Compliance and Risk Management

Compliance

Basic Idea

Since the time of our founding, our basic management policy has been to “contribute to the development of the economy and society while pursuing profits,” and we have placed an emphasis on fulfilling our social responsibilities as a good corporate citizen.
Implementation of compliance is becoming increasingly important in a diversified society. We will make efforts to become a truly global company that is trusted by society and contributes to the world, by not only complying with laws and regulations and social norms, but also engaging in business with integrity and high ethical standards.

We revised the Corporate Ethics Handbook, which has long been used as a tool for improving compliance awareness, and distributed it to the employees of Group companies as a compliance handbook in April 2022. As in the past, the compliance handbook continues to present the basic values of “trust,” “integrity,” “profit and fairness,” provides illustrations and specific “dont’s” in consideration of the changing corporate environment and the demands of society, and compiles easy-to-understand “guiding principles for individual actions” that every individual should bear in mind. The compliancehandbook is now used as a tool for education in the workplace to ensure understanding and thoroughness of compliance.

1 Compliance Promotion Committee	The Compliance Promotion Committee, which comprises the Heads and Chiefs of six BUs (with the chief of Corporate Planning, Finance, HR & Administration as the chairman), is convened to check our compliance promotion system, discuss policies and activities, and review the promotion status of awareness and training.
2 Training and Awareness Promotion Activities	In order to thoroughly enhance employees’ understanding and awareness of compliance, the company conducts various compliance training activities. In FY2021, we conducted training by external lecturers for new employees, e-learning training for managers at each management level, and training for employees dispatched overseas etc., while regularly introducing compliance issues and cases from other companies in our e-mail magazine and electronic bulletin board.
3 Internal Reporting System	The company has introduced an internal reporting system that can be used by Group employees. Related internal regulations stipulate basic matters on consultation and reporting, and clearly state protection of the anonymity of information providers and prevention of the disadvantageous treatment of such providers. In April 2022, we changed the external point of contact, so that employees can also directly consult with and report to fair and neutral external experts.
4 Export Control	Some of our products and technologies are subject to Japan’s security trade control-related laws and regulations. Based on the principle of observing export/import laws and regulations to conduct appropriate control, regulations related to security trade control have been established. We have also organized a company-wide Export Control Subcommittee, and established a trade control system under which granting of approval/disapproval for trading, examination of transactions, etc. is carried out without fail, for the purpose of putting these regulations into practice.

Risk Management

Basic Idea

The basic policy on Group-wide risk management activities is set forth in the company regulations, as specified below.

（1） The Kansai Paint Group deems risk management to be an important management task, and works to minimize human, economic, and social damage, carry out early restoration and prevent recurrence, while supporting the development of people and society, by contributing to providing new value and solving social issues such as ESG and the SDGs.
（2） The Kansai Paint Group, led by the Risk Management Committee, repeatedly extracts, analyzes, evaluates, and monitors risks in cooperation with each department, and strives to continuously conduct reviews and make improvements.
（3） The Kansai Paint Group promotes business continuity management activities to prepare for crises, and also responds swiftly with integrity in the event of an emergency, to minimize damage through responsible actions, in line with laws and regulations and social norms, while placing the highest priority on the safety of human life.
（4） The Kansai Paint Group discloses information in a timely and appropriate manner to customers and shareholders, regarding the details of, and initiatives for the risks surrounding the company, and builds strong relationships with them.
（5） The Kansai Paint Group provides each employee with opportunities to learn from one another with modesty through regular education and training, in order to enhance their ability to deal with risks, and to lead each employee to act appropriately as a member of society.

System

We established the Risk Management Committee under the supervision of the Corporate Governance Committee, and have put in place a system for cross-organizational risk management by preparing various regulations and manuals in order to properly respond to crises and prevent potential business continuity risks. • Risk Management Committee: Comprised of the Heads and Chiefs of the six BUs, and held twice a year. The Committee shares internal risk information, evaluates risks, identifies important risks, considers response policies, and reports and proposes policies for dealing with risks, as well as measures to prevent recurrence to the Board of Directors. The Committee improves risk management awareness within each business unit, primarily by adopting the policies determined within that business unit, understanding the status of implementation, and providing education.

Process for Identifying Risks

In order to implement our Growth Strategy and continue to increase our corporate value in an increasingly uncertain business environment, we are improving the accuracy of our detection prediction and precognition of possible management risks, and are developing a system to enhance our resilience to constantly respond to changes. In FY2021, we reviewed our process for identifying risks, developed risk management tools, conducted risk evaluations, and confirmed the effectiveness of these risk management tools based on the resulting evaluations.

Risk items and Response

Extract risks that affect the Group’s financial position and operating results, among other matters, and manage these risks from the standpoint of both damage minimization and business continuity

Examples of Individual Response

Extract risks that affect the Group’s financial position and operating results, among other matters, and manage these risks from the standpoint of both damage minimization and business continuity

・BCP responseIn FY2021, Corporate Production, Supply Chain Management, Procurement conducted a rehearsal drill assuming the occurrence of the Nankai Trough Mega Earthquake. We were able to implement the business continuity response specified in the business continuity plan document, and this drill also led to the identification of points for future improvement.
・Countermeasures against COVID-19 During the early phase of the COVID-19 pandemic in 2020, we promptly organized Committee for COVID-19 Countermeasures (Chairman: FURUKAWA Hidenori, Representative Director of the Board, Senior Managing Executive Officer) as well as a special subcommittee. Under the company-wide policy of “safety first for employees and their families” and “maintaining corporate functions and business continuity,” we are taking measures to prevent infection and minimize the impact of the pandemic on business.
- ・ Held the Committee for COVID-19 Countermeasures 31 times in FY2021
- ・ Implemented workplace vaccinations at the Amagasaki Plant
- ・ Issued manuals and notifications according to the circumstances, and implemented Group-wide behavior control
- ・ Monitor employees’ health condition
- ・ Regularly share information on the current situation with overseas Group companies
- ・ Promote teleworking and rolling work shift system
- ・ Establish workplace environment to keep social distancing
- ・ In the event of a COVID-19 outbreak, cooperate with the government and administrative agencies, close down offices, conduct thorough disinfection, and then resume business as soon as possible
・Information security measuresIn order to respond to cyberattacks, equipment and system failures, and information leaks, we implemented measures under the control of each unit head and Group HQ chief. For the purpose of establishing the company-wide management system that is necessary to maintain our information security, we established the Information Security Committee in FY2022.