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Risk Management and Compliance


Basic Risk Management and Compliance Policies

▶GRI102-16

Basic Risk Management Policy and Regulations

In our Business Principles we declare “we will strive to anticipate the changing business environment to assess new opportunities for growth.” We consider risk management to be a foundation for reducing management uncertainties and achieving management objectives. Based on our basic risk management policy, we manage risks that make the achievement of management goals uncertain, such as social change, changes in the global environment, natural disasters, accidents and scandals. In addition, we have established risk management regulations to incorporate the risk management policy into specific risk management activities. Our risk management regulations include responses to emergencies.

Basic Risk Management Policy
  1. We prevent and reduce risks in order to ensure the quality and safety of our products and services, protect the lives and safety of our employees and their families, and earn greater trust from our stakeholders.
  2. We create a system to appropriately manage a wide range of risks associated with our business activities.
  3. We promote risk management through a plan-do-check-act cycle.
  4. We quickly and appropriately deal with risks as they are identified.
  5. In collaboration with group companies we build a system for immediately detecting new risks arising from changes in our business environment and for quickly and appropriately dealing with risks at the group level.

Basic Compliance Policy

Under our Business Principles we pledge that we will act in strict compliance with the law and in accordance with social mores. Fully aware that compliance is the foundation of CSR management, we published the Basic Compliance Policy and simultaneously created compliance rules in March 2005. We do not limit our definition of compliance to legal compliance; our definition includes compliance with the social mores from which our laws originate, the mission and business principles of our group, and internal regulations.

Basic Compliance Policy (Summary)
  • Compliance with the Mission, Business Principles and social norms
  • Maintaining internal systems and rules and ensuring broad-based awareness of them
  • Cooperation with all group companies and promotion of educational and enlightenment activities
  • Establishing appropriate responses and policies for when problems occur
  • Timely and appropriate disclosure and communication of necessary information
  • Compliance with international standards and rules, and respect for local cultures and customs
  • Rejection of illegal and unwarranted demands from antisocial forces or organizations

Anti-Bribery

Message from President on Anti-Bribery Policy


Compliance is the fundamental concept of Taiheiyo Cement Group’s business. In our Business Principle developed based upon such concept, we pledged that, "we will act in an ethical manner and abide by laws and regulations" and published the Basic Policy on Corporate Governance in March 2005.

Furthermore, we established the Anti-Bribery Basic Principle (Policy) in January 2017 in order to enhance anti-corruption measures in light of the recent global trend of tightening regulations related to bribery.

We declare our thorough implementation of anti-bribery measures by publishing this policy outside the group.

Anti-Bribery Basic Principle (Policy)

Proper Implementation and Management of Public Research Funds and Response to Misconduct in Research Activities

Taiheiyo Cement has established the rules for proper implementation and management of public research funds in its research activities and response to misconduct in research activities based on the Guidelines for Managing and Auditing Public Research Funds at Research Institutions as well as the Guidelines for Responding to Misconduct in Research enacted by the Ministry of Education, Culture, Sports, Science and Technology (MEXT) of Japan, with the following systems installed in accordance with the rules.


●Responsibility system

The following responsibility system has been established to ensure proper implementation and management of public research funds and prevention of misconduct in research activities at Taiheiyo Cement.


Responsibilities Positions at Taiheiyo Cement
Chiesexecutive administrator President and Representative Director
Exetutive administrator Director in charge of research and development
Administrator responsible for compliance implementation in pblic research(Research ethics education administrator) Manager of the office to which researchers and otherinvolved memberbelong

※Every staff member involved in implementation and/or management of competitive or other public research funds


●Reception desk window of an accusation and the consultation

If there are accusation and consultation about misconduct in implementation and management of Public Research Funds and research activity at Taiheiyo Cement, please contact the head office general affairs department.


■Initiatives to ensure compliance related to tax

Taiheiyo Cement Group Tax Policy

The Taiheiyo Cement Group formulated the Taiheiyo Cement Group Tax Policy in November 2019 to enhance its corporate governance related to tax.
In accordance with the tax policy, the Group pays taxes appropriately by ensuring compliance related to tax.


Taiheiyo Cement Group Tax Policy

Risk Management and Compliance Promotion System

▶GRI102-17,30,31

Our president has ultimate responsibility for risk management and compliance promotion. The officer in charge of both areas (officer in charge of the General Affairs Department) is appointed by the president to preside over and run the Risk Management & Compliance Committee and systematically promote organized activities.

The committee plays a core role in our risk management and compliance promotion for the entire group. It deploys the policy, identifies, evaluates and specifies company-wide risks, implements risk management activities based on PDCA cycles and promotes compliance. Moreover, it studies and proposes the creation and revision of rules for risk management and compliance, and provides instructions for advancing the awareness and education of employees. Under the guidance of this committee, each business site and group company has an officer responsible for risk management and compliance, and a risk management and compliance promoter, who carry out specific duties. We held four Risk Management & Compliance Committee meetings in FY2021.

Risk Management and Compliance Promotion System
Risk Management and Compliance Promotion System

* Subject to risk management: 103 group companies (as of March 31, 2021)


Whistleblower Program

Reports and requests are handled properly in accordance with normal company procedures. We have also set up whistleblower hotlines to receive reports directly without the need for the usual company procedures. Whistleblowers have the option of either disclosing their identity, or reporting anonymously to mitigate any potential psychological constraints. We have whistleblower hotlines both internally (at the CSR Group of our General Affairs Department) and externally (at a law firm). Our internal hotline is in a dedicated, locked room equipped with dedicated phone and fax lines, as well as a computer with a dedicated address, in order to safeguard the privacy of those submitting reports. Our external hotline is also available to all employees of group companies in an effort to strengthen group governance, improve program effectiveness and reduce the burden on individual companies. In addition, we created the Whistleblower Program Regulations so whistleblowers using the program are not subject to unfavorable treatment.

Whistleblower Program
Whistleblower Program
Results* of the Whistleblower Program (FY2021)
Hotline Reports
Internal (CSR Group, General Affairs Department) 7
External (Kajitani Law Offices) 0

※Cases that should be regarded as reports according to the Whistleblower Program Regulations.

Risk Management and Compliance Promotion Activities

▶GRI102-11,17,201-2,205-2

Identifying, Evaluating and Specifying Company-wide Risks

In FY2020 we decided to identify the impact of anticipated changes in social and environmental conditions over the next ten years on uncertainties in group management, and then formulate measures to avoid and reduce those uncertainties.

We referred to sources such as the World Economic Forum and WBCSD guidance on the integration of sustainability and enterprise risk management for risk data, and identified and evaluated risks. We also consulted risk management experts.


Identification of Risks and Opportunities

Summary of the Collection, Evaluation and Identification of Company-wide Risks

We collect, evaluate and identify company-wide risks, including those of group companies, every three years and conduct an annual review of those risks. We carried out a company-wide risk review in FY2020. The purpose of identifying risks is to identify the impact of anticipated changes in social and environmental conditions over the next ten years in relation to uncertainty of group management, and then formulate measures to avoid and reduce that uncertainty.

Step 1
Compile anticipated changes in social and environmental conditions over the next ten years.
Step 2
Evaluate the impact of the identified changes on the group.
Step 3
Review the results of the evaluation of the impact.
Step 4
Review company-wide material risks (Risk Management & Compliance Committee).
Step 5
Determine company-wide material risks(CSR Management Committee)

Identification of Risks and Opportunities

We referred to the following risk information:


Measures to Reduce the Impact of Risks

Based on evaluations of identified company-wide risks, our Risk Management & Compliance Committee takes the lead in specifying those to be addressed every year and implementing activities to reduce risk impact through PDCA cycles. The challenges addressed in FY2021 were (1) the establishment of a system to prevent scandals such as accounting irregularities, and (2) the revision of compliance-related rules.


Examples of Overseas Risk Countermeasures

We have created and regularly revise the Riot/Terrorism Response Manual. In addition, with regard to high-risk countries to which our employees are dispatched, we clearly state the procedure for deciding on local evacuations, have created a tool for evaluating the emergency evacuation level according to changes in local situations, and provide training using the tool. We also list and secure supplies (food, clothes, hygiene supplies, and medicines), as well as cash and other resources needed, in the event of evacuation or an emergency at our overseas business sites.


Emergency Task Force

If an event such as a disaster, accident or misconduct has occurred, the affected business site informs the general manager of the General Affairs Department. The general manager considers the severity of the event and determines if an emergency task force should be established or if the response to the event can be delegated to the site management. Appropriate action is then taken by the emergency task force or local management.

13 such events were reported in FY2021. Important information, including how the situation is handled, is reviewed by the CSR Management Committee.

As preparation for responding to disasters and accidents, we also conducted Shake Out earthquake drills at each business site, and the general manager of the General Affairs Department attended an external course while exploring the question of providing executives with training on how to deal with the mass media. We also provided training for plant staff so they would understand how to appropriately handle complaints if an accident occurs.


Explosion at the Saitama Plant

On April 26, 2021 at 21:58, there was an explosion at the on-site power generation facility located on the north side of the Saitama Plant. We apologize profoundly for the trouble and anxiety we caused to the local residents, our customers, related companies, the authorities concerned, and many others.

It has been confirmed that debris flew beyond the plant perimeter, vehicles caught fire, buildings and vehicles were damaged and dirtied, and flying debris caused damage to farmland. People who were in a nearby parking lot have reported health issues, but there were no injuries to other local residents or other people.

We are dealing in good faith with the damage etc. working on implementing countermeasures to prevent a reccurance of the accident. There was no damage to plant facilities other than the on-site power generator and, after safety checks, cement production and shipments continued as normal, as did the treatment of municipal waste (combustible waste) entrusted to us by Hidaka, the city where the plant is located.

In addition, an accident investigation committee, including external experts, was established on June 1. We are working with the committee to investigate the causes of the accident based on an objective survey, and to formulate measures to prevent a recurrence.


Response to the Spread of the Novel Coronavirus (COVID-19)

We and our group companies prioritized the safety of our customers, business partners, the local community and employees of our business sites as COVID-19 infections spread. The emergency task force, headed by the president, implemented various measures and strove to ensure a stable supply of cement and mineral resources products that are essential for social infrastructure.

The Main Measures to Prevent the Spread of Infections

Going forward, the pandemic is expected to have a long-term impact on the economy and the business environment. However, Taiheiyo Cement and our group companies will continue to boost production while further promoting flexible work arrangement reforms, and to strive for business continuation even during states of emergency.


Risk Management and Compliance Promotion Training

We provide risk management and compliance training for managers and promoters working at the company’s business sites and group companies to ensure effective risk management and compliance. In FY2021, we invited outside lecturers to give talks to the managers at our group companies. Held in November, “Aiming for Harassment-free Workplaces: The Latest Legislation and Corporate Responses” and “Preventing Irregularities and Scandals at Group Companies” were attended by 82 companies, including those who participated remotely. A training program for the promoters was postponed due to the COVID-19 pandemic.


Compliance Training

In order to fulfill our mission and uphold our business principles, we formulated the Standards of Conduct to guide all our officers and employees in the performance of their daily duties. The standards consist of 35 items in 6 categories that draw upon Taiheiyo Cement’s policies, regulations and president’s messages delivered within and outside the company.

We have created and distributed to all our employees, as well as all those of our main group companies, the Standards of Conduct (Casebook), which describes specific examples on how to act in line with the Standards of Conduct.

We regularly revise the Standards of Conduct (Casebook) to reflect the latest information.

In addition, for all company employees, including those on loan to group companies, we conduct monthly quiz tests as part of e-learning programs to provide education on the Standards of Conduct (Casebook) and other materials so they learn how to act in individual situations. In FY2021, 77.4% of employees participated in the program.

Our Standards of Conduct (Casebook). (Japanese only)


Legal Roundtables for Group Companies

Since FY2006 we have been holding roundtable discussions attended by management and legal affairs representatives from our group companies. These provide opportunities to share legal information (mainly responses to revisions of laws) in order to further our understanding of major laws relating to corporate management and to assist in the creation of our group’s compliance regime.

These roundtables were postponed due to the impact of COVID-19 in FY2021, but the table below shows those held in FY2019 and FY2020. We plan to hold them in an appropriate form in FY2022, based on the COVID-19 situation and other considerations.

Previous Legal Roundtables for Group Companies
No. Date Attendance Theme
27th 2018
July
8 companies
14 participants
Legal issues concerning labor
28th 2018
November
89 companies
88 participants
Revised points in the Civil Code and their impact on business transactions
Practical responses to Civil Code revisions
29th 2019
July
11 companies
19 participants
Legal issues concerning labor
30th 2019
November
84 companies
86 participants
Communication with authorities in response to corporate scandals (criminal plea bargains, antimonopoly leniency and commitment procedures)
Practical responses to Civil Code revisions (contract clause examples)

Please see our website for more information about the TCFD and mitigating climate change.

Information Disclosure Based on the Recommendations of the TCFD (Scenario Analysis)

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