The NSG Group aims to operate with a spirit of openness and fairness. The continuous development of global corporate governance is an important element in this process.

The NSG Group’s Governance Structure

In all its business activities, the NSG Group places top priority on the enhancement of corporate governance, in order to establish relationships of trust with all stakeholders and to promote CSR-oriented management. To this end, the Group is also reinforcing its governance structure to ensure fair and transparent business operations.

As Chairman of the NSG Group, Yozo Izuhara has particular responsibility for corporate governance. He also ensures that the Company is run in accordance with the Group's long-term objectives and strategy and guiding values and principles. He also provides support to the Executive in communicating with the financial community, shareholders, governments and other external organizations of importance to the Group.

On 1 October 2009, Katsuji Fujimoto was appointed President and CEO of the NSG Group, with responsibility for the profitable operation of all businesses within the Group. He chairs an Executive Committee, which oversees the day-to-day management of the Group's businesses.

The adoption of the 'Company with Committees' model has brought the NSG Group into line with a growing number of leading Japanese corporations and with best practice. It has introduced additional safeguards for shareholders, increased transparency and enhanced corporate governance, with the role of the external directors strengthened. There are three board committees (Nomination, Audit and Compensation) and four external directors.

The Nomination Committee decides the details of the agenda items to be submitted to the General Meeting of Shareholders concerning the appointment and removal of directors. The Committee consists of seven directors, including four external directors and its chairman is Yozo Izuhara.

The Audit Committee, chaired by Tomoaki Abe, conducts audits of the execution of duties by directors and executive directors and ensures that adequate risk management processes are followed. It also decides the details of agenda items to be submitted to the General Meeting of Shareholders concerning the appointment and removal of independent auditors.

The NSG Group has established structures such as the CSR Committee and the Compliance Committee with the aim of improving internal control over the execution of Group-wide operations. The Japanese SOX Act (J-SOX), formulated in 2006, stipulates internal control-related rules under the Financial Instruments and Exchange Law. In accordance with the law, in fiscal 2009, all publicly listed companies will be required to assess their internal control systems regarding the reliability of their financial reporting, as well as ensuring that such systems receive external audits. The NSG Group has been proactively engaged in preparatory processes for the implementation of J-SOX.

Promotion of Compliance

The NSG Group strives to develop its compliance system and to raise awareness of this system among its employees, on the understanding that stringent compliance, including abiding by laws and social norms, is a minimum corporate social responsibility when pursuing continued business operations.

The NSG Group is proceeding with the development of a global compliance program under the global management structure launched in April 2007. In addition, the Group's Competition Law Compliance Policy has been further reviewed and revised, based upon a zero tolerance policy for unauthorized contact with competitors. New procedures, effective from 1st May 2007, require a formal assessment of the level of compliance risk for each manager, as part of the annual appraisal process. A new post of Competition Compliance Officer for the NSG Group has been created.

In order to ensure that all employees understand what is expected of them, we have over the past year revised and reissued the NSG Group's 'Code of Conduct'. The content of the Code takes into account the Group's values and principles, particularly the emphasis on safety, taking personal ownership for actions and communicating with openness and involvement. The Code defines the conduct expected of both the Group and its employees across all areas of our business. It applies to relationships with colleagues, customers, suppliers, business partners, the community and all others with whom we have contact in daily business life.

The wide range of issues addressed in the Code reflects the many diverse activities that are involved in operating a successful global business. The overriding basis of the Code is that the Group will carry out these activities in a safe, professional, legal, and ethical manner and in a way that demonstrates the Company's corporate social responsibility. Wherever possible, the Code defines a fair and common sense approach to doing business, while some elements are dictated by strict legal requirements. A summary document, 'The Way we do Business', covers the main points of the Code in a succinct pamphlet. Personal copies have been distributed to all Group employees in their own language. Both the full Code and the summary document can be downloaded from the Group website.

Response to Various Risks

The NSG Group has principal manufacturing operations in 29 countries around the world, with sales in 130 countries. The Group thus faces various risks with regard to its business activities and effective risk management is increasingly important to the Group's ongoing prosperity. Based on this understanding, the Group operates an enterprise risk management process to comprehensively identify and manage Group companies' exposure to risks. For risks relating to the environment, workplace safety, disasters, product quality, information security and credit control that may cause a significant impact on the Group's business, Group Policies set out rules to control the relevant risks, depending on their significance.

 

CSR Report 2008