Risk and Compliance Management
Policy and Basic Approach
To continue to conduct corporate activities and fulfill our corporate social responsibilities while earning the trust of our shareholders, customers, the local community, and all other stakeholders, it is crucial to effectively establish and operate a risk management and compliance promotion structure.
In February 2006, the Mitsui Chemicals Group formulated its Action Guidelines, which provide the basis for the actions of all its personnel, and introduced the two maxims, “always act in good faith” and “have a high regard for people and society.” Acting in accordance with these action guidelines and risk management rules (Company Rules), we will retain the trust of our stakeholders and fulfill our corporate social responsibility. As part of our risk management, we will endeavor to uncover risks in all events that may threaten business activities, including new risks that arise as a result of the transformation of our business portfolio and the global expansion of business in which the Group is engaging amidst recent changes in the international social and economic circumstances, and also prevent those risks from materializing.
For compliance, we have established the Compliance Management Committee in fiscal 2022 to further strengthen compliance management in light of the heightened social demand for companies. The Committee will play a central part to implement compliance measures across the Group globally.
System and Responsible Officers
Risk Management System
The Board of Directors is responsible for risk management across the entire Mitsui Chemicals Group.
The abbreviation of “Mitsui Chemicals - Global Risk Management & Business Support Improvement Platform”.
First Line and Second Line
All our divisions (Head Office, Works, laboratories, branch offices and affiliates) conduct risk assessments in accordance with the risk model and procedures within the annual budget. Having identified the risks, they design and implement a management system to address the risks within the organization. The responsible officer for each business division is responsible for identifying and managing the risks. (First Line)
To ensure that risk management is fully implemented in each division, the risk management support divisions with specialized knowledge provide support to each division and may conduct audits or give guidance when necessary. (Second Line)
Each division reports information according to the type and severity of the risks to the Company-wide Strategy Committee, Corporate Sustainability Committee, Risk & Compliance Committee, Compliance Management Committee, and Responsible Care Committee. Each of these committees deliberates on how to address the risks and either issues their decision as the policy of the division or provides advice. The Management Committee collects information on the risks identified in the whole of the Mitsui Chemicals Group and uses it as material for management decision-making and decides on what action to take.
M-GRIP, a platform for globally strengthening governance of affiliates and sharing best practices
With the goals of reducing the risks that have grown as globalization accelerates and of further transforming and expanding the business of the Mitsui Chemicals Group, in fiscal 2020 we began deploying the Mitsui Chemicals Global Policy Platform (M-GRIP), which is a shared indirect operations platform for the Group. M-GRIP is the mechanism that lays out Global Policies (G/Ps) comprising measures that are common to the entire Group regarding indirect operations such as human resources, accounting, and logistics. By ensuring that each company within the Group implements those measures, it allows the execution of proper business operations and ongoing improvements. It is also intended to support the activities of affiliates through the effective use of the Group’s economies of scale. In fiscal 2021, amid the ongoing COVID-19 pandemic, we explained the details of this mechanism to all Group companies via individual online meetings. Through dialogue, we sought to promote understanding of M-GRIP and firmly establish it within the Group. In addition, five new G/Ps, including the protection of personal information, have been established and have begun to be implemented on a global basis. Over the next several years, we plan to develop and roll out the necessary G/Ps. By fostering a common awareness throughout the Group and promoting sustainability management and thorough crisis management, which helps improve corporate value, we are working to reduce and avoid risk and improve business efficiency, thereby supporting the realization of a corporate group that enjoys sustainable growth.
M-GRIP Deployment Chart
The headquarters functional divisions, the regional headquarters, the affiliates, and the Affiliates Coordination Division are working together, each playing its respective role.
Message from an overseas affiliate
We often hear the rule of law mentioned by leaders of countries. It is a governing principle. Merriam- Webster defines rule of law as: “a situation in which the laws of a country are obeyed by everyone.” The Mitsui Chemicals Group too has a set of governance and compliance rules, namely M-GRIP, which was officially launched two years ago. It is significant that the Global Policies (G/Ps) were used to standardize the risk response standards that had been independently established by each Group company. G/Ps help employees to keep their actions within those standards. Such G/Ps are indispensable in holding employees accountable for any conduct that is unreasonable. In addition, G/Ps help to identify non-compliance and ultimately help an organization to build a stronger culture by creating “One Team”! The launching of M-GRIP by the Affiliates Coordination Division was very well organized, especially with effective communication prior to the implementation. The challenge now is how to ensure each entity’s compliance with the G/Ps.
The Internal Control Division independently audits operations in both the first and second lines and provides assurance to top management and the Board of Directors. The Internal Control Division conducts business audits and responsible care audits to maintain and strengthen the level of internal control in the Mitsui Chemicals Group and works to keep existing business risks at an acceptable level. At the same time, the Division conducts continual inspections and assessments of the design and operation of internal controls relating to financial reporting for the entire Mitsui Chemicals Group, as required under the Financial Instruments and Exchange Act, as the J-SOX assessment as a part of the statutory audit and directs its efforts to ensuring the correct and efficient execution of operations. The audit results are regularly reported directly to the Board of Directors and the Board of Corporate Auditors.
The business audit includes an internal audit process based on self-assessment of internal controls utilizing the compliance checklist. The compliance checklist includes items related to compliance with the competition law, prevention of bribery and corruption, insider trading and harassment, compliance with the securities export control regulations, appropriate handling of corporate and personal information, human rights, information systems security, risk management, credit management, fair accounting and tax administration, and organization and operation of appropriate internal controls. The checklist is revised every year. As process owners for each of the above items, the risk management support divisions are audited on the state of their operations. Additionally, audits are conducted based on a theme selected each fiscal year from the risk status both in and outside the organization.
From among the responsible care audits (environment & safety audit, occupational health audit, quality audit, and chemical safety audit), the Internal Control Division is responsible for executing the environment & safety audit and the occupational health audit. The Internal Control Division also audits quality audit and chemical safety audit conducted by the risk management support divisions have been executed appropriately. In addition to on-site audits, we have established a remote audit system that can be conducted even when it is difficult to visit our sites because of the COVID-19 pandemic.
Role of the Risk & Compliance Committee
The Risk & Compliance Committee has been created to develop and execute specific policies, strategies and plans to address concerns related to risk management and compliance.
Note that in 2022, the President was appointed as the chair of the Risk & Compliance Committee to make it clear that the President bears the ultimate responsibility for risk management and compliance.
External risks such as natural disasters, terrorism, riots and political insecurity, and in the category of internal risks, operational risks represented by violation of laws and rules, loss of credibility of financial reports, environmental pollution, plant accidents, major occupational incidents, product liability litigation, loss of supplier credibility, mental health issues, deterioration of labor management relations, information leaks and destruction of information communication systems, etc. are covered by the Committee's activities. The committee implements measures including information gathering and evaluation, issuing instructions to relevant divisions, development of the group-wide risk management policy, and reviewing countermeasures to specific risks. It also manages the whistleblowing (Risk Hotline) system. Policies, strategies, plans, and measures developed by the Committee and other important matters are approved by the Management Committee.
Composition of the Risk & Compliance Committee
|Members||Responsible officer for the Risk & Compliance Committee, Responsible officer for the Corporate Sustainability Committee, Responsible officer for the Corporate Administration & Legal Division, General Manager of the Internal Control Division, General Managers of the Planning & Coordination Divisions in each business sector, General Manager of the Planning & Coordination Division, General Manager of the Corporate Communications Division, General Manager of the Corporate Sustainability Division, General Manager of the RC & Quality Assurance Division, General Manager of the Corporate Administration & Legal Division, General Manager of the Human Resources Division, General Manager of the Finance and Accounting Division, General Manager of the Corporate Planning Division, General Manager of the Affiliates Coordination Division, General Manager of the Information System Division, and other members appointed by the Chairperson|
|Secretariat||Corporate Administration & Legal Division, Human Resources Division, Finance and Accounting Division|
Should there be an emergency* that seriously impacts or is likely to impact our Group or society at large and conducted action becomes necessary, The responsible officer for the Risk & Compliance Committee coordinates action with the relevant directors and they jointly assess conditions. Based on the findings, a report is submitted to the President, who decides whether action should be taken by the company or whether a headquarters for corrective action should be formed. When a headquarters for corrective action is formed by a decision of the President, it will issue guidance and advice on the corrective action needed to resolve the situation.
*Examples of emergencies:
- Accidents or incidents in the Mitsui Chemicals Group that cause damage to the lives, health, property and living conditions of people or that are likely to have an impact on the environment in the surrounding area.
- An event causing grave losses of human and tangible assets or damage to the credibility of the Group and resulting in a significant decline in business performance or in serious claims for damages.
Role of the Compliance Management Committee
In order to implement compliance measures systematically and in a planned manner across the Group on a global basis, we have established the Mitsui Chemicals Group’s Compliance Management Rules and created the Compliance Management Committee under the Risk & Compliance Committee in fiscal 2022.
Dividing compliance management into four stages of prevention, detection, initial response, and permanent response, the Committee will implement measures for each stage across the entire Group, under the responsibility and authority of the chair of the Compliance Management Committee, and continue to implement the PDCA cycle for compliance management, including raising awareness of compliance.
Composition of the Compliance Management Committee
|Chair||Responsible officer for the Risk & Compliance Committee|
|Members||General Manager of the Corporate Administration & Legal Division, General Manager of the Human Resources Division, General Manager of the Finance and Accounting Division, Relevant General Managers at Mitsui Chemicals, and other members appointed by the Chairperson|
|Observer||General Manager of the Internal Control Division|
|Secretariat||Corporate Administration & Legal Division|
Goals and Results
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(Medium to Long-term)
|Incidence of major legal and regulatory violations||Mitsui Chemicals Group||0||1||×||0||0|
Having decided on the KPIs for VISION 2030, we state the incidence of major legal and regulatory violations, such as those that affect the Group’s social standing, business operations, earnings, and other key parameters. In fiscal 2021, there was one incidence of major legal and regulatory violation in our domestic subsidiaries. We are treating this incident very seriously. We will endeavor to thoroughly strengthen group-wide compliance, review internal control, and prevent any further incidents of this sort from recurring in Mitsui Chemicals Group.