Standard Corporate Governance Code Addressing Sexual Assault on Minors
Preface

Risk Governance Committee

Japan Association of Corporate Directors (JACD)
Over the past few years, international interest in the need for companies to respect humanrights has been increasing. The UN Human Rights Council has endorsed the Guiding
Principles on Business and Human Rights, urging all States to create national action plans.

The protection and promotion of human rights are integral to achieving the Sustainable
Development Goals (SDGs).

The issue of sexual assault of minors by a former representative of an entertainment agency

is currently being discussed in Japan. Several companies have terminated their sponsorshipcontracts with the agency, and the media has suspended the use of the agency's celebrities.

We in the business community should recognize that this issue poses a universal and serious
challenge to human rights, particularly regarding compliance and governance systems forprotecting minors from sexual assault. The question now is what actions should be taken bycompanies directly or indirectly involved in the sexual assault of minors.

In this context, the "Standard Corporate Governance Code Addressing Sexual Assault on

Minors" was drafted by the Risk Governance Committee (Chairperson: Hyo Kambayashi, ViceChairperson: Tamaki Kakizaki) of the JACD, in collaboration with Mr. Kozo Takaoka, former

President and CEO of Nestlé Japan K.K., and Mr. Kazumasa Miyashita, a lawyer at IGPI Lawyers.

This Code is based on the UN Guiding Principles on Business and Human Rights (2011) and
the Road Map for the Next Decade of Business and Human Rights (2021).

The UN Guiding Principles on Business and Human Rights, also known as the Ruggie

Framework, were adopted by the UN Human Rights Council in 2011 and apply to all States

and companies. These principles consist of three pillars: (1) the obligation of States to protect
human rights, (2) the responsibility of companies to respect human rights, and (3) access toeffective remedies.

The Roadmap for the Next Decade of Business and Human Rights (2021) emphasizes thathuman rights due diligence be comprehensively integrated into corporate governance andculture and included in business models and strategies in order for companies to effectively

fulfil their responsibility to respect human rights. It also highlights the need to strengthen thebond between sustainability management and human rights as stakeholders' interest in
climate change and sustainability issues increases.

1This Code primarily focuses on how companies can fulfill their responsibility to respect thehuman rights of minors. Beyond that, it also encourages companies to continue fulfilling theircorporate responsibility to respect human rights over time.

(Individuals who were involved in drafting this Code, honorifics omitted)
Kazuhiko Toyama, Chairman, JACD

Risk Governance Committee of the JACD

Hiyoo Kambayashi, Chairperson (Senior Managing Director, Protiviti, LLC)

Tamaki Kakizaki, Vice-Chairperson (Professor, School of Law, Meiji University)

Kazumasa Miyashita (Representative Attorney at Law, IGPI Lawyers, Inc.)

Kozo Takaoka (CEO, K & Company, Inc., former President and CEO of Nestlé Japan K.K.)
For questions regarding this CG code, please contact
https://www.jacd.jp/contact/contact-e.html

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Standard Corporate Governance Code Addressing Sexual Assault on Minors
Basic Principles
1. Respect for the Human Rights of Minors

Companies must respect the human rights of minors and recognize that sexual assault on
minors is a grave human rights violation, often referred to as "murder of the soul."Companies should address all adverse impacts on the human rights of minors.
2. Corporate Responsibility to Respect the Human Rights of Minors

As part of a company's responsibility to respect the human rights of minors, it should takethe following actions:

1. Avoiding causing or contributing to adverse impacts on the human rights of minors
through its activities and addressing such impacts should they occur.

2. Preventing or mitigate adverse impacts on the human rights of minors directly
connected to the operations, services, or products of the company throughbusiness relationships, even if it is not contributing to those impacts.
3. Policies and Processes to be Established by the Company

To fulfill their responsibility to respect the human rights of minors, companies should clarify

and publicly disclose policies and commitments suited to their scope and circumstances.

They should also devise and implement processes, including human rights due diligence, toaddress adverse impacts and risks to the human rights of minors that may arise.
4. Remediating Adverse Impacts

When a company is found to have caused or contributed to adverse impacts on the humanrights of minors, it should take corrective action or cooperate in remediating the adverse
impact through appropriate processes.
5. Relief

Companies should establish effective operational-level grievance mechanisms (OLGM), suchas a Reporting and Response System, when they are found to be causing or contributing toadverse impacts on the human rights of minors. Such mechanisms should be in place toprovide remedies and cooperate in implementing remedies.

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Chapter 1: Respect for the Human Rights of Minors
Basic Principle 1

Companies must respect the human rights of minors and recognize that sexual assault on
minors is a grave human rights violation, often referred to as "murder of the soul."Companies should address all adverse impacts on the human rights of minors.
Commentary:
The UN Guiding Principles on Business and Human Rights (the "Guiding Principles"),formulated by the United Nations Human Rights Council in 2011, state that "adverse humanrights impacts" should be identified and assessed in order to gauge human rights risks (seeGuiding Principle 18). Sexual assaults against minors, often referred to as "murder of thesoul," must be recognized as the most "severe" of impacts or ones "where delayed response
would make them irremediable" (see Guiding Principle 24). Such impacts must be recognized
as a human rights violation of the highest priority.

Respecting the human rights of minors by companies means that every member of theboard of directors, executive management, officers, and employees must uphold theserights. Moreover, this commitment should be communicated to society and business

partners. "Respect" in this context goes beyond mere tacit awareness of the importance ofhuman rights; it means avoiding violations of human rights and addressing the adverse

impacts on human rights with which the company is involved (see Guiding Principle 11).

Addressing the adverse impact on the human rights of minors calls for taking appropriate

measures to prevent, mitigate, and, where appropriate, remedy all violations of the humanrights of minors, including sexual assault and human trafficking.

Supplementary Principle 1-1: Human Rights of Minors

The responsibility of companies to respect the human rights of minors is based oninternationally recognized human rights standards, including, at a minimum, those outlinedin the International Bill of Human Rights and the International Labor Organization Declaration

on Fundamental Principles and Rights at Work. If the level of human rights guaranteed bylaw or industry practices in the country or region in which the company is located does notmeet the standard of internationally recognized human rights, the company shall seek ways
to maximize respect for the latter.

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Chapter 2: Corporate Responsibility to Respect the Human Rights of Minors
Basic Principle 2

The responsibility to respect the human rights of minors requires companies to take thefollowing actions:
1.

Avoiding causing or contributing to adverse impacts on the human rights of minors

2.

Preventing or mitigate adverse impacts on the human rights of minors directly

through their activities, and addressing such impacts should they occur.

connected to the operations, services, or products of the company through business
relationships, even if it is not contributing to those impacts.

Commentary:Companies may potentially be involved in adverse impacts on the rights of minors throughtheir own activities or as a result of their business relationships with other parties. "Activities"of companies are understood to include both intentional and unintentional actions, and"business relationships" encompass relationships with trading partners, organizations in thevalue chain, and any other non-State or State entity directly linked to its operations, products,
or services.

The relationship between corporate activities and adverse impacts on human rights can be

categorized into (i) cases where corporate activities cause adverse impacts on human rights(causal), (ii) cases where corporate activities contribute to adverse impacts on human rights(contributory), and (iii) cases where corporate operations, products, or services are directly

linked to adverse impacts on human rights (directly linked). The actions required of thecompany differ in each of these cases (see Guiding Principle 19).

An example of directly linked impacts in (iii) above would be when a minor who is acelebrity is directly affected by sexual assault by the talent agency to which he or she belongs.

Major advertising agencies involved in the hiring of that celebrity, media companies

broadcasting the celebrity’s appearances or performances, and corporate sponsors

supporting those activities are companies with a "business relationship." They must recognize

the possibility that adverse impacts on the human rights of minors may be directly linked totheir own operations, products, or services. These partnering companies may likely be
involved in adverse impacts on the human rights of minors as a result of their business
relationship, and they should also prevent or mitigate such adverse impacts on human rights.
Moreover, (iii) directly linked impacts and (ii) contributory impacts are relative. Depending on

the degree and foreseeability of adverse impacts on human rights violations, (ii) contributory5

impacts may also be identified, and remediation may be required as described in

Supplementary Principles 3-4.

Supplementary Principle 2-1: Scope of Companies Respecting the Human Rights ofMinors

The responsibility to respect the human rights of minors applies to all companies,

regardless of their size, industry, business circumstances, ownership, and organizational

structure. However, the scale and complexity of measures taken by companies to fulfill their
responsibility may vary depending on these factors and the severity of adverse impacts onhuman rights caused by companies.

Chapter 3: Policies and Processes to be Established by Companies
Basic Principle 3

To fulfill the responsibility of respecting the human rights of minors, companies should

clearly establish and publicly disclose policies and commitments appropriate to their sizeand circumstances. In addition, they should devise and implement necessary processes,

primarily focusing on human rights due diligence, to address the potential adverse impacts
and risks to the human rights of minors that may arise in various situations.
Supplementary Principle 3-1: Commitment

Companies should establish a commitment based on a policy to respect the human rightsof minors. In order to inculcate the responsibility of respecting the human rights of minors,
companies should publicly disclose and clearly state their commitment to fulfilling this

responsibility, with the commitment in question by meeting the following requirements:i.

The commitment is approved by the board of directors or other top managementii.

The commitment is informed by relevant expert advice from both internal andiii.

bodies.

external sources.

The commitment clearly specifies a company’s stance on respecting the humanrights of minors to employees, business partners, and other stakeholders directly

involved in its operations, services, or products (for example, a clear policy of zerotolerance, such as not conducting any business with companies involved in sexualiv.

assault against minors).

The commitment is publicly available and thoroughly communicated both internally6and externally to all employees, business partners, and other stakeholders. In

addition, the company shall educate and train its employees and stakeholders tov.
vi.

raise awareness about identifying and preventing sexual assault against minors.

The commitment is reflected in a company's business policies and procedures toensure it is inculcated throughout the company.

The commitment clearly specifies measures to respond to confirmed violations ofminors' human rights, such as suspension of transactions or contract termination, as
terms of contracts.

Supplementary Principle 3-2: Due Diligence regarding the Human Rights of Minors

Companies should continuously conduct due diligence and processes regarding the humanrights of minors to identify, prevent, mitigate, and address adverse impacts on the humanrights of minors.
Commentary:i.

Scope:

Due diligence regarding the human rights of minors should focus on the adverse

impacts on the human rights of minors directly related to a company's operations,services, or products that are caused by, contributed to, or linked to its activities or
through its business relationships. The complexity of this process can varydepending on the size of the company, the risks associated with its impact onhuman rights, as well as the nature and circumstances of its operations. Recognizingthat the risks to the human rights of minors can change over time in line withchanges in a company’s operations and circumstances, this process should beii.

ongoing.

Risks to the Human Rights of Minors and Enterprise Risk Management

Human rights due diligence should not only identify and address significant risks to
a company itself but should also encompass risks to rights holders, including

minors, and should be integrated into enterprise risk management for a wide rangeiii.

of operations.

Complicity in and Responsibility for Risks to the Human Rights of Minors

When a company is contributing to, or seen as contributing to, or facilitating

adverse impacts on the human rights of minors by others, issues of complicity may

arise (see Guiding Principle 17). In terms of criminal liability, complicity, whether it
involves incitement or aiding and abetting under criminal law, requires intent. In

7terms of civil liability, however, negligence is grounds for liability, and one must

recognize that failure to actively investigate could constitute negligence, particularly

in cases of serious human rights violations against minors, such as sexual assault.

Principle 3-3: Assessment of Human Rights Risks for Minors

Companies should establish the following processes to remediate adverse impacts onhuman rights that they have caused or contributed to. That said, the process of assessing

the impact on the human rights of minors can be integrated into other processes such as
risk assessment and evaluation of impacts on the environment and society.
i.

Identification of Human Rights Risks for Minors

To assess human rights risks for minors, companies should identify and evaluate
the actual or potential adverse impacts on the human rights of minors that may

occur through their activities or as a result of their business relationships. In thisprocess, the following steps should be taken:a) Drawing on both internal and independent external sources for their expertise
regarding the human rights of minors.

b) Incorporating meaningful consultations with potentially affected groups andother relevant stakeholders in accordance with the size of the company and thenature and circumstances of its operations.

ii.

Assessment of Human Rights Risks for Minors

The first step in conducting due diligence on the human rights of minors is to

identify and assess the nature of actual or potential adverse impacts on the rightsof minors in which a company is involved. During this process, companies should
pay special attention to the unique impacts on the rights of minors who may besocially vulnerable or at risk of marginalization. A point worth noting is that there

may be different risks for females and males, as well as for adults and minors.
Principle 3-4: Response to Human Rights Risks for Minors

To prevent and mitigate adverse impacts on the human rights of minors, companies shouldincorporate the conclusions of their impact assessments into all relevant internalorganizational processes and take appropriate measures. The appropriate measures to betaken vary depending on the following factors:i.

Whether the company has caused or contributed to adverse impacts or it has

been involved in such impacts due solely to a direct connection to its operations,services, or products through its business relationships.

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ii.

The extent of the company's influence in addressing adverse impacts.

Commentary:i.

Contributing to Adverse Impacts

In cases where a company is contributing to adverse impacts as described in (ii)above, i.e., the company is contributing to or potentially contributing to adverse

impacts on the human rights of minors, the company should take necessary

measures to prevent or stop contributing to those impacts and use its influence tominimize any remaining impacts. A company has such influence only if it has theability to change the wrongful practices of the entity causing harm.

ii.

Involvement through Business Relationships

In cases where a company is directly linked to adverse impacts as described in (iii)
above, i.e., where a company has not contributed to adverse impacts on thehuman rights of minors but those impacts are directly related to the company’s

operations, services, or products through its business relationship with anotherentity, the company should consider its influence over the entity in question, theextent to which the business relationship is significant to the company, theseverity of the violation, and whether termination of the business relationship withthat entity would result in adverse impacts on human rights in order to determine

the appropriate action.
iii.

Exercising Influence to Prevent or Mitigate Adverse Impacts

If a company has the influence to prevent or mitigate adverse impacts, it should

exercise that influence. If a company lacks influence, it should explore ways toincrease it. For example, this can be achieved through capacity building for the

relevant entities or providing other incentives. Collaborating with other actors may
also help increase influence.
iv.

Termination of Business Relationships

There may be situations where a company lacks influence to prevent or mitigate
adverse impacts and it cannot increase its influence. In such cases, the company

should consider terminating the business relationship after assessing the potential
adverse consequences for human rights, taking into account reliable evaluationsof the situation, corrective actions, and remedial measures for the entity causing

harm. The company should also ensure that the conditions for such assessments

9are met, and if the duration of the remediation exceeds what is normally expected,
termination of the business relationship should be considered.

Principle 3-5: Tracking the Effectiveness of the Company’s Response

A company should track the effectiveness of its response to ensure that adverse impacts on
the human rights of minors are being addressed. Tracking should be based on appropriatequalitative and quantitative indicators and should include feedback from affectedstakeholders, both internal and external, as well as the use of fact-finding surveys andaudits.

Principle 3-6: External Reporting of the Company’s Response and Maintaining
Confidentiality

To fulfill their responsibility to address impacts on the human rights of minors and toprovide transparency and accountability to stakeholders, companies should be prepared to
publicly disclose this information when necessary. This includes formally reporting on theirefforts to address the concerns raised by affected stakeholders or their representatives andthe risks of serious harm to human rights arising from their operations or businessconditions.

Companies should provide sufficient information to assess whether their responses tospecific cases involving impacts on the human rights of minors were appropriate. However,they should not risk disclosing sensitive information related to affected stakeholders,
employees, and commercial transactions while doing so.

Chapter 4: Remediating Adverse Impacts
Basic Principle 4

When a company is found to have caused or contributed to adverse impacts on the humanrights of minors, it should take corrective action or cooperate in remediating the adverse
impacts through appropriate processes.
Commentary:

Principle 4 is designed to address cases of corporate activities that are (i) causal or (ii)contributory to adverse impacts. In these cases, besides stopping or preventing adverse
impacts, companies are required to remediate the actual adverse impacts that haveoccurred. In cases where corporate activities are (ii) contributory to adverse impacts, they10should leverage their "influence" as much as possible to mitigate the remaining impacts,

and particularly to change unjust practices of (i) companies causing adverse impacts (seeGuiding Principle 19).

In the case where corporate activities are (iii) directly linked to adverse impacts, i.e., where acompany is neither causing nor contributing to adverse impacts but is directly linked tosuch impacts through its operations, services, or products in business relationships, theresponsibility to respect human rights does not necessarily require the company itself totake corrective action. Instead, it may involve the company acting to remediate those

adverse impacts. For guidance on how (iii) companies that are directly linked to adverse

impacts should respond, see Supplementary Principle 3-4.

Chapter 5: Relief
Basic Principle 5

Companies should establish effective OLGMs, such as reporting and response systems,

when they are found to be causing or contributing to adverse impacts on the human rightsof minors. Such mechanisms should be in place to provide remedies and cooperate in

implementing remedies.
Commentary:An operational-level grievance mechanism (OLGM) is a mechanism for handling complaints
established within a company or organization that differs from existing judicial grievanceprocesses, such as courts. In this context, it functions as a reporting and response system.

When a company’s operations, services, or products are directly related to adverse impacts,
the company is not necessarily required to lead the remediation efforts. Even in such cases,

however, the company should strive to prevent or mitigate those adverse impacts byencouraging other companies that may have caused or contributed to those adverse

impacts to remediate them.

Moreover, if a company is aware of a prolonged adverse impact but fails to encourage its

remediation, it may be deemed to be complicit or exacerbating that adverse impact. In suchcases, the company should pursue remediation and also, depending on the circumstances,
cooperate in implementing relief measures, possibly involving the relevant industry as awhole.

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Supplementary Principle 5-1: Reporting and Response System

The Reporting and Response System is an OLGM, and it should be directly accessible toindividuals and local communities who have been or may be adversely affected by acompany's actions. This system is typically operated either by the company alone or incollaboration with relevant stakeholders. It may also involve external experts ororganizations acceptable to both parties. Creating this system will allow companies to

identify and assess issues related to adverse impacts and to work directly to alleviate harms.
Commentary:
The Reporting and Response System has two essential functions concerning a company's

responsibility to respect the human rights of minors.

First, it helps to identify adverse impacts on the human rights of minors as part of acompany's ongoing human rights due diligence. It does so by providing a means for those

directly affected or potentially affected by the company to express their concerns. Analyzing
trends and patterns in complaints and reports allows companies to identify organizational
issues and adjust their practices accordingly.

Second, this system enables the timely and direct remediation of adverse impacts once they

are identified through complaints or reports. This can prevent greater harm and worsening

issues.

Supplementary Principle 5-2: Eight Requirements for the Reporting and Response
SystemIn order to ensure the effectiveness of an OLGM, the Reporting and Response Systemshould meet the following requirements:i.

Legitimacy: It should be trusted by stakeholder groups who are system users andii.

Accessibility: It should be acknowledged by all stakeholder groups who are systemiii.

it should be responsible for the fair conduct of the complaint process.

users and provide appropriate support to individuals facing special barriers whenaccessing the system.

Predictability: The Reporting and Response System should indicate a reference

period for each stage, establish clear and well-known procedures, clearly explain

available processes and types of results, and have the means to monitor theiriv.

execution.

Fairness: It should ensure that harmed parties have legitimate access to sources of12

information, advice, and expertise necessary to participate in the reporting andresponse process under fair conditions where they are informed and mutualv.

respect is maintained.

Transparency: It should continually inform reporting parties about the status of
their reports, build trust in its effectiveness, and provide sufficient information

about the system's performance to protect the public interest in times of crisis.

vi.

Compliance with Human Rights: It should ensure that outcomes and remedies

vii.

A Source of Continuous Learning: It should make use of available means toviii.

comply with internationally recognized human rights.

improve the system and clearly identify lessons to prevent future complaints andharm.

Based on Engagement and Dialogue: It should focus on dialogue as a means to
discuss and resolve complaints, involving stakeholder groups who are systemusers in the design and performance of that system.
Commentary:

Stakeholders are the intended users of the Reporting and Response System. Whenstakeholders choose to use it, the Reporting and Response System must live up to their trust.

Regularly sharing information with the parties about the status of the response to each report

is essential to maintaining the credibility of the process. Transparency regarding theperformance of the Reporting and Response System to a wide range of stakeholders throughstatistics, case studies, or detailed information about the handling of specific cases isimportant to demonstrating its legitimacy and gaining widespread trust. At the same time,
confidentiality regarding dialogues between parties and personal information should bestrictly maintained as necessary.

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