Auditing and Responsible
Supply Chain Services

By integrating Japanese EHS guidelines with best international practices, EAI successfully develops programs that are compliant with local and global standards and customizable in accordance with client needs.

Environmental compliance audits

Most multi-national companies perform environmental audits on their operations for a number of reasons: To ensure that their environmental performance complies with applicable laws and regulations; to identify potential liabilities; to measure environmental performance with corporate goals and strategies; and/or in response to stakeholder requests for increased transparency.

Third-party environmental auditing, while not required by law, is a relatively new phenomenon in Japan. Most Japanese companies utilize internal audits which examine the organization's operations as compared to internal or industry standards. The validity of internal audit data is sometimes considered suspect due to the vested interests of the audit team.

Recently, Japanese companies are paying increased attention to third-party audits by teams of external environmental experts as a means of introducing heightened transparency in the disclosed results.

EAI audit scopes and methodologies typically include:

  • Identifying key environmental processes, discharges and emission sources
  • Reviewing copies of company permits, licenses and regulatory agreements
  • Reviewing company purchase orders and invoices
  • Facility inspections
  • Interviewing employees, managers, and executives
  • Examining corporate policies, internal reports and previously disclosed environmental data

Audit types

Screening audit: Utilizes simple checklists and an informal inspection to identify key areas of non-compliance within the subject facility and provide a quick ‘snapshot’ of overall compliance.

Regulatory compliance audit: Focuses on plant operations, discharges, emissions and waste disposal procedures and compares results against local and national standards and documentation.

Corporate audit: Typically measures both regulatory compliance and facility performance against corporate standards, policies, procedures and benchmarks.

Environmental Health & Safety auditing/management

The concept of environmental health and safety auditing is foreign to Japan. Most Japanese companies simply follow the standards established under the Ministry of Health, Labor and Welfare, most of which are administrative in nature. Japanese ‘audits’ are typically internal in nature and often lack any specific EHS expertise. Most Japanese companies prefer to use either ISO 14000 or OHSAS 18001 certifications (typically held in corporate headquarters) as proof of compliance. As such, EAI provides the majority of these audits for multi-national companies with Japan subsidiaries or operations.

EAI takes a holistic approach to EHS compliance using ISO, OSHAS, USDOL and other international standards in conjunction with applicable Japanese regulations. This approach provides clients with results leading to (a) legal compliance and (b) integration of best management practices. EHS audits generally take between one to two days to complete, depending on the size of the facility and the complexity of its operations. The audit scope includes reviewing health and safety- related documentation; interviewing selected management staff and employees; and, inspecting the workplace.

The audit covers the following ten general areas found in effective occupational health and safety (OHS) programs:

  • Leadership and administration
  • Workplace hazard identification, assessment and controls
  • Safe job practices and procedures
  • Employee education and training
  • OHS committee
  • EHS committee meetings and inspections
  • Accident/incident investigations
  • Lines of communication
  • Emergency/disaster preparedness
  • Fire and life systems safety

When the audit is complete, EAI prepares a report for the client outlining observations, compliance issues, best management issues and recommendations. EAI also works with clients to establish priorities and develop action plans in follow-on meetings.

Responsible Supply Chain

Ensuring responsible sourcing is an integral part of supplier performance management.  Most companies expect suppliers to adhere to international environmental and social responsibility principles. Responsible supplier policies are a tool for businesses to monitor and ensure that their operations comply with legal statutes, ethical standards and international best business practices.

Responsible suppliers are expected to maintain and enforce programs addressing:

  • Local labor regulations, including underage or coerced employees; minimum wage standards,
  • National and local employee health and safety laws;
  • National and local environmental laws, including hazardous chemical/waste management, discharge standards and facility permitting/licensing;
  • The use of conflict minerals in supply chain components;
  • Carbon footprint reduction and/or maximizing energy efficiency in manufacturing and office facilities;
  • Ensuring that ethical infractions, such as bribery and corruption, are eliminated from company operations.

Foreign and smaller manufacturers often lack sufficient knowledge to meet the standards expected of them. This can be due to language and/or cultural barriers; weak regulatory regimes and poor management practices. Many corporate policies are also ‘lost in translation’ on the manufacturing floor, resulting in improper practices and heightened risks to employees, the company and its reputation.

EAI assists its clients by identifying deficiencies or gaps in existing programs through a rigorous auditing process. Based on audit results, EAI can recommend process changes, monitoring measures or additional training, where warranted. EAI uses international EHS practices to provide an effective model for companies to fulfill their CSR responsibilities across their supply chains.