Risk and Compliance Management
Policy and Basic Approach
To earn the trust of our shareholders, customers, the local community and all our other stakeholders, and to fulfill our corporate social responsibilities, it is crucial to effectively engage in risk management and compliance promotion structure. We will endeavor to uncover new risks that arise in response to changes in our business portfolio, expansion of business and changes in the external environment, and also prevent those risks from materializing.
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 regulations) allows us to remain in control of all risks that could potentially threaten our business activities, thus retaining the trust of our stakeholders and fulfilling our corporate social responsibility.
System and Responsible Officers
Risk Management System
The Board of Directors is responsible for risk management across the entire Mitsui Chemicals Group.
First and second lines of defense
All our divisions (Head Office, Works, laboratories, branch offices and affiliates) conduct risk assessments in accordance with the risk model and procedureswithin the annual budget. Having identified the risks, they design and implement a management system to address the risks within the organization. The director in charge of each division is responsible for identifying and managing the risks. (First line of defense)
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 of defense)
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 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.
Third line of defense
The Internal Control Division independently audits operations in both the first and second lines of defense 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 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.
Risk & Compliance Committee and the roles of directors on the 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.
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. Important policies, strategies and plans decided by the Committee are approved by the Management Committee.
Composition of the Risk & Compliance Committee
|Chair||The responsible director in charge of the Risk & Compliance Committee|
|Members||Responsible director in charge of the Corporate Sustainability Committee, Responsible director in charge of 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 Affiliates Coordination Division, General Manager of the Information System Division, other members appointed by the Chairperson|
|Secretariat||Corporate Administration & Legal 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 director in charge of 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.
The most recent case involves the formation of the COVID-19 Action Headquarters. The director in charge of the Risk & Compliance Committee is in charge of the headquarters, which makes decisions and gives instruction on measures to ensure employee safety and related matters.
*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.
Goals and Results
|Incidence of major legal and regulatory violations||Mitsui Chemicals Group||0||1||✕||0||0
Having decided on KPIs for social and environmental targets under the 2025 Long-term Business Plan, we state the figures for major legal and regulatory violations, including those that affect the Group’s social standing, business operations, earnings and other key parameters. Our domestic subsidiaries, Shimonoseki Mitsui Chemicals, Inc. received a notice from Yamaguchi Prefecture on August 5, 2019 that it would be subject to legal procedures in accordance with the High Pressure Gas Safety Act. This relates to multiple problematic leaks found at the company’s high-pressure gas production facilities. In response to these events, we would like to sincerely apologize for causing significant concerns among many people, including local residents, the authorities and customers. We are treating this incident very seriously. We will endeavor thoroughly to strengthen group-wide legal compliance, review internal control and prevent any further incidents of this sort from recurrence in Mitsui Chemicals Group, including Shimonoseki Mitsui Chemicals, Inc.