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Theme 3 : Growing with Society

Compliance

Compliance

Compliance

Promoting Compliance

Komatsu considers the maximization of corporate value with the pursuit of Quality and Reliability as a core component of our management principles. The Company believes its corporate value is the total sum of trust given to the Company by society and all our stakeholders.

In order to raise the total sum of reliability, it is necessary not only to improve business performance and to enhance the soundness and transparency of management, but to also become a company that has acquired societal trust. Thus, it is increasingly important for any company to comply with the rules of business society.

Frameworks for Promoting Compliance

To make certain that the entire Komatsu Group complies with the rules of the business community, Komatsu has appointed an executive officer at the head office in charge of compliance, and established the Compliance Department to handle this issue exclusively. The Compliance Committee, chaired by the president and CEO, deliberates the Group's action policies and important issues while regularly reporting the state of compliance-related activities to the board of directors.

Komatsu's Worldwide Code of Business Conduct

The company has formulated Komatsu's Worldwide Code of Business Conduct (established in 1998 and revised ten times to date) as a compilation of best business practices to be observed by officers and employees of Komatsu Group companies around the globe.

While Komatsu is expected to achieve its own sound and sustainable growth as a global corporation, a growing number of stakeholders also expect Komatsu to give due consideration to the environmental and social impacts of its business activities, products and services, and to make positive contributions to the sustainable development of society. Komatsu believes that meeting these expectations is our social responsibility as a good corporate citizen, while we seek to find solutions for ESG (Environmental, Social and Governance) issues through our core business activities. In addition, a positive cycle of solving ESG issues and improving our earnings is expected to facilitate sustainable growth for Komatsu. Part 1 of “Komatsu’s Worldwide Code of Business Conduct” (the “Code”) provides principles and standards for responsible business conduct that Komatsu follows to fulfill its social responsibilities. For Komatsu to continue to earn the trust of society, each and every employee of Komatsu is required to act in good faith, ethically and in compliance with laws, regulations and other rules generally recognized and respected by society (the “Rules”). Accompanied by examples, Part 2 of the Code contains select universally applicable rules which set the code of conduct that must be followed by all employees of Komatsu.

“Komatsu’s Worldwide Code of Business Conduct” consists of two major parts. The first part clarifies the Komatsu Group's compliance policy and declares that executives and managers of each Komatsu Group company comply with it. The second part specifically describes what all Komatsu employees worldwide should and should not do in order to comply with the rules of the business industry as individuals. We explain easy-to-understand examples of basic ethics in business operations, antitrust laws and anti-corruption.

Komatsu considers CSR as a key responsibility, which is shown by Komatsu's Worldwide Code of Business Conduct clearly focusing on the importance of CSR. Turning a PDCA cycle of (1) formulating a code of conduct, (2) implementing the code, (3) determining whether and how the code is following and (4) reacting to contingencies for corrections and preventing recurrences of problems is the pillar of Komatsu's compliance activities.
Komatsu's Worldwide Code of Business Conduct is available at:

Process for Compliance Activities

  1. Formulate the Code:
    Formulate the Code and the Five Principles of Compliance as a foundation for compliance activities and revise the Code (currently in its 11th edition) as required to reflect social change.
  2. Implement the Code:
    Implement the Code through education that corresponds to employee rank and their respective duties, and by communicating information in accordance with the Code.
  3. Determine the current status:
    Determine whether we comply with rules of business society by having all business units regularly report on their use of the Code, implementing compliance and risk audits, conducting "visualization survey" of potential risks and enhancing Komatsu's internal reporting system.
  4. Reacting to contingencies:
    Any issues identified during the above activities or otherwise will be addressed in accordance with the Code and be rectified through implemented preventive measures.

Upholding Thorough Compliance

So that employees remain acutely aware of compliance all the time, the Group is working to cultivate their consciousness of best business practices by displaying business unit posters in every Komatsu Group listing The Five Principles of Compliance (a condensed version of Komatsu's Code of Worldwide Business Conduct). For employee education, we have been expanding global e-learning since the 10th edition of Komatsu's Code of Worldwide Business Conduct to help employees around the world understand the Code. Preparations are also underway for education on the 11th edition issued in April 2021. In addition, group training on compliance is conducted in Japan and is divided into managers and general employees. In addition, we are expanding business-specific compliance training, and individual training in response to requests from departments. Furthermore, as training for risks for overseas operations, education on anti-corruption, antitrust laws, export control and more is provided to prospective employees to be based abroad.

We have established a "Compliance Portal" on our intranet to ensure wide-spread awareness. The monthly magazine "Everybody’s Compliance" provides explanations of important laws, lessons learned from other companies, and articles on human rights, harassment prevention and traffic rules for general business-related practices. Articles on anti-corruption, antitrust laws, and export control have been repeatedly published as particularly important fields. By issuing compliance-related journals, we also expand awareness-raising activities for our overseas affiliates. In this way, we are committed on a global scale.

The Group strives to detect risks early and implement reforms at Komatsu business units and Group companies through monitoring during financial audits and compliance and risk audits. The monitoring covers compliance in highly important areas such as safety and environmental practices.

Internal Reporting System

Komatsu has established the Global Compliance Hotline in its HQ to offer counselling to and handle reports from employees of Komatsu Group companies pertaining to the rules in the business world. In this way, we strive to detect and correct problems early. In addition, Komatsu companies establish and maintain Regional Compliance Hotline that properly handles compliance of alleged or suspectied violation of the Rules so that whistleblowers can raise claims in their native languages.  Please note that reports directed to Global Compliance Hotlline will be forwarded to the corresponding Regional Compliace Hotline for investigation and application of the Rules.  The Global Compliance Hotline will monitor how the report is handled by the employee in charge of the Regional Compliace Hotline, with the goal of assuring global possess across the globe. The Group actively encourages consultations and reporting through Komatsu's Worldwide Code of Business Conduct, the Five Principles of Compliance, and Group companies' workplace rules, making it clear that employees who use the system for appropriate reporting will not be treated unfairly in any way as a result of their action.

The contact persons on the Global Compliance Hotline discuss the handling of all consultations and reports to ensure they are handled appropriately. They also participate in training sessions and workshops to improve their skills in handling reports.

Status in FY2020

No incidents of note occurred during 2020.

DATA

1. Number of Internal Reports

  FY2018 FY2019 FY2020
Number of Internal Reports
(number of serious cases)

134 (0)

141 (0)

89 (0)

2. About Komatsu's Worldwide Code of Business Conduct

Established

January 1, 1998

Last revised

April 1, 2021 (11th edition)

Languages

20 languages (Planning)

Japanese, English, Chinese, Spanish, Portuguese, German, Dutch, Italian, Polish, French, Swedish, Finnish, Indonesian, Thai, Russian, Turkish, Persian, Tamil, Taiwanese, Korean

3. Compliance Education in FY2020

Global training on the code of conduct (e-learning and group training)

Approx. 13,400 people

<Group training (mainly Japan)>
・Level-based training
・Individual training by request(offices and related companies in Japan)

Approx. 1,600 people
Approx. 1,300 people

4. Compliance violation in FY2020
 

   No compliance violation had a significant impact on the management of the company.

5. With regards to anti-corruption

Number of employees who were dismissed because of conflict with Komatsu's anti-corruption policy (global)

Fiscal Year 2020: Zero

Fines imposed on Komatsu related to corruption / Amount of penalties (global)

Fiscal Year 2020: Zero

Number of employee training sessions on anti-corruption prevention (in Japan)

Fiscal year 2020: 12 times

Target audience: Approximately 90 (planned to be transferred overseas)

Establishment of internal reporting system related to corruption (global)

Prevention of corruption is specified in "Komatsu's Worldwide Code of Business Conduct" as a key priority issue. If there is any suspicion or concern involving corruption or the violation of business society rules, concerned parties are invited to use the Global Compliance Hotlines established at the Komatsu Head Office or within each region to report the problem.

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