Compliance

Action Plan

Risks Opportunities
  • Occurrence of business continuity risk or unexpected loss resulting from the malfunction of corporate governance or internal control.
  • Improvement of transparency in decision-making, appropriate response to changes and establishment of a stable basis of growth enabled by the establishment of a firm governance system.
Materiality SDGs Targets Issues to address Business area Commitment Specific approach Performance indicators Degree of Progress
Maintain rigorous governance structures
Ensuring compliance Compliance We will make employees more aware that ensuring compliance at any time is our contribution to the company and society. Recognizing attitude of employees identifying issues and ensuring action plans to tackle the issues through periodic compliance attitude survey and direct communications. Continuous direct communication with employees through face-to-face training programs whose contents shall be updated along with monitoring the measures according to risks, expectations from society and issues on site which will change with the time.
  • We registered with the Whistleblowing Compliance Management System (self-declaration of conformity) as of April 10, 2019, which had been renewed for FYE 2020. For FYE 2021, we got started on the renewal proceedings on February 17, 2021.
  • We conducted the monitoring survey on compliance with the "Act on Prohibition of Private Monopolization and Maintenance of Fair Trade" and the "Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors" in ITOCHU Corporation and 62 ITOCHU group companies in the period of September through November 2020. During the course of such survey, we performed individual hearings and fact-finding investigations based on answers to questionnaire in certain prescribed format, as a result of which we found no serious concern on that.
  • We provided e-learning on thorough information management for ITOCHU Corporation employees, temporary employees and seconded employees in total of approximately 5,300 individuals (in the period of July 13 through 31, 2020).
  • The results of our on-site compliance training seminars in FYE 2021 are as follows (as of March 31, 2021):
    • For ITOCHU Corporation: 2,925 employees (who all watched the training video); and
    • For ITOCHU group companies: 12,903 employees in total (of which (i) the webinar sessions were provided for 72 companies in 90 occasions with 6,911 attendees; and (ii) the training video were provided for 32 companies with 5,992 viewers.

Policy and Basic Concept

  • All officers and employees are to conduct themselves in accordance with the ITOCHU Group Corporate Mission and the ITOCHU Group Guideline of Conduct based on high ethical values.
  • ITOCHU is to designate a representative director as the Chief Officer for Compliance (Member of the Board・CAO) responsible for supervising compliance and also establish the Compliance Committee and a department that oversees all compliance matters. In addition, the "ITOCHU Group Compliance Program" Is to be created to further enhance our compliance system.

Structures and Systems

ITOCHU Group's Compliance System

The ITOCHU Group is developing a system for compliance by having the Compliance Department of the Legal Division plan and suggest policies and measures to encourage compliance throughout the entire Group and appointing compliance officers in each organization within ITOCHU Corporation, overseas offices and major Group companies worldwide (including consolidated subsidiaries and some equity method associated companies; hereafter referred to as the “companies subject to compliance management”). The Compliance Department performs these roles under the direction of the Chief Administrative Officer (CAO) who serves as the Chief Officer for Compliance. In addition, the ITOCHU Group Compliance Program provides guidelines to maintain the compliance system. We then periodically monitor and review the implementation situation of these matters. At the same time, we strive to ensure thorough compliance throughout the Group by giving education and training in our group companies as necessary.

Compliance incidents revealed in each organization within ITOCHU, overseas offices or companies subject to compliance management are reported to the Chief Officer for Compliance (CAO) and the Corporate Auditors, while incidences of serious compliance violations are reported to the Board of Directors as appropriate. The Compliance Committee is chaired by the CAO and consists of two external members and heads of relevant administrative divisions and sales division as internal members. It deliberates on matters related to compliance as a permanent organization on business operations. The most recent Compliance Committee meeting was held on February 26, 2021. (The meeting is held two times a year, in principle.)

The ITOCHU Group Compliance Program details the compliance system development policy of the ITOCHU Group so that each organization within ITOCHU Corporation, its overseas offices, and companies subject to compliance management can ensure compliance by taking into account business characteristics, operational formats and local laws. At the same time, the Compliance Committee reviews the effectiveness and validity of the program every fiscal year based on laws/ordinances and social trends. The committee then revises and approves this program as appropriate.

Across the Group, we conduct Monitor & Review surveys once a year to check the status of compliance systems and operations of each organization. In addition, as for key organizations such as overseas offices and companies subject to compliance management, we are implementing activities with a focus on the constant improvement and enhancement of our compliance structure. For example, we have been proactively utilizing the Internet to provide on-site training using compliance incidences that have actually occurred as the teaching materials even during the COVID-19 pandemic. Furthermore, based on trends in former compliance incidences and the findings of the Monitor & Review surveys, we are formulating individual compliance reinforcement measures for each organization, and these measures are steadily being implemented.

The ITOCHU Chief Officer for Compliance (CAO) and the compliance officers of each organization, overseas offices and companies subject to compliance management report the situation of compliance system operation and the results of the Monitor & Review surveys in accordance with the ITOCHU Group Compliance Program to the respective board of directors and top management (e.g., presidents, compliance officers and management councils) once a year in principle. Moreover, the directors of ITOCHU and our group companies are obliged to report any serious compliance incidents with laws/ordinances and our Articles of Incorporation to the Audit & Supervisory Board members of the respective companies. The Internal Audit Division of ITOCHU confirms the compliance system operation in the relevant organizations and overseas blocs as appropriate. It does this in compliance audits to verify that the compliance system in the ITOCHU Group is functioning appropriately and regular audits on organizations (including supervising group companies) and overseas blocs in ITOCHU.

In addition, to ensure compliance throughout the Group, at individual performance evaluations every fiscal year, we confirm in writing that all employees have complied with laws, regulations, and other rules.

Response to Compliance Incidents (Violations)

The compliance officers in the relevant organizations make reports to the Chief Officer for Compliance (CAO) according to the prescribed standards and procedures if violations of laws/ordinances and internal rules – including those on the prevention of corruption – are uncovered or if it is determined there is a risk of a violation occurring in the organizations of ITOCHU, overseas offices and companies subject to compliance management. At the same time, the compliance officers in the relevant organizations play a central role in reporting results when dealing with such concerns (e.g., internal investigations, cause investigations and recurrence prevention measures) to the Chief Officer for Compliance (CAO).
We set up an investigation committee as necessary under the direction of the Chief Officer for Compliance (CAO) for serious compliance incidents requiring consideration from a company-wide perspective. That committee reports the results of the investigation and the recurrence prevention measures to the Board of Directors.

Furthermore, ITOCHU then takes the appropriate action as necessary upon considering whether it is necessary to respond, report and make announcements to external organizations. We verify whether it is necessary to impose internal punishments on officers and employees involved in violations of laws/ordinances, including those concerning bribery, with reference to the internal regulations (e.g., work regulations) of each company. If necessary, we impose appropriate punishments according to the standards and procedures stipulated in the internal regulations upon consulting and cooperating with the relevant departments and experts inside and outside the company.

In FYE 2021, ITOCHU Corporation identified and responded to 71 internal whistleblowing reports, but there was no serious compliance incident (including any breach of customer privacy) which shall require public disclosure.

Overview

The ITOCHU Group Compliance System

[Fig.]

Internal Reporting System (Hotlines)

ITOCHU Corporation has formulated regulations on the Internal Information Reporting System (Hotlines) and instructed the installment of similar hotlines at companies subject to compliance management as well. In addition to protecting whistleblowers through these arrangements, we have defined mechanisms for proper disposal of cases. This initiative is reinforcing compliance management by supporting the prompt discovery and rectification of any incidents of corruption, including bribery. The Internal Reporting System operation situation is reported to the Compliance Committee periodically.
ITOCHU Corporation has established multiple whistleblowing contacts both in Japan and overseas (including external whistleblowing contacts that utilize specialized company and external lawyers). We accept reports from employees who have an employment relationship with ITOCHU, those who have been dispatched to ITOCHU under a worker dispatch contract from a company that has entered into that contract with ITOCHU (temporary employees), and employees of group companies. It prohibits the unfavorable treatment (e.g., retaliation) of whistleblowers and allows whistleblowers to provide information anonymously.

Flow When a Report Is Received by the Japanese External Report Reception Desk (IntegreX Inc.)

[Fig.]

ITOCHU Corporation applied for recognition under the Whistleblowing Compliance Management System (Phase 1: self-declaration of conformity), which was newly introduced by the Consumer Affairs Agency of Japan. Our conformity with certification standards was confirmed and our registration was accepted as of April 10, 2019 (first to be registered in this system in Japan).

Consultation Desk for the General Public (including Stakeholders)

ITOCHU Corporation has established a system to accept opinions, proposals, and grievances and to accept inquiries from the general public and all our stakeholders, as described below.

[Fig.]

Initiatives

Implementation of Compliance Training

ITOCHU provides ongoing education and training on compliance. The aim is for each one of our officers and employees to understand the purpose of laws/ordinances and social norms and to then comply with these based on high ethical values.

On-site Training

Awareness Surveys

Corruption Prevention

Measures to Fight Collusive Bidding and Cartels

ITOCHU established the Basic Regulations on the Compliance with the Antimonopoly Act., etc. and the specific operational guidelines titled the Standard on Prevention of Cartels and Collusive Bidding in November 2017. The purpose of this is to prevent involvement in collusion, cartels and other violations of the Antimonopoly Act. In addition, we thoroughly inform our employees about compliance with the Antimonopoly Act. We do this by preparing the Antimonopoly Act Compliance Manual, various monitor reviews, and education and training.We passed instructions at a meeting of the Board of Directors according to four exclusion measure orders we received from the Fair Trade Commission from FYE 2018 to FYE 2019. We have notified and thoroughly informed all our employees of the content of these resolutions.

ITOCHU Group Tax Policy

Intellectural Property

Product Safety

Import/Export Control

Antisocial Forces

Insider Trading Regulations

Information Management

Personal Information Monitor & Review Surveys