Corporate Governance

Corporate Governance

1. Basic Policies for Corporate Governance

With the aim of preserving biodiversity and achieving a sustainable society, MORINAGA is carrying out various activities in the company-owned Iga/Angel Forest. During summer, we invited curators from the Mie Prefectural Museum and learned about plants and insects living in the Iga countryside. In addition, we aim to nurture sustainable and healthy forests by felling insect-damaged trees and encouraging coppicing.

(1) Positioning of Stakeholders
To enable us to fulfill our social responsibility in all areas of our business activities, we are committed to maintaining and further developing strong relationships with all stakeholders, who sustain our company, and achieving coexistence with society and sustainable growth in accordance with corporate principles and the code of conduct.
(2) Management Monitoring Functions
We are committed to building an effective internal control system by strengthening the management monitoring functions of the Board of Directors, appointing outside directors and auditors, requiring attendance by standing auditors at important meetings, and placing the Audit Department under the direct control of the president.
(3) Consistency in Thinking within the Entire Group
While respecting the independence of our subsidiaries, we endeavor to maintain close ties amongst Group member companies.

2. Corporate Governance System

Management of Corporate Affairs

In accordance with the Rules for Decision-making Criteria, the Board of Directors, management meetings, individual directors, executive officers, division managers, and directors are all assigned specific responsibilities and authority.

<Board of Directors>
The Board of Directors carefully makes decisions related to legal matters, important business operations based on the principles of managerial judgment, and oversees business operations. The Board consists of ten members: two members are outside directors and nine are male and one is female.
<Management Meetings>
Management meetings are attended by members of the Board of Directors and standing auditors. At these meetings, decisions are made after deliberations regarding important management issues and matters that have been referred to the Board of Directors. To insure the practicality and efficiency of the decisions of the Board of Directors and management, detailed deliberations are conducted in advance by various committees, which act in advisory roles. For example, the IR Committee has been established to discuss disclosure of information, and the Officer Appointment and Remuneration Committee has been established to discuss personnel matters and compensation for directors.
<Executive Officer System>
Morinaga has adopted an executive officer system in order to improve its agility in responding to changes in the business environment and to speed up the decision-making process. Under this system, the executive authority and responsibilities for daily operations with respect to strategic corporate activities are assigned to executive officers to ensure the efficiency of management and clarify management responsibilities.
<Board of Executive Officers>
In order to ensure the execution of corporate operations, a Board of Executive Officers consisting of the company president, executive managing directors, and executive officers has been established.

Auditing System

Operating under the direct supervision of the company president, the Audit Department (which is responsible for conducting internal audits) comprises four (4) staff members who systematically audit all divisions, including subsidiary companies, and together with standing auditors conduct discussions with each division. There are four auditors, two of whom are external auditors. Of the two external auditors, one is a standing auditor, and all four auditors are male. In accordance with the Guidelines for Auditors, the auditors oversee the activities of the directors. In addition, standing auditors regularly meet with the Board of Directors and attend important management meetings in order to monitor and audit the activities of the directors. The accounting auditors meet with all auditors, and the auditing manager meets with the standing auditors on a regular basis or as necessary to exchange information and opinions while maintaining cooperation. The audit manager and standing auditor also attend meetings of the Internal Control Management Committee, which comprises members selected from the primary departments within the corporation, and regularly conduct discussions with members of this committee. The company has appointed Deloitte Touche Tohmatsu LLC as the accounting auditor.

Officer Selection and Compensation

Selection and compensation of company directors are decided by the Officer Appointment and Remuneration Committee and approved by the Board of Directors.

Compensation for Auditors

Compensation for auditors is determined through discussions amongst the auditors.

Corporate Governance System

Corporate Governance System

Internal Controls

In order to maximize the company’s value and achieve perpetual corporate growth, we are committed to strengthening our internal control system and making management more efficient, increasing the reliability of business operations and ensuring effective audits and monitoring. To ensure that business operations are carried out appropriately, the Board of Directors endeavors to construct an effective internal control system and establish a system of compliance for both legal requirements and the Articles of Incorporation, and the Board relies on the auditors to monitor the effectiveness and functionality of the control system. Furthermore, a helpline has been established for both internal and external use for all related entities, including our subsidiary companies, as a means of gathering information related to compliance issues and implementing appropriate action.

Compliance Risk Management

Promotion of Compliance

Based on our awareness that compliance is a priority issue for all business activities, the Morinaga Group formulated the Morinaga Code of Conduct/Standards of Conduct in 2001. In 2008, the Morinaga Group Code of Conduct/Standards of Conduct was revised as the group-wide compliance management system.
Furthermore, we have created a Compliance Committee and are building and promoting compliance management. A helpline has also been established as a way to report compliance violations and consult about compliance issues. Consultation windows have been established at three points—within the company, labor union, and outside legal office—and efforts are being made to ensure the system becomes firmly established.

Compliance Management SystemCompliance Management System

Increasing Compliance Awareness

In order to diffuse and firmly establish an atmosphere of compliance, Morinaga displays the Morinaga Group Code of Conduct/Standards of Conduct on panels in each company office and also distributes booklets and cards to all employees. In order to increase compliance awareness, compliance training is provided as part of stratified training, such as training for new recruits and newly appointed managers, and training is also provided on a continual basis at the corporate head office and individual company offices. Furthermore, all employees complete a compliance questionnaire every year in order to provide understanding of the status of compliance at the company and obtain information that can be used in formulating responses in the future.

Risk Management Policies/System

In order to address potential risks to group business activities, the Morinaga Group formulated the Rules for Total Risk Management in 2001 as part of the internal control system. The company analyzes and evaluates expected risks and implements preventative measures during normal periods.
In addition, we have created a Total Risk Management Committee headed by the company president to formulate and implement total risk management plans.
In the event of a crisis, we endeavor to swiftly evaluate and determine the situation, set up a Response Headquarters, disclose information, and implement any other necessary response measures to identify causes and implement measures to prevent a reoccurrence.
With regard to antisocial forces, we gather information on a regular basis from the relevant government agencies and organizations and have measures in place for the entire organization to respond swiftly in the event of an incident by cooperating closely with the police and other related agencies.

Formulation of a BCP (Business Continuity Plan)

Within the Rules for Total Risk Management, the Morinaga Group has formulated the Guidelines for Natural Disaster Crisis Management and other guidelines, which are revised on a regular basis. These guidelines prescribe the measures for setting up a Disaster Response Headquarters and SCM (Supply Chain Management) Response Council to allow employees to recommence their activities as quickly as possible in the event of a disaster, as well as to set the standards for establishing a temporary head office if the company head office loses its functionality. Drills for setting up a temporary head office were carried out in January 2014, and a manual was compiled. We routinely conduct tests of the employee safety confirmation system at the corporate head office and other offices and work to ensure that all employees are thoroughly aware of evacuation procedures, secure the satellite telephones and other forms of communication, conduct regular drills, and stock emergency supplies. In addition, we are currently strengthening our IT system backup system through the construction of a DR (Disaster Recovery) site.

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Human Rights Policy

MORINAGA Group Human Rights Policy

As a member of the international community, the MORINAGA Group respects fundamental human rights, undertaking sincere business activities that do not tolerate human rights violations.

1. Respect for human rights and prohibition of discrimination
We respect fundamental human rights, and will not discriminate in any way based on a person’s race, gender, nationality, religion, ideology, age, or physical characteristics, or for any other reason.
2. Prohibition of harassment
We will not participate in power harassment, sexual harassment, or any other behavior whatsoever that injures human dignity.
3. Consideration of safety/hygiene
We will give consideration to safety and hygiene in the workplace, endeavoring to ensure a comfortable work environment, and respect employees’ fundamental human rights.
4. Building and maintenance of good labor-management relations
We will respect the right to freedom of association and collective bargaining and other fundamental rights, building and maintaining good labor-management relations.
5. Elimination of child labor/forced labor
In our various business activities, we will not accept child labor, forced labor, or any other unfair labor practices.

MORINAGA Group Human Rights Policy (established May 2018)