Ethics and Compliance
In All That
Working ethically and safely is essential for NSG Group to be sustainable.
NSG Group has in place the Group Ethics and Compliance (E&C) function and implements ethics and compliance programs in accordance with “Fundamental Policies of the Company on creation of effective internal control system of the Group” established by the Board of Directors.
The Group E&C function supports the Group in achieving its goals by assessing and analyzing ethics and compliance risks and establishing ethics and compliance programs that align with the Group's strategic goals to ensure the success of our business.
In line with these objectives, more specific key performance indicators (KPIs) have been developed to help measure the effectiveness of the ethics and compliance program as shown here.
Code of Ethics and Education
The NSG Group Code of Ethics broadly covers the ethical behavior expected of our employees in the work place, including compliance with all laws and all major Group policies, procedures and guidelines. The Code is available in all 19 Group languages.
The Group's new employee education is to cover not only the Code of Ethics, but also conflict of interest, fraud and IS security. Even for other existing Group employees, the fraud and IS security educations are mandatory. Key Roles for competition law compliance (CC) and anti-bribery and anti-corruption (ABAC) are also required to complete the relevant online education. The education modules will be assigned to the Group employees accordingly through the NSG Group Ethics and Compliance Education Center. We will continuously monitor its effectiveness as well as the completion rate of the educations.
New starters completed the training packages at their onboarding
Key Roles completed the CC and/or ABAC trainings accordingly
98.6 percent of Key Roles completed relevant trainings during the annual education campaign in FY2022. 85 percent of managers completed within 5 days before the deadline with increase by 9 points from FY2021. (Click here for more specific targets and results)
A Global Ethics Network is aimed to enhance the ethical culture and monitor compliance risks throughout the Group. The Ethics Network consists of senior managers who have been appointed Regional Ethics Ambassadors and Ethics Champions. Both roles will play a vital part in the communication and promotion of the Code of Ethics by leading and championing ethics and compliance in their local region or function which in turn will help embed ethics into the business.
Ethics Ambassadors across SBUs and Functions all over the world
Group E&C Function and Communication
Group E&C has a direct reporting line to NSG Group Audit Committee. Its responsibilities include the development, implementation and maintenance of an integrated internal ethics and compliance management and control system, as well as the creation and review of relevant Group policies and procedures.
Group E&C function has regional structure with E&C regional managers in Europe, North America, South America and Asia to embed E&C culture into the whole organization as well as cover risks in each region. In this regard, Group E&C puts importance on local communications even online during the COVID situation to reach out to local business/function people, liaising with the relevant Ethics Ambassadors and Champions.
The Group has set Ethics and Compliance Week every year since FY2022, which reconfirms our commitment to ethics and compliance, raising awareness of its significance for the Group business. Various events are held throughout the Group organizations such as message videos from the executive officers and senior managers including C-suite, daily communications, regional activities and relevant online educations during the Week. The concept last year was “Back to Basics.” The basic concept and requirements under the ethics and compliance programs and their significance for the Group businesses were communicated to the employees worldwide throughout various channels. In Asia, one of the high-risk regions, the Group implemented a E&C survey to directly listen to employees, receiving cir. 1,300 responses. The Group shared the specific concerns and questions raised in the survey as well as the answers or possible approach to them on its Intranet site.
The concept this year is “Make Respect Visible.” Respecting each other is crucial for us to accomplish each assigned task effectively and efficiently as a team so that we can achieve the business targets. However, we have experienced that respectful behavior or attitude toward others tended to be invisible at workplace, that likely gave rise to poor communications, relationships and work environment, leading to harassment issues in some cases. We focus, therefore, on making respect visible this year.
Top level communications regarding ethics and compliance were made four times in FY2022 including the above-mentioned message videos from the top management during the Week. (Click here for more specific targets and results)
Group E&C periodically issues Group Ethics and Compliance Briefings to employees. The Group's communications team translates the briefing into multiple languages and distributes to all NSG Group locations, which is also made available on the Group's Intranet. In addition, each regional E&C manager issues regional E&C newsletter to the relevant local employees.
Group E&C shares with the heads of Strategic Business Units and HR the case details reported via the E&C Hotline system to help improve the workplace environment and even business performance while taking care of its confidentiality.
Conflict of Interest Disclosure
Under our Code of Ethics, all employees are responsible for acting in the best interest of the Group. Employees are required to complete an educational module and at the end are asked to disclose any interest, activity or investment which actually or potentially could cause conflict against that of the Group. Group E&C reviews all reported disclosures and discusses certain matters with the relevant business or function managers if necessary. Feedback is provided to all reporters and in some cases, possible plans to mitigate exposure are also provided.
Activities for Competition Law Compliance and Anti-Bribery/Anti-Corruption
Regarding certain high-risk areas in the Group business such as competition law compliance (CC) and anti-bribery and anti-corruption (ABAC), NSG Group establishes and controls relevant policies, procedures and manuals. These internal rules stipulate a wide range of matters accordingly such as specific types of prohibited actions, the necessity and importance of compliance, and the impact of any violations to ensure that the Group conducts business in compliance with relevant laws of all countries where we operate.
There were no violations of competition law and anti-bribery and anti-corruption law in FY2022.
As mentioned in “Code of Ethics and Education” above, employees who meet the Group's criteria for CC and/or ABAC risks are appointed Key Roles accordingly and required to complete the relevant online educations at onboarding and annually, which includes explanations of the applicable laws and regulations and internal policies and requirements under the ethics and compliance programs as well.
Further, to ensure transparency of employees' actions, NSG Group policies provide reporting requirements about CC and ABAC. Group E&C centrally manages an online reporting system where employees are required to document or obtain prior permission from Group E&C whenever they contact our competitors, join a trade association, (CC risk controls), make charitable contributions, give or receive certain amount of gifts and entertainment, do businesses with third parties, and interact with public officials (ABAC risk controls). E&C regional managers confirm or approve the specific requests and notifications considering their regional or countries' risks.
NSG Group is monitoring around 500 third parties such as agents, consultants and joint venture partners that meet certain risk criteria of ABAC. This process includes due diligence, assessment and reputational screening.
Reporting of Concerns – Ethics and Compliance Hotline
NSG Group is committed to maintaining an environment in which employees can report, without fear of retaliation, any conduct they know of or suspect to be in violation of law, Group Code of Ethics policies/procedures or guidelines.
For this purpose, the Ethics and Compliance Hotline system provides an easy and simple way to report concerns, while employees are encouraged to speak to line management, HR or other relevant functions first.
This Hotline system is also available for any stakeholders outside the Group.
||■ Open to third parties
|■ Anonymous report is acceptable unless prohibited by law.
|■ 7/24/365/Multiple languages
|■ Toll free
|■ Anyone can ask questions.
|■ Operated by a qualified third party with a data privacy module
Managers who received the report from their colleagues must file the designated reporting form (Manager's Report Form) or report it directly to Group E&C if they believe that it has a potential adverse or negative legal, financial or reputational impact on NSG Group.
Since inception in FY2013 there had been 638 reported concerns managed via the Ethics and Compliance Hotline system as of the end of March 2022. FY2022 experienced 124 allegations reported via the Ethics and Compliance Hotline and Manager's Report Form with decrease by 13 from FY2021. Group E&C continues to analyze variance between the number of the actually received reports vs. the benchmark data, as well as details and trends of the reported cases so that the Group will take necessary actions for improvement.
The ratio of reports from Manager's Report Form (MRF) was 28 percent of the total reports in FY2022 with increase by 17 points from FY2021. (Click here for more specific targets and results) MRF is a platform for handling the cases reported to or consulted with managers first, which indicates some degree of “transparency” in the workplace. The benchmark is that 30% cases are reported through MRF. Group E&C continues to promote the Reporting of Concerns system including MRF via various communication channels such as internal bulletins and newsletters.
NSG Group constantly measures the effectiveness of the system by using the metrics against the benchmark region by region.
As explained above, FY2022 experienced the decreased number of the reported cases. But you can see the general trend of increasing numbers for the last few years. We understand that the recent actions have contributed to such increase of the reported cases; such as creation of or revisions to the relevant policies and our constant and continuous communications regarding the Reporting of Concerns System including Hotline through various channels like the aforementioned newsletters and online educations. The Group Policies on Ethics and Compliance and Reporting of Concerns which were revised in FY2021 more clearly define the managers' reporting requirement and the process of the case investigation and its follow-up. We established the Group Anti-Retaliation and Reporter Protection Policy which more explicitly provides that the Group never tolerate any form of retaliation against those who report concerns in good faith.
This global Hotline would be also deemed as “Internal Whistleblowing System” for NSG and its consolidated subsidiaries in Japan in the context of the revised Whistleblower Protection Act of Japan coming into effect on June 1, 2022.
We will continuously strive to embed “Transparency In All That We Do” committing to more open corporate culture.
Reports to Management Committee and Audit Committee
Group E&C reports to not only Management Committee but also Audit Committee which consists of Independent External Directors, periodically or on as-needed basis, on status, progress and issues of the above-mentioned ethics and compliance programs.