DOWA CSR Report 2019

Governance

To continue to be a company that is trusted by society, the DOWA Group has positioned the strengthening of corporate governance as a key management issue, and is working on it based on the "DOWA Group's Values and Code of Conduct".

Priority Measure - CSR Procurement
Towards Responsible Mineral Procurement

　In recent years it has been pointed out that ore mined in con flict areas around the world has been used to fund armed groups and to prolong such things as ci vil wars, causing great human right violations for workers and local residents. In the U.S. financial regulatory reform bill enacted in 2010 and which aims to cut off the source of funding for arme d groups, companies that are listed on the US stock market are obliged to annually disclose information on the usage of four kinds of minerals, namely gold, tantalum, tin and tungsten, that originate in the conflict area of the Democratic Republic of Congo (DRC) and its neighboring countries. Moreover, the European Parliament adopted conflict mineral regulations in 2017, and efforts to encourage companies to deal with conflict minerals as a social issue are spreading around the world.
　 As our social responsibility as a company that handles metallic materials, the DOWA Group is working toward responsible mineral procurement that takes human rights, the environment and ethics into consideration.

Strengthening our response towards responsible mineral procurement

　With automobiles, electronic devices and electrical appliance s, there are a huge number of products that use metals. These are distributed around the worl d and they support our lives. Regardless of how information is disclosed, we believe that the procurement of ore, the raw material for these products, should not prolong conflicts and not promote human rights violations. Because we do not use minerals as raw materials that may fund organizations involved in things like risky and illegal human rights abuses in conflict and high-risk areas, for the purpose of clarifying more specific management methods, in March 2019 we re vised the "DOWA Group Responsible Mineral Procurement Policy", our conflict minerals m anagement policy that was established in 2012.
　 Based on this policy, we conduct due diligence (risk assessment) for all suppliers of raw materials containing gold, tin and silver (excluding tin contained in recyclable raw materials), and respond appropriately to the identified risks. As a result of the risk assessment, if the manager in charge of conflict minerals determines that the risk is high, it is stipulated that the purchase o f the raw ma terials b e s topped. Due di ligence i s implemented in accordance with the "OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas".
　 In addition, in accordance with the policy revision, a dedica ted inquiry point of contact has been established on our website wi th regards to responsible mineral procurement. By responding in a timely and appropriate manner to concerns and opinions about conflict minerals from domestic and foreign stakeholders through this po int of contact, we can quickly deal with supply chain risks.

Responsible Mineral Procurement Policy

Audit by an independent third party

　The DOWA Group has multiple smelters in Japan and produces many types of metals, including gold, silver and tin. So that all customers can use these metals with peace of mind, we are regularly audited by a third-party organization with regards to our responsible mineral management system and its implementation status.
　Two of our companies, Kosaka Smelting & Refining and Eco-System Recycling, have been certified for the Conflict-Free Smelter Program in accordance with the Responsible Minerals Assurance Process established by the Responsible Minerals Initiative (RMI). In the program, an independent third party evaluates the smelter / refiner's procurement activities and determines whether all ores handled are from conflict-free mines and pits, or whether it is recycled material. In the actual audit, such things as our procurement policy and code of conduct, the procurement material analysis process, the method of determining suppliers, and the appropriateness of the definition of recycled materials, are verified through on-site audits and the checking of documents. In addition, as a part of promoting responsible mineral procurement, at these offices we regularly conduct employee training about conflict minerals and human rights.
　In 2019, to further promote responsible mineral procurement, we have newly obtained third-party certification for silver that is compliant with the Responsible Silver Guidance (RSG) set by the London Bullion Market Association (LBMA). We are actively responding to stakeholders' requests for transparency in the supply chain by strengthening management systems and policies, formulating risk assessment procedures for suppliers, and publishing audit results.

　As a role that we should fulfill as a smelter located in the upstream of the supply chain, we strive for responsible mineral procurement by establishing a metal supply system that is not related to conflicts or human rights abuses.

Kosaka Smelting & Refinin

Kosaka Smelting & Refining

Eco-System Recycling

Eco-System Recycling

Responsible Silver Guidance（RSG）

VOICE

In March 2019, DOWA Metals & Mining established a new management system to prevent the procurement of raw materials from suppliers with a wide range of risks, such as conflict areas, human rights abuses, money laundering and bribery. Supplier due diligence (risk assessment) is a daunting task of sending and collecting questionnaires and notices to hundreds of suppliers. There is a time difference with suppliers overseas, and since communication with them tends to be via emails, it of course takes time to collect. At first they did not understand, but by persistently explaining the importance of responsible mineral procurement and our efforts in this regard, we were able to be certified with the cooperation of our suppliers. I would like to express our gratitude to our suppliers and all those concerned.

NAGASAWA Hiroyuki NAGASAWA Hiroyuki, Precious Metal & Copper Business Unit, DOWA METALS & MINING
Governance

Progress of Activities

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