Strengthening Compliance Management on a Global Scale
Our Approach to Compliance ManagementCompliance Management Depends on the Good Intentions of Each Employee
In Sekisui Chemical Group, we established our “Compliance Declaration” in 2003 based on principles such as “contributing to society,” “being a trusted company,” and “adherence to the letter and spirit of the law.” In keeping with the spirit of the Group Principles and our Corporate Code of Ethics, we defined our stance for the acquisition of high social trust through compliance. In April 2019, under the leadership of President Koge ( Chairman of the Board and Representative Director as of March 1, 2020), the declaration was made that compliance is management itself for Sekisui Chemical Group, and that each and every employee will work together to act in accordance with compliance regulations. In order to ensure Sekisui Chemical Group will be widely trusted by society, we will continue to carry out initiatives for improving compliance awareness.
Prevent Compliance IssuesPrevent Major Compliance Issues
In the CSR Medium-term Plan (FY2017 to FY2019), we carried over “zero incidents of major compliance issues” as a target from the previous medium-term plan. From fiscal 2015 onward, Sekisui Chemical has continually achieved zero incidents of corruption and fraud. In fiscal 2019 as well, no cases of major compliance issues arose.
In the CSR Medium-term Plan, which we will start to implement in fiscal 2020, we will carry over “zero incidents of major compliance issues” as a target, and will continue strengthening our management of compliance and work to prevent compliance issues before they occur.
Growing Awareness Toward ComplianceCompliance Manuals and Compliance Cards Distributed
Sekisui Chemical Group has created and distributed the Compliance Manual, in which are described the matters with which each Group employee should comply, and also created a pocket version called the Compliance Card in order to instill awareness of compliance in each and every employee. The Compliance Manual includes information on topics such as the prohibitions on corruption and bribery, respect for human rights and the prohibition of discrimination, data management and protection, compliance with antitrust legislation, prohibitions on insider trading, conservation of the global environment and compliance with labor-related laws and regulations, and the internal whistleblowing system; it publicizes, and promotes thorough adherence with, these requirements among all employees.
In addition to the existing Compliance Manual, we have created a Global Compliance Manual covering regulations around the world. To allow all overseas Group employees to understand this manual, we have created English, Chinese, Thai, Indonesian, German, and Korean editions, and are proceeding with translating the manual into more local languages.
In fiscal 2019, we translated the Compliance Declaration released under President Koge (currently Chairman of the Board and Representative Director) into each language, and included this declaration in the Global Compliance Manuals published in the above listed languages.
The Company’s Compliance Manual
Compliance Manual (English)
The conveniently sized Compliance Card
Putting Compliance Management Efforts into PracticeBuilding an Effective Compliance Promotion System
We are building a realistic and effective compliance promotion system to ensure that compliance management is fully put into practice. In addition to having established a Compliance Subcommittee—which reports to the CSR Committee and is chaired by the executive officer who heads the Legal Department—as an organization to oversee Group compliance and to put forward policies and implementation measures, we are also establishing compliance promotion subcommittees at headquarters and at each divisional company, appointing persons responsible for putting compliance promotion into practice and implementing and deploying each measure. In the unlikely event that a major compliance issue arises, we will hold a Compliance Advisory Board meeting to address any problems that have actually occurred and examine measures to prevent a recurrence.
The Compliance Subcommittee met twice in fiscal 2019, in September 2019 and March 2020.
Compliance Promotion System (to FY2019)
Compliance Promotion System (from FY2020)
- The name of the CSR Committee was changed to the Sustainability Committee on April 1, 2020.
Compliance TrainingOngoing Provision of Opportunities to Learn About Compliance
As part of our efforts associated with putting compliance management into practice, we also focus on employee compliance education. We continuously provide opportunities for all Group employees to learn about the importance of compliance, such as by conducting e-learning sessions specific to compliance quarterly. These e-learning programs include information about compliance as training for new employees and as rank-specific training.
In order to provide the same learning opportunities for those employees without access to an environment from which they can individually view the intranet, such as those working on production plant floors, we have enabled employees to participate in paper-based learning programs at those Group companies and business sites that have requested such since fiscal 2019.
Upgrade of the Whistle-blowing ProgramWe Are Promoting Knowledge of S.C.A.N.'s Existence and Its Effective Operation
In 2002, Sekisui Chemical Group developed the Sekisui Compliance Assist Network (S.C.A.N.) intra-company whistle-blowing system, which is the mechanism that has been made available for use by all Sekisui Chemical Group employees and its business partners.
Operated under the supervision of the executive officer in charge of the legal department, S.C.A.N. enables direct reporting not only to the Legal Department but also to an outside law firm. In addition to serving as a reporting system, S.C.A.N. also plays a role as a point of contact for consultations, such as whether a specific act would be classed as a compliance violation.
In order to create an organizational culture that maintains full awareness of compliance, the system also prescribes the protection of the whistleblower and stipulates that information on the person who provided the information be kept secret from everyone other than at the point of contact and the prohibition of any prejudicial treatment toward that person. Regarding the report content, interviews are held to investigate the claims of both the informer and the informee, and eyewitnesses are interviewed as well when necessary. The truthfulness of these reports is confirmed in this way, ensuring intra-organizational issues are handled in a fair manner.
Responses to External Notifications
We reconfigured the intra-company whistle-blowing system in fiscal 2015 as part of the strengthening of governance functions at each Sekisui Chemical Group company and put in place points of contact for consultations from, and whistleblowing by, suppliers.
This consultation / notification point of contact is intended for use by the executive officers and employees of business partners in Japan who are continuously conducting business transactions with Sekisui Chemical Group companies. We occasionally accept requests for consultations and receive reports via a form made available on Group company websites and, while conducting consultations with business partners, proceed to confirm the facts and take corrective action concerning any alleged “law-violating conduct.” The content of consultations and reports is shared only among the minimum number of people necessary to resolve the “law-violating conduct" concerned, and all parties that need to be involved are obliged to keep that content confidential.
Prevention of Bribery and CorruptionGuidelines in Place, Educational Programs Conducted for High-risk Divisions
A signatory to and an approver of the UN Global Compact, which stipulates anti-corruption efforts under its voluntary action principles, Sekisui Chemical Group is promoting efforts to prevent acts of bribery and corruption in that spirit.
As part of our internal regulations, we have put in place rules to prevent bribery and corruption and are promoting their introduction at all Sekisui Chemical Group companies. We have also formulated anti-bribery guidelines, which summarize matters concerning bribery and corruption, that employees should observe when doing business in Japan, the United States and China. We have worked to make these regulations and guidelines known via the intranet, so that Group employees can check them at any time.
Main Measures Relating to Bribery and Corruption
In our efforts to prevent the breaking of any laws, we identify high risk cases regarding corruption and bribery, and put countermeasures in place. For example, when a government official is to be entertained or presented with a gift, a form must be submitted in advance to obtain approval from management. In the event that we appoint an agent or consultant in connection with business transactions, including those involving public officials from other countries, we stipulate that this can only be undertaken once we have confirmed that payments of remuneration to that agent or consultant could not be classed as bribes, that there are no reasonable grounds to suspect that payments could constitute bribes and only after a predetermined settlement procedure has been followed.
Identification of High-risk Divisions and Employee Training
In the sales and purchasing departments, which are especially at risk for bribery and corruption, we encourage them to learn about regulations and guidelines, such as by conducting training specific to countering graft and corruption, and to make full use of the relevant forms, among other measures.
In fiscal 2019, in connection with the “Compliance Reinforcement Month,” held yearly throughout the Sekisui Chemical Group in October, we conducted bribery prevention training at each Group company in China. We also called attention to bribery prevention during overseas assignment pretraining for those employees being assigned overseas for the first time.
We also disseminated our policies regarding bribery prevention in the Compliance Manual for domestic use and the Global Compliance Manual for overseas Group companies. We translated the Global Compliance Manual into English, Chinese, Thai, Indonesian, German, and Korean, and have enabled Group employees to freely check these from the intranet.
Cases of Violations in Fiscal 2019
No cases of major violations of the laws governing bribery and corruption occurred in fiscal 2019.
Tax Compliance InitiativesContribute to the Economic Development of Each Countries and Regions Through Proper Tax Payments
Sekisui Chemical Group considers paying taxes as one of the fundamental and important social responsibilities of a company. We comply with the tax laws of each of the countries and regions in which our business activities are conducted and properly pay taxes.
We do not use tax havens for tax avoidance purposes, and pay taxes appropriately in the countries and regions where we operate, thereby contributing to the economic development of those countries and regions.
In regard to transfer pricing risks, our transactions are conducted in accordance with arm's length prices based on local laws and OECD (Organisation for Economic Co-operation and Development) guidelines. We use APA (Advance Pricing Arrangement) as necessary to eliminate unstable tax positions.
Compliance Reinforcement MonthConducting Educational Programs in the Two Areas of Corporate Scandals and Labor Management
In fiscal 2014, the Sekisui Chemical Group decided that October of each year would be Compliance Reinforcement Month, to give all employees the opportunity to reflect on their compliance awareness and actions.
In fiscal 2019, we conducted educational programs in Japan covering the two areas of corporate scandals (fraudulent accounting, data breaches) and labor management. In order to provide learning opportunities for those of our employees who are unable to participate in these educational programs, we began offering new online educational programs.
Initiatives Taken During Compliance Reinforcement Month in Japan (Fiscal 2019)
1.Thorough dissemination of the Compliance Declaration (2019.4) to all Group employees
2.Implemented all types of compliance training / Held an open-style legal seminar in which employees participated of their own accord (8 locations, 11 times in total)
3.Introduced the Compliance Reinforcement Month activities in Group newsletters and provided class information on educational video programs in Group newsletters
4.Conducted e-learning / Implemented e-learning on the Company intranet (questions centered on misconduct and labor management)
5.Compliance Implementation Report by frontier leaders
6.Initiatives in North America, China, Southeast Asia, and Europe (September to March)
＜ Other compliance training ＞
1.Implemented education programs conducted by visiting staff at business sites where there had been several compliance issues
2.Provided educational opportunities at business sites in Japan where the opportunities were deemed insufficient
Upgrade of Legal Affairs StructureReinforcement of Global Legal Affairs Structure
Sekisui Chemical Group has been reinforcing its legal affairs structure by developing and deploying legal personnel, strengthening collaboration among legal departments and enhancing legal functions.
In fiscal 2017, employees responsible for legal affairs at Sekisui Europe B.V. and Sekisui Southeast Asia Co., Ltd., our regional headquarters in Europe and Thailand, respectively, took up new posts.
In fiscal 2017, we also began implementing those initiatives that have been undertaken during the Compliance Reinforcement Month in Japan in North America and China. Since fiscal 2018, we have deployed these initiatives horizontally on a global scale, for example by extending them to and implementing them each year in the Southeast Asian and European regions. The themes taken up during the Compliance Reinforcement Month are selected with a focus on those issues that are judged by each of the regional headquarters to be of high risk to the region.
Fiscal 2019 Compliance Reinforcement Month Initiative Themes by Region
North America: Initiatives selected upon advanced discussion with North American Group companies (contract fundamentals, intra-company whistle-blowing systems, etc.)
China: Bribery prevention, business secrets protection, workplace sexual harassment prevention, addressing site inspections by administrative bodies
ASEAN: Sekisui Chemical Group rules, fraud prevention (accounting)
Europe: Cyber security countermeasures
Marketing CommunicationsLegal Compliance with Regard to Advertising and Labeling
When conducting business activities, Sekisui Chemical Group strictly adheres to laws and regulations while engaging in good-faith marketing activities. In fiscal 2019, there were no cases of serious violations of laws, regulations or internal rules to report within the context of marketing communications related to advertising and product labeling.
Handling Measures for Antitrust Laws
At Sekisui Chemical Group, we have been operating a business organization membership payment system, a pre-application and follow-up report system for competitor contact, and a price revision committee system since 2007 as a compliance program for antitrust laws. The implementation status of these systems is audited yearly, and the program is revised as needed. We are currently working to expand these systems to Group companies, and the introduction of the program was completed at domestic business companies with high cartel risk in fiscal 2018.
There were no cases of major violations of antitrust laws in fiscal 2019.
Employees Using the e-learning System Over Time
Employees Using the e-learning System Over Time
- Average values for four sessions conducted in each year. However, the third and fourth
sessions were underway during fiscal year 2019 when this chart was created, so the
average value for sessions one and two is provided for that year.
- With the exception of overseas local hires, all Sekisui Chemical and Sekisui
Chemical Group employees are required to take part in e-learning programs.
List of Results Relating to Compliance Training
Fiscal 2019 List of Results Relating to Compliance Training
|Sekisui Chemical Attendance
|Regular training||Training for new employees||〇||〇||107|
|Training for new managers||〇||〇||268|
|Training for specific employee ranks||Training for beginner employees||〇||3|
|Newly appointed senior management training||〇||87|
|Training for newly appointed intermediate employees||〇||29|
|Newly appointed executive officer training||〇||6|
|Training for executives at affiliated companies||〇||77|
|Training for new auditors at affiliated companies||〇||6|
|Training for those responsible for management||〇||〇||81|
|Training for those responsible for compliance||〇||〇||31|
|Training for compliance promotion committee members||〇||〇||34|
|Training for compliance committee members||〇||9|
|Area-specific training||Compliance training||〇||〇||742|
|Harassment preventing training||〇||〇||867|
|Export controls training||〇||〇||86|
|Act against Delay in Payment of Subcontract Proceed, etc. to Subcontractors training||〇||〇||516|
|Training in Act against Unjustifiable Premiums and Misleading Representations||〇||39|
|Personal information protection training||〇||19|
|Information management training||〇||28|
|Contract fundamentals training||〇||〇||59|
|Information security training||〇||479|
|Global training||Training for prior to overseas transfers||〇||〇||21|
|Compliance Reinforcement Month||Domestic training||〇||〇||926|
|North America training||〇||795|
|Southeast Asia training||〇||263|
Number of Whistleblowing Cases and Consultations
Fiscal 2019 Number of Whistleblowing Cases and Consultations
|Reports/consultations||Number of cases|
|Workplace environmental concerns||2|
|Misuse of expenses||2|
|Sales methods related||1|
|Misrepresentation of work performance||3|
|Incidents with business partners||0|
|Total number of complaints||93|
Donations Relating to Governmental Policies
Donations (made by Sekisui Chemical non-consolidated) to industry bodies and political groups for fiscal 2015 to fiscal 2019 are as follows: