Compliance System and Risk Management System
The following is the basic policies regarding the systems to ensure the appropriateness of execution of duties (internal control systems), which were resolved at the Board of Directors Meeting of the Company.
1.Systems to ensure that Directors’ and employees’ execution of their duties complies with laws and regulations and the Articles of Incorporation
- ①The Board of Directors shall formulate “The Suzuki Group Code of Conduct” to ensure Directors and Managing Officers and employees in the Company and the Group (Suzuki Group) execute their duties in a healthy manner as well as shall oversee the state in which the Code is fully known to the Group.
- ②A corporate governance committee, chaired by the Director or Managing Officer in charge of corporate planning, shall be established under the Board of Directors. The Corporate Governance Committee shall deploy measures for advancing in thorough compliance and promote efforts to address cross-sectional challenges in coordination with the relevant sections.
- ③Executive General Managers shall clearly define the division of work among their responsible sections and establish work regulations and manuals that include compliance with laws and regulations related to their responsible duties, approval and decision procedures, and rules for the confirmation process by other sections. Executive General Managers shall ensure that the people concerned are fully aware of said regulations, manuals, rules, etc.
- ④The Human Resources Department shall hold seminars about compliance and individual laws/regulations for executives and employees in a continuous manner in cooperation with the Corporate Planning Office, Legal Department, Engineering Department and other related departments.
- ⑤To prevent violations of laws and regulation and take corrective measures at an early stage, a whistleblowing system (Suzuki Group Risk Management Hotline) that has both internal and external contact points, shall be established to allow executives and employees of the Suzuki Group to report on breach of laws and regulations or their possibility without any disadvantageous treatment to the whistleblower.
The Corporate Planning Office shall strive to make the whistleblowing system fully known and to promote its use.
2. Systems relating to the storage and administration of the information in relation to Directors’ execution of their duties
The minutes of meetings of the Board of Directors and other information related to Directors’ execution of their duties shall be retained and administered by responsible sections pursuant to laws, regulations and internal regulations, and shall be made available to Directors and Audit & Supervisory Board members for examination when the need arises.
3. Rules and other systems relating to management of the risk of loss
- ①Important matters regarding corporate management shall be decided after meetings of the Board of Directors, the Executive Committee, circular resolutions and other systems deliberate and evaluate their risks in accordance with the standard for deliberation.
- ②Executive General Managers shall establish work regulations and manuals that include preventive measures against risks that can be presumed in their responsible duties, and counter-measures in case of their occurrence. Executive General Managers shall ensure that the people concerned are fully aware of said regulations, manuals, measures, etc.
- ③To prepare for a large-scale disaster, action manuals and business continuity plans shall be formulated, and drills shall be carried out.
4.Systems to ensure efficient execution of duties by Directors
- ①Important matters regarding corporate management shall be deliberated at the Executive Committee and other meetings prior to decision-making.
- ②The Board of Directors shall clarify responsibilities regarding the execution of Managing Officers’ and Executive General Managers’ duties, and shall supervise their execution.
- ③The Board of Directors shall receive reporting from the person responsible for the execution of the duties, as necessary, on how the matters, which were decided at meetings of the Board of Directors, the Executive Committee and other meetings, are executed. In response to reports, the Board of Directors shall give necessary instructions.
- ④The Board of Directors shall formulate mid-term management plans that include consolidated subsidiaries and regularly verify the progress of business plans for fiscal years as made by Executive General Managers in order to achieve the mid-term plan.
- ⑤The Audit Department, which directly reports to President, shall audit the state of establishment and operation of internal controls, which are based on the basic policies, on a regular basis and shall report on the outcome to the Board of Directors.
The Board of Directors shall make Managing Officers and Executive General Managers attend meetings of the Board of Directors, if necessary, and ask them to explain or report on issues that were detected in activities such as internal audits and whistleblowing. Accordingly, the Board of Directors shall give instructions for correction of the issues and require reporting on results.
5.Systems to ensure appropriateness of duties of the Corporate Group consisting of the Company and subsidiaries
- ①The Board of Directors shall formulate mid-term management plans that include consolidated subsidiaries, and the presidents of the subsidiaries shall make business plans in the fiscal years in order to achieve the mid-term plans.
- ②The Company shall set forth regulations for managing subsidiaries, which clarify the departments that are responsible for administering the subsidiaries, and receive reporting from subsidiaries on the situation of their business on a regular basis and on matters set forth in the regulations. Important matters related to the corporate management of subsidiaries shall be subject to prior approval from the Company.
- ③The Corporate Governance Committee shall deploy thorough compliance and measures for risk management, which include consolidated subsidiaries, to the presidents of subsidiaries as well as give them necessary assistance in coordination with the relevant departments.
The Audit Department, directly reporting to President, shall regularly audit the state of dissemination of “the Suzuki Group Code of Conduct”, compliance, risk management and the state of establishment of a whistleblowing system as well as report the results to the Board of Directors.
The Board of Directors shall make the presidents of subsidiaries attend meetings of the Board of Directors, if necessary, and ask them to explain or report on issues that were detected in activities such as internal audits and whistleblowing. Accordingly, the Board of Directors shall give instructions for correction of the issues and require reporting on results.
- ④The Corporate Planning section shall create awareness for the “Suzuki Group Risk Management Hotline” at subsidiaries to allow the Directors, Managing Officers and employees of subsidiaries to report directly to the Company on violations or possible violations of laws and regulations.
6. Matters for employees to support the business of the Audit & Supervisory Board Members when the Audit & Supervisory Board Member seeks appointment of the employees; matters for independence of such employees from the Directors; and matters for ensuring the efficiency of instructions given the employees
- ①The Company shall establish the Secretariat of Audit & Supervisory Board in which staff is dedicated to executing their duties under the direction of Audit & Supervisory Board Members.
- ②Audit & Supervisory Board Members whom the Audit & Supervisory Board appoints can ask a change of their staff anytime, and Directors shall not refuse the requests without proper reason.
- ③Transfers, treatments, disciplinary punishments, etc. of the staff in the Secretariat of Audit & Supervisory Board shall be subject to approval from Audit & Supervisory Board Members whom the Audit & Supervisory Board appoints. Evaluation of personnel shall be conducted by Audit & Supervisory Board Members as appointed by the Audit & Supervisory Board.
7. Systems for reporting to the Audit & Supervisory Board Members
- ①Audit & Supervisory Board Members may attend the Executive Committee, other important meetings and various committees in addition to meetings of the Board of Directors to ask questions and express their opinions.
- ②In additions to delivering circular resolutions and other important documents to Audit & Supervisory Board Members, the Board of Directors, departments and the presidents of subsidiaries shall submit necessary information and report on the state of business and duties at the request of Audit & Supervisory Board Members.
- ③Upon finding a fact that can cause serious damage to the Suzuki Group, the Board of Directors shall report on the fact to the Audit & Supervisory Board immediately.
- ④The Audit Department, directly reporting to President, shall report on the results of internal audits to the Audit & Supervisory Board.
- ⑤One of the contacts of the “Suzuki Group Risk Management Hotline” shall be Audit & Supervisory Board Members. In addition, the state of whistleblowing activities outside that of Audit & Supervisory Board Members shall be reported to Audit & Supervisory Board Members on a regular basis.
- ⑥The Company shall not engage in disadvantageous treatment against those who reported to Audit & Supervisory Board Members, and shall ask the subsidiaries to treat them in the same way.
8. Matters regarding procedures for prepayment or redemption of expenses arising from the execution of duties of Audit & Supervisory Board Members and processing of other expenses or liabilities arising from the execution of such duties
The Company shall budget a certain amount of funds each year to pay expenses, etc. caused by the execution of Audit & Supervisory Board Members’ duties. When Audit & Supervisory Board Members claim an advance payment of expenses and others related to the execution of their duties, the Company shall process the claim without delay.
9. Other System to ensure effecting auditing by the Audit & Supervisory Board Members
Audit & Supervisory Board Members may seek advice, etc. from lawyers and other external experts, if necessary, at the expense of the Company.
[Overview of Operation of the Systems for Ensuring Appropriate Execution of Duties]
The Company has been operating the above basic policies related to the systems for ensuring appropriate execution of duties.
Since our improper sampling inspection of fuel consumption and exhaust gas was revealed in August 2018, we have asked external experts (Nagashima Ohno & Tsunematsu) to conduct a thorough investigation about the final inspection. We have also submitted our report which contains preventative measures for such inspection based on the results of the investigation and advice of external experts
(https://www.suzuki.co.jp/release/d/2019/0412/) to the Ministry of Land, Infrastructure and Transport and disclosed it on 12 April 2019 while we have decided to recall vehicles related to this case.
We acknowledge the seriousness of this series of issues which occurred consecutively after the improper measurement test of fuel consumption revealed in 2016, derived from our corporate culture, where we have lacked a sense of public interest and not sufficiently recognised the importance of final inspection and not taken compliance with laws and regulations seriously just like the external experts stated in their report.
To tackle the issues, we will take, and continue to take, preventive steps across the company, as well as strive to change our corporate culture and strengthen business fundamentals. We will do this by enhancing the management’s commitment to quality assurance and establishing the Inspection Reform Committee where inspection work procedures are reviewed fundamentally and revised. We will also do this by enhancing the quality in the production department and by newly establishing the inspection division to improve the independence of the inspection department and self-auditing systems, and establishing systems of audit where the engineering division and audit department perform second- and third-tier audits. We will also conduct training provided by external experts for the employers about quality management and risk management, offer education to inspection personnel in a continuous manner and implement evaluation systems where inspection personnel are evaluated depending on their contribution to quality to improve senses of respect for rules. We will enhance systems where information on compliance is transmitted from the sites to the management.
The following is an overview of operation of the basic policies related to the systems for ensuring appropriate execution of duties in FY2018:
[Measures relating to compliance]
- The Company is integrating lessons on compliance without fail in training for all levels such as for managerial position and the annual training for employees after joining the Company. Training on laws, regulations, etc. concerning safety and environment is provided for engineers to sufficiently understand laws, regulations, etc. with which they are required to comply in carrying out their work. Further, E-learning and other formats are being used to raise awareness toward compliance related to business activities.
In addition to the above, with regard to the final vehicle inspection operations, the Company is making efforts to raise normative consciousness of the employees of the plant departments including mainly the inspectors engaged in the final vehicle inspections. It is doing this by giving lectures from the Chairman and the President, distributing the internal notification on compliance, and providing training on the type designation system.
- We regularly check laws and regulations in each domestic and overseas subsidiary regarding their operation, observe each company’s activity toward compliance of the laws and regulations while we take necessary measures for such compliance.
As a lesson learned from the case regarding the improper measurement test of fuel consumption disclosed on May 18, 2016, we set the day as “Remember 5.18” so that we do not let our determination to not violate regulatory compliance fade away. Also, we perform thorough checks focussing on the staff of the engineering, manufacturing, and purchase departments to see whether they comply with laws and regulations by stopping operations for one day.
- Education, training, and urging posters at all worksites are some methods being used to ensure awareness of the “Suzuki Group Risk Management Hotline” in an effort to discover compliance issues early and to respond appropriately.
- The Corporate Governance Committee engages in enhancement of compliance awareness by employees and urges caution for individual legal compliance throughout the Company. Furthermore, if compliance issues arise, the Committee conducts deliberation for each issue, formulates required measures, and reports the details to the Board of Directors and the Audit & Supervisory Board Member as appropriate.
[Measures relating to risk management]
- The Company has constructed a system in which issues occurring or recognised in any department are deliberated on promptly by the Corporate Governance Committee or the Executive Committee, depending on their urgency and severity.
- Since smooth communication of information within the Group is effective for early discovery of problems, the top level of management is directly supervising the thorough application of these basic rules of information communication by all Directors, officers and employees: “Immediately give reports to your manager. Immediately contact your manager. Think for yourself, then consult;” and “Observe the actual site or object to plan measures and take action.”
- In regard to risks of legal violations, the Company is continuously identifying laws and regulations related to operations of the Company, domestic subsidiaries, and overseas subsidiaries. In addition to confirming the status of compliance, the Company is constructing corrective measures as necessary.
- Internal rules are constantly being developed in each department. The Company is working to strengthen systems for efficient and appropriate operations in compliance with laws, regulations, etc. We all have provided chances for ourselves to check each work procedure and make the necessary improvements regularly every year.
- In accordance with the Company’s “CSR Guidelines for Suppliers” to comply with laws and regulations, we are working with suppliers to fulfill our corporate responsibilities together, including those relating to human rights, labour and the environment, with the principle of safety and quality first in our mind.
- As part of measures to prepare for natural disasters, the Company held two trainings for tsunami evacuation assuming the occurrence of the Nankai Trough Megaquake. The Company also reviewed issue in our Business Continuity Plan (BCP) and made necessary revisions.
[Measures relating to efficiency improvements in Directors’ execution of their duties]
- To allow the Board of Directors to make decisions on vital management issues efficiently and quickly, such issues are deliberated at the Executive Committee attended by the Representative Directors and other concerned Directors, Managing Officers and others before being put to the Board of Directors. Also, in order to allow sufficient time for the Board of Directors to deliberate important issues related to management, meetings of the Board of Directors are operated to secure ample time in schedule and materials for the meetings are distributed in advance.
- The Company tries to clearly assign an executor to new management issues as they arise.
- The Company is aiming to improve efficiency and speed in decision-making by the Board of Directors through certain measures such as by delegating decisions on individual matters to Directors or Managing Officers through the approval system, by receiving monthly reports on the state of operations of each department, the state of progress of each department’s plans. etc., and by holding meetings of the Executive Committee attended by the Representative Directors and other concerned Directors, Managing Officers and others periodically and as the need arises to deliberate and make decisions on vital management issues and measures quickly.
- The internal audit department audits the state of establishment and operation of internal controls, which are based on these basic policies, on a regular basis and reports the results of audits to the Board of Directors.
[Measures for ensuring appropriate execution of duties at the Group]
- The Company has defined the Rules of Business Control Supervision for Affiliated Companies and established departments responsible for the management of each of its subsidiaries. Subsidiaries are managed and supervised to ensure regular provision of status reports and reports on other matters as defined by these Rules, and to ensure the receipt of approval from the Company ahead of any significant matters.
- Through the Suzuki Group Risk Management Hotline, the Company strives to identify compliance issues at subsidiaries.
- In accordance with the audit plan, through on-site auditing and investigation of written documentation, etc., the Company’s internal audit department with personnel thoroughly familiar with the various fields of the Company’s operation periodically audits the state of establishment and operation of internal controls, including the appropriateness and efficiency of business at departments of the Company and at domestic/overseas subsidiaries, the state of compliance with laws/regulations and internal rules, and the state of management/maintenance for assets. Based on audit results, the audit department provides advice and guidance for making reforms until they are complete. In addition, for subsidiaries that have an internal audit department, the Company's audit department checks the activities of those internal audit departments, receives reports on audit plans and results, and provides advice and guidance as needed.
[Measures related to audits by Audit & Supervisory Board Members]
- The Company has established the Secretariat of the Audit & Supervisory Board, which is a full-time staff department independent from the chain of command of Directors, etc., to support the duties of Audit & Supervisory Board Members. Merit Rating of staff at the Secretariat of the Audit & Supervisory Board shall be performed by Audit & Supervisory Board Members whom the Audit & Supervisory Board appoints, and approval from Audit & Supervisory Board Members whom the Audit & Supervisory Board appoints shall be obtained in advance of personnel transfers, etc.
- By having Audit & Supervisory Board Members attend meetings of the Board of Directors, the Executive Committee, corporate governance meetings, and other meetings related to business operations and management, the Company makes it possible for Audit & Supervisory Board Members to verify the decision-making process and receive any necessary reports, and express their opinions.
- The decision documents concerning the business operations of the Company and its subsidiaries are provided to the Audit & Supervisory Board Members, and when necessary, the business and business conditions are explained as necessary.
- The internal audit department properly reports results of audits to Audit & Supervisory Board Members, allowing for more efficient auditing to be carried out in joint collaboration between Audit & Supervisory Board Members and the internal audit department.
- The Suzuki Group Risk Management Hotline serves as a contact point with Audit & Supervisory Board Members for whistleblowing. Additionally, all of the reports received for other contacts are also reported to the Audit & Supervisory Board promptly so that information regarding various issues within the Company is shared with them.
- Expenses for the execution of duties of the Audit & Supervisory Board Members are independently budgeted and properly processed.
Protecting Personal Information
We fully recognise that personal information (information regarding our customers, business partners, shareholders, investors, employees, etc.) is a valued asset that we receive from individuals, and it is our obligation under the law and our accountability to society, to handle this information properly and with care. In response to this, we establish the “Basic policy on protection of personal information” and work hard for protection of personal information. Details of handling of personal information are released on our public website: https://www.suzuki.co.jp/privacy_statement/index.html (in Japanese language only)
We establish the in-house rules and revise them as required according to revision of related laws etc. in order to handle personal information appropriately. To familiarise our employees with these rules, Suzuki provides education through employee seminars or enlightenment from the in-house homepage so that all employees thoroughly become aware of protection and appropriate handling of personal information. In addition, the “Basic policy on protection of personal information” is followed also at member companies of the Suzuki Group to thoroughly ensure protection of personal information. We will continuously review and improve the personal information protection system.
Activities on Information Security
As described in the section “Protecting Personal Information”, Suzuki prepares codes related to protection of personal information and those related to information control in order to manage information useful for the company including those provided by other companies.
In addition, we thoroughly ensure appropriate handling of confidential information by prescribing proper handling and leakage prevention of confidential information in the Suzuki Group Code of Conduct for employees.
As for information security, we promote improvement in work by introducing the information system and network, and determine the concept and rules to build, manage and operate such information system and network in order to prevent information leakage and unauthorised access, while improving availability of information.
Servers which may cause severe influence if it stops and those that save data important for security such as personal information are installed in the lockable server room with seismic countermeasure taken by seismic isolators etc.
Suzuki organises the confidential information control promotion meeting and reinforces the information control system of the entire Suzuki Group.
Disaster measures by Suzuki
Suzuki takes various measures for natural disasters including Great Earthquake along the Nankai Trough to minimise influence of damages, giving top priority to “protecting employees’ lives” and “quickly restoring ourselves for our customers”. For example, we have taken various preventive measures such as earthquake-resistant measures for buildings and facilities, fire prevention measures, establishment of the disaster action manual and Business Continuity Plan (BCP) that include establishment of the disaster response organisation, and purchases of earthquake insurances.
While the Group has been taking various measures to prevent anticipated damage caused by Great Earthquake along the Nankai Trough, after experiencing the Great East Japan Earthquake, it has diversified production and research sites including overseas. Firstly, it is relocating plants and facilities to Miyakoda district in northern part of Hamamatsu from Ryuyo region in Iwata, Shizuoka since massive tsunami damages are anticipated in the region. The Group decided to found the test course of the motorcycle in the Aoya district of Tenryu-ku, Hamamatsu. Also, the Group has diversified its production of engine for minivehicle, which was concentrated to Sagara Plant, to Kosai Plant to mitigate risk. Further, the Group is expanding its research facilities in India partly in order to mitigate risk concerning product development facility for automobile in Sagara test course. In order to enhance performance of Disaster Prevention Headquarters, which is to be established upon disaster, the headquarters periodically conduct trainings with officers and each representative of the Disaster Prevention Headquarters attending in cooperation with consulting company specialised in disaster prevention. Through these initiatives, the Group will continue to enhance its preparedness against natural disasters.
Measures against earthquakes and tsunami taken by Suzuki for local residents
A part of Suzuki’s facilities is registered as a tsunami shelter for local residents, and they are invited to see the facilities registered as shelter once a year. Also, we have a system for an earthquake to deploy watchmen on the roof of the headquarters, let them check occurrence of tsunami, and sound a siren to notify residents when tsunami is found. Manual and electric sirens are installed on the roof of the headquarters. The electric siren is designed to be operated even with the dedicated electricity generator in case of a power failure.
Measures against earthquakes and tsunami taken by Suzuki for employees
Aimed to protect the lives of our employees, Earthquake Early Warning Systems are installed at the headquarters and each plant and manufacturing companies. Earthquake and tsunami evacuation drills are repetitively conducted with all employees participating. In this drill, when the Earthquake Early Warning System alerts, the employees secure their safety and the employees at offices with risk of tsunami evacuate to safe places where the water of tsunami cannot reach. We have a system to confirm safety of employees immediately when a disaster occurs via communication equipment such as satellite telephones and radios set at each plant and sales distributors all over Japan as an emergency communication tool. We conduct a drill for satellite telephones every month to be ready for an emergency.
In addition, relief method trainings are conducted by retired fire fighters in all offices since 2012, and repetitive trainings are continuously carried out. This enables our employees to arrest bleeding or treat injuries and convey in stretcher on their own upon large-scale disasters. (Total of 4,550 employees participated in 7 years (as of the end of June))
Furthermore, in order to confirm safety of off-duty employees, we introduce the "safety information system" in case an earthquake or tsunami occurs. In order to confirm safety of employees and their family, this system automatically sends “safety inquiry e-mail” to e-mail addresses that each employee has registered and those who receive the e-mail send a reply about their own safety situation.
Measures for fire disasters
At the headquarters and each plant, all unpredictable fires are treated as fire disaster. Regardless of how small the size of the fire, we conduct an initiative to find out the real cause of fire and thoroughly carry out effective measures. All cases of fire are shared throughout the Suzuki Group in an effort to cross-functionally take measures in preventing familiar disasters. A fire drill using fire extinguishers and fire hydrant is conducted at plants so that everyone in a worksite can perform first-aid firefighting to minimise damage caused by fire.
Also, water discharge drills by fire engine or small transportable pump are performed for promoting individual disaster prevention activities by the private fire brigade. Above all, the premises of headquarters, Kosai Plant, Iwata Plant, and Osuka Plant, are certified as cooperative business entities for local fire brigades by the city of Hamamatsu, Kosai, Iwata, and Kakegawa, respectively because of their contribution to reinforcement of local fire-fighting and disaster-prevention system etc.
Contribution to construction of storm surge barrier in coastal zone of Hamamatsu
Suzuki contributed 500 million yen by FY2014 to "Hamamatsu Tsunami Protection Measure Fund" that Hamamatsu founded for constructing the storm surge barrier as a measure for tsunami caused by an earthquake.
The Suzuki Suppliers Association organised by Suzuki's associated companies also decided to contribute 39.06 million yen in total for five years.
The Company also contributed 340 million yen in total to neighbouring eight cities and towns for disaster measures such as earthquakes and tsunami by the end of March 2019.
In addition, a total of 500 million yen was contributed to "Hamamatsu Sports Facility Align Fund" by FY2014 to cooperate with construction of a sports facility which has both tsunami evacuation base and urgent relief heliport functions in the accident.