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COMPARISON TOOL

Canon 12/100

(NYSE:CAJ) 18 of 20 (2016)

Canon Inc. (Canon) demonstrates limited disclosure of policies and programs aimed at mitigating forced labor risks in its supply chain. The company discloses very limited information on its work with suppliers, underperforming across all themes compared to its peers and ranking eighteenth on the benchmark overall. Canon discloses some information on its commitment to the issue and its supply chain traceability initiatives. To improve its transparency and performance, Canon is encouraged to strengthen its overall approach to mitigating the risk of forced labor and disclose its approach publicly. Canon may consider adopting a Supplier Code of Conduct that formalizes its requirements of suppliers, including in relation to forced labor. In addition, it may also consider establishing responsible purchasing practices and designing a remedy program for suppliers who are found to be violating the company's standards.

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12 /100

2016 Ranking: 18 of 20

HOW DO THEY COMPARE?

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12

Canon was evaluated both in 2016, when it ranked 18th out of 20 companies, and in 2018, when it ranked 29th out of 40 companies. Despite a strengthened methodology which makes it harder to achieve the same score, since 2016, its score improved from 12/100 to 16/100, such that it is no longer is among the lowest scoring companies. This is because it has developed and disclosed policies and processes that include forced labor, such as CSR guidelines for its suppliers, internal accountability for CSR topics, internal CSR training, and a supplier selection process. It has also set up a "channel for feedback" where anyone can submit grievances regarding forced labor in the company's supply chain.

METHODOLOGY

16

The average score for the sector was 32/100, compared to 39/100 in 2016. The drop in score is due in part to the increase in number of small and mid cap companies from 20 to 40, as well as the changes made to the methodology that strengthened it. The 20 companies benchmarked in both 2016 and 2018 saw their average score improve from 39/100 to 40/100, which is notable given the changes to the methodology.

2018 BENCHMARK

2016

12

Canon was evaluated both in 2016, when it ranked 18th out of 20 companies, and in 2018, when it ranked 29th out of 40 companies. Despite a strengthened methodology which makes it harder to achieve the same score, since 2016, its score improved from 12/100 to 16/100, such that it is no longer is among the lowest scoring companies. This is because it has developed and disclosed policies and processes that include forced labor, such as CSR guidelines for its suppliers, internal accountability for CSR topics, internal CSR training, and a supplier selection process. It has also set up a "channel for feedback" where anyone can submit grievances regarding forced labor in the company's supply chain.

METHODOLOGY

2018

16

The average score for the sector was 32/100, compared to 39/100 in 2016. The drop in score is due in part to the increase in number of small and mid cap companies from 20 to 40, as well as the changes made to the methodology that strengthened it. The 20 companies benchmarked in both 2016 and 2018 saw their average score improve from 39/100 to 40/100, which is notable given the changes to the methodology.

2018BENCHMARK

THEME AND INDICATOR SCORE

The benchmark methodology has seven themes, selected to capture the key areas where companies need to take action to eradicate forced labor from their supply chains. There are a total of 22 indicators across the seven themes. For each theme, a company can score a total of 100 points.

Commitment and Governance

The company's top-level commitments on forced labor, supply chain standards, management processes, training programs and stakeholder engagement

OVERALL 14
INDICATORS
Awareness and Commitment
50
Supply Chain Standards
20
Management and Accountability
0
Training
0
Stakeholder Engagement
0

Traceability and Risk Assessment

The extent to which the company traces its supply chain and conducts forced labor risk assessments, and discloses information about these processes.

OVERALL 50
Traceability and Risk Assessment
50
Transparency
50

Purchasing Practices

The company's awareness and action on purchasing practices that can exacerbate forced labor risks, and its process for selecting suppliers, integrating standards into contracts and cascading them down the supply chain.

OVERALL 13
Purchasing Practices
0
Supplier Selection
0
Integration into Supplier Contracts
0
Cascading Standards through the Supply Chain
50

Recruitment

The company's approach to reducing exploitation by recruitment agencies and eliminating workers' payment of fees for their jobs.

OVERALL 0
Recruitment Approach
0
Recruitment Fees
0
Recruitment Audits
0

Worker Voice

The extent to which the company proactively communicates with workers through the supply chain, enables freedom of association and ensures access to effective and trusted grievance mechanisms.

OVERALL 5
INDICATORS
Communication of Policies
0
Worker Voice
0
Worker Empowerment
0
Grievance Mechanism
20

Monitoring

The company's process for auditing (including whether it includes non-scheduled visits, document review, worker interviews) and disclosure about the audit process and findings.

OVERALL 0
Auditing Process
0
Audit Disclosure
0

Remedy

The extent to which the company has corrective action plans for non-compliant factories, as well as processes for remedying workers who are victims of forced labor, and reports on remedies provided.

OVERALL 0
Corrective Action Plans
0
Remedy Programs
0

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