G: Compliance

Challenge

  • Further establish a positive corporate culture and business practices

Our policy

We ensure that all executives and employees within the Group prioritize compliance in their day-to-day operations.

Activity promotion system (as of April 2022)

Compliance promotion system

The president of the Toyo Tire Group, as the officer in charge of overseeing compliance, places the highest priority on compliance in management and strives to solidify and improve the Group’s compliance systems.
We set up the Compliance Committee as one of the special committees under the jurisdiction of the Executive Committee to consult and investigate ways to promote compliance. The Chief Compliance Officer (CCO), compliance officers (CO), and compliance leaders (CL) play a key role in promoting compliance under our compliance officer system.
The Compliance Committee, chaired by the CCO appointed by the Board of Directors, meets quarterly in principle, and reports the results of its discussions twice a year to the Executive Committee, which is supervised by the Board of Directors.
The CCO has the right to investigate, issue instructions and orders (including the suspension of operations and shipments), and make proposals regarding compliance-related issues for the Group as a whole, and COs have similar rights within their individual divisions. We have established a system that enables the CCO to report to and seek advice from external specialist organizations if a compliance-related incident occurs. CLs help COs promote various activities in individual workplaces and are expected to report to their general manager and COs if they notice any compliance-related incidents. An investigation is launched as soon as a compliance incident, or suspected incident, is reported to a CO. We disclose internally any incidents that have been investigated and preventive measures put in place as reference when exploring any similar incidents occurring nearby as well as ensuring horizontal deployment, reconfirming laws, regulations and internal rules, or compiling measures to handle any similar incidents and prevent a reoccurrence.

Compliance promotion system

Preventing corrupt practices and bribery

The Group formulated our Global Anti-corruption and Anti-bribery Policy, which covers all manner of corrupt practices and has been in force since 2019. We have determined some anti-corruption items in our CSR Procurement Guidelines, and ask all suppliers to ensure compliance. The Compliance Committee, Compliance & Legal Division, Procurement Division and the general affairs departments at each site are responsible for appropriately implementing initiatives regarding the operation, internal and external permeation, and monitoring of the basic policy.

  • * Within Toyo Tire Corporation
Preventing corrupt practices and bribery

Grievance mechanism

  • Reporting hotline (whistle-blowing system): For executives, employees and suppliers
  • Customer Relations Department: For customers (consumers) and local communities
  • Online inquiry form: For customers (consumers), shareholders and investors, and NGOs
  • Labor-management Council Meetings: For employees
  • Consultation Desk for Compliance with the Antimonopoly Act: For employees
  • IR meetings: For shareholders and investors
  • Harassment Advice Desk: For executives and employees

Main resources for promoting activities (2021)

  • Total executive compensation (2021)
  • Directors (10): 307 million yen *Maximum annual limit: 450 million yen
  • Audit & Supervisory Board members (4): 49 million yen *Maximum annual limit: 80 million yen
  •  * The above numbers of executives and total compensation include compensation of 57 million yen for 6 outside officers (outside directors and outside Audit & Supervisory Board members). Those numbers also include compensation for one director who retired in 2021.
  •  * The above total amount of compensation includes the provision of bonuses for officers recorded in 2021 of 117 million yen.
  •  * Includes 8 million yen for transfer-restricted shares granted.

Compliance officers (as of April 2022): 25
Compliance leaders (as of April 2022): 118

Initiative

Instilling the Group Charter of Corporate Behavior and Code of Conduct

We have established the Toyo Tire Group Charter of Corporate Behavior as a set of common principles for all Group companies that ensure our business activities are conducted in good faith, and the Toyo Tire Group Code of Conduct to help each executive and employee implement the Charter. The Charter and the Code are reviewed when appropriate and any necessary revisions are resolved by the Board of Directors. Group companies located outside Japan use the Code of Conduct as a basis for formulating their own behavioral guidelines that reflect differences in local laws, regulations and customs.
We instill awareness of the Code and further enhance compliance across the Group by creating and distributing a common edition of the Global Code of Conduct Handbook that stipulates the underlying way in which each Group executive and employee should act (available in nine languages: Japanese, English, Russian, German, Italian, Chinese, Thai, Malay and Portuguese).
In Japan, we conduct read-along training sessions for all executives and employees, including Group companies, of the Code of Conduct Handbook or the Supplementary Reader with familiar and specific examples for manufacturing or sales sites. Upon completing the training, each participant submits a written pledge to promote compliance.
Group companies outside Japan use the Code of Conduct as a guide for establishing their own standards of behavior that reflect differences in local laws, regulations, customs and other factors, and work to foster compliance awareness.

Training in different regions

Our subsidiaries in China conduct annual training for all employees centered on a theme that relates to their own specific compliance risks. They confirm the degree of understanding acquired by asking participants to fill out a questionnaire after completing the course. For example, in 2020, Toyo Tire (Shanghai) Co., Ltd. conducted legal and compliance seminars focusing on specific themes such as antimonopoly law, commercial bribery, and the law surrounding the protection of personal information as well as read-along sessions of the Code of Conduct Handbook and presentations.
Our European subsidiaries conducted e-learning in 2021 surrounding anti-bribery and anti-corruption themes. All 126 Group employees attended the course. Our European R&D Center is also working to raise awareness of compliance in R&D activities through a combination of external lectures on safety management and in-house training.

Conducting compliance awareness surveys

We conduct annual compliance awareness surveys to ascertain the degree of compliance-related awareness among employees and aid our future endeavors.

[TOPIC] 2021 compliance awareness survey result: 92.5% response rate (81.6% in 2020)

  1. Implementing activities to promote compliance
  • Made one or more attempts to raise compliance awareness over the past year: 94% (95% in 2020)
  1. Degree of compliance awareness and understanding

Understand what compliance means: 89% (88% in 2020)

  •  * Toyo Tire compliance: Instead of simply adhering to laws and regulations, we must comply with laws, regulations and internal rules, and be guided in our actions by a keen sense of ethics.
  1. Degree of embedding of compliance

Remain conscious of compliance when conducting own work activities: 94%(94% in 2020)

Comments from survey manager

We were concerned that the continued COVID-19 pandemic throughout 2021 would impact the survey results, but employee recognition, overall understanding and awareness of compliance remained at a high level. The number of survey responses increased sharply compared to 2020, indicating that employees had been finding ways to actively promote compliance despite the difficult circumstances and that compliance awareness had become more deep-rooted. At the same time, some responses suggested some past issues had still not been solved and that new issues could emerge in light of changing lifestyles, so we are working on improving these areas. We are also working with individual workplaces to examine the content of compliance activities and instill deeper compliance awareness.

Sachiko Yamagishi
Compliance Dept.,
Compliance & Legal Division,
Toyo Tire Corp.

Whistle-blowing system

The Group has been operating a whistle-blowing system since 2006. In Japan, we respond to anonymous reports from both inside and outside the company, and have established contact points that can be used by executives, employees and suppliers.
We are establishing similar systems at bases outside Japan and striving to ensure fairness and transparency as the foundation of healthy business activities.

Awareness of the reporting hotline in Japan

Whistle-blowing system

Preventing anti-competitive conduct

The Toyo Tire Group is building compliance frameworks and systems and promoting education and awareness-building activities to ensure thorough compliance with competition laws and regulations in individual countries. Specifically, we oblige our employees to submit prior applications, follow-up reports and exclusion applications relating to any contact with competitors based on the Cartel Prevention Rules, as well as a written pledge regarding the upholding of antimonopoly laws. We also pursue various initiatives to ensure compliance with laws and regulations, such as establishing a Consultation Desk for Compliance with the Antimonopoly Act, getting the Audit Department to check the status of compliance with the Cartel Prevention Rules, and conducting training (including e-learning) for related parties.

Anti-corruption initiatives

The Group strives to ensure fairness and transparency as the foundation for conducting sound business activities. We have established the Global Anti-corruption and Anti-bribery Policy along with our Anti-bribery Rules and are developing activities to ensure these rules are instilled and properly operated in our business activities. In 2021, we conducted e-learning on anti-bribery themes for employees working in the headquarters, R&D divisions and administrative departments at production sites.
We know that discovering any corrupt practices or bribery would risk not only potentially huge fines or the detention of involved parties, but also significant damage to our corporate value through the suspension of transactions or the imposition of social sanctions. As such, we work hard to prevent any such acts as part of our corporate social responsibility.
The 2021 Corruption Perceptions Index (CPI) researched and published by the international NGO Transparency International assesses the risk of corrupt practices in markets where the Group has business sites. We believe we must pay particular attention to our business activities in countries where the CPI is assessed to be lower than 50.
The Group is conducting more educational and awareness-raising activities in light of the tightening of regulations surrounding various corrupt practices, especially in relation to bribery, in markets worldwide.

Global Anti-corruption and Anti-bribery policy

Legal compliance in the environmental and socioeconomic fields

There were no significant fines or other sanctions imposed on the Group in 2021 for environmental or socioeconomic violations.

Violations relating to the health and safety impact of products and services

We are striving to prevent a reoccurrence of past frauds caused by Toyo Tire Corporation and its affiliates. As of the end of December 2021, we had started changing the seismic isolation rubber for buildings in 151 of the 154 target buildings, and had completed the replacement of non-conforming products in 149 of these buildings.
There were no violations relating to the health and safety impact of products and services in 2021.