Strengthening Management
The Furukawa Electric Group properly monitors our business practices
and endeavors to establish structures for improving them, so as tosteadily meet our responsibilities to our various stakeholders,
who view us from differing perspectives.

Main Stakeholders and Main Responsibilities

Environment

Localcommunities

Customers

Suppliers

FURUKAWA
ELECTRICGroup

Employees

Main Stakeholders

Shareholders

Means of Communication

Main Responsibilities

EnvironmentsReduce emission of gases that contribute to global warmingsPromote energy conservation and recyclingsProtect biodiversity
sCurtail industrial wastesManage and reduce harmful chemical substancessCompliance with laws and regulations
sCompliance with the Kyoto Protocol and the Nagoya Protocol onbiodiversitysResponse to environmental activities of the Ministry of theEnvironment and other government organs
sResearch and information exchange on biodiversity preservation
through JBIB*

CustomerssMaintain and improve the quality of products, operations andservices
sOffer products and services that are useful to societysProvide solutions to issues confronting customers through a broadarray of technologies and know-how

sDialogue through regular businesssWebsite, Sustainability Reports
sDialogue at technology exhibitions, trade showsSupplierssEstablish a sound relationship founded on fair trading incompliance with laws and regulations
sRealize CSR throughout the supply chain by implementing CSR
Deployment Guideline for Business Partners

sPartner Meetings
sDialogue through regular businesssCSR surveys
sFeedback interviews on results of partner evaluations

ShareholderssProvide appropriate returnssEnsure timely and appropriate disclosuresEnhance corporate value

sSustainability Reports
sGeneral meetings of shareholders, shareholder reports
sManagement briefings and results presentations
sInvestor visitssShareholder plant tours

EmployeessRespect human rights
sCultivate and appropriately value and reward human resources
sPromote health, including occupational health and safety, as wellas mental healthsSupport diverse workstyles and work/life balancesInternal newsletter, intranet
sManagement briefings

Local
communities

sNurture future generationsPromote sporting and cultural activities
sLive in harmony with the natural environment and localcommunities

sFactory tours
sCooperate with and sponsor sports and traditional eventssSupport the activities of and collaborate with local NPOssPreserve the Satoyama Environment* Japan Business Initiative for Biodiversity. Founded in 2008, the JBIB is a joint effort by
Japanese companies to act on behalf of biodiversity preservation.

39

Furukawa Electric Group Sustainability Report 2012

Strengthening Management

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

are independent of the Board of Directors. We continue tomake every effort to strengthen our audit functions throughclose collaboration between our Corporate Auditors,
Accounting Auditors and the CSR Division, which acts as ourinternal auditing department, including sharing informationand exchanging opinions.

Board of Directors and Board of
Corporate Auditors
Board of Directors
The Furukawa Electric Board of Directors is composed of
11 directors, including two Outside Directors. This is so as
to receive advice and opinions from an outside perspective
in Board of Directors meeting discussions and decisions.
It helps to ensure transparency in decision-making, andstrengthens the oversight function in management overall.
The Outside Directors bring their rich experience fromthe worlds of trading and corporations, and provide valuableadvice and guidance from a variety of perspectives, andthe Board takes these into serious consideration in making
decisions. Therefore, we have created a system that enables
Outside Directors and Outside Auditors to perform theirduties 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, provide them with
documentation several days in advance 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 thedecision 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 groupwide strategies, resource
allocation and administration are handled by the relevant
chief officer. Details are then reported back to the Board ofDirectors 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 overseesGroup companies. The CSR Division Administration
Department Internal Control System Group upgrades
the system, and also assesses and seeks to improve its
operations. The Group J-SOX Committee and the CSR
Division are responsible for composing the Furukawa ElectricGroup’s financial reports as required under the Financial
Instruments and Exchange Act, and maintaining andenhancing their credibility.

Board of Corporate Auditors
Furukawa Electric has in place a Board of Auditors. We
place great importance on the function performed by ourCorporate Auditors and Board of Corporate Auditors, which
Corporate governance organization chart

Shareholders’ Meeting

MonitoringandSupervising

Appoint
Submit proposals
and reports

Appoint

Board of Directors
11 Directors (including 2 outside directors)
Submit reports,
attend meetings
and audits

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

Monitors

BusinessOperations

Appoint

Audit accounts

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

Submit reports

Collaboration between auditsCompensation Committees Decision of critical matters relating to business operationss Supervise business operations

Accounting
Auditorss Screen reports relating to businesss Examine status of operations and assets

s Screen reports relating
to accountings Examine status ofoperations and assets

Appoint

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

Submit reports

Direction

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 affiliate companies

Furukawa Electric Group Sustainability Report 201240

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
as a specialized unit for promoting CSR activities andappointed a Chief Social Responsibility Officer (CSRO) tosupervise its operations in accordance with the Group’s
Basic Policy on CSR. 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,and takes 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.

Furukawa Electric Group Basic Policy on CSR

necessary.
In line with the Group’s development of business inglobal markets, the risks that it faces grow more diverse andcomplex each year. Going forward, we plan to reorganize
our risk management structure, integrating it with themanagement control function to create a more effective risk
management organization.

Business Continuity Management (BCM)
The Furukawa Electric Group has established a BusinessContinuity Management System (BCMS). We pursue
groupwide BCM activities based on this system.
In fiscal 2012, we distributed a companywide
questionnaire to evaluate our response to the Great East
Japan Earthquake. Based on the responses we received, werevised our Crisis Management Rules (Companywide Rules)
and Emergency Response Headquarters Establishment
and Operation Manual (CSR Standards) and created a new
Emergency Contact Card.

Based on the Furukawa Electric Group Corporate Philosophy,•We will operate our businesses in harmony with society andthe environment and endeavor to create social value throughtechnological innovation, complying with laws, social norms,and ethics as a member of the international community.
•We will strive to maintain and build sound and friendly
relationships with all of our stakeholders and contribute to
the sustainable development of society.

WEB

CSR Promotion Framework

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

Risk Management
Risk Management
Our CSR and Risk Management Committee conduct
regular risk assessments, identifying and evaluating risks.
The committee defines important risks that require acompanywide response and promotes measures to addressthem.
The CSR and Risk Management Committee Secretariat
reports the status of progress on these measures to thecommittee and the Board of Directors and follows up, as
Important companywide risks and priority management
items (fiscal 2012)
Important Companywide Risks
1. Compliance
2. Quality control
3. Large-scale disasters, such as
earthquakes
4. Information security
5. Affiliated company controls

41

Priority Management Items (Fiscal 2012)
1. Occupational safety
2. Management of toxic and poisonous
substances

Furukawa Electric Group Sustainability Report 2012

Furthermore, we conducted BCP Exercise Assuminga Tokai Earthquake at our Hiratsuka Works (October),
BCP Exercise Assuming a Tokyo Metropolitan Earthquakeat our Chiba Works (November) and Incident Response
Exercise Assuming a Tokyo Metropolitan Earthquake at ourheadquarters (December). We confirmed the viability of theabovementioned rules and manuals, and held discussions
to envision potential situations. The Central Disaster
Prevention and Business Continuity Management Promotion
Committee, the body that promotes groupwide disasterprevention and BCM activities, deliberated the results ofthese discussions, and we are now in the process of making
further revisions.
Four of our affiliated companies suffered damage fromthe flooding in Thailand in October 2011, and temporarilysuspended production. We had alternative productionin place within two months, but we recognize that ourresponse to this risk had been insufficient. Learning from

this experience, we will improve our BCM activities goingforward.
In recognition of our efforts, in April 2012 we received theBCAO Award 2011*, the “Award for Practical Excellence”
from the Business Continuity Advancement Association(BCAO), a specified nonprofit organization managed by
the Japanese Cabinet Office. We were evaluated highlyin three areas: “efforts to promote companywide BCM
activities through committee action,” “the rapid restorationof works following the Great East Japan Earthquake throughthe actual operation ofestablished BCPs,” and“proactively communicatinginformation pertaining to
the experience outside thecompany.”* This award is presented to recognize
individuals and organizations inJapan that contribute to the spreadand implementation of business
continuity (BC) activities.
Award ceremony

Compliance
Instilling Compliance Globally throughout theGroupThe Furukawa Electric Group is working to augmentgroupwide compliance, including at overseas bases. These
efforts are designed to identify changes in the businessenvironment resulting from global developments andchanges in the positioning of compliance within internationalsociety, as well as taking into account our international scopeof activities.
In fiscal 2012, in accordance with our March 2011
revision of the Furukawa Electric Group CSR Code ofInternational version (English)

International version (Indonesian)International version (Thai)

China area version (Chinese)

Conduct, we issued the fourth edition of the Furukawa
Electric Group CSR Compliance Handbook, which serves
as an instruction manual. Furthermore, to instill at overseas
affiliated companies our Group corporate philosophy andcode of conduct, we held meetings to exchange ideas in
China and Southeast Asia, and we published internationaland China area version of the handbook. In addition, toensure our compliance with individual countries’ competition
laws, we published a bilingual Japanese/English Competition
Laws Compliance Guide that outlines the content thatoverseas affiliated companies need to put into practice.
We have shared this information groupwide to prevent any
recurrence of breaches of conpetition laws.
Exchanges of Ideas in China and Southeast Asia
In August 2011, our CSR Division hosted Internal Control
Presentations/Exchanges of Ideas Pertaining to Compliancein Shanghai, Tianjin and Bangkok. The representatives ofaffiliated companies in China and Southeast Asia participatedin these activities. After
explaining the revisions
to the Furukawa
Electric Group CSR
Code of Conduct, we
had exchanges of ideas
on global compliancepromotion.
Meeting to exchange ideas (Tianjin, China)
Preventing Bribery
Anti-bribery laws, including but not limited to the U.S.
Foreign Corrupt Practices Act and the UK Bribery Act haverecently being strengthened, and government agencies are
increasingly active on their enforcement. Accordingly, theFurukawa Electric group is continuously determined thatthe groupwide management of bribery risks is of the utmost
importance.
During fiscal 2012, we conducted bribery risk
assessments targeting overseas affiliated companies todetermine the degree to which they were currently facing therisk of bribery. To enhance our own measures in this area, inApril 2012 we formulated the Furukawa Electric Group AntiBribery Statement.
Going forward, we will create a groupwide bribery risk
management system, drawing up guidelines for consistentaction across the Group and conducting awarenessactivities.

International and China area versions of our CSR Compliance Handbook

Furukawa Electric Group Sustainability Report 201242

Strengthening Management

CSR Management

Monitoring
Voluntary Compliance Checks
Furukawa Electric has designated October and Novemberof each year as “Compliance Months,” during which we
execute compliance activities. During this period, one such
effort was our Voluntary Compliance-Checking Activities.
In fiscal 2012, we asked each department conduct selfchecks with check sheets covering four areas: the AntiMonopoly Act, dispatch and contract work, subcontracting
transactions and occupational safety. We plan to expand
areas covered by such check sheets in an effort to enhance
this activity. In addition, we are developing the informationin check sheets for affiliated companies in order to raisegroupwide awareness.
Employee Compliance Awareness Surveys
We conduct compliance awareness surveys targeting theemployees of Furukawa Electric and affiliated companies inalternate years. Designed to gauge employee awarenessand understanding of compliance, these surveys aim toencourage recognition of compliance. In fiscal 2012, we
conducted such surveys targeting approximately 5,400
employees. In fiscal 2013, we plan to boost complianceawareness and strengthen risk management based on
survey results.

Compliance Education
The Furukawa Electric Group conducts complianceeducation for employees at every level of the Company, fromnew recruits to directors. Furthermore, we hold theme-based
group training such as seminars related to the Anti-Monopoly
Act and e-learning courses, and conduct groupwide
compliance education.
WEB

Compliance education in fiscal 2012

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

Report on Anti-Monopoly Act Violations
In September 2011, the Company entered into a plea
agreement with the U.S. Department of Justice concerning
allegations of cartel activities with certain competitors involving
transactions of automotive wire harness products. In court
proceedings following this agreement, the Company wasassessed a fine of US$200 million. Investigations involving
transactions on these same products are also underway by
the authorities of some countries, including the European
Commission. In Japan, the Japan Fair Trade Commission
submitted an order related to transactions on these products
in January 2012. Although we were not the recipient of thisorder, we were cited within the order as being in violation.
Furthermore, in July 2011, we received from the Japan Fair
Trade Commission cease and desist as well as administrative
surcharge orders in relation to Anti-Monopoly Act violations by
two of our domestic subsidiaries involving transactions related
to wire and cable products for construction and interior wiring.
Also in July 2011, equity method affiliate VISCAS Corporation
received from the European Commission a Statement ofObjections* related to transactions involving power cables and43

Furukawa Electric Group Sustainability Report 2012

related products, and this investigation is ongoing.
On December 10, 2009, the Furukawa Electric Group
released the report of the Third-Party Investigation Committee
on Violations of the Anti-Monopoly Act. Prior to releasing thereport, we had investigations conducted by outside attorneys
with the aim of preventing and eradicating activity considered
to be in potential violation of the Anti-Monopoly Act, and we
introduced groupwide recurrence prevention measures, basedon the committee’s findings. Although the abovementioned
proceedings and investigations result from transactions priorto December 2009, we apologize sincerely to all related parties
for the concern and trouble we have caused them over a
prolonged period. We will continue working to restore publictrust through thorough compliance activities at each company
in the Furukawa Electric Group, both in Japan and overseas.
* A “Statement of Objections” indicates a provisional opinion by theEuropean Commission concerning suspicion of infringement of European
competition laws, and requests a statement by the party or parties
involved. The Statement of Objections document is currently under
examination, and no final determination has been made.