Governance Compliance

Our Risk Management / Compliance Committee, which is chaired by the officer in charge of risk management for the entire Takasago Thermal Engineering Group, implements various initiatives based on our basic policy for compliance. Our Compliance Office—a dedicated department—develops our compliance system and promotes compliance initiatives, for example disseminating information to executives and employees and informing everyone about the consultation and reporting contacts.
We have incorporated major compliance themes—including harassment prevention and compliance with competition laws—into our compliance program to ensure a common understanding of the issues, and promote these themes through the Company-wide Risk Management / Compliance Committee, which checks the progress of measures and discusses cooperation and collaboration between departments.
We are also continuing to develop a Groupwide system by, for example, strengthening collaboration with the Company by appointing an officer in charge of corporate ethics and a person in charge of promotion at each of our domestic and overseas affiliates.

Group Compliance System Chart

The Group Corporate Code of Ethics and Awareness Activities Using Various Tools

We have established the Group Action Guidelines as a guideline for the basic conduct of executives and employees, and distribute our Group Corporate Code of Ethics to them in a booklet and otherwise portable form for use in daily operations, internal training programs, and elsewhere.
We also provide a variety of compliance-related training not only for employees, but also for partner companies in addition to regularly creating and distributing tools for mini seminars in the workplace.

Conducting Compliance Awareness Surveys

We periodically conduct Compliance Awareness Surveys to identify changes over time and new trends in employees’ compliance awareness.
We conduct these surveys to solicit responses about employees’ perceptions and conditions within the Company regarding various types of harassment and business orders with the aim of identifying and resolving problems as soon as possible.
Although our FY2022 survey revealed overall improvement, labor-related issues were identified as in the previous year. Regarding harassment, responses differed by level and other attributes, so we will continue to implement prevention and awareness activities.
We shared the results with all employees and used them toward various ends, including compliance training in individual departments. Analysis of the results was also reported to various committees to share information about issues and utilize the results in formulating activity policies and measures for improvement.

Results of Compliance Awareness Survey

Response rate	Awareness of various types of harassment
88%	I believe I have been sexually harassed (2%)	I believe I have suffered from an abuse of power (12%)

Maintaining Appropriate Relationships with Customers
(Anti-Corruption Initiatives)

In order to maintain appropriate relationships with our customers, our Group Corporate Code of Ethics prohibits bribery of public officials and commercial bribery of private-sector customers as well as excessive business entertainment.

Additionally, in light of recent global circumstances, and to clarify our anti-corruption policy, we have established Anti-Corruption Regulations for each of our subsidiaries in Japan and overseas, adapting them to local cultures and business practices and regularly monitoring them to enhance their effectiveness.

Anti-Corruption Regulations (Basic Policy)

1. The Company shall comply with all applicable domestic and foreign anti-corruption laws and regulations relevant to its business activities, and shall not engage in corruption or any conduct that could lead to the suspicion of corruption. Additionally, executives, employees, and others shall comply with the laws and regulations of each country, bearing in mind that some countries have laws and regulations that make it illegal to provide benefits to private companies for the purpose of obtaining illicit gains.
2. These Regulations do not prohibit the provision or transfer of all money or other benefits between executives, employees, and others on one side and relevant people on the other. Executives, employees, and others may provide or transfer money or other benefits as outlined in manuals of operational procedures for purposes that are legitimate (e.g. maintaining and establishing normal business relationships with relevant people, properly promoting the Company or the like, formalities at weddings, funerals, and other ceremonies) and not in excess of socially accepted norms.
3. The Company may exempt executives, employees, and others from disciplinary action if the Company determines that they provided money or other benefits to public officials or others because they were truly forced to do so to protect their own or their family members’ lives, bodies, property, or freedom.

Compliance with
Antimonopoly Act

Prevention	Clarification of rules with the Basic Rules on Compliance with Competition Law and the Guidelines on Contact with Other Companies in the Industry and periodical review of them Enhancement and improvement of training for compliance with competition laws
Detection and early discovery	Check and storage of records on contact with companies in the same industry Voluntary inspection by sales sections and management sections Internal audits or monitoring by legal sections
Response to the occurrence or suspicion of a violation	Establishment of procedures to prevent violations Development of an in-house investigation system
Measures to prevent any violations from being forgotten or the rules from losing substance	Periodical review and implementation of training in the “Compliance Month” Report of the status of management and operation of the Competition Law Compliance Program to the Internal Control Committee and the Board of Directors

In addition to internal contact points, we have established a broad range of reporting channels that include an outside contact point through a law firm separate from the Company’s legal counsel—thereby eliminating conflicts of interest—to provide pathways for reports about wrongdoing that are independent from the operational chain of command. We have established and enacted Rules on the Protection of Whistle-blowers in the Group that ensure impartiality and anonymity.
In FY2021, a total of nine cases were reported through the whistle-blower system companywide. Some of the cases involved harassment, while others stemmed from opinions about the Company.
The details of reports are reported to the Company-wide Risk Management / Compliance Committee and the Internal Control Committee while ensuring that whistle-blowers are protected. Efforts are made to discover problems as soon as possible and make improvements in addition to establishing and maintaining proper systems, for example incorporating the details of the reports into the selection of topics for compliance training.
In addition to spreading the word about the whistle-blower system to all employees at overseas locations, we are promoting transitions to multilingual contact points.

Flow Chart of Whistle-blowing and Consultation

Number and Breakdown of
Whistle-blowing Cases

Classification	FY2020	FY2021	FY2022
Harassment	4 (1)	2 (0)	4 (0)
Opinions to the company or superiors	1 (0)	4 (2)	5 (3)
Labor management, etc.	0 (0)	1 (1)	0 (0)
Other	1 (1)	2 (2)	1 (1)
Total number of reports	6 (2)	9 (5)	10 (4)

Numbers in parentheses indicate cases that were not subject to correction