Sustainability Management

Risk Management

Risk Management and Compliance Promotion System

Kuraray monitors risks regularly as the Group, led by the Risk Management and Compliance Committee, and identifies material risks that could have a significant impact on business management. Such risks are proposed to the President, who then specifies critical management risks, and priority countermeasures are carried out after deliberations by the Board of Directors. The Risk Management and Compliance Committee is working to ensure priority countermeasures against business management risk, as well as compliance with laws and regulations and corporate ethics, and realizes fair business practices.

Risk Management Policy

The Kuraray Group Risk Management Policy, which the President instructs to each organization, consists of a long-term, continuous “Basic Policy” embracing overall Group risk management and “Priority issues” which are focused on in a relevant fiscal year in light of social conditions and trends of the Company and other companies, thereby allowing flexible and prompt actions to be taken against changes in the risk environment while maintaining the basic approach to responding to risks. The Priority issues are those in which the President clearly indicates specific tasks for the organization to mitigate priority risks and instruct the organization on how to implement steadily.

Fiscal 2021 Kuraray Group Risk Management Policy
Basic Policy
  • Completely prevent illegal or inappropriate conduct that betrays the trust of society.
  • Completely prevent accidents and injuries (e.g. process accidents, occupational injuries, pollution, and product defects) that threaten the health and safety of employees, the local community, clients, partners, and so on.
  • Should an event occur that seriously impacts the business or society, be sure to secure trust from society, safety, and health, and implement measures to achieve business continuity or early recovery. (Prioritize trust from society, safety, and health, and then work to continue or restore the business.)
Priority Issues

Based on the above policies, and recent social conditions and trends at our company or other companies, the following are the priority issues for fiscal 2021.

  • Conduct a comprehensive review of the facilities of overseas plants in particular, not only for confirm their safety designs but also management aspects (operation management and facility management) and establish highly effective countermeasures for identified issues in order to mitigate the risk of safety-related accidents occurring.
  • Establish a globally unified confidential information management system and strengthen measures to protect data in a timely manner.
  • Ensure the thorough prevention of recurrence of any violation recurring through the use of globally established programs to comply with the Antimonopoly Law.
  • Ensure business continuity in response to the pandemic by thoroughly implementing measures to prevent infection and the spread of infection based on the emergency response to COVID-19.

Our Priority issues for fiscal 2020 are shown below, together with specific initiatives taken for these tasks.

Priority Issues for Fiscal 2020
  • Conducting careful re-examination by the entire Group, including affiliated companies in Japan and overseas, of the risks regarding violations of the Antimonopoly Act, and thoroughly enforcing measures to prevent recurrence.
  • Conducting an overall inspection of the facilities and soft aspects of overseas plants in particular, and striving to achieve improvement and refinement, in order to reduce the risk of the occurrence of process accidents.
  • Clarifying the classification and management method of information and data in accordance with their importance, and strengthening initiatives for maintenance.
  • Continuing to inspect, improve, and enhance the quality assurance system, to increase the trust in products.

Specific Measures
  • In order to establish an effective global system for complying with the Antimonopoly Act, we implemented a series of measures for each Group company worldwide, including the development of relevant regulations, education and training for officers and employees, risk assessment for each business, and auditing of the businesses that participate in bidding.
  • A promotion team was established to grasp the process safety and disaster prevention risks of chemical plants outside Japan and to take countermeasures. The promotion team proceeded with activities such as remote audits of overseas bases and held a progress confirmation meeting every three months to share information and discuss the horizontal development of process safety countermeasures. In Japan, we have worked to mitigate and manage risks associated with fires, explosions, and leakage of hazardous substances by taking measures against individual risks (equipment deterioration, earthquakes, etc.), examining risks associated with new capital expenditures, and promoting off-normal operation risk assessments.
  • We prepared a draft manual to serve as guidelines for managing confidential information. In the area of electronic information management, in order to raise the IT security level of the entire Group to a certain level, we established a global security policy and started to take necessary additional measures. As for the management of personal information, we have prepared a basic response to the Personal Information Protection Law and the European General Data Protection Regulation (GDPR) and are working to establish an operational system.
  • We have worked on improvement activities on tasks extracted through hearing from all inspectors in fiscal 2019 and completed them in fiscal 2020. In addition, in order to ensure the prevention of human errors, such as unauthorized rewriting of test data and errors in transcribing data, we have begun studying the introduction of an IT system that can automatically store data from analytical equipment and link analytical data with backbone systems.

Risk Management

The Kuraray Group’s risk management is characterized by a two-tier approach, such as “vertical” and “horizontal” risk managements. In the vertical risk management, the business units, divisions, offices, plants and affiliates identify risks facing their individual organizations, evaluate such risks by themselves and appropriately devise and implement actions and measures to be taken. In the horizontal risk management, the corporate staff departments evaluate and conduct the cross-sectional management of pure risks such as natural disasters and infringement of laws and regulations that cause only negative impacts when such risks take place. Among these risks, the Risk Management and Compliance Committee discusses, selects, and proposes to the President who then specifies critical management risks that need to be addressed by the entire Group, while assigning an officer in charge. The critical management risks are classified into the priority risks described above and the continuous management risks, and proper measures are taken for both of the risks after deliberations of the Board of Directors. In fiscal 2021, the following risks are identified as continuous management risks.

Risks Related to Raw Materials
  • - Discontinuation of the supply of raw materials

This risk is addressed by implementing countermeasures, including the possibility of supply shutdowns due to accidents or disasters at suppliers.

Risks Related to Product Liability
  • - Risks concerning product qualities

Product qualities include the appropriate management of chemical substances contained in products.

Risks Related to Accidents and Disasters
  • - Regulations on chemical substances
  • - Natural disasters

In the area of natural disaster risk, we are strengthening our risk assessment and countermeasures for extreme weather conditions and catastrophic disasters caused by climate change.

Risks Related to Legal Regulations and Compliance
  • - Compliance
  • - Bribery

With the tightening of regulations on bribery in countries around the world and the expansion of our Group's business bases, it is necessary to strengthen prevention measures. We are implementing measures in accordance with the Kuraray Group Global Anti-Bribery Policy established in 2015.

Risks Related to Intellectual Property
  • - Infringement of intellectual property

This risk is assessed and countermeasures are implemented for both cases in which the intellectual property rights of our group are infringed and cases in which our group infringes the intellectual property of other companies.

Compliance

Group Compliance

“Our Commitment” states the principles of our conduct which we should adhere to in our business activities that have diverse points of contact with society. The “Kuraray Group Code of Conduct” serves as guidelines to implement the commitment in performing day-to-day work. The President has declared that we will comply with laws and regulations and “Our Commitment” under all circumstances. To share these principles and commitments among all Kuraray Group employees throughout the world, the Compliance Handbook has been compiled containing the foregoing declaration by the President and explanations of the “Kuraray Group Code of Conduct” and distributed to all employees in Japan and overseas.
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In addition, we have appointed compliance officers at plants and overseas offices of Kuraray and Group companies, and have organized regional compliance committees. Since fiscal 2019, we have linked the timing of the activities of the regional compliance committee and Risk Management and Compliance Committee to raise awareness of compliance throughout the Group

Whistleblower System

The Kuraray Group has the Kuraray Group Employee Counseling Room in place for all employees of the Kuraray Group in Japan (including contract employees, temporary employees, and part-time employees) as a whistleblower system to prevent or detect and resolve compliance violations at an early stage.

In addition, we established the Global Compliance Hotline, which is available to all Group employees across the globe, in response to the rapid progress of globalization. The whistleblower system handles all issues on compliance reported from employees, such as business transaction in general (e.g., bribery/corruption), violation of company rules, and personnel affairs including respect for human rights and harassment.

As established by the Guideline for the Operation of the Kuraray Group Employee Counseling Room and the Guideline for the Operation of the Global Compliance Hotline, they can report anonymously and are protected from any disadvantageous treatment that may occur due to the report.

Thorough Compliance Measures

Efforts to Comply with the Antimonopoly Act

We seriously and sincerely accept the gravity of the violations of the Antimonopoly Act on two recent occasions, consider compliance with the Antimonopoly Act to be one of the highest-priority management risks, make every effort to prevent recurrence through a range of measures, and are developing and strengthening compliance programs throughout the Kuraray Group.

In fiscal 2020, in order to establish an effective global system for complying with the Antimonopoly Law, we carried out measures at each of the Kuraray Group companies around the world, such as the establishment of related internal rules, education and training for officers and employees, risk assessments for each business, and audit of businesses that participate in bidding. From fiscal 2021 onward, the entire Kuraray Group will continue to ensure that the Antimonopoly Act Compliance Program is enforced and thoroughly monitor compliance systems in high-risk businesses and fields.

Status of implementation of priority measures in fiscal 2020
  • Established and updated various internal rules regarding compliance with the Antimonopoly Act
  • Assessed the Antimonopoly Law risks in each business
  • Assessed the Antimonopoly Law risks through trading associations, etc.
  • Conducted annual audits of public bidding tenders
  • Provided training for officers
  • Hosted seminars for employees engaged in sales, etc.
  • Applied the in-house leniency program for participants of the seminars and obtained a declaration from them to comply with the Antimonopoly Law
  • Expanded the management rotation program for certain departments (in Japan only) in order to prevent the risk of fraud, including violation of the Antimonopoly Act

Anti-Bribery Initiatives

The development and strengthening of an anti-bribery program is an ongoing objective that must be addressed by the entire Kuraray Group, and we recognize it as a management risk. In the Kuraray Group Code of Conduct, action guidelines to prevent bribery and that cover the handling of donations and gifts are declared, and the basic policy against bribery is set forth in the Kuraray Group Global Anti-Bribery Policy. In accordance with these basic policies, each company of the Kuraray Group will focus on developing and operating an anti-bribery program, including development of relevant internal rules, education and training for officers and employees, and the evaluation and management of bribery risks conducted through third parties. We have signed the United Nations Global Compact and will continue to work to further strengthen anti-corruption activities.

Compliance Seminar

Since fiscal 2017, departmental compliance education and seminars have been provided once a year to all Group employees in Japan (including contract employees, temporary employees, and part-time employees), with the aim of improving communication and openness within the department. In fiscal 2020, the seminar was held on the Internet for managers of the Group companies in Japan due to the COVID-19 pandemic. Through dialogue with external lecturers, participants learned why it is necessary to foster awareness of compliance and aimed at a level where they can speak about the importance of compliance in their own words to their subordinates. In the group discussion held in the latter half of the seminar, participants engaged in lively discussions on topics of high interest such as new risks after COVID-19, information security, and harassment. Subsequently, the participants brought back the knowledge and awareness they had gained at the seminar to their departments, and through interactive departmental education they sought to boost their awareness of compliance and improve communication.