Compliance

Basic Approach and Policy

Top Message

The following top message has been issued to all directors, officers and employees (including fixed-term job-specific employees, temporary employees, part-time employees, trainees, etc.) since the Nabtesco Group believes it is a required condition that all of us working in the Nabtesco Group act in accordance with the same compliance standards, to ensure that the business activities of the entire Nabtesco Group are conducted on the basis of high ethical standards and transparency.

To All Nabtesco Group Directors, Officers and Employees

The Nabtesco Group is strictly committed to high standards of legal compliance as well as business ethics. The compliance standards are fundamental principle of Nabtesco Group to be successful in business and implement our corporate philosophy "The Nabtesco Way."
Moreover, there is no doubt that this approach is, in today's global marketplace, essential for us to be chosen as preferred business partner by our customers.

In December 2016, we established the Nabtesco Group Code of Ethics. Subsequently, on April 1, 2022, we revised the Code. We also made a handbook to explain the revised Code of Ethics.
If ever you are in doubt with respect to any compliance issues in your daily operations, please refer to this handbook to confirm what action you should take. You are also expected to promptly report to and consult with your supervisors, the corporate ethics hotline or other whistleblowing helplines or departments responsible for compliance if you have concerns about or witness unacceptable behavior.
You should not hesitate to take such actions because of the pressure of achieving business target or winning a new business or by an undue order from your superior. In the Nabtesco Group, any profit derived from any non-compliance will not be tolerated.

Trust from our stakeholders is very hard to win, but very easy to lose. Actually, we have seen many cases where only one non-compliance case brought a prestigious company into a management crisis.
Compliant behavior with the Nabtesco Group Code of Ethics based on high integrity and transparency is source of business of the Nabtesco Group.
As the CEO and the chairperson of the Nabtesco Group's Compliance Committee, I am committed to give you any support as you may require to adopt such behavior. Let us steadily embrace and meet challenges to make the Nabtesco Group "Leaders in Innovation for the Future" while always taking actions based on the Code of Ethics.

Representative Director,
President and CEO
the chairperson of the Nabtesco Group's Compliance Committee

Kazumasa Kimura

Basic Approach to Compliance

The Nabtesco Group has defined "Compliance" as "meeting the expectations of stakeholders (customers, employees, business partners, shareholders and local communities) not only by complying with laws, regulations and internal company rules (including manuals, guidelines and other implementation rules) but also by behaving in accordance with generally accepted social and ethical standards."

The Nabtesco Group is working to promote and strengthen compliance management as our top priority based on the understanding that the compliance standards are the fundamental principle of Nabtesco Group to be successful in business and to implement our corporate philosophy, "The Nabtesco Way" is essential for us to be chosen as preferred business partner by our customers in today's global marketplace.

Nabtesco Group Code of Ethics, Handbook for the Nabtesco Group Code of Ethics

The Nabtesco Group has established the Nabtesco Group Code of Ethics.

The Legal & Compliance Department, which is in charge of compliance issues, fulfills a central role by increasing employees' compliance awareness in addition to fostering their compliance with laws and regulations in order to enhance the Group's corporate value over the medium- to long-term. The Nabtesco Group Code of Ethics defines actions that each officer and employee should take to realize the corporate philosophy in his/her business activities from compliance perspectives.

We check the effectiveness of the Code of Ethics every year and revised it in April 2022 in response to the recent revision of related laws and regulations, changes in the global business environment and situation, and the requirements to be met concerning action plans on business and human rights.

In order to help directors, officers and employees to deepen their understanding of the Code of Ethics and take specific actions based on it, we created the Code of Ethics and the Compliance Handbook in multiple languages for use in compliance education and awareness-raising activities within and outside Japan.

Nabtesco Group Code of Ethics

In order to conduct our business activities in line with our corporate philosophy, we set the Nabtesco Group Code of Ethics as the behavioral standards to be met by all Group members to ensure compliance*.

*Compliance means meeting the expectations of stakeholders (customers, employees, business partners, shareholders and local communities) not only by complying with laws, regulations and internal company rules (including manuals, guidelines and other implementation rules) but also by behaving in accordance with generally accepted social and ethical standards.

System

Enhancement of the Compliance System

The Nabtesco Group has established the Group Compliance Promotion System Regulations based on the Basic Policies for the Construction of an Internal Control System. Its Compliance Committee has been set up to deliberate the basic policies and important issues related to the compliance system and develop and strengthen the system and report on the results of activities. This committee, chaired by the CEO, who assumes final responsibility for the Group’s compliance, includes external experts among its members and serves as an advisory board to the Board of Directors.

In addition, by appointing "Chief Compliance Officers" and "Compliance Officers" who support the Chief Compliance Officers for all of our administrative departments, in-house companies and Group companies within and outside Japan, we are working to increase understanding of and ensure compliance with the Nabtesco Group Code of Ethics throughout the Group, through the guidance, awareness-raising, and training for all directors, officers and employees (including fixed-term job-specific employees, temporary employees, part-time employees, trainees, etc.). We hold a Compliance Liaison Meeting to enable the Chief Compliance Officers and Compliance Officers to share information and exchange opinions, both in Japan and in all overseas regions where we conduct business (China, other Asia region, North America and Europe).

Furthermore, local in-house lawyers are deployed at Shanghai Nabtesco Business Management Co., Ltd. in China and Nabtesco Europe GmbH, the European regional headquarters in Germany. This, through close collaboration with the headquarters Legal & Compliance Dept., enhance a global legal and compliance system.

The operational status of the compliance system is regularly reported to the Compliance Committee and the Board of Directors.

Compliance Promotion System

Compliance Promotion System

Measures

Whistleblowing System

The Nabtesco Group has established a whistleblowing system as part of its compliance management initiatives.

In Japan, we launch an internal contact point (the Legal & Compliance Dept.) and external contact points (a law firm and a specialized company) to implement the Whistleblowing System (Nabtesco HotLine). Through this system, we have been taking measures for the prevention, early detection and correction of any misconduct, such as bribery, the formation of a cartel, or harassment (including bullying). The system may be used by all of directors, employees (including fixed-term job-specific employees, temporary employees, part-time employees and trainees) of the Nabtesco Group companies and former employees within a year from the date of retirement in Japan.

In addition, to ensure that all employees are aware of the system, we have been featuring it on employee portal sites and in the Compliance News, an internal newsletter, while at the same time distributing posters and cards.

In FY2022, approximately 36 consultation requests including those without suspicion were received through the system. By content, 14 cases were related to "harassment," 12 cases to "personnel and labor management" and 4 cases to "fraud and violation of laws and regulations" (all of these cases are based on the classification in light of the content of consultation with whistleblowers, and do not represent the number of cases in which misconduct was actually admitted.). Each request was handled appropriately after conducting a fact-finding investigation. Whistleblowing report is periodically escalated to the Compliance Committee by Legal and Compliance Dept.

On the overseas side, we introduced a scheme to handle whistleblowing information sent from Group companies in China, Europe, North America, and Southeast/South Asia. The schemes are in operation in every area in which we have operations bases.

These schemes ensure that whistleblowers are not treated unfairly and their privacy is protected.

Whistleblowing System (Nabtesco HotLine) in Japan

Internal Reporting System (Hotline) in Japan

*A whistleblowing report can be made 24 hours a day, 365 days a year via email or in writing.

Global Whistleblowing System (Nabtesco Global HotLine)

Global Internal Reporting System (Hotline)

*A whistleblowing report can be made 24 hours a day, 365 days a year

Hotline for business partners (including suppliers, etc.)

The Nabtesco Group has a hotline for business partners with a view to ensuring transparency and fairness in its transactions with business partners for the sustainable development of mutual relationships.

We will prevent the occurrence of problems or take corrective actions in response to the information given to us via the hotline about the Nabtesco Group’s or its individual member’s unfair acts or acts that might constitute misconduct.

Compliance Education

Every year, the Group provides various types of position-specific and theme-specific compliance education to all target members through group-based on-site training and e-learning, among other methods, to foster the compliance awareness of directors, officers and employees (including fixed-term job-specific employees, temporary employees, part-time employees, trainees, etc.).

In Japan, we provided training courses on the prevention of insider trading, anti-bribery measures, the Antitrust Law, the Subcontract Act, security export control and the prevention of harassment. Overseas, we provided compliance education aimed at instilling and promoting understanding of the Nabtesco Group Code of Ethics, the Group’s commitment to preventing bribery, cartels and accounting fraud, and the Nabtesco Global HotLine in the countries and regions around the world where the Nabtesco Group has business bases (China, Asia, Europe, and North America).

In FY2022, in order to raise the awareness of our inside directors, executive officers and departmental managers regarding Corporate Ethics and Corporate Culture, we invited an outside lecturer to provide them with training on the theme of “Corporate Ethics ~Learning Corporate Ethics and Corporate Culture from Quality Fraud Cases~."

Various Types of Compliance Training Results (FY2022)

Training content Area in which training was provided Number (percentage)
of employees who
received training
Compliance training
(on the Code of Ethics, for the prevention of harassment and private use of social media)
Japan 6,084
(91.8%)
Compliance-related guidelines
(on entertainment expenses and the use of social media)
(Corporate Ethics Month)
Japan 2,272
(95.2%)
Overall compliance
(Nabtesco Group Code of Ethics, the Group’s commitment to preventing bribery, cartels and accounting fraud, and the Nabtesco Global HotLine)
Overseas 647
(99.8%)

Compliance Meeting

With the enhancement of employee awareness of compliance in mind, we ensure that compliance meetings are held once a year at workplaces to freely discuss compliance-related themes.

Compliance Awareness Survey

We have established every October as corporate ethics month internally and distribute a CEO video message on compliance every year, while also conducting a compliance awareness survey to understand the degree of compliance awareness.
In FY2022, we conducted the compliance awareness survey targeting the Group’s employees in Asia (excluding China and Thailand) for the first time, in addition to those already have conducted the survey in Japan, China, Thailand and North America.

Training for Directors and Officers

We provide our inside directors, executive officers and senior managers with compliance training each year.
In FY2022, we invited an outside lecturer to provide training on the theme of "Corporate Ethics ~Learning Corporate Ethics and Corporate Culture from Quality Fraud Cases~."

Information Dispatch and Enlightenment Activities

Corporate Ethics Month

We designated every October to be Nabtesco Group Corporate Ethics Month and have been conducting a campaign, led by top management, to enhance the compliance awareness of employees at each workplace of the Nabtesco Corporation and its Group companies.

In FY2022, we distributed a video message from the CEO regarding compliance to all directors, officers and employees (including fixed-term job-specific employees, temporary employees, part-time employees, trainees, etc.) of the Nabtesco Group in Japan and overseas, making it available in eleven languages in order to reemphasize the importance of compliance. In addition, we distributed messages from the presidents of each Group company and each in-house company.

Activities

To raise employees’ compliance awareness, we used the intranet as well as handouts to disseminate information to all employees.

Examples of Main Activities Conducted
  • Publication of the newsletter on compliance (issued monthly in the Japanese language and bi-monthly in the Chinese and Thai languages)
  • Issue of collections of cases and guidelines regarding compliance

Anti-Corruption Measures

Basic Anti-Bribery Policy

We have the Nabtesco Group Global Anti-Bribery Policy in place, considering the elimination of risk of bribery as one of the important areas of compliance. Applicable to Nabtesco Corporation and all its Group companies in and outside Japan, this policy clearly prohibits any acts of bribery including facilitation payments, requires the establishment of internal rules and guidelines regarding entertainment and gifts, and rules out any engagement with third parties who may pose a bribery risk. In addition, this policy is published on the website of Nabtesco Corporation in multiple languages along with a message from the CEO.

Furthermore, all Group companies must ensure that their internal anti-bribery regulations and guidelines are maintained based on this policy.

Anti-Corruption System

If any Group company, whether based in Japan or abroad, notices any situation that is actually, or likely to be, in violation of its internal anti-bribery regulations, it is obligated to report it to the General Manager of Legal & Compliance Dept. as well as to Chief Compliance Officers and Compliance Officers of each in-house company and Group company, and then take steps appropriately according to the instructions given by the relevant managers.

To enter into a new contract with any intermediaries such as a business partner or sales agent, we make the necessary and appropriate investigations in advance and refrain from concluding contracts with any intermediaries that are actually, or likely to be, involved in corruption (bribery, corruption, etc.). More specifically, according to the guidelines, we select intermediaries through due diligence including careful examination from the perspectives of country risk and contact with public officials, among other factors. By going through these processes, we conduct prior investigations of bribery risks. On top of that, we take additional measures such as the inclusion of anti-bribery clauses in relevant contracts and explaining the Group’s basic anti-bribery policy.

Anti-Corruption Activities

We are working to anti-bribery across the group by rolling our basic policy to each Compliance Officer in each group company, in Japan and abroad, as well as promoting compliance education and the creation of internal standards and guidelines at each group company.

In particular, we have been conducting activities to ensure that the basic anti-bribery policy is fully understood by the employees of all Group companies including overseas Group companies as well as an assessment regarding the bribery-related risks faced by each Group company every year.

We have been participating in the Anti-Corruption Subcommittee of the United Nations Global Compact and workshops on the investigation of misconduct sponsored by the Business Ethics Research Center (BERC). Through these efforts, we actively engage in exchanges of opinions and information with other companies.

The Nabtesco Group has not been fined for any bribery offense since its establishment in FY2003. We have made no political donations since 2003.

In FY2022, there were no employees disciplined due to engagement in corruption, including bribery.

In FY2022, costs were 0 yen for penalties, penal regulations and amicable settlements pertaining to corruption.

Prevent Cartels

To ensure compliance with antitrust/competition laws and regulations on an international scale, the Nabtesco Group stipulated the Code of Conduct to Prevent Cartels as a set of internal rules that define prohibited practices, rules on contact with competitors, and the audit authority of the Legal & Compliance Department and the Business Auditing Department, among others. Then, all Group companies in and outside Japan established their respective codes of conduct to the same effect.

We have also been making efforts to provide training programs on the prevention of cartel activities, and have provided training on measures to prevent cartel activities at a meeting of executive officers and an anti-cartel e-learning program targeting the sales departments of Nabtesco Corporation and its Group companies within and outside Japan.

We make risk assessment on issues related to the practices that are deemed anti-competitive (according to antimonopoly, anticartel and other laws), targeting all Group companies including those outside Japan, every year.