Charter of Corporate Behavior

Member corporations of Nippon Keidanren (The Japan Business Federation) are expected to conduct themselves in a socially responsible manner, observe both the spirit as well as the letter of all laws and regulations applying to their activities both domestically and overseas in accordance with the following ten principles. We believe that corporations exist not only as economic entities designed to pursue profits through fair competition, but also as social entities which must make a contribution to society at large.

1. Member corporations of Nippon Keidanren (hereafter referred to as "members") by the development and provision of socially beneficial goods and services in a safe and responsible manner shall strive to earn the confidence of their consumers and clients.

2. Members shall promote fair, transparent, and free competition between corporations. They shall also ensure that their relationships and dealings with government agencies and political bodies are of a normal and proper nature.

3. Members shall engage in the active and fair disclosure of corporate information, not only to shareholders but also to members of society at large.

4. Members should recognize that a positive involvement in environmental issues is an essential part of their activities and their very existence as a corporation, and should therefore approach these issues positively.

5. As "good corporate citizens," members should actively engage in philanthropic and other activities of social benefit.

6. Members should strive to respect the individuality and differences of their employees, to promote safe and comfortable workplaces, and to ensure the physical and mental well being of their employees.

7. Members shall reject all contacts with organizations involved in activities in violation of the law or accepted standards of responsible social behavior.

8. Members shall respect the culture and customs of other nations and strive to manage their overseas activities in such as way as to promote and contribute to the development of local communities.

9. The highest levels of management within member corporations must assume the responsibility for implementing this charter and for taking all necessary action in order to promote awareness of it among all those concerned. Management must also heed the voice of their organization's stakeholders, both internally and externally, and promote the development and implementation of systems that will contribute to the achievement of ethical corporate behavior.

10. In the event of a violation of the principles of this charter, management of member corporations must investigate the cause of the violation, develop reforms to prevent its recurrence and make information publicly available regarding their intended actions for reform. After the prompt public disclosure of appropriate information regarding the violation, responsibility for the violation and its effects should be clarified and disciplinary action should be taken which includes the highest levels of management where necessary.

Note:

The original Japanese language version of this document is the official version used by Nippon Keidanren. This document is an English language translation of the Japanese language original and has been prepared as a public service. Establishment and revision dates shown at the beginning of this document refer to the original Japanese language document.

I. Background

Nippon Keidanren (The Japan Business Federation) has long considered the establishment of corporate ethics to be a critical mission and has therefore invested considerable time and resources into the development and promotion of the "Charter of Corporate Behavior." Although this mission has realized considerable success to date in terms of our fight against antisocial elements, an unfortunate series of scandals affecting consumers has provoked the widespread criticism not only of the corporations directly involved, but also of Japanese business as a whole. Social solidarity and trust form the foundation upon which business is possible. Recent events have damaged this trust, and, if left unchecked, may even undermine confidence in the free market economy.
In order to redress this situation, Nippon Keidanren calls upon its members to renew their commitment to the Charter of Corporate Behavior and further promote its effectiveness by 1) Strengthening the commitment of corporate management towards corporate ethics, 2) Developing internal systems effective for the prevention of corporate misconduct, and 3) Implementing concrete systems and measures for dealing with actual instances of corporate misconduct.
In addition to paying special attention to legal compliance and the prevention of corporate misconduct, Nippon Keidanren calls upon corporate management to take positive action in the event of corporate misconduct, to publicly disclose details of any incidents and to take every action necessary to redress such problems and prevent their recurrence.

II. Plan of action

1. Revision of the "Charter of Corporate Behavior" and its "Implementation Guideline"

(1) Revision of the Charter - points of reform

1. Emphasis placed on legal compliance in the preface.
2. Emphasis placed on creating trust between consumers and corporations by the responsible provision of goods and services in principle 1.
3. The role of executive corporate management in the prevention of corporate misconduct and the reforms following the event of corporate misconduct is of critical importance. Because of this, renewed emphasis has been given in principles 9 and 10 to the role of corporate management in prevention and in implementing reforms following misconduct.

(2) Revision of the Guideline - points of reform

1. The guideline has been revised in accordance with the changes made to the charter and with regard to recent social developments (these include guides for the: implementation of a company-wide system of corporate ethics and corporate conduct, establishment of a corporate ethics helpline, and the monitoring of corporate ethics).
2. Additional model action plans have been appended to the guideline for reference.

2. Requirements for the establishment and maintenance of a system for promoting ethical corporate conduct within corporations

The following seven points detailing reforms which corporate management are required to implement and maintain within their own corporations have been provided in order to further promote the goals and spirit of the charter.

1. Establishment and development of a corporate code of conduct(Includes development of an original charter).
2. Disclosure and public communication of the nature and extent of corporate commitment towards responsible corporate conduct (Includes use of the Internet, corporate and social reporting).
3. Establishment of a company-wide system of compliance (Includes appointment of a director in charge of corporate ethics, establishment of a corporate ethics committee or office).
4. Establishment of a corporate ethics helpline or consultation office (Establishment of a means for consultation apart from normal corporate channels, the means for informing corporate management of important developments, and the protection of personal information and anonymity).
5. Implement and develop training and education programs (Special attention to training by management level and by function).
6. Implementation of in-house review of progress in achievement of ethical behavior goals.
7. Appropriate and timely disclosure of information, investigation of causes, implementation of plan for prevention of recurrence and discipline of employees and executives involved in a violation of the rules of ethical corporate conduct.

3. Commitment of new members of Nippon Keidanren to Charter compliance

New members of Nippon Keidanren will be required to submit a written confirmation of their intention to comply with the Charter.

4. Support in the prevention of misconduct

Nippon Keidanren shall provide the following services in order to support the independent actions of member corporations attempting to prevent misconduct and other incidents.

(1) Support for the self-assessment of member's corporate behavior

1. Periodical administration of questionnaire surveys and interviews of corporate conduct and compliance systems in member corporations, publication of analysis and results.
2. Development and provision of a compliance checklist whereby members may assess their own achievements in upholding the principles of the Charter. Nippon Keidanren will also evaluate the ethics management systems of member corporations upon their request.

(2) Establishment of a consultation service for members within Nippon Keidanren

The opportunity for representatives of member corporations to consult directly with the Chairman of Nippon Keidanren or the Chairman of Nippon Keidanren's Committee of Corporate Behavior will be provided. Where necessary, Nippon Keidanren will also recommend lawyers and other professionals in related fields to members.

(3) Conducting seminars and related events

1. Seminars and related events for corporate management
   Nippon Keidanren will hold seminars and other events for the management of member corporations on topics related to the theory and practice of corporate ethics.
2. Training for directors in charge of corporate ethics
   Nippon Keidanren will hold off-site training workshops for corporate directors in charge of corporate ethics in order to inform them of developments in the field, best practices of member corporations, and relevant case studies.
3. Preparation and publication of case studies in corporate ethics and conduct
   Nippon Keidanren will research and publish case studies including the analysis of best practices in member corporations, examples of effective in-house training programs, and examples of crisis management and reform plans.

(4) Establishment of a "Corporate Ethics Promotion Month"

To promote an ongoing awareness for corporate ethics and ethical conduct among member corporations Nippon Keidanren will establish and hold an annual "Corporate Ethics Promotion Month" in October each year. The surveys and seminars outlined in sections 2 and 3 above will be held during this period. Member corporations will be encouraged to hold self-evaluations and training sessions as part of this month.

(5) Establishment of an office for corporate ethics within Nippon Keidanren

An office for corporate ethics will be established within Nippon Keidanren in order to administer and coordinate support activities for member corporations.

5. Codification and increase of penalties for member corporations violating the Charter

(1) Codification and intensification of penalties

Members in violation of the Charter were previously responsible for making their own report on their actions to Nippon Keidanren and the self-imposition of penalties. Under the revised charter, the ad hoc committee established under Article 13 of the Nippon Keidanren Constitution may go beyond this by determining penalties and making recommendations to the Chairman of Nippon Keidanren for official action.
Nippon Keidanren has previously imposed penalties consisting of warnings, removal from official positions within Nippon Keidanren, and voluntary suspension of participation in Nippon Keidanren activities. In addition to this, Nippon Keidanren will impose membership suspension, advise retirement of membership or expulsion.

Table: Explanation of Penalties and their effect upon Nippon Keidanren membership rights and privileges

Penalty	Membership	Official posts	Participation in committees	Participation in general assembly
Warning	Maintained	Maintained	Maintained	Maintained
Removal from office	Maintained	Forfeit	Maintained	Maintained
Voluntary suspension of membership	Maintained	Maintained (but suspended for duration)	Forfeit (for period of suspension)	Maintained
Suspension of membership	Forfeit (for period of suspension)	Forfeit	Forfeit (for period of suspension)	Forfeit (for period of suspension)
Retirement of membership	Forfeit	Forfeit	Forfeit	Forfeit
Expulsion	Forfeit	Forfeit	Forfeit	Forfeit

(2) Requirements for members in violation of the Charter

1. Submission of report of measures to prevent recurrence of misconduct
   Members who have violated the Charter will be required to submit in writing a report to the Chairman of Nippon Keidanren detailing their plans and actions to prevent recurrence.
2. Participation in corporate responsibility training seminars
   Members who have violated the Charter will be required to participate in corporate responsibility training seminars as designated by the Chairman of Nippon Keidanren. (Note: These seminars will comprise of events held by the Committee on Corporate Behavior, Committee on Corporate Philanthropy, The 1% Club, Council for Better Corporate Citizenship and other bodies, and will include the seminars detailed in point 3 of section 4)

(3) Restoration of rights and privileges

Penalties will be terminated and rights and privileges will be restored to members where deemed appropriate.

Note:

The original Japanese language version of this document is the official version used by Nippon Keidanren. This document is an English language translation of the Japanese language original and has been prepared as a public service. The establishment date shown at the beginning of this document refers to the original Japanese language document.