Sustainability / Governance Corporate Compliance
- Basic Approach
- Corporate Compliance Management System
- Legal Compliance System
- Initiatives Pursued by Daicel’s Committees
- Fair Business Practices
- Priority Objectives and Results of Corporate Compliance Activities
- Initiatives for the Daicel Group Compliance Awareness Month
- Education and Training Programs
- Compliance Help Line System (Whistleblower System)
Basic Approach
Corporate compliance constitutes one of the foundations upon which we pursue sustainable management. To further enhance our law-abiding corporate compliance activities, since the establishment of the Daicel Chemical Industries Code of Conduct on March 25, 1998, we have made revisions to our policies and rules concerning corporate compliance according to changes in internal policies and in society.
Consequently, we put two new policies into effect on April 1, 2023. The first was the Daicel Group Code of Conduct, a guide for all Daicel Group officers and employees to follow in order to remain constantly aware of the prime importance of becoming a self-sufficient member of society, and to govern one’s own behavior. The second was the Ethical Standards of Daicel Group, which address all officers and employees of the Daicel Group, as well as all business areas and company activities in our supply chain, and which encapsulates the norms we must observe as company.
The Daicel Group has sought to clarify the relationship between our Sustainable Management Policy formulated in 2020 and our other policies, and to ensure that all personnel, whether internal or external, are familiar with and practicing our management policy of prioritizing safety, quality, and compliance, the foundation of the Group’s manufacturing operations. The Daicel Group believes that instilling good corporate compliance into every employee is an important managerial objective. Therefore, as part of our corporate compliance activities, every one of our departments and groups (“organizations”) makes Corporate Compliance Action Plans every year based on the Daicel Group Code of Conduct and Ethical Standards of Daicel Group. The Corporate Compliance Action Plans are used to maintain a uniform set of values throughout the Group.
Corporate Compliance Management System
To promote corporate compliance activities, the Daicel Group established the Corporate Compliance Management Regulations and the Corporate Compliance Management System based on a check-act-plan-do (CAPD) cycle* to drive continuous improvement and development of activities.
The Daicel Group believes that corporate compliance should not be limited to the activities of certain individuals or organizations but should be practiced by all Group employees.
*Instead of a Plan, Do, Check, and Act (PDCA) cycle, the most widely known approach to continuous improvement, Daicel has adopted a CAPD improvement cycle to avoid the risk of overlooking crucial facts and realities that often lie hidden in the initial planning stage.
Corporate Compliance Management System Based on the CAPD Cycle
Corporate Compliance Program Promotion System
Daicel has established a Corporate Compliance Program Division under the responsibility of Senior Managing Executive Officers to promote its corporate compliance activities across the entire Group. The head of each organization appoints a corporate activity facilitator to spearhead corporate compliance activities.
Each organization submits a report on the status of corporate compliance and outstanding issues to the Corporate Compliance Program Division at the end of the fiscal year. The division compiles these reports and presents them at the Top Management Review on corporate compliance, which is attended by the top management, Standing Audit & Supervisory Board members, and the Workers’ Union representative, to discuss related issues and objectives for the next fiscal year.
The result of the discussion is reported to the Board of Directors, which deliberates on key objectives for the next fiscal year. Following approval by the Board of Directors, the Corporate Compliance Program Division presents the priority objectives to each organization, which then formulates activity plans in accordance with the priority objectives.
The Corporate Compliance Program Division serves as a venue for dialogue for the promotion of corporate compliance programs with each organization. We used an on-demand format and customized contents in FY2024/3 based on the needs of each organization. Listening sessions are held to ascertain the current state of each organization’s compliance activities, and if necessary, the relevant divisions participate and offer advice on corporate compliance programs. These exchanges of views and other activities also serve, incidentally, as a type of internal audit, and in addition to the state of corporate compliance activities, the Corporate Compliance Program Division also checks the status of compliance violations (such as relationships with competitors, entertainment, and donations to public officials). We then further review the contents of reports and consultations received through the whistleblower system established at each Group company and the responses to such reports and consultations.
In the event that the Corporate Compliance Program Division identifies any issues that may significantly impact corporate management, it will confirm the facts and promptly report to the corporate compliance officer and the Standing Audit & Supervisory Board members to discuss how to respond.
In addition, the Corporate Compliance Program Division submits a periodic report about four times a year to the Board of Directors. This report summarizes the reports received and consultations undertaken through each Group company’s Compliance Help Line, which were set up to identify and adjust for management risks at an early stage, as well as the status of response and results.
Compliance Help Line System (Whistleblower System)
Corporate Compliance Program Promotion System
Legal Compliance System
Daicel has established the Legal Compliance System, through which supervisory divisions in charge of ensuring compliance with different laws manage information on the latest legal developments. The Legal Compliance Division is made up of different departments, centering around the corporate departments such as the Legal Group. They provide relevant departments with legal information on any amendment of laws and guidelines as well as educational materials to ensure thorough legal compliance.
This information is also provided to domestic Group companies. When new laws and regulations are established, the Legal Group temporarily takes on the role of a legal compliance division to confirm their details and other important matters before designating the appropriate legal compliance division.
Initiatives Pursued by Daicel’s Committees
To address specific compliance issues, such as export management and the protection of personal information, Daicel has established individual committees in accordance with each set of relevant rules and regulations. These committees maintain and promote compliance.
Committees (Excerpt)
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| Committees | Regulations | Frequency of Meetings | Members | Purpose |
|---|---|---|---|---|
| Risk Management Committee | Risk Management Regulations | Once per year |
Chairman: Senior Managing Executive Officer Members: Representatives of relevant divisions |
To discuss and approve issues and countermeasures related to promoting risk management of the entire Group |
| Information Disclosure Committee | Regulations on Information Disclosure | As needed |
Chairman: President and CEO Vice Chairman: Senior Managing Executive Officer Members: Management and heads of other related divisions |
To discuss and determine the concrete details, schedule, and methods of information disclosure and to discuss information that may be required for future disclosure from the perspective of crisis management |
| Export Controls Committee | Regulations on Export Controls | Once per year |
Chairman: Senior Managing Executive Officer Members:
|
To establish and thoroughly integrate an internal management system across the Company to ensure there are no illegal export activities or provision of goods and technologies under security trade-related laws and regulations for maintaining international peace and security |
| Personal Information Protection Committee | Regulations on Personal Information Protection | As needed |
Chairman: Senior Managing Executive Officer Members:
|
To ensure the proper handling of personal information based on the relevant laws and regulations such as the Act on the Protection of Personal Information |
Fair Business Practices
In the Ethical Standards of Daicel Group, it states “We practice fair business and competition. We understand laws, regulations and rules of each country. We do not involve in unfair or anti-competitive business practices, including collusion, cartels, and bid rigging.” In April 2024, we created the Daicel Group Basic Policies on Anti-Corruption and Compliance with Competition Law［PDF：149KB］.All Daicel Group employees are required to act in line with the word and spirit of this policy and live up to the code in their day-to-day operations. In FY2024/3, there were no reports of anti-competitive behavior, violations of laws or regulations governing corruption, bribery and conflicts of interest, or other illegal activities, or fines or monetary penalties.
ESG DataRefer to page 8 "Corporate Compliance."
Compliance with Antitrust Laws
In its business activities, the Daicel Group has established the Daicel Group Basic Policies on Anti-Corruption and Compliance with Competition Law. To maintain free and fair competition, the Group also abides by the Antimonopoly Act (the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade), the Subcontract Act (the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors) as well as laws, regulations, and guidelines on anticompetitive behavior stipulated by each country. Daicel has formulated our own manuals such as "Compliance Manual for the Antimonopoly Act", "DOs & DON'Ts Practical Guide on U.S. antimonopoly law", and "Practical Guide on EU Antimonopoly Law." We concurrently work to raise employee awareness through rank-based group training and e-learning. For employees who are to be transferred outside of Japan, we educate them on local laws and regulations as well as other important issues.
We provide education that caters to the needs of each company by organizing e-learning for the prevention of anticompetitive behavior for officers and employees at domestic Group companies, as mentioned above, while also providing English language educational materials and confirmation tests for overseas Group companies.
Prevention of Bribery and Corruption
The Daicel Group has signed the United Nations Global Compact and is determined to prevent all forms of corruption, including bribery. Regardless of where we operate, domestically or overseas, we strictly forbid engagement in any actions that may be perceived as bribery, and we maintain highly transparent relationships with politicians, governments (public servants), business partners, and all other stakeholders. As stipulated in the Ethical Standards of Daicel Group and the Daicel Group Basic Policies on Anti-Corruption and Compliance with Competition Law, we prohibit the giving and accepting of gifts, meals, and entertainment to or from business partners, except when it is deemed to be within the scope of sound business practices and social norms, and any such conduct is approved each time by the relevant division head. In addition, each organization conducts a periodic inventory of risks involved in business activities, including corruption and bribery.*1
Daicel educates its employees on preventing corruption through rank-based group training and e-learning. For employees who are to be transferred outside of Japan, we provide training on the Prevention of Bribery of Foreign Public Officials under the Unfair Competition Prevention Act, and precautions regarding local laws and regulations, including the extraterritorial reach of the US Foreign Corrupt Practices Act. We provide education catered to the needs of each company by organizing the above-mentioned e-learning for the prevention of anti-competitive practices for domestic Group company officers and employees, while providing English-language educational materials and confirmation tests for overseas Group companies.
The Corporate Compliance Program Division conducts hearings at each organization about entertaining public employees, based on payment records, and reports the results to the Top Management Review for corporate compliance.*2
Furthermore, the internal whistleblowing system also covers corruption and bribery, and suspicious cases are investigated and properly addressed under the system.
- *1The Corporate Compliance Program Division conducted audits and found no serious risks concerning corruption or bribery at any organization in FY2024/3.
- *2The Corporate Compliance Program Division conducted audits and flagged no prohibited expenditures at any organization in FY2024/3.
Information Management
In the Ethical Standards of Daicel Group, we made the following statement, “We commit to the safeguarding of our company’s and third parties’ confidential information, including personal data, by maintaining an effective information security system. Accordingly, we practice proper and appropriate information management.”
Protection of Intellectual Property
Our group respects the intellectual property rights held by third parties based on the Ethical Standards of Daicel Group and “1-(viii) Protection of Intellectual Property." We recognize that the intellectual property rights (patents, utility models, trademarks, design rights, etc.) that belong to the companies are important assets, and work to maintain and preserve such assets.
Tax Policy
Regardless of where we conduct business, the Daicel Group strives not only to comply with applicable laws and regulations, social norms, and internal regulations but also to act with social decency to earn the trust of society. When dealing with tax matters, we will thoroughly investigate tax risks associated with international business transactions, including transfer pricing, to ensure that our tax payments are made in a legally compliant and appropriate manner.
Priority Objectives and Results of Corporate Compliance Activities
Based on issues identified in FY2023/3, we set the Group-wide priority objectives for FY2024/3 as follows.
FY2024/3 Priority Objectives of the Daicel Group’s Corporate Compliance Activities
- (1)Detect workplace problems at an early stage to “nip them in the bud” (Bad News Fast & First)
- (2)Creation of workplaces where all members can “Visualize, Voice, Listen and Respond”
Until last fiscal year for two consecutive years, we set priority objectives that can be shared by every organization. This year, we maintain this as our goal. At the same time, we encourage each organization to set and implement specific goals that are necessary and sufficient. These goals should be directly linked to the issues in each organization's operations and corporate ethics, as our current corporate compliance activities at each organization are centered around awareness raising such as education and training.
Summary of Activities in FY2024/3
FY2024/3 was an especially impactful year for our group due to increased attention from the society on compliance following scandals at other well-known companies. For us:
- In the previous fiscal year, we saw a major compliance issue with the “misconduct related to the certification by Underwriters Laboratories Limited Liability Company for the products of our group company.”
- It was the first year in which the new Daicel Group Code of Conduct and the Ethical Standards of Daicel Group were established following the major compliance issue.
Given these factors, interest in compliance within the Group has likely increased. During the Compliance Awareness Month, the corporate compliance officer gave the statement in a particularly stern tone, which was not seen in other years.
The number of internal reports and reports through the reporting line also increased, indicating that the Corporate Compliance Management System (CAPD cycle) functioned to some extent, as we faced the reality, by identifying issues, and correcting them one by one.
However, this does not mean that there were no compliance violations; several significant issues were reported, with some discovered through internal whistleblowing. Some internal reports revealed a lack of psychological safety in the workplace. The Corporate Compliance Management System's viability hinges on this factor. This has shown us the necessity for an organizational cultural reformation.
Priority Objectives for FY2025/3
Even though we have had the same priority objectives for three years in a row, we have yet seen visible changes in our organizational culture at work as a result. The idea behind this objective is to create psychological safety in the workplace. The leader's goal will be to turn the climate to be one where workers feel they have the right support and permission for “voice.” To achieve that, leaders must think about what they can do. In parallel, we have also defined our common initiatives to clarify specific actions.
FY2025/3 Priority Objectives of the Daicel Group’s Corporate Compliance Activities
- (1)Bad News Fast ＆ First (Early detection and action for workplace problems)
- (2)Let’s create a workplace where all members can “Visualize, Voice, Listen and Respond”
Initiatives for the Daicel Group Compliance Awareness Month
In addition to the initiatives planned by each workplace, we also designated every August and September as the Daicel Group Compliance Awareness Month. In FY2024/3, we carried out the following activities according to the Priority Objectives of the Daicel Group’s Corporate Compliance Activities.
1. Small Group Discussions
We created a number of cases requiring the attention of all Group employees, and the participants held discussions in small groups. We examined issues that require our attention by linking them to the Daicel Group Code of Conduct and discussing the causes of their occurrence, countermeasures, and similar experiences to recognize and share diverse opinions while at the same time also developing an understanding of how important it is for us to “Voice” and “Listen and Respond.”
(1) Case involving the acquisition of unauthorized authentication
Case objective: To gain an understanding of improper practices concerning third-party authorization related to the Group’s products
(2) Case involving long working hours
Case objective: To know the importance of the right working hours, which is essential for work-life balance.
(3) Case involving dishonest behavior (harassment)
Case objective: There is a coined term “customer harassment." This example helps to understand the importance of appropriate behavior towards service providers.
2. Educational Sessions
E-learning courses for subjects that include those indicated below are provided to all Daicel Group company employees every year, including contract employees and temporary workers. In FY2024/3, these courses was held at 100% of all Daicel Group companies and 11,354 personnel (89.2% of all personnel) took part in the courses.
(2) The Daicel Group Code of Conduct and the Ethical Standards of Daicel Group
(3) Case study on the misconduct related to the certification by Underwriters Laboratories Limited Liability Company for the products of our group company
(4) FY2024/3 corporate compliance group priority objectives
(5) The compliance help line system
*There are 12,732 personnel in the Daicel Group, including contract employees and temporary workers (as of end of March 2024)
3. Senryu* Contest
We encouraged our Daicel Group employees in Japan to submit their own senryu poem on compliance and then selected and awarded excellent examples for prizes from 447 submissions. The contest provided employees with an outstanding opportunity to reflect on compliance.
*Senryu is a humorous seventeen-syllable poem.
Education and Training Programs
Daicel systematically provides corporate compliance training tailored to each position and role for new graduate recruits, recently promoted employees, managers, directors, presidents of domestic Group companies, employees posted to companies outside Japan, and others. The Corporate Compliance Program Division also organizes seminars on compliance-related themes in response to requests from individual divisions and Group companies.
Along with the group training mentioned below, as in FY2023/3, compliance-related study materials that include news, group discussions, comics, and quizzes were made available every month on the Group’s intranet. This is being done to facilitate a greater utilization of these materials at workplaces. We have also created the Handbook for Practicing the Daicel Code of Conduct and the Ethical Standards of Daicel Group as a supplementary guide to better understanding of the Code of Conduct and Ethical Standards. This handbook is used in company internal training sessions.
Group Training Programs in FY2024/3
| Name | Target | Content | Number of Participants |
|---|---|---|---|
| Rank-based Training | New recruits | General course on corporate compliance (lectures and group discussions on topics including prevention of corruption and anticompetitive measures, concept for harassment, harassment prevention and response measures, and obligation to report on recognized misconduct) |
88 |
| C1/C2/E3/E5 (former "newly appointed mid-level staffs") |
129 | ||
| C3/C4/E7/E9 (former "newly appointed senior staffs") |
204 | ||
| Newly appointed managers | 72 | ||
| Engineering Compliance Training | Employees enrolled in our engineer development program | General course on engineering compliance (lectures and group discussions) | 54 |
*Please see the “Overview of Training Programs in Place” for more information on the new human resources system for non-managers.
Training for Using the Help Line
This practical training session prepares personnel to use the Groups’ help lines by having them make simulated reports based on a fictional case document.
In FY2024/3, we introduced a new case document inspired by the “misconduct related to the certification by Underwriters Laboratories Limited Liability Company for the products of our group company" incident mentioned above. A total of 1,074 people from Group companies participated.
Other Training Programs in FY2024/3
| Name | Target | Content |
|---|---|---|
| Training for Expatriate Employees | Employees posted outside of Japan | Competition law, bribery, discrimination, harassment, and prevention of misconduct |
| Training for Directors | Daicel directors and presidents of Group companies in Japan | Quality management to prevent quality fraud |
Compliance Help Line System (Whistleblower System)
In accordance with the Whistleblower Protection Act, the Company has set up several help lines through which employees can report and receive consultations anonymously or otherwise about issues that include violations of the Ethical Standards of Daicel Group. Intended to help prevent wrongdoing and misconduct and to identify these problems early, these help lines can be accessed 24/7 in any language spoken in the areas in which Daicel Group companies are located.
Compliance Help Line
The Company’s Compliance Help Line allows personnel to report and receive consultation when problems cannot be properly solved by going through one’s supervisor.
We also have an external help line for reporting and receiving consultation through external organizations. Accessible by all Group companies in Japan, these help lines make it easy for personnel to report and receive consultation.
We have established and publicly disclosed rules to protect those reporting or requesting consultation through the Compliance Help Line, including ① protecting personal information and privacy, ② prohibiting unfavorable treatment (prohibition of retaliation) for having reported or sought consultation, and ③ informing of survey results.
Other Help Lines
There is also a help line for officers and employees at Group companies to report to and seek consultation from Daicel, as well as a Web-based help lines service accessible to both internal and external personnel. These services provide a means to report and seek consultation for a greater number of stakeholders that include customers, suppliers, partner company employees, retirees, and community residents.
Responding to Reports and Requests for Consultation
When necessary, the Corporate Compliance Program Division responds to reports and requests for consultation, which includes confirming facts about and investigating reports received through the Compliance Help Line, as well as resolving and rectifying confirmed problems and establishing measures to prevent their recurrence. If it is more appropriate for another department to handle it, the division passes the case on to the relevant department and follows up on the case. Although reports and requests for consultation received from Group companies are generally handled by that company, each case is reported to the Corporate Compliance Program Division, which provides support when needed. Reports and requests for consultation received via email or the Web are also forwarded to Standing Audit & Supervisory Board Members.
Furthermore, the Corporate Compliance Program Division makes regular reports (about four times a year) at Board of Directors meetings that include the number of reports and requests for consultation received through all help lines, as well as an overview of each case and the status or results of their handling.
Along with regularly informing all organizations of these reporting and consultation services, the Group raises broad awareness of these services through rank-based training and e-learning courses offered during Daicel Group Compliance Awareness Month.
These measures have been in place from April 1, 2024 to ensure a greater confidence in use of our Help Line by officers and employees:
- Creating the Help Line Response Team – Representatives from different corporate departments working together to probe and respond to the reports.
- Creating a system to assign women to investigations and address reports on women-specific issues.
In FY2024/3, there were no reports or requests for consultation that materially impacted the Company’s management.
*For ②, companies are required to check with those making reports or seeking consultations to confirm that those individuals were not met with retaliation for such reporting or consultations, and to take all necessary measures according to the circumstances.
Target user:
All employees in Daicel Group and all stakeholders (e.g., customers, suppliers, partner company employees, retirees, and community residents)
Reporting content:
Matters that may be in violation of the Ethical Standards of Daicel Group
(Illegal acts, anticompetitive behavior, corruption, bribery, human rights violations, harassment, employment environment, environmental pollution, and other compliance violations)
Contact point:
(1) Contact points at Daicel Corporation
(2) Contact points at each Group company
(3) External contact points (consigned to specialized external institutions)
(4) Contact points on the corporate website
Process Flow of Compliance Help Line System (Whistleblower System)
Number of Reports and Consultations
(Reported cases including those which were not confirmed as fact)
(Cases)
| Content | FY2021/3 | FY2022/3 | FY2023/3 | FY2024/3 |
|---|---|---|---|---|
| Disruptive behaviors | 17 | 24 | 35 | 50 |
| Harassment, etc. | 13 | 19 | 20 | 30 |
| Dissatisfaction with the Company | 22 | 4 | 16 | 21 |
| Other | 2 | 3 | 5 | 1 |
| Total | 54 | 50 | 76 | 102 |
*The total number of cases indicates those reported to the Corporate Compliance Program Division from individuals across the Group.