Compliance

Executive Message

Photo
Risk Management and Compliance at Idemitsu

Idemitsu Kosan Co.,Ltd.
Senior Executive Officer
(As of December 31, 2022)

Seiji Oshima

We would like to once again express our deepest apologies for the inappropriate conduct that took place in product testing at our subsidiary,which was announced in May 2022 and undermined the trust of our customers and stakeholders. A special investigative committee with external experts conducted a separate investigation from our own in regard to this matter to identify the cause and establish preventive measures. We are currently working on thorough implementation of those measures. We are also educating our employees on quality throughout the Group. Moreover, we are focusing on creating a more open and non-hierarchical workplace, and are identifying workplace issues by using questionnaires and the content of reports submitted to hotlines as part of our efforts to create a workplace culture and environment, which is a prerequisite for fostering compliance awareness. Furthermore, we will increase the sense of ownership among employees in regard to compliance matters by conducting compliance training in response to those issues.

As part of our initiatives to strengthen our risk management, we are improving the effectiveness of our management system with respect to emerging business risks. In addition, we formed a company-wide task force to respond to latent risks keeping discontinuous environmental changes such as economic security, cyber security, and human rights problems in mind. We developed a structure for gathering information, analyzing latent risks, and putting together and implementing measures in a timely manner. Particularly when it comes to economic security, which has a significant impact on energy security, we will coordinate with think tanks to gather the latest information and reflect it in our medium- to long-term growth scenario.

出光興産, DFF Inc.

Basic Approach / Promotion System

Basic approach

The Idemitsu Group defines compliance as adhering with laws, regulations, internal rules and business contracts, in addition to refraining from the violation of ethical and social norms, regardless of the possibility of an actual legal offense occurring. Based on this definition, every Group employee is expected to live up to high ethical standards and act appropriately and sincerely while maintaining self-discipline.

To this end, the “Compliance Code of Conduct” has been established for all employees working around the world to disseminate the compliance mindset that each employee should have and act in accordance with. The code is designed to provide explicit, simple and easy-to-understand guidance that exemplifies desirable employee behavior in terms of maintaining compliance.

Compliance Code of Conduct

In accordance with the principle of “Integrity” set forth in the Action Mindset, we have established the following items as specific compliance codes of conduct for all employees working around the world for both domestic and overseas companies. Specific standards of conduct related to compliance are compiled in the Compliance Book, which we regularly review for effectiveness and revise accordingly.

  1. Compliance with Laws, Regulations, and Morals
    We will comply with domestic and international laws and regulations, social ethics, internal regulations, and contracts, and act with integrity as good corporate citizens.
  2. Respect for Human Rights
    We will not tolerate any infringement of human rights. We accept diversity in all forms (e.g. race, nationality, gender, etc.), and strive to create healthy and comfortable workplaces free of harassment.
  3. Safety, Quality, and Environmental Preservation
    We will ensure the appropriate quality of our products and services; We will do our utmost to prevent accidents and minimize losses due to disasters, and will act with due consideration to the preservation of the global environment.
  4. Fair and Free Competition
    We will conduct business transactions based on fair and free competition.
  5. Anti-Corruption
    We will maintain sound and transparent relationships with civil servants, government authorities, etc., both in Japan and abroad when conducting our business activities.
  6. Information Disclosure and Information Management
    We will manage information held by the Company appropriately with transparency and soundness of management. We will disclose information appropriately to the general public when necessary.
Promotion system

Our Group has established the “Risk Management and Compliance Committee” under the Enterprise Risk Management Committee for the purpose of deliberating on business execution and risk management issues from a more practical and specialized standpoint and is responding to cases of compliance concern, implementing compliance promotion activity plans, and monitoring the status of compliance activities. Regular committee meetings are held quarterly.

Every May, reports on risk and compliance from the previous fiscal year are provided at the meeting of the Board of Directors where they reflect on the previous fiscal year and, based on that, pass a resolution on the Basic Policy on Internal Control for the current fiscal year.

The heads of our Group’s divisions and the presidents of its affiliated companies appoint officers in charge of compliance promotion and are responsible for promoting compliance at each division and

Compliance promotion system
Figure
出光興産, DFF Inc.

Response to Compliance-Related Concerns

Reports from divisions and reports to the various hotlines based on the internal “Rules on How to Deal with a Crisis” are regarded as compliance-related concerns, and the Risk Management and Compliance Committee responds by providing support for countermeasures,directing or requesting investigations, and implementing measures toprevent recurrence.

Major compliance violations in FY2022 2
出光興産, DFF Inc.

Establishment of Hotlines

All the compliance-related reports received by the hotlines from employees in Japan and abroad are relayed to the Risk Management and Compliance Committee. The Risk Management and Compliance Committee, in turn, appoints individuals to investigations as necessary and thereby determines facts pertaining to the reported incidents while ensuring that the identity of anyone who consults with the center is kept secret and that said individuals are not subjected to disadvantageous treatment. In this way, the committee formulates countermeasures, including reprimands of employees responsible for compliance violation. The committee also provides those who file reports with feedback about measures executed in response while striving to prevent recurrences in line with the Company’s promotion system.

Domestic hotlines

We have established internal hotlines primarily for consultations on compliance and harassment. We also have an external hotline operated by a third party, and a qualified industrial counselor is available by phone.

These hotlines have been published on the internal information portal site, with their contacts also featured on posters displayed at each workplace, so everyone will be aware of their existence. In addition to ensuring the confidentiality of the content of consultations, we have also established rules banning disadvantageous treatment of those who report or consult with us.

Poster

Overseas hotlines

We have established the Idemitsu Global Hotline (IGHL) to handle reports from overseas business sites. It is for employees at approximately 40 bases located in China, Asia, and Oceania as well as the Middle East, Europe, Russia, and both North and South America, covering most of the Group’s overseas business sites. The IGHL accommodates consultation in all languages spoken in countries where Idemitsu maintains local subsidiaries.

Domestic /overseas
Internal /external
Name of contact Reception Eligible individuals Scope of consultation Consultation method Number of
reports in
FY2022
Domestic /internal Compliance Consultation Center General Affairs Department Officers and employees (including part-time, contract, seconded, and temporary employees) of the Company and affiliated companies as well as those who resigned less than a year ago Fraud, misconduct, and other compliance issues In principle, real names are to be used Email or letter 22
Harassment Consultation Center Human Resources Department Sexual harassment, power harassment, and other forms of harassment In principle, real names are to be used Email or letter 22
Domestic /internal Workplace Helpline operated by third party Third party
(certified industrial counselor)
Compliance issues, and harassment Can be anonymous Email or phone 6
Overseas /internal Idemitsu Global Hotline (IGHL) General Affairs Department Employees (including local staff and employees seconded from our company) of the Group’s overseas business sites Misconduct and harassment as well as violations related to occupational safety, facility safety, the environment, quality assurance and human rights problems Email 7
出光興産, DFF Inc.

Compliance Promotion Activities

In accordance with the Compliance Code of Conduct, we carry out ongoing education and training to ensure that each and every employee of the Group acts with integrity and fairness based on high ethical standards.

Compliance Book

In 2020, we published our Compliance Book, with the aim of offering specific compliance standards, including for preventing corruption and conflicts of interest and prohibiting insider trading. We periodically revise the book. All Group employees use the book as a tool to confirm the specific code of conduct. In addition to the Japanese version, we issued English edition of the Compliance Book in an effort to ensure that all Group employees at home and abroad are properly educated on compliance topics.

Photo
Compliance education

We provide regular e-learning on compliance once a year. In November 2022, 18,418 employees took the course (100% participation rate) as we offered it to employees at our company and 58 affiliated companies in Japan. The purpose of the course is to provide employees with mutual understanding about power harassment in the workplace and to give them knowledge about the revised Whistleblower Protection Act and our whistleblower system. In addition, we implement compliance training specifically designed for new hires and individuals appointed to managerial positions.

“Compliance Room”

We have opened the “Compliance Room,” a new webpage accessible from the internal information portal site. This page features compliance violation case studies and four-frame comic strips, with the aim of providing employees with information on the latest compliance concerns outside of Idemitsu, disseminating other relevant insights to a broad range of Group business units, and raising employees’ awareness of compliance.

Other dissemination of information

Since June 2022, we have been raising awareness through posters and distributing them to refineries, complexes, laboratories, and affiliated companies. In addition, at the head office, digital signage is used to disseminate information.

Photo
出光興産, DFF Inc.

Bribery and Corruption Prevention / Prevention of Anti-Competitive Practices

Bribery and corruption prevention

Whether it takes place in Japan or overseas, our Compliance Code of Conduct stipulates that all forms of corruption must be prevented. Furthermore, having established basic rules and systems to be observed in the prevention of bribery, we have upgraded them into the “Bribery Prevention Rules” with the aim of preventing violations of the OECD convention and the Foreign Corrupt Practices Act (FCPA) as well as laws and regulations, enforced in countries where we operate, that prohibit unfair competition and bribery. We are currently striving to ensure that these rules are strictly observed. Moreover, we regard anticorruption as a particularly important compliance issue for those working at our overseas sites, and are raising their awareness about the importance of specific preventive measures. We have included articles on such topics as the prohibition of bribery, such as the bribery of public officials and limitations on excessive gifts and entertainment, in our Compliance Book to raise employee awareness.

Number of cases of corruption and bribery in FY2022 0
Number of employee disciplinary actions related to corruption and bribery in FY2022 0
Prohibition of Bribery (Bribery of Public Officials): Rules of Conduct (excerpt from the Compliance Book)

We will not improperly offer, provide or promise economic benefits, such as money and goods, to public officials or equivalent, regardless of whether they are located in Japan or abroad. We will maintain sound and transparent relationships with politicians and governments. We will take a firm stance against improper financial transactions.

Prevention of anti-competitive practices

We have established the “Antimonopoly Law Compliance Rules,” which stipulate basic matters that must be observed to ensure compliance with the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade as well as competition laws enforced in each country in which we operate in addition to other relevant regulations. These rules also define necessary compliance promotion structures. Specifically, the Representative Director and President is responsible for providing overall supervision over activities aimed at ensuring the proper observance of these rules and preventing employees’ involvement in prohibited practices. The division heads of the Company and presidents of its subsidiaries are tasked with putting these rules into practice. To this end, they strive to ensure that appropriate self-management measures are implemented in a way that gives due consideration to risks associated with the characteristics of their businesses and organizational structures as well as country-specific circumstances and local antimonopoly laws.

出光興産, DFF Inc.