Strengthening Management
The Furukawa Electric Group properly monitors ourbusiness practices and endeavors to establish
structures for improving them, so as to steadily meet our
responsibilities to our various stakeholders, who view us
from differing perspectives.
Main Stakeholders andMain Responsibilities
Environment

Customers

Localcommunities

Suppliers

Group
Employees

Main Stakeholders

Shareholders

Main Responsibilities

Means of Communication

Customers• Maintain and improve the quality of products, operations and services• Offer products and services that are useful to society• Provide solutions to issues confronting customers through a broadarray of technologies and know-how• Dialogue through regular business• Website, CSR Reports• Dialogue at technology exhibitions, trade shows

Suppliers• Establish a sound relationship founded on fair trading in compliancewith laws and regulations• Realize CSR throughout the supply chain by implementing CSR
Procurement Guidelines for Partners• Partner Meetings• Dialogue through regular business• CSR surveys• Feedback interviews on results of partner evaluations

Shareholders• Provide appropriate returns• Ensure timely and appropriate disclosure• Enhance corporate value• Annual reports, general meetings of shareholders• Shareholder reports• Management briefings and results presentations• Investor visits• Shareholder plant tours

Employees• Respect human rights• Cultivate and appropriately value and reward human resources• Promote health, including occupational health and safety, as well as
mental health• Support diverse workstyles and work/life balance• Internal newsletter, intranet• Heart-to-heart communication between president
and employees• Management briefings

Local
communities• Promote sporting and cultural activities; cultivate the next generation• Cooperate with and sponsor traditional events• Support the activities of and collaborate with local NPOs

• Factory tours• Hosting of Japanese dance and other regional events• Social contribution activities, such as employee
participation in community clean-ups

Environment• Reduce emission of gases that contribute to global warming• Promote energy conservation and recycling• Protect biodiversity• Curtail industrial waste• Manage and reduce harmful chemical substances• Compliance with laws and regulations• Compliance with the Kyoto Protocol and the Nagoya
Protocol on biodiversity• Response to environmental activities of the Ministry of
the Environment and other government organs• Research and information exchange on biodiversity
preservation through JBIB** Japan Business Initiative for Biodiversity. Founded in 2008, the JBIB is a joint effort by Japanese companies to act on behalf of biodiversity preservation.

Furukawa Electric Group CSR Report 201110

Strengthening Management

Fiscal 2011 Targets and Results,
Fiscal 2012 Targets
The Furukawa Electric Group sets firm targets for our CSR efforts based upon our CSR Code of Conduct, and seeks to
upgrade these efforts through use of the PDCA Cycle.
Fiscal 2011 Targets and Results, Fiscal 2012 Targets
Fiscal 2011 Targets

Fiscal 2011 Results

Achievement

Fiscal 2012 Targets• Thorough compliance awareness• Held “heart-to-heart
communication between president
and employees” at 6 business sites• Held “Compliance Roundtables” ateach site and branch✓• Develop “heart-to-heart communication
between president and employees” atsales bases• Execute 2nd Employee Compliance
Awareness Survey• Revision of CSR Code of Conduct• March 2011
Revised CSR Code of Conduct(Global edition)✓• Prevention of recurrence ofAnti-Monopoly Act violation
issues and voluntarycompliance checking• Held Anti-Monopoly Act Seminars,
auditing of main points byauditing unit
• Implemented voluntary checking
within units using the“Check Sheets”✓• Enhance voluntary compliance checking(Expand range of area-specific
Check Sheets)• Implementation of BusinessContinuity Plan (BCP) andits certification• January 24, 2011
Acquired BS25999 certification
covering the opticalsemiconductor business✓• Revise BCP and make it more thorough• 0 serious accidents, accidents
requiring leave 2 or fewer• 0 serious accidents, 3 accidents
requiring leave• Construction of labor safety andhealth management system• Acquired Japan Industrial Safety
and Health Association OSHMS
certification at the Mie Works andHiratsuka Works✓• Acquisition of JISHA OSHMS certificationby the Nikko Works

Quality• Reduction of quality complaints.
10% in comparison withfiscal 2010

• Reduced by 24.5% compared withfiscal 2010✓

• Reduce by 10% compared withfiscal 2011

Environment

Initiatives for the Environment Refer to Targets and Performance (page 22)

Procurement• Make suppliers aware of
CSR Promotion Guidelines
for Partners• Distributed guidelines atPartner Meetings• Assessed main partners and held
feedback consultations✓• Execute partner assessments andfeedback consultations• Disclosure of CSR Guideline (English
edition) for overseas partners• Global personnel development• Executed Global Development
Program (GDP) through ouroverseas local corporate members✓• Continue with GDP• Improve worksite capabilities• Established Training Center forstrengthening worksite capabilities• Developed 16 Senior Trainers✓• Develop worksite capability training at
all works• Increase number of Senior Trainers• Put workstyle innovations
into practice• Newly established Refresh
Leave Program• Executed “Facilitation Training” toimprove meeting effectiveness(for all Section Managers)✓• Look into and execute work systems in
response to disaster/power supply issues• Work from home system for use duringchildcare leave, introduce return to work
system for employees who dropped out
due to childbirth or childrearing• Active social contribution efforts• Lateral development of social
contribution examples within
the Group✓• Newly establish Volunteer Leave System• Newly establish volunteer activity
portal site• Publish educational materials in English
and ChineseCompliance /Risk Management

Safety and Health

Labor and
Personnel
Development

Social and local
community
contribution

11

Furukawa Electric Group CSR Report 2011

• Publish Furukawa Electric Group CSR
Compliance Handbook (4th Edition) and
use in training• 0 serious accidents, accidents requiring
leave 1 or fewer

Strengthening Management

Corporate Governance
The Furukawa Electric Group strives to maintain sound management by constructing and upgrading highly transparent
and efficient internal control systems.

collaboration between our Corporate Auditors, Accounting
Auditors and the CSR Division, which acts as our internal
auditing department, including sharing information andexchanging opinions.

Board of Directors andBoard of Corporate Auditors
Board of Directors
The Furukawa Electric Board of Directors is composed of 12
directors, including three Outside Directors. This is so as toreceive advice and opinions from an outside perspective inBoard of Directors meeting discussions and decisions. It helps
to ensure transparency in decision-making, and strengthens
the oversight function in management overall.
The Outside Directors bring their rich experience fromthe worlds of finance, trading, and corporations, and provide
valuable advice and guidance from a variety of perspectives,
and the Board takes these into serious consideration in making
decisions. Therefore, we have created a system that enables
Outside Directors and Outside Auditors to perform their duties
smoothly, which includes doing our best to schedule our
Board of Directors meetings so that our Outside Directors
and Outside Auditors are able to attend, and also to provide
them with detailed prior explanations so as to deepen theirunderstanding sufficiently in regard to items of discussion.
The Compensation Committee, which includes Outside
Directors, is charged by the Board with the policy oncompensation of directors and the details of individualcompensation, so as to maintain transparency in the decision
process and eliminate arbitrariness.

Operational Performance
Our operational structure is based on a company system anda chief officer system. Under the supervision of the president,
who is responsible for overall operational performance,
operations are run by company presidents, and operations
relating to matters such as Group-wide strategies, resource
allocation and administration are handled by the relevant chief
officer. Details are then reported back to the Board of Directors
on a quarterly basis.

Internal Control
Our Group internal control system is implemented withthe understanding that internal control maintains andenhances the efficiency of operational performance, ensurescompliance, manages risk and information, and oversees
affiliated companies. The CSR Division Control Department
Internal Control System Group upgrades the system, and also
assesses and seeks to improve its operations. The GroupJ-SOX Committee and the CSR Division are responsible forcomposing the Furukawa Electric Group’s financial reports as
required under the Financial Instruments and Exchange Act,and maintaining and enhancing their credibility.

Board of Corporate Auditors
Furukawa Electric has in place a Board of Auditors. We place
great importance on the function performed by our Corporate
Auditors and Board of Corporate Auditors, which are
independent of the Board of Directors. We continue to makeevery effort to strengthen our audit functions through close

Corporate governance organization chart
Shareholders’ Meeting

Monitoring
andSupervision

Appoint
Submit proposals
and reports

Appoint

Board of Directors
12 Directors (including 3 outside directors)
Submit reports,
attend meetings
and audit

CSR and Risk Management Committee
Chairman, President, Chief Officers, Company Presidents
Special Committees
Central Committee for Environmental Management
Central Compliance Committee, etc.

MonitorBusiness
Operations

Appoint

Audit accounts

Delegate

Board of Corporate Auditors
5 Corporate Auditors (including 3 outside auditors)

Accounting
Auditors

Submit reports

Collaboration between auditsCompensation Committee• Decide on critical matters relating to business operations• Supervise business operations• Screen reports relating to business• Screen status of operations and assets• Screen reports relating
to accounting• Examine status ofoperations and assets

Appoint

ChairmanPresident
AdviseManagement Committee
Chairman, President, Chief Officers, Company Presidents

Submit reports

Instruct

CSO (Chief Strategy Officer)
CFO (Chief Financial Officer)

Internal Audit (CSR Division)

Chief Officers
CMO (Chief Marketing Officer)
CPO (Chief Production Officer)

CSRO (Chief Social Responsibility Officer)
CTO (Chief Technology Officer)

Provide support and guidanceBusiness
operations

Company Presidents

Furukawa-Sky Aluminum Corporation

Telecommunications Company, Energy and Industrial Products Company, Metals Company, Electronics and Automotive Systems Company

Light Metals Company

Affiliate Companies

Other Group companies

Furukawa Electric Group CSR Report 201112

Strengthening Management

CSR Management
The Furukawa Electric Group has created a specialized unit for taking a unified approach to CSR activities, including
strengthening compliance and risk management.

CSR Promotion Framework
The Furukawa Electric Group established the CSR Division asa specialized unit for promoting CSR activities and appointed
a Chief Social Responsibility Officer (CSRO) to supervise its
operations. It enhances the monitoring of overall corporate
practices from the point of view of CSR concerns such as
internal controls, compliance, risk management, safety,
environmental conservation, and social contribution, andtakes a unified approach to CSR-related activities. In theevent a problem occurs, it provides a system for taking thenecessary measures, such as investigating the backgroundof the problem and elucidating the cause, establishing andimplementing remedial and recurrence prevention measures,
disclosure, etc.

supply chain. Also, in 2010, which was the International Yearof Biodiversity, further efforts to develop global environmental
conservation were discussed, and the international guidelines
on social responsibility (ISO26000) were issued.
In response to these changes, in March 2011 we revised
the Furukawa Electric Group CSR Code of Conduct so as tostrengthen our CSR efforts across the entire Group, including
our overseas bases, to take into account our international
scope of activities. Also, in conjunction with this we published
the Furukawa Electric Group CSR Compliance Handbook (4thEdition), which clearly explains the new Code of Conduct using
concrete examples.
WEB

Furukawa Electric Group CSR Code of Conduct

http://www.furukawa.co.jp/english/csr/management/index.htm

Risk Management
Furukawa Electric Group Basic Policy on CSR
Risk Management(Revised March 2011)

Based on the Furukawa Electric Group Corporate
Philosophy,• We will operate our businesses in harmony
with society and the environment and endeavor
to create social value through technologicalinnovation, complying with laws, social norms, andethics as a member of the international community.
• We will strive to maintain and build sound andfriendly relationships with all of our stakeholders
and contribute to the sustainable developmentof society.

WEB

CSR Promotion Framework

http://www.furukawa.co.jp/english/csr/management/csr_manage.htm

Revision of the Furukawa ElectricGroup CSR Code of Conduct
The social importance of CSR and compliance has been
rapidly changing in recent years, with more customers
demanding the promotion of such activities across the entire

The Furukawa Electric Risk Management Committee assesses
risks through its regular risk survey. It designates the fiveimportant risks that must be undertaken throughout thecompany as well as the units that are responsible for them,as it works to reduce the degree of risk and follow up on thestatus of risk responses.
For example, we have established a basic policy for
information security and personal information protection soas to maintain information security, and thoroughly revised
the related company-wide regulations accordingly. At thesame time, we conduct e-learning courses along themes
such as information leak prevention, trade secret protection
based upon the Unfair Competition Protection Act, personal
information protection and the prevention of unauthorizedaccess, and promote activities for increasing risk awarenessconcerning information security.
New risks have arisen since the occurrence of the Great
East Japan Earthquake on March 11, such as electrical powerissues. We will further strengthen risk controls as we take aclose look at changing risk trends.

Major Fields of Company-Wide Risk
Integration of the Furukawa Electric Group Action Guidelines
into CSR Code of Conduct
Furukawa ElectricGroup Philosophy

Furukawa ElectricGroup Philosophy

Furukawa Electric Group
Action Guidelines

New Furukawa Electric GroupCSR Code of Conduct

CSR Code of Conduct

13

Furukawa Electric Group CSR Report 2011

1. Compliance
4. Information security
2. Quality control
5. Affiliated company controls
3. Large-scale disasters, such as earthquakes

BCM (Business Continuity Management)
In fiscal 2011 the Furukawa Electric Group Central Disaster
Prevention and Business Continuity Management Committee
established the Business Continuity Management System(BCMS) based upon the British Standards (BS25999-2),
which in practical terms is considered the international
standard for business continuity management system. It
determined that companies which had not set about creating
business continuity plans (BCP) for important business should
do so, prompting the start of BCM at all companies.
We took the lead with BCM promotion in fiscal 2009 in
our laser diode business, which is one of our main businesses,
and received British Standards (BS25999-2) certification for
it on January 24, 2011. We provide products to domestic
and overseas telecommunications equipment manufacturers
and telecommunications carrier through this business, andthe pivotal importance of this business in supporting theconstruction of a supply chain for telecommunications
systems caused many customers to strongly demandbusiness continuity capability. Therefore, this is an activity that
increases our enterprise value, so we put effort into acquiringcertification.
Also in fiscal 2011, the relevant units from Headquarters
and the Chiba Works participated in a read-through of the
BCP, which presupposes an earthquake with an intensity ofupper 6 on the Japanese seismic intensity scale. Although
this was only a tabletop exercise, its effectiveness was borneout by the lack of confusion and smooth initial response in ourwork to restore business in the aftermath of the Great East
Japan Earthquake.

BS25999-2 Certification Ceremony

Compliance
Improving Compliance AwarenessHeart-to-Heart Communication between the President
and Employees
Our New Frontier 2012 mid-term management plan declares
our focus on the President’s policy of thorough safety, quality
and compliance in our business practices. We conduct
our “Heart-to-heart communication between the President
and employees” program so that the President can confirm
for himself exactly how this focus on safety, quality andcompliance is developed at our worksites and what activities
are being undertaken, and for the President to get
unvarnished opinions from employees on the spot. The
program was conducted at six of our Works in fiscal 2011,
where the Works
Chiefs, Manufacturing
Department General
Managers, Forepersons,and Chief Operators sat
down with the President
to exchange opinions. We
will expand the program
to include our sales bases “Heart-to-heart communication between
the President and employees” meetingin fiscal 2012.
Compliance Roundtable
Members of the CSR Division visited the Furukawa Electricbusiness bases for small-group roundtable discussions ofcompliance themes. 26 such meetings, delineated by rank,
were held at 11 sites during the period May through July 2010,
with a total of 200 employees in attendance. At the meetings,
the CSR Division provided the results of the Employee
Compliance Awareness Survey conducted in fiscal 2010,
after which lively exchanges of opinion about complianceensued. This of course enabled the unfiltered opinions of theparticipants about compliance to be expressed, while it also
deepened the participants’ understanding of compliance,
making these roundtable discussions valuable.
The Employee
Compliance Awareness
Surveys are conducted
reciprocally by Furukawa
Electric and the affiliates
in alternate years. In fiscal
2011, the Survey was
conducted at 22 affiliates,with around 3,000
Compliance Roundtable for the Section
employees surveyed.
Chief/Manager level

BCP-based exercise (Chiba Works)

Furukawa Electric Group CSR Report 201114

Strengthening Management

CSR Management

Monitoring
Strengthening the Group Auditing System and Functions
The CSR Division regularly tours each unit as well as theaffiliates to conduct internal audits of business execution.
Compliance was added last year to the list of important
audit categories, and audits of 50 Headquarters units wereconducted, mainly of those involved in manufacturing andsales, as well as at 30 consolidated subsidiaries. We also
conduct internal audits at overseas affiliates, in addition towhich outside experts in local laws and risks are enlisted to
conduct special audits.
Voluntary Compliance Checks
Furukawa Electric has designated October and November of
each year as “compliance months,” during which we execute
our company-wide compliance activities. In fiscal 2011, wenewly added checking using Individual Compliance Review

Check Sheets and Area-Specific Check Sheets pertaining toindividual areas such as the Anti-Monopoly Act. We will
expand the range of items covered by the Area-Specific Check
Sheets and continue to increase our Voluntary Compliance
Check system.

Compliance Education
We conduct compliance education for employees at every levelof the company, from new recruits to directors. We published
the Furukawa Electric Group CSR Compliance Handbook (4thEdition), which explains the CSR Code of Conduct and othercompliance-related matters, for use as a textbook, and plan
to develop compliance education throughout the Furukawa
Electric Group in fiscal 2012.
WEB

Compliance seminars

http://www.furukawa.co.jp/english/csr/management/comp.htm

Reports on Misconduct (As of August 15, 2011)
Anti-Monopoly Act Violation
The Furukawa Electric Group was served with anadministrative order as described below concerning theviolation of anti-monopoly statutes. We deeply regret theconcern that these incidents have caused our customers,
shareholders and all related parties.
In December 2009, the Furukawa Electric Group
released the report of the Third-Party Investigation
Committee on Violations of the Anti-Monopoly Act, andimplemented measures to prevent recurrence based on
the Committee’s findings. In parallel with the Committee’s
investigation, we had thorough investigations conductedby outside attorneys. In addition to confirming that there
will be no recurrence of behavior that caused problems
in the past, any behavior that could cause suspicion has
been ceased. We will continue to work to restore public
Anti-Monopoly Act Violation
Issue

Company

Date

Optical fiber
Furukawa
cable andElectric Co., Ltd.
related products

May 2010

Electric wires
Furukawa
for construction
Elecom Co., Ltd.
and distribution

November
2010

Specific VVF
cable forinterior wiring

Kyowa Electric
Wire Co., Ltd.
Furukawa
Elecom Co., Ltd.

Administrative
Ceaseand-Desist Surcharge
Payment Order
Order¥4.6 billion—¥460 million—

July 2011—¥50 million*F urukawa Electric has made a court appeal with regard to some
optical fiber cable and related products included in the administrative
surcharge payment order regarding violation of the Anti-Monopoly Act.

15

Furukawa Electric Group CSR Report 2011

trust, and enlist the entire Group in seeking thoroughcompliance awareness.
Other items currently under investigation concerning
overseas competition laws are as follows:• Cooperating with the EU and US authorities in an
investigation concerning automotive wire harnesses andrelated products;• Statement of Objections received in July 2011 by
VISCAS Corporation (an equity-method subsidiary) andFurukawa Electric from EU authorities concerning power
cables and related products.
* A “Statement of Objections” indicates a provisional opinion by
the European Commission concerning suspicion of infringementof European competition laws, and requests a statement by thepart(ies) involved. The Statement of Objections document is currently
under examination, and no final determination has been made.

Theft of Gold Potassium Cyanide from the Nikko Works
In January 2011, it was revealed that a quantity of gold
potassium cyanide, a toxic substance listed in the Cabinet
Order for the Designation of the Poisonous and Deleterious
Substances, was missing. This substance could cause
serious harm to large numbers of people, and we offer ourmost sincere apologies for any concern this has caused.
According to a police investigation, the substance wasstolen to be sold for cash, and the full amount of gold
potassium cyanide stolen at the end of December 2010
had been recovered. While Furukawa Electric has always
managed toxic substances in accordance with laws andregulations, our measures against theft had not beenabsolutely sufficient, so we conducted examinations of ourcontrols at all Group companies, and are proceeding withmeasures to prevent recurrence.