. We also strive to improve the quality of our ships by assigning shipbuilding superintendents from our group companies to the shipyard, where they are jointly involved in the development and introduction of low environmental impact vessels. This is one way that we work with our business partners toward achieving a sustainable society.
The MOL Group charters some vessels that are essential to its business from shipowners. We apply MOL Safety Standard Specifications not only to our owned vessels, but also chartered ships (not including those on short-term charters), striving to ensure high fleet-wide standards of quality and safety. In addition, with shipowners, we proactively share safety awareness, exchange information and opinions to improve safety/quality through visits to ships, plus meetings and periodic liaison group activities with shipowners. And in response to the grounding//oil spill incident involving the MOL-chartered bulk carrier Wakashio off the coast of Mauritius in 2020, we recognized anew that we have a profound social responsibility to prevent the reoccurrence of such an incident, even with a chartered vessel, and we have stepped up our efforts to achieve the world's highest level of safety and quality, working closely with shipowners. Beginning in FY2022, we provided liaison group activities with shipowners and other opportunities for them to gain an understanding of the MOL Group Human Rights Policy and Supplier Procurement Guidelines, as well as our approach to value chain management (partnership initiatives). We also pursue value chain management initiatives, including dialogues with some shipowners regarding this initiative.
Recycled steel from ship scrapping supports the demand for steel in various countries and regions, and demand is also increasing as a measure to promote environmental awareness and reduce the burden on the environment. Recycled steel from vessels is also a valuable resource, but on the other hand, issues related to the management and disposal of hazardous substances during dismantling, environmental impact, and worker health and safety management have been recognized internationally. In 2009, the Hong Kong Convention for the safe and environmentally sound recycling of ships ("Hong Kong Ship Recycling Convention") was adopted at the International Maritime Organization (IMO) with the objective of addressing issues related to ship recycling, and the ratification process is currently underway. MOL will not only comply with this convention, but also cooperate with ship recycling yards to fulfill its responsibilities as a seller of vessels to be recycled, while taking into account the environment, human rights, safety and quality, and prevention of corruption, including bribery.
The MOL Group established "Superior Ship recycling Standards (SSS)" in FY2023, which set out its own standards for ship recycling yard selection, with an eye toward promoting sustainable ship recycling in line with the background issues outlined above.
Overview of the screening process:
In screening each ship recycling yard, we established a number of criteria that incorporate a variety of items, such as certification status from Nippon Kaiji Kyokai (ClassNK) regarding the Hong Kong Ship Recycling Convention, as well as compliance with regulations, laws, and international treaties, encompassing concerns for the environment, human rights, safety and quality, and prevention of corruption and bribery, as stipulated in the "MOL Group Supplier Procurement Guidelines." Based on these criteria, we select yards after risk assessment (screening) through a written survey and on-site inspection. In the selection process, we also consider advanced environmental initiatives and activities that contribute to the local community. We further classify the selected yards according to the content of the screening, and establish a system to prioritize collaboration with yards in the higher classifications that meet the criteria.
Operation after screening and selection:
We will confirm that the selected yards are being operated in accordance with the screening criteria even after selection through periodic monitoring such as written surveys and on-site inspections. At that time, yards that do not meet the criteria will be excluded from the selection process. We will also encourage yards that are not selected to improve their facilities and operations through feedback on the content of the screening process, thereby continuing the yard selection activities.
During the vessel dismantling period, we or a third party will be commissioned to conduct on-site monitoring to confirm the status of actual operations.
Records of yard screening and selection:
Prior to the establishment of the SSS, in FY2022, we conducted sequential audits of over 50 (at the time of the survey) ship recycling yards, mainly in India and Bangladesh, which had been certified under the Hong Kong Ship Recycling Convention by the Nippon Kaiji Kyokai (ClassNK). Some of the yards identified issues such as employee wage levels through the screening, and we provided feedback for improvement.
Number of yards screened・・・37 yards
Number of yards selected ・・・13 yards
|Year||Ship name||Yard||Plot #||LDT||Year
|Before SSS||2019||Green Garnet||NBM Iron and Steel Trading Pvt.Ltd||61(24G)||9,186||1996||Mitsui O.S.K. Lines, Ltd.|
|2019||Rakiura Maru||Leela Green Ship Recycling Pvt.Ltd||35||8,363||1996|
|2019||Meridian||Triveni Ship Breakers LLP||23||9,142||1996|
|2020||Universal Green||Baijnath Melaram||13||10,464||2002|
|2020||Cougar Ace||Anupama Steel limited||15||13,551||1993|
|2021||Senshu Maru||Sachdeva Steel Products (SB) Ltd||65(24L)||20,296||1984|
|After SSS||2023||Siam Ocean||PHP Ship Breaking and Recycling Industries Ltd||-||7,996||1995|
Dismantling work at our selected ship recycling yard