Sustainability / Governance Corporate Compliance
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.
Starting with our Sustainable Management Policy formulated in 2020, we have created the Daicel Group Doctrine to make it easier to understand the relationship between the policies established by the Daicel Group. We have established that compliance with safety, quality, and compliance, which are the foundations of the Group’s manufacturing, are our top priority management policies, and we are thoroughly communicating this internally and externally to ensure widespread awareness. 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 the status of compliance and issues of the Group as a whole 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, the Corporate Compliance Program Division presents the priority objectives to each organization, and activity plans are formulated in accordance with the priority objectives.
To promote corporate compliance activities, the Corporate Compliance Program Division directly speaks with the top management of each organization once a year to exchange various opinions and information on compliance. In addition to the priority themes decided each year, they engage in dialogue on various topics other than these themes. The Corporate Compliance Program Division also receives reports that are submitted to “Help-Line” (Whistleblowing system) established at each Group company. The status of responses and the results of these reports, including those reported from inside and outside the Company, are reported monthly to top management and quarterly to the Board of Directors.
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 in all divisions and Group companies, the Corporate Compliance Program Division also checks the status of compliance violations (such as relationships with competitors, entertainment, and donations to public officials).
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 reports every month to senior management and regularly (about four times a year) to the Board of Directors on a summary of the reports received and consultations undertaken through Compliance Help Line, which were set up to identify and adjust for management risks at an early stage, and through the whistleblower system established at each Group company, 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 participate 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.
We believe that risk assessments related to corruption are necessary for all organizations, but we prioritize them in consideration of regional characteristics. In FY2025/3, we first conducted a risk assessment at a meeting to exchange opinions with all Group companies outside of Japan, holding interviews about control procedures (including internal rules and expenditure approval mechanisms) to prevent corruption and bribery. As a result, there were no companies with major problems. 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 it must be approved by the relevant division head. In addition, in order to ensure the effectiveness of the aforementioned basic policy, in April 2025, Daicel established the "Rules for Management of Entertainment and Gifts," which clearly stipulates that detailed records of entertainment and gifts will be kept, and the results of such records will be audited regularly. We plan to apply these rules to Group companies in the future.
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.
Furthermore, the whistleblower system also covers corruption and violations of the competition laws, and suspicious cases are investigated and properly addressed under the system, including reports from outside the company.
In addition, no serious risks concerning corruption or bribery were found at any organization in FY2025/3 to the extent that it can be grasped through internal audits by internal audit departments, audits by auditing firms, and whistleblowing.
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 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.
Summary of Activities in FY2025/3
We established the following as priority objectives for Daicel Group compliance activities in FY2025/3:
- ①"Bad News First ＆ Fast" (Early detection and action for workplace problems)
- ②Let’s create a workplace where all members can "Visualize, Voice, Listen and Respond"
Looking back, we can analyze our progress as follows.
The results of our efforts are steadily being shown:
- Increased training participation rate across the entire Group
- Almost on track to achieve our target for participation in "training for using the Help Line," which is also a materiality KPI in this fiscal year
- Compliance score in external ESG rating has increased
Although there were no serious compliance violations with implications for management, we recognized the need to further strengthen governance across the Group and the departments in charge due to the insufficient development of internal controls for Group companies in the world. We also observed instances that appear to be caused by insufficient knowledge among individuals and inadequate internal controls. Of course, fostering a healthy organizational culture is crucial as a fundamental of business activity, so that we will continue to prioritize this. However, we believe that returning to the basics of "ensuring each individual possesses the correct knowledge" and "creating a system that prevents and prohibits violations" is also necessary to maintain and improve compliance. Therefore, we should reflect these considerations in our new "proactive engagement" activities for FY2026/3.
Priority Objectives for FY2026/3
In addition to the “Bad News First & Fast” and “Let’s create a workplace where all members can Visualize, Voice, Listen and Respond” initiatives that began in April 2023, we have established two new priority objectives. Considering the trends of compliance violations that have occurred within our Group, we believe that action is needed from the aspect of not only organizational culture but also knowledge and internal controls.
We have been proactively addressing all of these areas, but by considering them in relation to compliance at this time, we can identify areas where we can do even better.
FY2026/3 Priority Objectives of the Daicel Group’s Corporate Compliance Activities
(Organizational Culture)
- Bad News First & Fast (BNFF)
- Let’s create a workplace where all members can “Visualize, Voice, Listen and Respond”
(Knowledge)
- Acquire the "correct knowledge" necessary to judge right from wrong
(Internal Controls)
- Reconfirm systems and mechanisms that one cannot violate and that do not allow one to violate
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 FY2025/3, 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) Conflicts of interest
Case objective: To understand the key points by examining a case where problems may arise in the relationship between the company and individual employees
(3) False reporting of workers' compensation claims
Case objective: To understand the importance of accurately reporting incidents
(4) Harassment
Case objective: To understand the term “customer harassment” and the importance of appropriate interactions toward service providers (including avoiding sexual harassment)
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 FY2026/3, these courses were held at 100% of all Daicel Group companies and 13,123 personnel (98.3% of all personnel) took part in the courses.
(2) The Daicel Group Code of Conduct and the Ethical Standards of Daicel Group
(3) Daicel Group Basic Policies on Anti-Corruption and Compliance with Competition Law
(4) FY2025/3 corporate compliance group priority objectives
(5) The Compliance Help Line system
(6) Respect for human rights
(7) Quality compliance
*There are 13,353 applicable personnel in the Daicel Group, including contract employees and temporary workers
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 389 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, compliance-related study materials that include news, group discussions, comics, and quizzes were made available every month on the Group’s intranet, the same as FY2024/03, 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 FY2025/3
| 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) |
76 |
| C1/C2/E3/E5 (former "newly appointed mid-level staffs") | 142 | ||
| C3/C4/E7/E9 (former "newly appointed senior staffs") | 196 | ||
| Newly appointed managers | 58 | ||
| Engineering Compliance Training | Employees enrolled in our engineer development program | General course on engineering compliance (lectures and group discussions) |
69 |
*Please see the “Overview of Training Programs in Place” for more information on the new human resources system for non-managers.
Other Training Programs in FY2025/3
| 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 | Management perspective on power harassment issues |
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
In anticipation of situations where appropriate problem resolution cannot be achieved through the usual chain of command via managers in each workplace, we have established the Compliance Help Line as a channel through which all officers and employees of Daicel Group can report and consult with our division in charge of corporate compliance as a contact point. We have established not only an internal help line, but also an external help line managed and operated by external organizations within Daicel and Group companies in Japan.
In addition, within our Group companies, in addition to a system where officers and employees can directly report to and consult with us, we have established an independent whistleblowing help line within each company and use both in tandem to gather opinions from a wider range of officers and employees. As such, our Group maintains a structure where officers and employees can readily report and seek advice.
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.
*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.
Contact Point from Outside the Company
In addition, there is 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.
Furthermore, at the end of FY2025/3, to improve the accessibility of the external whistleblowing help line on our website, we have implemented changes such as:
- layout adjustments
- separation from other inquiry forms
- addition of links to compliance-related articles
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 were started on 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.
Over the past year, we consider that these two measures have played the following roles:
- Help Line Response Team
Sharing all reported content and holding regular monthly meetings for discussion contributed to a faster response in subsequent actions. - Support Team for Female
This initiative was started after we received feedback stating, "Since the support staff are all men, it is hard to report concerns such as sexual harassment through the help line." Several reported cases showed that by listening to victims, offering follow-up care, and responding with empathy, we were able to ease their psychological distress and provide reassurance.
In FY2025/3, there were no reports or requests for consultation that materially impacted the Company’s management.
Training for Using the Help Line
We conduct training for using Help Line reporting to promote its use. This practical training, designed independently by our Group, is grounded in the idea that making actual use of the Help Line will do more than anything to eliminate resistance to it.
Although our Group was early to establish a whistleblower system and has made the structure and safety of our system known to employees, survey results have revealed that many employees remain resistant to using it. We introduced the training to address this issue.
Participants in the training undergo a simulated experience identical to actual use of the Help Line, through the following actions:
- (1) Read case documents (email messages) describing a fictitious compliance incident
- (2) Write a report as a person involved a party to the incident
- (3) Report directly to a simulated Help Line
- (4) After reporting, read explanatory email messages sent from the simulated Help Line
The case documents are prepared on the basis of key compliance cases that actually occurred within our Group, with the goal of making these incidents known and personally familiar to employees.
We began the training on a trial basis in FY2022/3 and introduced it full-scale in FY2024/3. We set FY2025/3 as a year for intensive training. During the year, 4,914 domestic employees, including at Group companies, underwent the training, bringing total participants to 5,988, or 97% of our target. Many of the employees tackled the training earnestly regardless of department or position, and we received many comments calling the training a “masterpiece" with a strong sense of reality. The number of Help Line reporting cases has recently increased significantly, growing about 2.5-fold over the past three years. We believe that the expansion of our Help Line training into the Group supported this achievement.
Target users:
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 | FY2022/3 | FY2023/3 | FY2024/3 | FY2025/3 |
|---|---|---|---|---|
| Disruptive behaviors | 24 | 35 | 50 | 70 |
| Harassment, etc. | 19 | 20 | 30 | 42 |
| Dissatisfaction with the Company | 4 | 16 | 21 | 4 |
| Other | 3 | 5 | 1 | 10 |
| Total | 50 | 76 | 102 | 126 |
*The total number of cases indicates those reported to the Corporate Compliance Program Division from individuals across the Group.