Compliance Initiatives

Whistleblowing system

Our whistleblowing system (helplines and hotlines) can be used by everyone who works at NGK and every Group company location. This includes officers, employees, employees dispatched on external assignments, advisors, contract employees, temporary employees based on a temporary employment agreement, and resident employees accompanying a service contract. Consultations and reports should be handled by a designated agent in principle, but it is also possible to seek consultation anonymously through an outside hotline. Our company rules guarantee protection of those seeking advice or reporting issues. We have also revised the company rules and established a structure to align with enforcement of the revised Whistleblower Protection Act.

Organization of whistleblowing system

Helpline

We have established a helpline to receive inquiries and reports from employees aimed at curtailing and preventing activities contrary to the spirit of the NGK Group Code of Conduct and to facilitate quick resolution when issues occur. Each Group company outside Japan has its own helpline. In FY2021, these helplines received requests for consultation on a variety of issues, including harassment, rule violations, and quality issues.

Number of Helpline Consultation Cases (NGK)

In FY2021, there were a total of 43 consultations concerning harassment, interpersonal relations, various rules and regulations, and the like. Each case was handled carefully in consultation with outside lawyers, and none of the details of the whistleblowing had an impact on company operations. Hereafter, we will continue to periodically evaluate and improve the effectiveness of the NGK Group Code of Conduct and our compliance measures.

Hotline

We have established a hotline as a whistleblowing system for responding to fraud and legal infractions committed by senior management of NGK, and all violations related to competition laws and anti-corruption laws. Outside lawyers manage the hotline and the Business Ethics Committee, which consists mainly of outside directors, handles issues. The Committee reports these issues to the Board of Directors and takes corrective steps.
We continue to set up hotlines at Group companies outside Japan to respond to fraud and legal infractions committed by senior management, while taking the circumstances in each country into consideration. All Group companies outside Japan have set up hotlines for matters related to competition laws and anti-corruption law-related violations.

Compliance Card

To ensure thorough awareness of the whistleblowing system, we created a Compliance Card that employees could keep with them at all times, and distributed it to all employees at NGK and all Group companies in Japan. Also, in line with the revisions to the Whistleblower Protection Act, in FY2021 we revised our company regulations to allow former employees to contact the helpline/hotline for one year after leaving the company.

Compliance with Laws and Regulations

Observing Competition Laws, other laws and regulations pertaining to business transactions

In addition to mandating compliance with competition laws in the NGK Group Code of Conduct, we have established the Competition Laws Compliance Rules, set forth to comply with international standards. These standards are strictly enforced by the NGK Group. We have established these policies and procedures in order to eradicate unfair business practices and maintain fair and equitable business relationships with our business partners.
We also provide education and training aimed at ensuring widespread awareness and thorough compliance with the Competition Laws Compliance Rules and the Competition Laws Compliance Handbook. The Competition Laws Compliance Activity website we established posts practical manuals to guide compliance with competition laws. The Competition Laws Compliance Handbook was revised in FY2021 to accommodate changes in social conditions.

Anti-Competitive Behavior Incidents

In FY2021, there were no confirmed incidents of anti-competitive behavior in the NGK Group.

Strengthening Our Compliance System in Relation to Competition Laws

These items continue every year

Strict Adherence to Laws and Regulations Relating to Import/Export Management

As part of its full compliance efforts, NGK is engaged in strictly observing and enforcing laws and regulations related to import and export control. Based on the NGK Group Code of Conduct, we stipulate abidance with laws and regulations related to secure export control, and we carry out export control and employee training in accordance with internal rules and the Export/Import Handbook.

Using Databases to Conduct Comprehensive Inspections and Customs Management

In response to the Foreign Exchange and Foreign Trade Act and other export control-related laws and regulations, NGK has screened exports to determine whether export licenses are required and has recorded screening results in a security export control database. However, since October 16, 2017, we have moved to a security export control system (TTP) and are performing management via this new system. Furthermore, export management with respect to the export of certain products is conducted under the Japanese government’s AEO (authorized economic operator) Program.
We have used an export/import cargo management ledger to fulfill our obligations to track and record imports and exports; however, since our switch to a security export control system (TTP), we have been using the system’s shipment ledger to track and record exports. We continue to use an import cargo control ledger for imports. Each department performs voluntary inspections of imports and exports under the AEO Program at the start of the fiscal year.
In addition, we use NACCS data (Nippon Automated Cargo and Port Consolidated System) to verify the completeness of export/import cargo management ledgers and shipment ledgers. We have achieved nearly 100% completeness for both imports and exports.

Familiarization with the Export/Import Handbook

NGK also makes efforts toward thorough compliance with the Export/Import Handbook, which was published in FY2012 and summarizes items for the observance of export/import customs clearance regulations.
In addition to publishing this handbook on the company intranet where it can be viewed throughout the entire company, we provide training to spread awareness of the content of the handbook through study meetings related to export/import management conducted in each business division.
Study meetings on the AEO Program and export/import management are held one or more times per year targeting relevant staff in divisions responsible for export and import activities. In FY2021 these meetings were held not only in-person, but via web conferencing and newsletters. The meetings were held a total of 32 times, with 963 employees in attendance.

Independent review of Competition Laws Compliance Program

Since FY2015, NGK has contracted PwC Advisory LLC (hereinafter, “PwC”) as an independent compliance professional. We retain PwC to perform an annual review of the NGK Group’s implementation of its competition law compliance program according to the Competition Laws Compliance Rules. PwC also assesses the overall oversight and reporting structures in place for NGK Group companies, both in Japan and overseas locations. In FY2017, PwC began conducting interviews with the directors overseeing NGK’s various business groups in order to assess the tone of each director’s approach toward competition law compliance and further enhance their awareness of these efforts. The results of these reviews are used in operating and improving the competition law compliance program and other purposes.

Corruption Prevention Structure

The NGK Group Code of Conduct states, “We will never in any manner undertake bribery” and “We will undertake business activities with common sense and based on strict compliance and ethics.” To this end, we implement anti-bribery measures in order to ensure fair and transparent transactions. In FY2015, we formulated anti-bribery rules for dealing with foreign public officials in order to ensure compliance with anti-bribery laws as well as ethical standards for business conduct. These rules prohibit engaging in acts of bribery, either directly or indirectly through a third party (entertainment, gifts of money and/or goods). The rules likewise prohibit payments to public officials to facilitate administrative procedures. Our Auditing Department also began reviewing overseas money transfers and entertainment expenses from FY2017.

Conducting Anti-Bribery Training

In addition to having in-house lecturers provide job grade-specific training to NGK employees, in FY2019 we began conducting training for sales department employees that incorporates interactive lectures by outside lawyers and group discussion of case studies. We also arrange attorney-led seminars and other training at all Group companies.

Corruption and Bribery Incidents

In FY2021, there were no confirmed incidents of corruption or bribery in the NGK Group.

Anti-Harassment Measures

In FY2021, our measures to combat harassment in the workplace included the position-based lectures we have carried out in the past, plus a continuation of the video-based training targeting executives and employees at NGK and Group companies in Japan that we held in FY2020 out of consideration for the risk of infection with COVID-19. It defined both sexual harassment and harassment from a position of power, explained how to handle them in accordance with workplace regulations, and used multiple case studies to deepen participant understanding of what constitutes harassment and how it can be prevented. We continue working to prevent harassment before it occurs and improve the workplace environment.

Anti-Harassment Training

Compliance Education

Compliance Education for Employees

Compliance training and awareness among corporate officers and employees is driven primarily by the Group Compliance Department and the Legal Department. In addition to career training and training for employees to be posted overseas, we provide Laws and Compliance Seminars to explain laws and regulations and to introduce case studies. Since FY2018, we have included quality compliance and contract observance as part of our career education courses.

Compliance Education Conducted in FY2021 (Overall)

Competition Law Education Conducted in FY2021

Anti-Bribery Training Conducted in FY2021

Other Dissemination Activities

We post the Compliance Newsletter on the company’s intranet once a month. The Newsletter features a four-frame cartoon that explores familiar themes followed by detailed explanations of what we can learn from these examples.
In FY2017, we began making October the annual compliance strengthening month, during which we do things such as put up educational posters and inform employees about the whistleblowing system.
In FY2021, we trialed a Compliance Activities Award System and have begun to put it into practice from FY2022. We give awards for compliance activities, from each department and Group companies, that are particularly independent and original. They are then publicized throughout the NGK Group as good examples.

Themes Covered in the Compliance Newsletter in FY2021