Legal and Ethical Issues
Strengthening Compliance Management on a Global Scale
Basic ConceptCompliance Management
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 October 2020, under the leadership of the President of the SEKISUI CHEMICAL Group, the Group declared that it regards compliance as the foundation for growth, and that each and every director and employee must act with a high sense of ethics and responsibility and behave in ways that conform to community expectations.
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 Major Compliance Issues
In the Medium-term Plan (FY2020 to FY2022), we carried over “zero incidents of major compliance issues” as a target from the previous medium-term plan. From fiscal 2015 onward, SEKISUI CHEMICAL Group has continually achieved zero incidents of corruption and fraud. In fiscal 2020 as well, no cases of major compliance issues arose.
We will also carry over “zero incidents of major compliance issues” as a target in fiscal 2021, and will continue strengthening our compliance management and work to prevent compliance issues before they occur.
Growing Awareness Toward Compliance
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, Korean, and other editions, and are proceeding with translating the manual into more local languages.
In fiscal 2020, we translated the President’s Compliance Declaration into various languages and included this declaration in the Global Compliance Manuals published in the languages listed above.
- The Company’s
- The Company’s
- The Company’s Global Compliance
Manual (English edition)
- The Company’s Global Compliance
- The conveniently sized Compliance Card
Putting Compliance Management Efforts into Practice
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 Sustainability 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 committees 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 2020, in September 2020 and March 2021.
Compliance Promotion System (from FY2020)
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.
Continuing on from fiscal 2019, we once again enabled employees to participate in paper-based learning programs at the request of Group companies and business sites in fiscal 2020 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.
Promotion and Operation of the S.C.A.N. Intra-company Whistle-blowing System
SEKISUI CHEMICAL Group established the Sekisui Compliance Assist Network (S.C.A.N.) intra-company whistle-blowing system as a mechanism available to all employees and business partners of the Group.
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 serves as a point of contact for advice on questions such as whether a specific act might constitute a compliance violation, including discriminatory speech or behavior or harassment.
In order to create an organizational culture that is highly conscious of compliance, the whistleblower regulations require anyone who discovers a compliance violation on the part of an employee to report the matter, while also prescribing the protection of the whistleblower, stipulating that information on the person who provided the information be kept secret from everyone other than at the point of contact and prohibiting any prejudicial treatment toward that person. Reports consist of findings regarding the truth or otherwise of the matter at hand, Based on the information received, interviews are conducted not only with informants but also with the accused, as well as other related parties as necessary, to confirm the veracity of the information. The purpose is to ensure that organizational issues are resolved in an impartial manner.
Responses to External Notifications
SEKISUI CHEMICAL Group 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 Corruption
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. These rules have been introduced to all SEKISUI CHEMICAL Group companies. In addition, we have 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 employees can check them at any time.
Main Measures Relating to the Prevention of Bribery and Corruption
In addition to identifying high-risk cases, SEKISUI CHEMICAL Group has established and implements rules to prevent bribery and corruption. For example, when a government official is to be entertained or presented with a gift, a specified form must be submitted in advance and approval obtained from management. In the event that we appoint an agent or consultant in connection with business transactions, including those involving overseas public officials, 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.
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.
In fiscal 2020, bribery-related issues were included in an e-learning program for employees of domestic subsidiary companies. In addition, video training programs on bribery prevention and in-house rules were distributed to domestic subsidiary companies as a part of the “Compliance Reinforcement Month” initiative. As far as our overseas business is concerned, and in similar fashion to fiscal 2019, we continued to conduct educational programs on commercial bribery to subsidiary companies in China. We also called attention to bribery prevention during overseas assignment pretraining for those employees being assigned overseas for the first time. A total of 354 employees from 14 companies participated in the training at subsidiary companies in China.
Initiatives to Strengthen Accounting Compliance
SEKISUI CHEMICAL Group is working to improve accounting skills and financial expertise across the Group as a whole in order to reduce risks related to finance and accounting. We hold accounting meetings for personnel responsible for accounting at consolidated Group companies in Japan and overseas, to explain and share the rules of accounting and compliance activities. In addition, we conduct accounting workshop meetings as well as e-learning sessions to provide training on accounting skills and financial knowledge, to prevent any incidence of accounting treatment error or accounting fraud, and to enhance the awareness of divisions and employees involved in accounting operations regarding compliance.
In fiscal 2020, from the perspective of preventing the spread of COVID-19, the accounting meetings were held online, with 212 people in Japan and overseas participating. The accounting training sessions and workshop meetings were also conducted online, with a total of 121 people participating.
Cases of Violations in Fiscal 2020
No cases of major violations of the laws governing bribery and corruption occurred in fiscal 2020.
Tax Compliance Initiatives
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 accordance with the economic realities of the countries and regions where we operate. We will contribute to the economies of those countries and regions, aiming for mutual harmonious and stable development.
Transactions with tax risks are confirmed by external specialists as necessary to ensure their proper treatment and to reduce tax risks. 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 Advance Pricing Arrangements (APAs) in accordance with the size of the transaction and level of tax risk and endeavor to maintain good relationships with tax authorities in each country to eliminate unstable tax positions.
Compliance Reinforcement Month
SEKISUI CHEMICAL Group has set aside October of each year as Compliance Reinforcement Month, to give all employees the opportunity to reflect on their compliance awareness and actions.
In fiscal 2020, we implemented training in Japan covering four broad themes: power harassment, bribery, antitrust legislation, and personal data protection. This training was conducted remotely online to prevent the spread of COVID-19 and to provide learning opportunities for employees who could not attend. A web conference system was employed in the case of power harassment training and video streaming for the remaining three themes.
Initiatives Taken During Compliance Reinforcement Month in Japan (Fiscal 2020)
1.Thorough dissemination of the Compliance Declaration (October 2020) 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 (Web conference system relay training 6 times in total), video streaming (3 themes)
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 using the Company intranet (setting themes centered on bribery and harassment, including discrimination)
5.Dissemination and reporting of compliance messages by frontier leaders to their own organizations
6.Initiatives in North America, China, Southeast Asia, and Europe (September to March)
Reinforcement of Global Legal Affairs Structure
SEKISUI CHEMICAL Group is reinforcing its legal affairs structure by developing and deploying legal personnel, strengthening collaboration among legal departments, and enhancing legal functions.
We are also expanding and rolling out horizontally those initiatives undertaken during Compliance Reinforcement Month in Japan on a global scale across a wide range of countries and regions including North America, China, Southeast Asia, and Europe. The themes taken up during Compliance Reinforcement Month are selected with a focus on those issues that are judged by each regional headquarters to be of high risk to the region.
Fiscal 2020 Compliance Reinforcement Month Initiative Themes by Region
North America:Offsite educational programs using various tools including learning management systems (LMS) and intra-company whistle-blowing system explanatory briefings
Note:Themes selected from the following options:
Privacy and information security
Promoting safety and security in the workplace
Promoting global cyber-security foundations
Promoting harassment prevention and respect
China:Educational programs implemented on the following themes:
Antitrust legislation and Sekisui in-house rules
Southeast Asia:Educational programs implemented on such themes as the prevention of trade secret leakage and circulated prescribed forms for non-disclosure agreements and other agreements
Europe:Educational activities regarding the leakage of information
Legal 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 2020, 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 operate a business organization membership payment system, a pre-application and follow-up report system for competitor contact, and a price revision committee system as a compliance program for antitrust laws. The implementation status of these systems is audited yearly, and the program is revised as needed.
This program has also been introduced at domestic business companies with high cartel risk. There were no cases of major violations of antitrust laws in fiscal 2020.
Employees Using the e-learning System Over Time
Employees Using the e-learning System Over Time
List of Results Relating to Compliance Training
Fiscal 2020 List of Results Relating to Compliance Training
|Sekisui Chemical Co., Ltd.||Group companies|
|Training for specific employee ranks||Training for new employees||✔||✔||59|
|Newly appointed senior management training||✔||228|
|Newly appointed executive officer training||✔||3|
|Training for executives at affiliated companies||✔||259|
|Training for new auditors at affiliated companies||✔||19|
|Training for those responsible for management||✔||✔||65|
|Training for those responsible for compliance||✔||✔||67|
|Area-specific training||Compliance training||✔||✔||1645|
|Harassment preventing training*||✔||17|
|Export controls training||✔||✔||274|
|Act against Delay in Payment of Subcontract Proceed, etc. to Subcontractors training||✔||✔||472|
|Anti-monopoly law training||✔||80|
|Labor law training||✔||✔||31|
|Personal information protection training||✔||✔||500|
|Information management training||✔||✔||306|
|Non-disclosure agreement (NDA) training||✔||360|
|Information security training||✔||29|
|Global training||Training for prior to overseas transfers||✔||✔||10|
|Compliance Reinforcement Month||Domestic training||✔||✔||1863|
|North America training||✔||1605|
|Southeast Asia training||✔||149|
- Training on harassment includes some content related to discrimination.
Number of Whistleblowing Cases and Consultations
Fiscal 2020 Number of Whistleblowing Cases and Consultations
|Reports/consultations||Number of cases|
|Workplace environmental concerns||11|
|Misuse of expenses||3|
|Sales methods related||2|
|Misrepresentation of work performance||3|
|Collusive relationship with business partners||0|
|Total number of complaints||111|