Canon Medical Systems Corporation Procurement Policy

Basic Procurement Policy

Canon Medical Systems Corporation, its Group Companies and Subsidiaries including its supply chain (collectively, "CMSC") shall:

1. comply with all applicable laws and regulations and appropriate social practices governing our local and global businesses ; and

2. promote procurement activities in a way that reduces the environmental impacts while selecting suppliers (hereinafter including prospective suppliers) and procurement items.

3. provide suppliers with equal opportunities for transactions with CMSC.

4. promote procurement activities based on mutual understanding and trust.

Policy for Selecting Suppliers

While selecting suppliers and carrying out transactions continuously, priority shall be given to companies satisfying the following criteria:

• The company complies with laws, regulations and places emphasis on human rights and environmental consciousness.

• The company has sound business operations.

• The company has the ability to supply goods and/or services to CMSC with emphasis on appropriate quality, price and delivery lead-time.

• The company is capable of providing a stable supply of goods and/or services. Also the company must have the flexibility to respond quickly to supply/demand fluctuations.

• The company possesses technology that contributes positively to CMSC products.

• The company has a plan for providing a continuing supply of goods and/or services in times of unexpected circumstances that may affect the company and its supply chain.

Supplier Expectations

As a global company involving a wide range of products, CMSC must take stakeholder's requests into consideration in order to conduct its business, including its diverse procurement activities. We, therefore, expect our suppliers to conduct themselves in accordance with the following standards. We also request that our suppliers ask their own suppliers adhere to the follows.

• Compliance with Laws, Regulations and Social Customs

  Suppliers are required to ensure compliance with laws, regulations and appropriate social customs of the countries and/or regions in which they operate.

  • Ensuring compliance with the prevailing laws and regulations in the countries and/or regions in which they operate include anti-trust laws, commercial codes, subcontractor regulations, foreign exchange laws, personal privacy laws, copyright laws, etc.

  • Prohibition of bribery (any gift, payment, consideration, financial or non-financial advantage or benefit of any kind which constitutes a corrupt and illegal practice)

• Considerations to Human Rights, Labor, Health and Safety

  Suppliers are encouraged, in every sort of business activity, to respect basic human rights and to establish safe and clean working environment. Also, suppliers are encouraged to understand "Conflict Mineral Policy*" and work cooperatively with CMSC.

  • Prohibition of following practices
    1. Forced labor (including slave labor), 2. Trafficking of humans, 3. Inhumane treatment and infringement of human rights, 4. Child labor, 5. Discrimination

  • Consideration to following practices
    1. Payment of appropriate wages, 2. Regulation of working hours, 3. Respect to freedom of association

  • Establishment of safe and clean working environment

• Environmental Considerations

  Suppliers are encouraged to engage vigorously in activities to create environmentally friendly products. This is based upon the conviction that humankind has a fundamental responsibility to bequeath the irreplaceable global environment in a flourishing condition to succeeding generations.

  • Suppliers are encouraged to adopt ISO 14001-based environmental management systems and to promote third-party certification.

  • Suppliers are encouraged to utilize Green Procurement, which provides for the procurement of parts and materials that have the smallest negative impact on the environment. Suppliers are also encouraged to reduce or eliminate use of potentially hazardous substances.

  • Suppliers are encouraged to promote environmental protection activities, such as, the establishment of positive environmental policies, the improvement of systems that affect the environment and to provide training opportunities in the area.

• Maintaining Sound Business Operations

  Maintaining sound business operations over the long-term strengthens business relationships. Accordingly, suppliers are requested to disclose their management policies and the status of business operations (including financial statements).

• Securing Excellent Product Quality

  Suppliers are expected to establish a quality assurance system in accordance with the ISO 9000 family of standards. This system should help improve and maintain the quality of products delivered to CMSC.

  • Compliance with the safety standards of the countries and regions in which suppliers operate (e.g., CCC, JIS, Electrical Appliance and Material Safety Law, UL, CE Marking, etc.)

  • Furnishing goods and services on a continuous basis satisfying the specifications and quality required by CMSC

• Offering Goods and/or Services at Appropriate Prices

  Suppliers are requested to provide goods and/or services at competitive prices and strive to reduce prices on a continuous basis so CMSC can provide its own customers with products that satisfy them financially.

• Firm Delivery Commitment and Establishment

  Suppliers are requested to keep delivery commitments. They are also requested to establish a system for the stable and flexible supply of goods and/or services enabling them to successfully respond to rapid supply-demand fluctuations.

• Enhancement of Technological Capabilities

  Suppliers are requested to continually improve their technological capabilities. This will enable CMSC to provide excellent and safe products to its own customers.

• Continuous supply in times of unexpected circumstances

  Suppliers are requested to have a plan for providing a continuous supply of goods and/or services in times of unexpected circumstances that may affect CMSC and its own supply chain.

*"Conflict Mineral Policy" :
Since Section 1502 on conflict minerals of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) enacted in January 2013, companies listed in American Exchange are required to report on the use of conflict minerals mined in the Democratic Republic of the Congo and its adjoining countries. Although CMSC is not a listed company, (as a part of the supply chain of listed companies,) CMSC will voluntarily investigate and report to our customers.

 CMSC will continue working on prohibiting use of tin, coltan, wolframite, tantalum, tungsten, and gold, whose extraction or trade supports conflict in the Democratic Republic of Congo or adjoining countries, and/or contributes to inhumane treatment, including human trafficking, slavery, forced labor, child labor, torture and war crimes in the region.

(Jan. 2018)