Evaluation by Outside Organization

Basic Issues in JSR Group's Corporate Activity Compliance

1. Philosophy

JSR Group has been endeavoring, by building up and maintaining good relationship with all our stakeholders, to become a trustworthy and indispensable corporate citizen.
We have been vigorously performing our Code of Conduct in order to materialize "Our Responsibility to our Stakeholders", an essential part of our Management Policies, as well as to ensure compliance with the relevant laws and regulations during the course of our business.

2. JSR Group Principles of Corporate Ethics

JSR Group is advancing corporate ethics activities in an integrated manner at all Group companies both at home and abroad. To achieve this, we have formulated the JSR Group Principles of Corporate Ethics as a concrete guideline for globally-shared corporate ethics that reflects our "Essential Elements." The principles serve as a Code of Conduct that all directors and employees (full-time, contract, part-time, and temporary employees as well as employees on short-term contracts) of JSR companies should comply with in order to develop our corporate activities while fulfilling the management policies spelled out in "Our Responsibility to our Stakeholders."

JSR Group shall never require directors and employees of Group companies to act in violation of this Codes of Conduct. Additionally, JSR Group shall not disadvantage any director or employee who refuses to execute an order to perform an act that is in violation of the Code of Conduct because of that refusal.

JSR Group Principles of Corporate Ethics

3. Advancement Structure

Corporate Ethics Committee of JSR is responsible for advancing the Group wide activities such as promotion of corporate ethics activities, monitoring and enhancing legal compliance, and promotion of respecting and safeguarding human rights.

Advancement Structure

4. Corporate Ethics Activities

JSR Group has been pursuing the following 3 major corporate ethics activities;

(1) Publication and Education of JSR Group Principles of Corporate Ethics

JSR Group formulated the JSR Group Principles of Corporate Ethics to serve as a globally-shared Code of Ethics. By preparing English, Simplified and Traditional Chinese, Korean and Thai versions in addition to the Japanese version, we are ensuring that directors and employees at all Group companies can become acquainted with the JSR Group Principles of Corporate Ethics in their native language or in a language in which they are proficient.

Moreover, each year we provide an e-learning program on the Principles of Corporate Ethics for all employees of JSR Group companies in Japan. We are incorporating the themes of confidential information management, prevention of abuse of power, and prevention of data falsification into the program. We also conduct corporate ethics training for each stratum, such as new recruits and newly promoted managers. Especially regarding harassment education, we conduct management training related to bullying and harassment reports and the handling of actual cases for high-ranking and managerial positions.

JSR Group Principles of Corporate Ethics

(2) Corporate Ethics Awareness Survey

JSR Group works to grasp and improve corporate ethics-related issues by conducting annual surveys on corporate ethics awareness that target the directors and employees of JSR Group companies in Japan and overseas. The results are reported at the Corporate Ethics Committee and then to an Officers Committee. They are subsequently fed back to employees by being posted in a summarized form on the company intranet together with a message from the assigned officer explaining issues and other matters gleaned from the results. Some overseas Group companies also strive to build awareness of corporate ethics and legal compliance among their employees, including their locally hired employees, using methods that are appropriate for the local culture.

(3) Hotline (Internal Reporting Channels)

  • Hotline for Employees

    The JSR Group has introduced a system of internal reporting channels called the "Corporate Ethics Hotline." The "internal hotline" is connected to the Corporate Ethics Committee in JSR or the relevant Group company. The "external hotline" is set up to connect to two contact points. One is a designated independent attorney and the other is an independent and specialized outside organization capable of handling communication in Japanese, English, Chinese, Korean, Thai, and Indonesian. This system is designed to facilitate use even by overseas employees. Reports made to the external hotline are also simultaneously reported to full-time auditors, and independence from management is ensured. We encourage our employees to use these hotlines through promotions via internal newsletters and other media, and strive to build trust in the hotlines by ensuring confidentiality and prohibiting unfair treatment of hotline users.

    We also hold regular once-yearly meetings between the corporate ethics officers of domestic Group companies and JSR's Corporate Ethics Committee for the purposes of getting all Group companies in Japan on the same page and tackling ethics-related issues. Furthermore, we post and display guides for accessing the hotlines on the company intranet and online internal newsletters to make the hotlines easier to use.

    State of Use of JSR Group’s Hotline (Number of Reports)

    State of Use of JSR Group’s Hotline (Number of Reports)

    For each report that comes in, the office of the Corporate Ethics Committee in the company concerned asks the relevant department to ascertain the facts. The office then discusses and decides on responses based on the department's findings, and later follows up on the results. If the reporter desires feedback, the contact point that initially received the report contacts him or her with the results as well as the responses taken.

    Six reports were received during FY2018. Of them, four involved abuse of power. Suitable responses are being implemented in all cases.

  • Hotline for Business Partners

    JSR employs at its Procurement Department a "Suppliers' Hotline," an external reporting channel for business partners, namely suppliers and services providers, with whom domestic Group companies do regular business. It receives reports from business partners to quickly discover and resolve violations of the law as well as actual and possible violations of corporate ethics in business transactions. Hotline services are entrusted to the same outside organization employed for the employees' hotline. Efforts are being made toward improving reliability, by thoroughly enforcing strict secrecy of reports and prohibiting handling of reports that would be disadvantageous to those reporting something.

    Since its introduction in FY2014, there have been no reports made using the Suppliers’ Hotline.

5. Legal Compliance Measures

Every JSR Group member defines legal compliance regulations that form the basis of its legal compliance. Each company then uses the regulations to solidify its compliance through regular review and improvement as well as legal training to increase awareness of laws and regulations and instill commitment to compliance. JSR Group identifies laws and regulations that are particularly relevant to the execution of business as Overall Significant Laws and Legal Regulations, and concentrates on establishing individual systems to ensure compliance with these critical laws and regulations.

1) Approach to Preventing Bribery and Unfair Competition

JSR has formulated “Rules on Complying with Anti-Corruption Laws” and “Standards for Gift-Giving and Entertaining” that specify necessary items for all executives and employees to comply with the Japanese Unfair Competition Prevention Act, U.S. Foreign Corrupt Practices Act, U.K. Bribery Act and other anti-corruption laws when performing their tasks, based on the JSR Group Principles of Corporate Ethics and laws and regulations that require compliance.

In addition, JSR has also formulated “Rules on Antimonopoly Law” (Japan), “Rules on Complying with U.S. Antitrust Laws”, “Rules on Complying with the EU’s Antitrust Laws and “Rules on Complying with Korean Fair Trade Laws” that specify items necessary for complying with each country’s antimonopoly (antitrust) laws.

Participation in global incentives

JSR participates in the Corruption Prevention subcommittee of the Global Compact Network Japan (GCNJ), which is a local network for the UN’s “Global Compact”. In this subcommittee, various activities are carried out, such as lectures with invited experts, exchange of information related to measures for preventing corruption among participating companies, etc. Through these activities, JSR is exploring, examining and implementing effective and ideal corruption prevention measures that are suitable for the JSR Group.

Corruption prevention measures have a strong compliance system advancement aspect of complying with relevant laws of each country. At the same time, the foundation of such measures is closely linked to global social issues related to human rights, labor and the environment. In addition to continuing to implement effective corruption prevention measures, JSR is searching for ideal forms of such measures.

2) Approach to Taxes (Philosophy)

The JSR Group understands that carrying out appropriate tax payments and tax management that follows relevant laws and regulations of each country fulfills an important role in the economic and social development of each country and is linked to supporting and earning the trust of all stakeholders.

The JSR Group is engaged in taxes by supporting the following philosophy as provided by the Chief Financial Officer (CFO).

“JSR Group will comply with the taxation laws of each country in which it does business, including that regarding transfer pricing and tax havens.”

(1) Reviewing and Improving Legal Compliance

JSR Group identifies the laws and regulations that require compliance in each country, and confirms on a yearly basis that group business activities conform thereto. The regular sharing of information on cases of non-compliance within JSR Group is useful in preventing legal violations and quickly detecting and improving non-compliant situations. It also helps improve awareness of compliance.

The number of Group companies is growing as JSR Group's global activities expand, particularly in the Life Sciences Business. In light of this, we are focused on supporting the formulation of legal compliance regulations in all Group companies.

(2) Training and Increasing Awareness

1) Compliance Handbook

Compliance Handbook

Compliance Handbook

Group is thoroughly publicizing important points that demand legal compliance among employees in Japan, South Korea, and China by issuing Japanese, Korean, and Chinese versions of JSR's Compliance Handbook. The Chinese Version is issued to not only Group companies in China but also JSR departments and Group companies that sell products, supply samples, or otherwise engage in business dealings with Chinese enterprises. Through it, we are working to ensure thorough understanding and practice of legal compliance in China.

We revised the Compliance Handbook's Japanese version during FY2017 and redistributed to employees in April 2018. The revision covered content pertaining to recent cases of data falsification and fabrication at other companies and revisions of related laws.

2) Seminars and E-Learning

We held periodic seminars and provided e-learning programs for directors and employees of all JSR companies as part of legal education to ensure full organizational knowledge of laws demanding compliance. The main seminars held in FY2018 were as follows.

  • January: Subcontract Act seminar
  • February-March: Export Control seminar
  • September: Antitrust Act seminar

We also provided e-learning on the Subcontract Act, Antitrust Act, export control, and anticorruption-related laws in March.

We also provide legal education that has been customized to meet the requirements of individual departments and Group members. We provided individualized education for employees being sent to new assignments (training on the Antitrust Act, anticorruption laws, etc.). We also held chemical substances seminars at various locations in Japan and, as part of them, provided education on domestic laws (Act on the Evaluation of Chemical Substances and Regulation of Their Manufacture, etc., Industrial Safety and Health Act, Poisonous and Deleterious Substances Control Act, etc.) and overseas laws.

6. Protection of Personal Information

JSR Group recognizes the importance of protecting personal information under the circumstances of highly advanced information and communication technologies. We have therefore formulated a Privacy Policy and Rules for Handling Personal Information that sets out our approach to the acquisition, use, and management of personal information based on the Act on the Protection of Personal Information. We have also established Rules for Handling Specific Personal Information in response to the introduction of Japan's Individual Number system. Moreover, in accordance with relevant laws and our privacy policy, we ensure the appropriate handling of specific personal information in the company by defining precautions and security standards necessary to ensure the proper use and protection of this information at each of the stages of acquisition, storage, use, provision, disclosure, correction, suspension of use, and deletion.

Furthermore, for Group companies that will handle personal data covered by the EU's General Data Protection Regulation (GDPR), we are providing support for the development and operation of a GDPR compliance system to be applied to the acquisition, processing, and transfer of covered personal data.