Mazda Canada Inc. Modern Slavery Report for the Financial Year: April 2023 - March 2024

This report is made and submitted by Mazda Canada Inc. (“MCI” or “Company”) pursuant to Section 11 of Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act¹ (the “Act”) which has been approved by the governing body of MCI.

MCI is the exclusive importer and distributor of Mazda motor vehicles, parts, and accessories in Canada, working with a network of 163 independently owned Mazda retailers across the country to promote, sell and service such products. MCI employs approximately 175 people operating through its head office in Richmond Hill, Ontario and its regional offices in Langley, British Columbia and Pointe-Claire, Québec. MCI is a privately held, wholly owned subsidiary of Mazda Motor Corporation who is based in Hiroshima, Japan. The directors of MCI have primary responsibility for the governance of MCI.

With at least $20 million in assets and $40 million in revenue in its last financial year, MCI is an entity that is required to file this report with Canada’s Federal Minister of Public Safety. Pursuant to the Act, Mazda has drafted this report to assist in preventing and reducing the risk of forced labour and/or child labour in its supply chain.

MCI is an organization incorporated under the laws of the Province of Ontario, which is governed by a Board of Directors and led by an Executive Team consisting of its President and Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer who oversee the day-to-day operations of the Company. Underneath the Board and Executive Team are additional levels of management consisting of its Directors, National Managers, and Managers who, in turn, supervise the Company’s remaining levels of employees.

MCI has a network of independently owned and authorized Mazda retailers across Canada who, in turn, have each entered into a Dealer Sales and Service Agreement outlining each party’s respective rights and obligations concerning, among other things, the wholesale purchase, retail sale, and after-sale repair and maintenance services of Mazda products to customers.

Overarching MCI’s organization and governance structure is the Company’s policies and procedures, culture and values, business processes, and risk management.

MCI operates primarily as an importer and distributor of Mazda motor vehicles, parts, and accessories with its operations including the workers it employs.

MCI appreciates that its supply chain constitutes the products and services (including labour) that contribute to the Company’s own products and services, including products and services sourced in Canada, the United States, Mexico, or overseas.

MCI has a supply chain made up of several contracted suppliers. Our supply chain relationships include suppliers from the following sectors: Automotive Parts, Consulting Services, Corporate Clothing, Fleet Management, Information Communications and Technology, Logistics and Transport, Marketing, Office Cleaning, Office Supplies, Print and Promotional Goods and Services, Property Services and Travel.

MCI recognizes the products and services that contribute to its own products and services extend beyond those received from direct suppliers. MCI’s supply chain also includes products and services used by indirect suppliers.

MCI understands the importance of protecting human rights and is committed to protecting the rights of all people, and is further supportive of Canada’s international commitment to contribute to the fight against forced labour and child labour with the objective of eradicating modern slavery.

To this end, MCI has established key policies and procedures to assist in protecting human rights, and to encourage conducting business in an open and ethical way. These policies and procedures include the following:

1. Employee Standards of Conduct Policy
2. Workplace Health and Safety Policies and Procedures
3. Workplace Violence and Harassment Policy
4. Termination of Employment Policy.

Currently, MCI is undertaking a review of the following to minimize the risks of modern slavery within Mazda:

• Existing suppliers in renewal and new suppliers in accordance with established procurement protocols, ensuring compliance with company policies; and
• Gap analysis of Mazda’s current policies and procedures against the Act.

As detailed in its inaugural Sustainability Report released in February 2024, MCI has adopted a strong, values-driven culture and is actively applying a sustainability framework in Canada designed to deliver meaningful results for our earth, people, and society. The high standards we bring to every aspect of MCI has guided us in several of our social and environmental activities and accomplishments to-date, and are confident that they will continue to do so in our ongoing commitment towards co-creating a more sustainable future including the upholding and enhancement of respect for human rights.

MCI is further aligned with the Human Rights Policy of its global parent company in Japan, Mazda Motor Corporation (“MC”), whereby Mazda globally is committed to upholding, promoting, and respecting human rights. Additionally, for the supply chain of Mazda branded products and those partners and suppliers who work with us, the Mazda Supplier CSR Guidelines was created in July 2010. This promotes Corporate Social Responsibility (“CSR”) activities among Mazda suppliers and requests total compliance with the laws and regulations of all countries and regions. The guidelines outline six areas such as respect for people including the prohibition of child labour and forced labour, and requests that all Mazda suppliers comply with the guidelines in these areas. MC intends to update its Mazda Supplier Sustainability Guidelines in May 2024.

Through contractual arrangements and procurement principles, MCI suppliers and contractors are required to comply with Mazda Policies. As part of MCI’s assessment for any new supplier working with us, we are working to implement a Business Partner Code of Conduct which details, among other things, how we expect the supplier to operate in relation to promoting labour and human rights within our supply chain, together with the CSR guidelines that suppliers that work with Mazda must follow. Non-compliance with these policies will not be tolerated.

We are further working to implement into MCI’s standard terms and conditions the requirement, upon request, that our suppliers promptly confirm in writing to MCI what checks it has done (and steps taken) in respect of its own supply chain to prevent bribery, corruption, and slavery. MCI’s standard terms and conditions will also require minimum standards in ethical business practices, safety, and environmental protection.

It is important to differentiate that MC runs the compliance and due diligence process with MCI’s indirect suppliers, on behalf of MCI, as MC oversees the governance and manufacturing of Mazda vehicles globally. Similarly, MCI runs due diligence with the suppliers it directly contracts with for services such as Consulting Services, Corporate Clothing, Fleet Management, Information Communications and Technology, Logistics and Transport, Marketing, Office Cleaning, Office Supplies, Print and Promotional Goods and Services, Property Services and Travel.

MCI has a number of mechanisms for stakeholders and other third parties to anonymously report suspected or actual illegal activities, breaches of human rights and/or Company policies. One such mechanism is the completion of an annual Global Employee Survey, which allows Mazda employees to anonymously share their concerns.

Grievances can also be received via direct correspondence, social media, or through bodies such as Canada’s federal and provincial Human Rights Commissions.

Where concerns are raised, MCI will conduct an investigation in accordance with regulatory requirements and will address any concerns as appropriate. MCI’s grievance procedures ensure all grievances are managed and investigated in a comprehensive, timely, and transparent manner.

Modern slavery has the potential to exist in supply chains in a number of ways, including by child labour, debt bondage, forced labour, and human trafficking.

MCI therefore recognizes the following risks in its operations and supply chains:

1. Risks that may cause modern slavery practices;
2. Risks that may contribute to modern slavery practices; and
3. Risks that may be directly or indirectly linked to modern slavery practices.

MCI considers the third risk the most likely (if any) that may link MCI to modern slavery practices. MCI is highly aware of the risk that its operations, products, or services may be connected to modern slavery through the activities of another entity MCI has a business relationship with, including those suppliers which maintain a majority of operations outside Canada. These business relationships include all entities in the Mazda supply chain, including entities MCI does not have a contractual relationship with. It also includes all business partners but does not include customers who purchase Mazda products and services.

MCI considers products and services arising from Office Cleaning and Print and Promotional Good sectors, as well as some subsets of the Vehicle Manufacturing and Parts Supply Sectors, to present the highest risk of modern slavery in Mazda’s supply chain. MCI appreciates its most severe modern slavery risks may not align with the volume or cost of the products and services procured.

MCI further recognizes that products and services procured from select countries may constitute some of the highest modern slavery risks. This is due to a variety of factors including some countries maintaining poor governance, weak rule of law, conflict, migration flows, and socio-economic factors such as poverty.

MCI is committed to continually improving how we work with business, government, suppliers, and society to meet moral and ethical obligations to combat modern slavery. MCI is strongly committed to working with its suppliers to eliminate modern slavery from its supply chain.

As a leading vehicle importer and distributor, MCI considers the risk of modern slavery within its direct business operations to be low, particularly when considering that all Mazda products that are imported into and distributed across Canada are overseen from Richmond Hill, Ontario under the supervision of MCI’s management and employees. Nevertheless, MCI recognizes that its supply chain and customers can be indirectly exposed to modern slavery risks.

MC works with MCI’s indirect stakeholders to identify and understand the impacts of its activities. Due diligence is implemented to prevent and mitigate adverse impacts arising from MC ’s activities. This due diligence refers to an ongoing management process to identify, prevent, mitigate, and account for how MC addresses actual and potential adverse human rights impacts in its operations and supply chains.

The due diligence process is initiated by a risk identification and assessment of suppliers prior to any contracting. These measures are discussed in more detail below. MCI being a small/medium Canadian enterprise understands that its ability to use its leverage to minimize modern slavery risks may be limited, particularly when engaging with large conglomerate organizations further down its supply chain.

MCI is not aware of any confirmed or suspected instances of forced labour or child labour within our supply chain. If any instances of child labour or forced labour are identified, MCI would address them on a case-by-case basis using the tools currently available to MCI, including without limitation the termination of contracts, reporting of illegal activity to law enforcement agencies, and excluding the offending Suppliers from future opportunities to conduct business with MCI if they cannot provide sufficient evidence that forced labour and child labour have been eliminated from their supply chain or business practices.

MC conducts an annual CSR Questionnaire to survey its suppliers. This aims to establish a system to understand and evaluate the status of CSR implementation across main suppliers. The CSR questionnaire survey was introduced in March 2014 and is performed every year. In March 2017, Mazda analysed the results of the surveys conducted over the past three years and reviewed and revised the questionnaire items and methods, taking into account the changes in society’s interest in CSR. In January 2018, MC signed the United Nations Global Compact. This is a voluntary effort by corporations and organizations to be good corporate citizens by exercising responsible, creative leadership and to build a global framework for sustainable growth. Mazda works to uphold the 10 principles of the United Nations Global Compact, including protecting human rights, eliminating all forms of forced labour, undertaking environmental initiatives, and working against corruption. Mazda is committed to contributing to the development of a sustainable society through these activities.

MCI will assess the effectiveness of its actions in comparison to industry standards and practices by conducting an annual executive review of MCI’s response to modern slavery.

MCI has set the following priorities for its 2024-2025 financial year:

1. Reviewing Policies and Procedures – to review and continue to ensure MCI’s current policies and procedures are consistent with the Act.
2. Contracts Compliance with Policies – to insert modern slavery compliance requirements in our standard contractual templates and make it clear in procurement process the requirement to be fully compliant with MCI policies which address legal and ethical compliance.
3. Supplier Code of Conduct - to create Canada specific Supplier Code of Conduct which suppliers agree to be fully compliant with MCI policies which address legal and ethical compliance.