Compliance

Action Plan

Risks	Opportunities
Occurrence of business continuity risk or unexpected loss resulting from the malfunction of corporate governance or internal control, and others.	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, and others.

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.	Registered with the Whistleblowing Compliance Management System (self-declaration of conformity) on April 10, 2019. We monitored all ITOCHU Corporation for bribery and corruption in July and August 2019. We confirmed the application status under the Public Officer and Foreign Public Officer Guidelines, Business Partner Guidelines and Investment Guidelines based on certificates. We found no major problems as a result of that. We conducted compliance attitude survey on 57,781 employees in ITOCHU Corporation and group companies in August and September 2019. The number of employees subject to this survey increased by approximately 14,000 compared to the previous survey (FYE 2018). The response rate was 94.9%. This exceeded the response rate for the previous survey (93.4%). We provided e-learning on dealing with bribery and corruption and organized crime for ITOCHU Corporation employees (January 31 to February 29, 2020). The situation concerning the implementation of training tours in FYE 2020 is as follows. For ITOCHU Corporation : Implemented 53 times with 2,198 attendees For ITOCHU group companies (implemented in 84 companies): Implemented 195 times with 10,715 attendees

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 (Senior Managing Executive Officer・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, 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 subsidiaries as necessary.

Incidents of compliance violations revealed in each organization within the Headquarters, 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 three 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, 2020. (The meeting is held two times a year, in principle.)

The ITOCHU Group Compliance Program details the compliance system 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. The Compliance Committee (Chair: CAO) reviews the effectiveness and validity of the program based on laws/ordinances and social trends. The committee then revises and approves this program as appropriate every year.

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 system operation, including on-site guidance with the objective of ascertaining actual front-line compliance conditions and identifying risks. Furthermore, based on trends in former incidences of compliance violations and the findings of the Monitor & Review surveys, we are formulating individual compliance reinforcement measures tailored to each Division Company, 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 monitoring and reviews in accordance with the ITOCHU Group Compliance Program to the respective board of directors and top management (e.g., DMCs, responsible directors, presidents and board of directors) once a year in principle. Moreover, the directors of ITOCHU and our group companies are obliged to report any serious violations of compliance with laws/ordinances or our Articles of Incorporation to the Audit & Supervisory Board members of the respective companies. The Internal Audit Division of ITOCHU conducts two types of internal audit: compliance audits to verify that the compliance system in the ITOCHU Group is functioning sufficiently and regular audits to check the compliance implementation situation of the relevant organizations as appropriate in the regular audits on each division (including supervising group companies) and overseas bloc.

In addition, to ensure compliance throughout the Group, at personal performance evaluations at the end of each fiscal year we ask all employees to confirm in writing that they have complied with laws, regulations, and other rules.

Response to Violations

The compliance officers in the relevant organizations make reports as appropriate to the Chief Officer for Compliance (CAO) on compliance-related concerns for which violations of the aforementioned policies and regulations, including those concerning the prevention of corruption, have been discovered or for which it has been determined there is a risk of such occurring in each organization in the headquarters, overseas offices and companies subject to compliance management. At the same time, the compliance officers in the relevant organizations play a central role in taking a proactive response that includes investigating the causes of issues and formulating measures to prevent their recurrence and to then report developments in the situation, the results 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-related concerns 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 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 in accordance with the internal regulations (e.g., work regulations) of each company. If necessary, we impose appropriate punishments according to the procedures stipulated in the internal regulations upon consulting with the relevant departments including the supervising organization.

Overview

The ITOCHU Group Compliance System

Internal Information Reporting System (Hotlines)

ITOCHU Corporation has formulated regulations on the Internal Information Reporting System (Hotlines) and instructed the installment of 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 Information 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, and group companies. It prohibits the unfavorable treatment of whistleblowers, such as retaliation, and allows whistleblowers to provide information anonymously.

Flow of report

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, ahead of the competition (first on the registrant list).

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.

Initiatives

Implementation of Compliance Training

ITOCHU provides ongoing education and awareness 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

In recent years, there have been many reports of suspected cartel activities in markets around the world. In response, to prevent involvement in any illicit transactions, ITOCHU Corporation established the Basic Regulations on the Compliance with the Antimonopoly Act, etc. and the Standard on Prevention of Cartels and Collusive Bidding on November 1, 2017. In addition, we regularly revise our Anti-Monopoly Law Manual and the document "A Must-Read! 51 Q&A about the Antimonopoly Act"” which facilitates referral. (The last revision was made in August 2017.) Through various Monitor & Review surveys and education and training programs as well, we are making sure all employees are aware of requirements. Further, in July 2017, we set up the Antimonopoly Act Desk in the Legal Division as the consultation desk and created "The 29 Frequent Misunderstandings about the Antimonopoly Act" as a new educational material. 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.