Sustainability / Governance Corporate Compliance
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 that 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 representative of the Daicel workers union, 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. Discussions were held with all organizations (100% achievement rate) in FY2023/3, but were held remotely due to COVID-19.
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 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 (including violations of competition laws and prevention of corrupt practices, such as payments to public employees), as well as the contents of reports received through the whistleblower system established at each Group company and the responses to such reports. 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.
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. We seek to ensure thorough legal compliance under the system by having 13 corporate departments, including the Legal Group, take responsibility as the designated legal compliance divisions, and provide them with information on revisions to laws, regulations, and guidelines as well as educational materials. 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.
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|Committees||Regulations||Frequency of Meetings||Members||Purpose|
|Risk Management Committee||Risk Management Regulations||Once per year||
Senior Managing Executive Officer
|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||
President. and CEO
|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||
Senior Managing Executive Officer
|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||
Senior Managing Executive Officer
|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, which includes the statement “We practice fair business and competition. We do not participate in unfair or anti-competitive business practices, including collusion, cartels, and bid rigging,” we provide concrete rules that also include “Compliance with contract terms and customer requirements,” “Responsible Procurement,” and “Proper relationships with politics.” 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 FY2023/3, there were no reports of anticompetitive behavior, serious violations of laws or regulations governing corruption, bribery or other illegal activities, or fines or monetary penalties.
Compliance with Antitrust Laws
In its business activities, the Daicel Group seeks to maintain free and fair competition through compliance with 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 compliance manual for the Antimonopoly Act, the “DOs & DONʼTs” practical guide on U.S. antimonopoly law, and a 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*1. 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, 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 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*2.
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*3.
Furthermore, the internal whistleblowing system also covers corruption and bribery, and suspicious cases are investigated and properly addressed under the system.
- *1As of June 2023, we are currently formulating the Daicel Group Basic Policy on Corruption Prevention.
- *2No serious risks concerning corruption or bribery were discovered at any organization in FY2023/3.
- *3No prohibited expenditures were made in FY2023/3.
In the Ethical Standards of Daicel Group it states, “We commit to the safeguarding of our company’s and third parties’ confidential information, including personal data, by maintaining an effective information security system. We adhere to privacy and information security laws and regulatory requirements when personal information is collected, stored, processed, transmitted, and shared.” Accordingly, we practice proper and appropriate information management by formulating the Information Management Regulations as a basic guide for handling information.
In addition to defining the responsibilities of officers and employees in managing information, the regulations define the roles played by the heads of SBUs, corporate departments, plants, and sites with regard to constructing and managing the information management system of their respective areas of responsibility as the person responsible for information management.
We have formulated the Confidential Information Management Regulations to maintain the confidentiality of and appropriately manage such information, while preventing leaks. The regulations lay out the basics of handling confidential information associated with Daicel’s business activities, including technical, sales, management and personal information, and they are being implemented at each organization under the leadership of the person responsible for information management.
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 FY2022/3, we set the Group-wide priority objectives for FY2023/3 as follows.
FY2023/3 Priority Objectives of the Daicel Group’s Corporate Compliance Activities
(1)Detect workplace problems at an early stage to “nip them in the bud”
To get the word out quickly, it is important for team members to be mindful of the “bad news first” axiom, but the “supervisor’s approach,” which involves talking to team members and directly observing how they work, is also important. The Group encourages all personnel to take deliberate, concrete actions.
(2)Creation of workplaces where all members can “Visualize, Voice, Listen and Respond”
Much importance has been attached to “psychological safety” in recent years around the world. Creating environments where everyone in the organization can feel free to express their thoughts and feelings to anyone prevents misconduct and fraud while also improving productivity. This year the Group once again worked to establish and practice “psychological safety” as a keyword translated to meet Daicel’s unique characteristics.
Issues identified during FY2022/3 are largely due to “being slow to respond” and “inadequately communicating potential problems.” The fundamental principle of preventing these kinds of compliance violations has been given continued attention since FY2021/3 as the two above-mentioned objectives.
The goal of (2) above is to achieve workplaces wherein all members:
- 1Understand and communicate job details, progress, and issues among one another (visualize)
- 2Express their views openly (voice)
- 3Listen to others’ views (listen and respond)
The Corporate Compliance Program Division has once again explained the purport and background of this concept to all organizations.
In turn, these organizations have each created action plans. The Corporate Compliance Program Division has kept track of each organization’s plan of progress and held discussions about matters such as issues unique to each organization and company, and has provided support in conducting CAPD for their activities.
Summary of Activities in FY2023/3
In the three years since the start of FY2021/3, the Group has continually pursued these two objectives and has routinely conducted activities pursuant to the Daicel Group’s Corporate Compliance Activities. We believe these concepts are essential for creating a healthy organizational culture and that we have a long way to go until they become fully entrenched. In FY2024/3, we will continue to pursue these objectives as we conduct Corporate Compliance Activities.
Priority Objectives for FY2024/3
To achieve our mission of “preventing any and all compliance violations,” we are asking every organization to keep “necessity” and “adequacy” in mind as they establish and work toward goals for corporate compliance activities that are directly tied to the Group’s mission and business. In light of the importance of psychological safety in these endeavors, we have set the same goals as usual.
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”
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 FY2023/3, 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 Conduct Policy and discussing the causes of their occurrence, countermeasures, and similar experiences to recognize and share diverse opinions while 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 neglect of safety rules
Case objective: Understand what kinds of problems that neglecting safety rules can lead to
(3) Case involving working long hours
Case objective: Figure out the proper working hours on their own to personally achieve a good work-life balance
(4) Case involving disingenuous actions (harassment)
Case objective: Think about how unconscious bias contributes to the causes and environmental factors behind an incident occurring when “visualize, voice, listen and respond” are not practiced
E-learning courses for subjects that include those indicated below are provided to all Daicel Group employees every year, including contract employees and temporary workers. In FY2023/3, this course was held at 100% of all Daicel Group companies and 9,338 personnel (73.4% of all personnel) took part in the courses.
(2) Priority Objectives of the Daicel Group’s Corporate Compliance Activities in FY2023/3.
(3) The Daicel Group Conduct Policy
(4) The Compliance Help Line System (Whistleblower System)
*There are currently 12,716 personnel in the Daicel Group, including contract employees and temporary workers (as of March 2023)
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 446 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 FY2022/3, 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 in Japan and overseas. We have also created the Handbook for Practicing the Daicel Code of Conduct as a supplementary guide to better understanding the Code of Conduct, and revise the handbook as needed.
Group Training Programs in FY2023/3
|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)
(former "newly appointed mid-level staffs")
(former "newly appointed senior staffs")
|Newly appointed managers||76|
|Engineering Compliance Training||Employees enrolled in our engineer development program||General course on engineering compliance (lectures and group discussions)||46|
*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 study. This training is aimed at enabling employees to make internal reports without hesitation when the need arises. A total of 84 people participated from Group companies in FY2023/3.
Other Training Programs in FY2023/3
|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||Organizational management to prevent harassment Effective communication in workplaces|
Respect for Intellectual Property Rights
Basic Approach to Intellectual Property
Based on Section １－viii (“Protection of Intellectual Property”) in the Daicel Group Ethical Standards), the Daicel Group respects the intellectual property rights held by third parties, and also recognizes that the intellectual property rights held by the Company (patent rights, utility model rights, trademark rights, design rights, etc.) are important assets, and strives to maintain and protect them.
Internal System Related to Intellectual Property
Under the slogan of “Proactive IP,” the Intellectual Property Center is engaged in activities for strengthening Daicel Group’s businesses by effectively using intellectual property through collaboration among the Business and Planning Divisions, the Research & Development Division, and the Intellectual Property Center.
Internal System for Intellectual Property
Daicel Group companies have approximately 35 intellectual property activity teams for each area of concern. Focusing on different themes, the teams are involved in the certification of inventions, decision-making on whether to file a patent application for an invention or keep it as confidential know-how, patenting, judgments on the necessity of patent maintenance, patent exploitation, examination and avoidance of a possible infringement of other companies’ patents, and the response to patent litigation.
Initiatives on Intellectual Property Management
Applying Patent Analysis to Operational Systems
Under the process of developing new businesses or products, Daicel conducts an analysis and confirmation of patents using our proprietary system, the Patent Analysis and Confirmation System (PACS). Through this process, we confirm that our products do not infringe on any third party intellectual property rights and ensure efficient and reliable promotion of the new technological developments that drive the success of the Company.
Educational System for In-house Engineers
Collaborating with the Intellectual Property Center and Human Resources Division, we seek to enhance engineers’ literacy about intellectual property through the human resource development programs.
Specific Examples of Activities Related to Intellectual Property
As a Partner of WIPO Green
As a partner of WIPO Green (run by the World Intellectual Property Organization), the Daicel Group develops environment-related products and technologies and contributes to building a sustainable society, as mentioned in the Sustainable Development Goals (SDGs).
Compliance Help Line System (Whistleblower System)
In line with the objectives of the Whistleblower Protection System, 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 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 in Japan and abroad 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 and follows up on reports and requests for consultation, which includes confirming facts about and investigating reports received through the Compliance Help Line, as well as resolving confirmed problems and establishing measures to prevent their recurrence. 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.
In FY2023/3, there were no reports or requests for consultation that materially impacted the Company’s management.
- *1The Compliance Help Line was initially registered under the Japan Consumer Affairs Agency’s Whistleblower Compliance Management System (based on self-declaration of conformity) in July 2020. This registration was renewed in July 2021 but expired in July 2022 following a February 1, 2022, announcement by the Consumer Affairs Agency that it was suspending the system.
- *2For ②, companies are required to check with those making reports or seeking consultations to confirm that those individuals have not met with unfavorable treatment for such reporting or consultations, and to take all necessary measures according to the circumstances.
All employees in Daicel Group and all stakeholders, including those overseas (e.g., customers, suppliers, partner company employees, retirees, and community residents)
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)
(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)
|Dissatisfaction for the Company||16||22||4||16|
*The total number of cases indicates those reported to the Corporate Compliance Program Division from individuals across the Group.