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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 nine times to date) as a compilation of best business practices to be observed by officers and employees of Komatsu Group companies around the globe. Rules of business society include not only laws in a narrow sense, but also outlines rules that are generally respected in society. Also, today, as the importance of roles to be played by company in society is increasing, it is important for each and every employee to be fully aware of "corporate social responsibility" and to act in a manner that gains society's trust. Komatsu's Code of Conduct, which shows the basic principles, policies and philosophies that should be observed anywhere in the world, is an excellent guide to living in accordance with the rules of these broad business societies.

“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. The pillar of Komatsu's compliance activities is based on constant repetition of the following process, outlined in the Code : (1) Formulate the Code, (2) Implement the Code, (3) Determine the Code's current status, and (4) Address inadequacies.
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 tenth 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. Address inadequacies:
    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). As 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 across all operations understand the Code. Also, compliance training in the form of group education is being conducted according to the levels of 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.

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 "Compliance Hotline" consultation office both internally and externally at the Komatsu Group companies to respond to consultations or reporting from Group company employees that pertain to rules of business society aiming for prompt detection and correction of those problems. 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.

Status in FY2018

No incidents of note occurred during 2018.

DATA

1. Number of Internal Reports

  FY2016 FY2017 FY2018
Number of Internal Reports
(number of serious cases)

95 (0)

105 (0)

134 (0)

2. About Komatsu's Worldwide Code of Business Conduct

Established

January 1, 1998

Last revised

October 1, 2017 (10th edition)

Languages

20 languages

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

3. Compliance Education in FY2018

Global e-learning

Approx. 30,000 people

<Group training (mainly Japan)>
Level-based training
Individual training by request

Approx. 1,700 people
Approx. 700 people

4. Compliance violation in FY2018
 

   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 2018: Zero

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

Fiscal Year 2018: Zero

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

Fiscal year 2018: 12 times

Target audience: Approximately 100 (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 Compliance Hotlines established at the Komatsu Head Office or within each region to report the problem.

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