Legal and Ethical Issues

Basic Concept

Compliance 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 adhering to the letter and spirit of the law. In keeping with the spirit of the Group Principles and our Corporate Activity Guidelines, we defined our stance for the acquisition of high social trust through compliance.
Positioning compliance at the core of our efforts, we are currently working toward sustainable growth under our Long-term Vision, Vision 2030. Guided by the current Medium-term Management Plan we have worked diligently to raise each and every employee’s awareness toward compliance by promoting various compliance programs in a bid to enhance the Group’s management ability to sustain business through the reduction of serious incidents.
Looking ahead, we will continue to carry out initiatives for improving compliance awareness in order to ensure SEKISUI CHEMICAL Group remains widely trusted by society.

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With the aim of preventing damage to the Group’s corporate value resulting from a serious incident, we identified zero incidents of major compliance issues as a KPI under the current Medium-term Management Plan. In an effort to achieve this KPI, we have continued to promote compliance activities. Thanks to these endeavors, the number of major compliance issues was zero. The results of major implementation measures are as follows.

Major Implementation Measures Management Indicators Current Medium-term Management Plan Final Fiscal Year (FY2022) Targets Fiscal 2022 Results
Strengthen overseas Group company control Deployment rate of important rules (regarding antitrust laws, anti-bribery, etc.) at overseas Group companies 100% 96%
Establishment of internal whistleblowing systems at overseas Group companies (number of regions) All overseas regions (10 regions) Completed in 9 regions

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 the Company’s 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.
In fiscal 2022, the Compliance Subcommittee met on two occasions, once in May 2022 and again in November 2022.

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Compliance Promotion System

Major Initiatives

Formulating the Compliance Policy

SEKISUI CHEMICAL Group published a compliance manual, which contained a code of conduct and detailed explanation for various compliance items, including corruption prevention, conflicts of interest, antitrust laws, accounting, and harassment, in 2003. Utilizing this manual, we have undertaken in-house training and related activities.
To ensure that the Group’s approach toward compliance is known to a wide range of stakeholders, we drew on the code of conduct portion of the manual to put in place a Compliance Policy and posted details on the Company’s website in fiscal 2022.

Fostering Compliance Awareness

SEKISUI CHEMICAL Group has created and distributed the aforementioned Compliance Manual, the Global Compliance manual, its overseas version, and a pocket version called the Compliance Card in order to instill awareness of compliance in each and every employee.
In fiscal 2022, the Compliance Card was updated and once again distributed to employees in Japan. At the same time, the Global Compliance Manual was revised and disseminated to all overseas regions.

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  • The Company’s
    Compliance Manual

  • The Company’s Global
    Compliance Manual
    (English edition)

  • The conveniently sized Compliance card

Compliance Training

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, through such measures as including information about compliance in training for new employees and rank-specific training. We also conduct e-learning sessions specific to compliance at least four times each year. In fiscal 2022, we once again enabled employees to participate in paper-based learning programs at the request of Group companies and business sites 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 Whistleblowing System

SEKISUI CHEMICAL Group established the Sekisui Compliance Assist Network (S.C.A.N.) intra-company whistleblowing system. Operated under the supervision of the executive officer in charge of the Legal Department, the system serves as a mechanism for the early detection and revision as well as the prevention of any reoccurrence of compliance problems, including harassment, within the Group.
Group employees can use S.C.A.N. either anonymously or by giving their name while reporting not only through the intra-company whistleblowing system, but also to an outside law firm.
Intra-company whistleblower regulations strictly protect the whistleblower by ensuring that information remains confidential and prohibits prejudicial treatment or retaliation while requiring employees to report compliance violations that come to their attention.
When a report is received, interviews are conducted not only with informants but also with the accused, as well as other related parties as necessary. Based on a range of evidence, we confirm the veracity of the facts and, as a reporting point of contact strive to resolve organizational issues from an impartial standpoint.
In fiscal 2022, we took the opportunity to further strengthen the Company’s intra-company whistleblower structure and systems while improving reliability by revising the intra-company whistleblower regulations, providing training to employees who work at the point of contact, and implementing other measures at the time Japan’s Whistleblower Protection Act was revised.
From a global perspective, we have completed steps to establish whistleblower systems in North America, China, the EU, ASEAN, South Korea, and Taiwan.
SEKISUI CHEMICAL Group has also put in place points of contact for consultations from and whistleblowing by business partners.
These consultation / notification points of contact are 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 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.

Status Regarding the Prevention of Bribery and Corruption

SEKISUI CHEMICAL Group has signed onto and endorsed the UN Global Compact, which identifies anti-corruption efforts under its voluntary action principles. In this spirit, we are promoting efforts to prevent acts of bribery and corruption through a variety of measures, including putting in place rules to prevent bribery and corruption as one of our internal regulations and introducing these rules to all Group companies.
In addition, we have formulated anti-bribery guidelines, which employees are expected to 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.
As a major preventative measure against corruption and bribery, we have established and are implementing rules to prevent violations by identifying high-risk cases. 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.
In departments, which are especially at risk for bribery and corruption, we encourage employees to learn about the relevant regulations and guidelines and to use the appropriate application forms through various measures, including training specific to countering graft and corruption.
Moreover, we are endeavoring to inform all relevant parties of our stance toward bribery prevention through our Compliance Policy, Compliance Manual, and Global Compliance Manual.
In fiscal 2022, we established a rule requiring prior approval from the Administration or Legal Departments when inviting foreign public and other officials. We also included questions on bribery in an e-learning program for employees of Group companies in Japan.

Status Regarding the Prevention of Transactions That Represent a Conflict of Interest

In the event of a conflict between the interests of the Company and an individual director or employee, the Group determines whether the subject transaction is in the best interests of the Company. Our policy is to that the Company does not incur damages as a result of a conflict of interest. In fiscal 2022, we formulated Guidelines for Outsourcing Transactions that May Raise Conflict of Interest Concerns and established rules to check in advance outsourcing transactions that may raise conflict of interest concerns in a bid to thoroughly implement the aforementioned policy.

Legal Compliance with Antitrust Laws as well as Statutory and Regulatory Requirements Relating to Advertising and Labeling

At SEKISUI CHEMICAL Group, we operate a business organization membership payment system, a pre-application 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.
In addition, SEKISUI CHEMICAL Group adheres strictly to laws and regulations including the Act against Unjustifiable Premiums and Misleading Presentations while engaging in good faith marketing related to advertising and product labeling when conducting its business activities.

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.
Taking into consideration the need to prevent further spread on COVID-19, accounting meetings were held online, with 261 people in Japan and overseas participating in fiscal 2022 in similar fashion to fiscal 2021. The accounting training sessions and workshop meetings were also conducted online, with a total of 122 people participating.

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 Organisation for Economic Co-operation and Development (OECD) guidelines. To eliminate unstable tax positions, we will use Advance Pricing Arrangements (APAs) in accordance with the size of the transaction and level of tax risk. We respond to investigations by tax authorities in a sincere and appropriate manner, and report the results of investigations to the Board of Directors for improvement as appropriate. Through these efforts we endeavor to maintain good relationships with tax authorities.

Compliance Reinforcement Month

Initiatives Taken in Japan

SEKISUI CHEMICAL Group has set aside October of each year as Compliance Reinforcement Month, to give all employees the opportunity to reaffirm the importance of compliance.
In fiscal 2022, we implemented training in Japan covering four broad themes: labor management, labeling and representation regulations, intra-company whistleblowing system, 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 labor management and video streaming for the remaining three themes.

Initiatives Taken During Compliance Reinforcement Month in Japan (Fiscal 2022)

  • 1.
    Thorough dissemination of the Top Message on Compliance (October 2022) 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 9 times in total), video streaming (3 themes)
  • 3.
    Introduced Compliance Reinforcement Month activities and provided class information on educational video programs in SWITCH Group web newsletters
  • 4.
    Conducted e-learning using the Company intranet (setting themes centered on antitrust law and bribery as well as labor management)
  • 5.
    Dissemination and reporting of compliance messages by global leaders to their own organizations
  • 6.
    Initiatives in North America, China, Southeast Asia, and Europe (October to January)

Overseas Initiatives

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.

Overseas Compliance Reinforcement Month Initiative Themes(Fiscal 2022)

  • North America:
    1) Implementation of an intra-company whistleblowing system poster contest and display of the winning poster
    2) Dissemination of the top message
    3) Distribution of training videos on the intra-company whistleblowing system to local companies under the control of SEKISUI CHEMICAL Group
    4) Implementation of training
    ・ IInitiatives implemented during October: Emergency response training, cyber security training prepared by SAC, other compliance training, including harassment prevention
    ・ IOther initiatives implemented: Bribery and corruption prevention training, Success Factors training
    5) IImplementation of a survey on the degree of awareness of the intra-company whistleblower system
    6) IImplementation of a survey to solicit feedback on activities during Compliance Reinforcement Month
    7) IIntroduction of Compliance Awareness Survey conducted by SEKISUI CHEMICAL CO., LTD. in November 2022
  • China:
    Training conducted in the following format:
    ・ Training format: Face-to-face and/or online training
    ・ Themes: Information leakage countermeasures, explanation of contract templates, individual themes
  • Southeast Asia:
    Training implemented on the themes of incident introduction in Japan, confidential information management, antitrust compliance program, and intra-company whistleblower system awareness
  • Europe:
    Raising awareness through articles in the SEBV Newsletter; distribution of Anti Skimming Cards with a message on Compliance Reinforcement Month; exchange of opinions on compliance.
Performance Data

Employees Using the e-learning System Over Time

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  • Employees Using the e-learning System Over Time

    • Note 1:
      Average values for four sessions conducted in each year. However, the third and fourth sessions were underway during fiscal 2022 when this chart was created, so the average value for sessions one and two is provided for that year.
    • Note 2:
      With the exception of overseas local hires, all SEKISUI CHEMICAL and SEKISUI CHEMICAL Group employees are required to take part in e-learnings programs.

List of Results Relating to Compliance Training

Fiscal 2022 List of Results Relating to Compliance Training

Training Training content Trainees Attendance
SEKISUI CHEMICAL Co., Ltd. Group companies
Domestic Overseas
Employee rank-based training New employee training   497
Newly appointed deputy (assistant) manager training   101
Newly appointed manager training     62
Newly appointed executive officer training   6
Affiliated company director training     44
Training for managers in Housing Company     63
Area-specific training Compliance training   806
Harassment prevention training   79
Export controls training   708
Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors training   3,742
Anti-monopoly law training     129
Personal information protection training   43
Information management training   531
Affiliated company institutional management training     18
Industrial waste management training     28
Startup business collaboration training     56
Global training Overseas transfer training   25
Compliance Reinforcement Month Domestic training   3,084
North America training     3,243
China training     564
Southeast Asia training     1,060

Number of Whistleblowing Cases and Consultations

Fiscal 2022 Number of Whistleblowing Cases and Consultations

Reports/consultations Number of cases
Power harassment 25
Working conditions 40
Sexual harassment 4
Workplace environmental concerns 18
Misuse of expenses 4
Sales method related 2
Misrepresentation of work performance 5
Collusive relationship with business partners 1
Others 33
Total number of complaints 132

Donations to Political Groups

SEKISUI CHEMICAL Group does not make illegal political contributions.
The amount of donations (made by SEKISUI CHEMICAL on a consolidated basis) to political groups that are intended to encourage the formulation of public policies that benefit society as a whole are as follows:

(Unit: thousands of yen)
Fiscal Year Amount
FY 2018 14,429
FY 2019 16,936
FY 2020 8,705
FY 2021 10,690
FY 2022 12,562