Guidelines on Corporate Global Conduct
Preamble
In April 1987, the Japan Overseas Enterprises Association published the Guidelines forOverseas Direct Investment that were formulated to expand the scope of application of its
predecessor released in 1973, the Guidelines for Investment in Developing Countries, andto serve as guiding principles for overseas investment by Japanese companies in all
countries worldwide, including industrialized countries.
Japanese companies have subsequently undergone internationalization at a remarkablepace and have markedly increased their presence overseas, and further
internationalization is inevitable.
In countries and regions in which Japanese companies conduct business and investment
activities, expectations with regard to their role have risen, while there is rigid
requirement for responsible behavior. Behavior that violates that requirement is not only
subjected to government restrictions but may also give rise to severe social criticism bystakeholders of all kinds that may make corporate activity itself difficult. As witnessed by
the United Nations Global Compact and the OECD Guidelines for Multinational
Enterprises, the generally accepted principle is that global companies must not only
observe the laws of the countries and regions in which they operate, but must alsoendeavor to respect human rights and ensure worker protection, environmental protection,
corruption prevention, and other responsible behavior in accordance with internationallyproclaimed standards. Companies unable to comply appropriately with such requirements
of international society will face major risks.
Amid the growing worldwide importance of corporate social responsibility, Japan has formany centuries had a merchant philosophy that regards an enterprise as a public
instrument that benefits society, reflected in the ancient principle of sampo yoshi: “Goodfor the seller, good for the buyer, and good for society.” Another national characteristic
trait is that of not regarding nature as the antithesis of human society, but instead
endeavoring to ensure coexistence with nature. These are behavioral principles that are
innate in Japanese people and companies and thus can function effectively.
Therefore, in order to ensure appropriate conduct by Japanese companies in theirbusiness and investment activities overseas, these Guidelines on Corporate Global
Conduct (hereinafter referred to as “the Guidelines”) have been instituted to incorporate
Japan’s characteristic corporate ethics while addressing global trends.

Fundamental Stance
1. A company is recognized as a “public instrument that benefits society” only when it
has the support and approval of its customers, shareholders, and other diverse
stakeholders. The roots of this principle lie in traditional Japanese merchantphilosophy. In consequence, Japanese companies must, in their business andinvestment activities overseas, adhere to these traditional values and, by being aware
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and proud of their status as public instruments, conduct management that makes it
possible to achieve sustained growth.
2. A company must not restrict the behavioral principles it adopts to the level of ideals orconcepts, but put them into practice tangibly and systematically. In addition, thesubstance and details of that practice must be explained to stakeholders in a readily
comprehensible manner.
3. A company should, with reference to the Guidelines, institute its own specific code ofconduct that takes into consideration matters such as the company’s business activity,business conditions, scale, and localities in which it has launched operations.
Companies that have already formulated a specific code of conduct should, whenpreparing future revisions thereto, examine and consider incorporating the principlesof the Guidelines in their new code of conduct.
4. A company must, in conjunction with the institution of its specific code of conduct,
endeavor to ensure the effectiveness thereof by improving its internal control systems.
When doing so, attention should be paid to the following matters:(1) Top management should make an explicit declaration to the effect that adherence
to the code of conduct is fundamental to the company’s overseas business activity.
(2) Internal control systems should not be considered to be uniform in character, butshould rather have flexible and effective structures adapted to the actualconditions in the countries and regions in which business and investment areconducted.
(3) If activity in conformity with the code of conduct is prevented, with regard to thebackground and circumstances thereof the risk should be evaluated, and theauthorized persons with responsibility therefor should make a clear determination
on how to address that risk.
(4) Regulations for disciplinary action and sanctions for code violations should belaid down, and a clear uncompromising stance adopted. In particular, theapplication of disciplinary provisions should be strictly consistent, with noarbitrary application being permitted.
(5) When putting the code of conduct into practice, the action taken should becommensurate with the risk, and the accuracy of risk management should beenhanced by verifying the effects of action taken.
(6) To ensure that the meaning and intent of the code of conduct are understood andthey are shared globally, systematic, structured education and training should beimplemented.
(7) The status of procedures being applied and other aspects should be audited andverified regularly, and the code of conduct, internal regulations, internal control
system, and related rules should be revised if necessary.

25. A company must not, in the course of its own business activity, violate human rights
or workers’ rights, and must not permit any complicity in causing environmental
damage or corruption. If an improper act is identified in the course of business activity,
the company must ensure that it is not ignored and tolerated. If a supply chain, etc.,
experiences a problem, it is essential not only to request that the problem be corrected,
but also to provide support through measures such as capacity building to the greatest
possible extent. Seeking to be a public instrument entails having good intentions,originality, and ingenuity, and using those attributes to exert influence in order tobenefit society.

3I. Human Rights
The Guidelines
1. Companies must engage in business activity that respects internationally proclaimed
human rights.
2. Companies must endeavor to ensure that their own business activities do not lead tocomplicity in, or the aiding of, human-rights abuses.
Commentary on the Guidelines
1. By having a sense of respect for the people of the host country, and engaging inbusiness activity that respects human rights, a company can facilitate the protection ofhuman rights in the host country. The protection of human rights is an essential dutyof any nation, but there are some countries that arguably do not do enough to protect
them. In countries such as those, it is incumbent on companies to contribute to theamelioration and evolution of the societal conditions for human rights, giving this amore distinct status as their social responsibility. Of particular note is that, if there areconflicts between local laws and international norms, companies are expected to givepriority to internationally proclaimed norms and standards on respect for andprotection of human rights.
2. Companies should recognize that fostering the protection of human rights in hostcountries enhances the business environment, and that gaining the trust of consumers
and other stakeholders by doing so will assist them to achieve their own sustained
corporate growth.
3. Companies must set out explicitly their basic principles of respect for and protectionof human rights as well as specific codes of conduct they will use to realize theseprinciples. Furthermore, companies must make their own clear commitment towards
those basic principles and codes of conduct.
4. Companies must pay close attention not only to their own business activities, but also
their entire supply chains, to ensure that, either directly or indirectly, or by action orinaction, no instances of complicity in, or aiding of, human rights abuses arise.
5. Companies must create procedures and mechanisms to verify the impact on humanrights of their own business activity and the appropriateness of their actions to ensurethat human rights are respected and protected. It is essential that this also involves
action to acquire an adequate assessment of the risk of human rights abuses, including
at suppliers and other business partners; the implementation of appropriate remedial
measures to address any such risk; active dialogue with stakeholders; and the reportingof details of the status of the action taken to address these matters.

4II. Labor
The Guideline
1. Companies must endeavor to ensure worker protection.
Commentary on the Guideline
1. If companies perceive workers merely as expedients and cost-components of business
management, that attitude can lead to the condoning of exploitation, thereby
entrenching poverty in the society of host countries and hindering their growth. In
view of this, companies should recognize workers as being individuals vested with theright to the pursuit of happiness, and as having the status of vital partners in corporate
activity.
2. Companies must be aware that only by seeking to coexist and enjoy shared prosperity
with their workers will they be recognized as important corporate citizens of the hostcountries, and be able to achieve sustained growth. Above all, by keeping in mind thefundamental principles that growth will enable people to feel joy, and that the growthof individual people is the foundation of national prosperity, companies should help
workers to achieve self-fulfillment.
3. In order to ensure occupational health and safety, companies must regularly, andwhenever deemed necessary, evaluate health and safety risks, and take action in atimely and appropriate manner.
4. Companies must not subject workers to discrimination on unreasonable grounds suchas race, skin color, gender, religion, political opinion, national extraction, social origin,age, disability, HIV/AIDS status, trade union membership, or sexual orientation.
5. Companies are prohibited from engaging in any form of child labor or forced labor,
and if there is any suspicion that it is occurring anywhere in their supply chains, thecompanies concerned must exert their influence to help eliminate it. For that purpose,
it is essential to conduct regular checks of working conditions in the host country andat business partners, and prepare rational preventive or improvement measures basedon the actual circumstances. With reference to best practices used by other entities
such as those in the same industry, if any, companies must then each formulate andimplement its own more effective program.
6. Companies must endeavor to take opportunities of various kinds that occur from day
to day to communicate adequately with workers, in order to stimulate theirunderstanding about what the companies are doing, and to listen to their opinions,suggestions, and concerns. It is particularly vital to exchange opinions with employees,
such as trade union representatives, who have a good understanding of conditions in
the workplace. Companies shall be expected to make efforts to eliminate factors thatare harmful to communication and to build good labor-management relations.

5III. The Environment
The Guidelines
1. Companies must devise and implement precautionary measures to prevent
environmental damage.
2. Companies must endeavor to develop and diffuse environmentally friendlytechnologies.
Commentary on the Guidelines
1. Earth’s environment is fragile, and environmental damage may inflict irremediableharm on humankind. Even when it is possible to restore the environment after it hasbeen damaged, massive expenditure of money and time is required to do so, imposing
a huge burden on companies, nations, municipalities, regions, and the international
community, and serious damage is done to corporate images if companies areresponsible. Furthermore, once environmental damage has occurred, the expense
required for the recovery is far in excess of the expense that would have been requiredfor prevention. In view of this, companies should address environmental issues with aprecautionary approach.
2. Companies should make commitments that proclaim the use of precautionary
measures, establish codes of conduct and guidelines to underpin them, and develop
structures to ensure their effectiveness.
3. Environmental problems affect large numbers of stakeholders. Therefore, companies
should establish lines of transparent mutual communication with their stakeholders,
take steps to gather information required for a precautionary approach, and foster
understanding about their environmental policies.
4. Environmentally friendly technologies, which reduce environmental load, use
resources by means of sustainable methods, and encourage recycling, not only prevent
environmental damage but also create new business opportunities, enhance corporate
competitiveness, and contribute to their sustained growth. Accordingly, companies
should endeavor to undertake the development and diffusion of environmentallyfriendly technologies.
5. If there is any suspicion that environmental damage is being caused anywhere in their
supply chains, the companies concerned must exert their influence to help eliminate it.
For that purpose, it is essential to conduct regular checks of the environmental
conditions at business partners, and to prepare rational preventive or improvement
measures based on the actual circumstances.

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IV. Anticorruption
The Guideline
1. Companies shall not permit corruption in any of its forms, including bribery, by theiremployees or agents.
Commentary on the Guideline
1. Irrespective of the amount of money involved, if companies offer illicit gains togovernment officials in a foreign country, that would inadvertently make the country’s
government into a master that exploits its citizens rather than a servant that serves its
citizens. Producing large numbers of public officials who say “I won’t do the work
unless I receive a bribe” would destroy the rule of law and be an obstacle to thatcountry’s sustained development.
2. Companies that comply with improper demands by foreign countries’ public officials
become attractive targets thereafter, being requested to pay ever-higher amounts. To
avoid being trapped in this kind of vicious cycle, companies must engage thoroughlyin effective risk-based approaches aimed at preventing corruption.
3. In preventing corruption, companies must formulate not only general codes of conduct,but also more specific internal rules concerning matters such as the provision ofbenefits, the bearing of expenses, and the implementation of contributions andassistance. When formulating these, they must set out clear criteria for what isprohibited and what is permitted that also indicate specifically whether or not there isdishonest intent.
4. Managers themselves must show a clear commitment to fighting corruption to ensurethat formulated internal rules become well-established and that they function. The
managers’ level of commitment must be communicated to all employees and staff, notonly verbally but also by practical action, including by assessing the bribery risk foreach operating division and project, and conducting education and training on thebasis of that.
5. If companies employ agents (intermediaries) in relation to their business activity, risk
appraisal prior to conclusion of contracts must of course be undertaken, and themonitoring of the agents must be continued after the contracts are concluded. In
addition, when an M&A takes place the bribery risk at the acquired company must beanalyzed systematically, and it is essential to formulate a plan relating to the creationof internal controls for implementation after the acquisition.

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V. Anticompetitive Acts
The Guideline
1. Companies must not be complicit in any acts that impede fair competition or in any
collusive acts, particularly those that influence market prices.
Commentary on the Guideline
1. By stimulating free competition among companies, markets benefit the society andnation. That is because companies can better utilize their management resources withmore imaginative thinking under free competition and thus provide better goods andservices to business partners and consumers. However, if influential companies tend toengage in price-fixing and other anticompetitive acts (hard-core cartels in particular),the benefits that markets are expected to create will be lost, and it may even be that therightful distribution of wealth and income will be distorted.
2. Companies are able to grow because of the benefit of being able to conduct businessfreely, and to enjoy that benefit it is necessary to observe and act in accordance withthe fundamental principle of fair competition demanded by markets. Collusive acts
committed by companies may benefit those companies in the short term, but in thelong term they bring about intervention in markets by the government, with the resultthat companies lose places in which they can conduct business freely.
3. In order to prevent anticompetitive acts, companies must formulate not only generalcodes of conduct, but also more specific rules and manuals. Particularly, globallyoperating companies must remain fully aware that commercial practices in certain
countries and industries may have a negative influence on consumers and stakeholders
in other countries, and may attract multilayered penalties, both criminal and civil, inmultiple countries. It is therefore imperative that such companies clearly identify thepolicies and procedures to be complied with.
4. Managers themselves must show leadership in ensuring that formulated manuals
become well-established and functional, and it is particularly essential for them toshow all officers and employees that they have an absolutely uncompromising stancewith regard to the prevention of hard-core cartels. If there are units, businesses, relatedcompanies, or regions where the risk of violations is high owing to the nature of theirbusiness activities, then education, training, and audits must be conducted more
frequently there, and personnel reassignments must be made regularly.
5. With regard to anticompetitive acts it is necessary for in-house procedures to be
defined clearly: both ex ante protection and ex post handling. If an improper act isconfirmed as a result of internal auditing and inspections, or marketing staff, a relatedcompany, overseas base, etc., identifies a matter of concern (particularly a hard-corecartel), that information must be transmitted promptly to the head-office department incharge. Scrupulously collating all information on the issue at head office, and building
and setting in motion a mechanism to make that possible, will determine the quality ofthe ex post handling of the issue in the company concerned.
Establishment date : July 18, 20148