NKC Group CSR Procurement Guidelines
Ver.1.0

Jul/2022

Nakanishi Metal Works Co., Ltd.

1

Introduction
To promote corporate and social sustainability through its business, the NKC Group remains
committed to producing products and services that resolve a variety of social issues. We willseek to improve our corporate value in a sustained manner and contribute to society by working
to resolve social issues through our business while establishing a high degree of trust not onlywith customers but also with all other stakeholders connected with our company.

In addition,

based on this idea, we will coexist with mutual trust and transparency from a fair, equitableand global perspective, in compliance with laws and social norms, together with many partsprocurement partners that make up the supply chain. We strive to build relationships of mutual
prosperity and work on "Corporate Social Responsibility (CSR)".
Looking around the world, the United Nations Guiding Principles on Business and Human
Rights, the SDGs (Sustainable Development Goals), the Guidelines for Multinational
Enterprises by the Economic Cooperation and Development Organization (OECD), and theInternational Labor Organization (ILO) ), Various international documents on CSR, suchas the "International Enterprise Declaration," have been issued and revised, and it is expectedthat social demands for corporate initiatives will continue to grow.
Considering these social demands regarding international CSR, we have formulated the"NKC Group CSR Procurement Guidelines."
Table of Contents
Section 1: Code of Conduct
Section 2: Establishing a Management System
Annex: Description of Section 1 and Section 2
The NKC Group believes that mutual prosperity of the entire supply chain can be realized bycooperating with many parts procurement partners that make up the supply chain andresponding to the demands of society. We would like to ask all of you to understand theabove purpose and to support and practice this guideline.
These guidelines conform to the “Responsible Business Conduct Guidelines” issued by theJapan Electronics and Information Technology Industries Association (JEITA).

2

NKC Group Procurement Policy
NKC Group (the "Company" or "we"), having established its Corporate Vision of "NKC
strives to be a company that is constantly evolving and whose employees always havepride in working," regards its suppliers as important partners in achieving this vision.
The Company will continue to promote procurement activities along with suppliers basedon the following basic concepts with the aims of providing products and services that meetthe expectations of customers and of achieving a sustainable society.
Basic concepts for procurement
1. Fair and impartial selection of suppliers
The Company, which is developing production activities globally, offers equal
opportunities to all domestic and overseas suppliers. In selecting suppliers, we strive
to ensure a fair, impartial, and transparent selection process.
2. Compliance with laws and social norms
The Company will continue to promote procurement activities that fulfill its corporatesocial responsibilities (CSR), such as prohibition of child labor, forced labor, anddiscrimination, along with its suppliers, in compliance with laws and social norms ineach country.
3. Pursuing cutting-edge technologies and optimal quality
As it is vital to develop products incorporating cutting-edge technologies in order toachieve our corporate vision, we are willing to employ cutting-edge technologies heldby suppliers and will continue to create value.
Furthermore, we set our clear quality objectives from the product development phase,and strive to employ materials and products that can ensure an optimal quality level.
4. Pursuing optimal costs
To achieve product prices that are acceptable to customers, we aim to reduce not only
material costs and processing costs but also all elements composing product cost. To
those ends, we will continue to promote development and purchasing activities
together with suppliers, and proactively employ their suggestions for cutting-edge
technologies, new materials, and Value Engineering.
5. Promoting Green Procurement
We will continue to promote Green Procurement activities in creating products, while
giving due regard to reducing environmental impacts, and preferentially employ
materials and products that have low impacts on the global environment.
6. Promoting stable procurement and BCP
To maintain stable supplies of products to customers, we will continue to work with our
suppliers toward the efficient and stable procurement of materials and products.
3

In addition, we consider it important to secure supply chains in the event of a disaster also
in the context of fulfilling our corporate social responsibilities, and will continue topromote the procurement of materials and products based on our BCP policy.
Expectations of suppliers
1. Maintaining a sound management base
We request that our suppliers maintain a sound and stable management in order tobuild strong partnerships with us through long-term transactions.
We also ask our suppliers to disclose their management policies, management andfinancial information on a regular basis.
2. Compliance with laws and social norms
We request that our suppliers comply with laws and social norms in each country andeach region where they do business, in addition to understanding our "NKC GroupCSR Procurement Guidelines," and be committed to complying with those guidelines.
3. Suggesting cutting-edge technologies and ensuring optimal quality
We ask our suppliers to suggest cutting-edge technologies that lead to our productdevelopment, while developing their quality assurance systems together with us andproviding materials and products that meet our specifications and quality standards.
4. Fair price and cost improvement activities
To achieve product prices that are acceptable to customers, we request that our
suppliers supply materials and products at fair prices and implement continuous cost
improvement activities.
5. Committing to Green Procurement
We request that our suppliers promote Green Procurement activities in creatingproducts, while giving due regard to reducing environmental impacts, and preferentiallyemploy materials and products that have low impacts on the global environment.
6. Pursuing stable supply and BCP
To maintain stable supplies of products to customers, we request that our suppliers
achieve reliable delivery schedule management for materials and products, reduce
lead times, and make suggestions to secure stable supplies.
Furthermore, to secure supply chains in the event of a disaster, we also ask our
suppliers to develop thorough systems for ensuring stable supplies by formulating
BCP policies such as production in multiple factories.

4NKC Group CSR Procurement Guidelines
CONTENTS
Section 1: Code of Conduct ................................................................................................... 9
1.Respecting the Laws and Internationally Recognized Standards........................................ 9
2.Human Rights and Labor .................................................................................................... 9(2-1) Prohibiting Forced Labor ........................................................................................... 9(2-2) Prohibiting Child Labor and Respecting the Rights of Young Workers ....................... 9(2-3) Decent Working Hours .............................................................................................. 9(2-4) Adequate Wages and Allowances ............................................................................. 9(2-5) Prohibiting Inhumane Treatment ............................................................................. 10(2-6) Prohibiting Discrimination ........................................................................................ 10(2-7) Freedom of Association and Right to Collective Bargaining ..................................... 10
3 Health and Safety ............................................................................................................. 10(3-1) Occupational Safety ................................................................................................ 10(3-2) Emergency Preparedness ....................................................................................... 10(3-3) Occupational Injury and Illness ................................................................................ 11(3-4) Industrial Hygiene.................................................................................................... 11(3-5) Physically Demanding Work .................................................................................... 11(3-6) Machine Safeguarding............................................................................................. 11(3-7) Health and Safety at Facilities ................................................................................. 11(3-8) Health and Safety Communication .......................................................................... 11(3-9) Worker Health Management .................................................................................... 11
4 Environment ......................................................................................................................12(4-1) Environmental Permits and Reports .........................................................................12(4-2) Reducing Energy Consumption and Greenhouse Gas Emissions ............................12(4-3) Air Emissions ...........................................................................................................125

(4-4) Water Management ..................................................................................................12(4-5) Effective Utilization of Resources and Waste Management ......................................12(4-6) Chemical Substance Management ...........................................................................12(4-7) Managing the Chemical Substances Contained in Products .....................................13
5 Fair Trading and Ethics .....................................................................................................13(5-1) Preventing Corruption...............................................................................................13(5-2) Prohibiting Inappropriate Provision and Improper Benefit .........................................13(5-3) Fair Information Disclosure .......................................................................................13(5-4) Respecting Intellectual Property ...............................................................................13(5-5) Conducting Fair Business .........................................................................................13(5-6) Protecting Whistleblowers ........................................................................................13(5-7) Responsible Minerals Procurement ..........................................................................14
6 Quality and Safety .............................................................................................................14(6-1) Ensuring Product Safety ...........................................................................................14(6-2) Quality Management ................................................................................................14(6-3) Providing Accurate Information on Products and Services .......................................14
7 Information Security ..........................................................................................................14(7-1) Defense from Cyber Attacks .....................................................................................14(7-2) Protecting Personal Information ...............................................................................15(7-3) Preventing Leak of Confidential Information .............................................................15
8 Business Continuity Planning ............................................................................................15(8-1) Developing and Preparing a Business Continuity Plan .............................................15
Section 2: Establishing a Management System ....................................................................16
A Establishing a Management System .................................................................................16
B Supplier Management .......................................................................................................16
C Proper Import/Export Control ............................................................................................16
D Establishing a Grievance Mechanism ...............................................................................16
E Disclosing the Activities.....................................................................................................16
6

Annex ...................................................................................................................................17
Section 1: Description of Code of Conduct ...........................................................................17
1 Respecting the Laws and Internationally Recognized Standards .......................................17
2 Human Rights and Labor ...................................................................................................17(2-1) Prohibiting Forced Labor ..........................................................................................17(2-2) Prohibiting Child Labor and Respecting the Rights of Young Workers ......................19(2-3) Decent Working Hours .............................................................................................21(2-4) Adequate Wages and Allowances ............................................................................22(2-5) Prohibiting Inhumane Treatment ..............................................................................23(2-6) Prohibiting Discrimination .........................................................................................24(2-7) Freedom of Association and Right to Collective Bargaining ......................................25
3 Health and Safety ..............................................................................................................26(3-1) Occupational Safety .................................................................................................26(3-2) Emergency Preparedness ........................................................................................27(3-3) Occupational Injury and Illness .................................................................................28(3-4) Industrial Hygiene.....................................................................................................28(3-5) Physically Demanding Work .....................................................................................29(3-6) Machine Safeguarding..............................................................................................29(3-7) Health and Safety at Facilities ..................................................................................29(3-8) Health and Safety Communication ...........................................................................30(3-9) Worker Health Management .....................................................................................30
4 Environment ......................................................................................................................30(4-1) Environmental Permits and Reports .........................................................................31(4-2) Reducing Energy Consumption and Greenhouse Gas Emissions ............................31(4-3) Air Emissions ...........................................................................................................31(4-4) Water Management ..................................................................................................32(4-5) Effective Utilization of Resources and Waste Management ......................................32(4-6) Chemical Substance Management ...........................................................................327

(4-7) Managing the Chemical Substances Contained in Products .....................................33
5 Fair Trading and Ethics .....................................................................................................33(5-1) Preventing Corruption...............................................................................................33(5-2) Prohibiting Inappropriate Provision and Improper Benefit .........................................33(5-3) Fair Information Disclosure .......................................................................................34(5-4) Respecting Intellectual Property ...............................................................................34(5-5) Conducting Fair Business .........................................................................................34(5-6) Protecting Whistleblowers .........................................................................................35(5-7) Responsible Minerals Procurement ..........................................................................35
6 Quality and Safety .............................................................................................................36(6-1) Ensuring Product Safety ...........................................................................................36(6-2) Quality Management ................................................................................................36(6-3) Providing Accurate Information on Products and Services .......................................36
7 Information Security ..........................................................................................................37(7-1) Defense from Cyber Attacks .....................................................................................37(7-2) Protecting Personal Information ...............................................................................37(7-3) Preventing the Leak of Confidential Information .......................................................38
8 Business Continuity Planning ............................................................................................38(8-1) Developing and Preparing a Business Continuity Plan .............................................39
Section 2: Description of Establishing a Management System .............................................40
A Establishing a Management System .................................................................................40
B Supplier Management .......................................................................................................42
C Proper Import/Export Control ............................................................................................43
D Establishing a Grievance Mechanism ...............................................................................43
E Disclosing the Activities.....................................................................................................438

Section 1: Code of Conduct
To Description

1.Respecting the Laws and Internationally Recognized Standards

The NKC Group and its business partners must respect internationally recognized standards inaddition to complying with the laws and regulations of their home country as well as countries
and regions where they conduct business.
To Description

2.Human Rights and Labor

The NKC Group and its business partners must respect the rights of workers in line withinternational human rights standards including the ILO core labor standards in addition tocomplying with relevant laws and regulations.
To Description(2-1) Prohibiting Forced Labor

The NKC Group and its business partners must not use labor obtained by forced, bonded,
exploitative prison labor, slavery, or human trafficking. The NKC Group and its business partners
also must not force to work, and must keep the right of workers to terminate employment.
To Description(2-2) Prohibiting Child Labor and Respecting the Rights of Young Workers
The NKC Group and its business partners must not allow children who are under the minimum
age for employment. Furthermore, The NKC Group and its business partners must also notallow young workers under the age of 18 to perform hazardous work that is likely to jeopardize
their health or safety, including night work or overtime.
To Description(2-3) Decent Working Hours

The NKC Group and its business partners must not allow workers to work exceeding the
maximum working hours set by local laws and regulations, and appropriately manage working
hours and days off in consideration of internationally recognized standards.
To Description(2-4) Adequate Wages and Allowances

The NKC Group and its business partners must comply with all applicable laws andregulations regarding payments of work (including minimum wage, overtime payments, andallowances and deductions required by law). Furthermore, it is expected that The NKC Groupand its business partners pay wages at a level that allows workers to support their basic
needs (a living wage).

9

To Description(2-5) Prohibiting Inhumane Treatment

The NKC Group and its business partners must respect the human rights of workers and must
not treat workers in a manner that is or may be construed inhumane, including physical andpsychological abuse, coercion, or harassment. The NKC Group and its business partners mustalso provide workers with individually secured accommodations for storing their personal andvaluable items, and a reasonable personal space along with reasonable entry and exit privilege.

(2-6) Prohibiting Discrimination

To Description

The NKC Group and its business partners must not engage in discrimination or harassment.
The NKC Group and its business partners must also consider requests from workers regarding
religious practices where appropriate.
To Description(2-7) Freedom of Association and Right to Collective Bargaining

In conformance with local laws and regulations, the NKC Group and its business partners shallrespect the right to collective bargaining of workers and openly communicate with workers for
improving working environments and wage conditions.

3 Health and Safety

To Description

In addition to complying with relevant laws and regulations, the NKC Group and its business
partners must take consideration of standards such as ILO health and safety guidelines tominimize injury and illness in the workplace and maintain a safe and healthy working conditions.

To Description(3-1) Occupational Safety
The NKC Group and its business partners must identify and assess risks regarding
occupational safety and maintain safety through proper design, engineering andadministrative controls. Taking reasonable steps must also be taken to protect pregnant
women and nursing mothers.
To Description(3-2) Emergency Preparedness

The NKC Group and its business partners must identify the possibility of emergency situations bysuch as natural disasters or accidents that may adversely affect human life or safety, establish
procedures in case of emergency to minimize harm to workers and property, install the required
equipment, and conduct training and drills so that the required responses can be taken in case of
emergency.
10

To Description(3-3) Occupational Injury and Illness

The NKC Group and its business partners must identify, assess, record, and report the statusof occupational injury and illness, and implement appropriate countermeasures andcorrective actions.
To Description(3-4) Industrial Hygiene

The NKC Group and its business partners must identify, assess, and appropriately control therisk of workers being exposed to hazardous biological, chemical, or physical agents in theworkplace.
To Description(3-5) Physically Demanding Work

The NKC Group and its business partners must identify and assess worker exposure to thehazards of physically demanding tasks and appropriately control such work so that it does notlead to occupational injury and illness.
To Description(3-6) Machine Safeguarding

The NKC Group and its business partners must evaluate the machinery used by workers forsafety hazards and provide appropriate safeguarding.
To Description(3-7) Health and Safety at Facilities

The NKC Group and its business partners must appropriately maintain the health and safety offacilities and accommodations provided to workers (such as dormitories, cafeterias, and toilets).
Dormitories also require appropriate emergency egress to be provided.
To Description(3-8) Health and Safety Communication

The NKC Group and its business partners must provide training on appropriate health andsafety information regarding various workplace hazards that workers are exposed to in theworkplace in languages and methods that the workers can understand. A system that enables
workers to provide feedback on safety is also required.
To Description(3-9) Worker Health Management

The NKC Group and its business partners must conduct appropriate health management for all
employees.

114 Environment

To Description

The NKC Group and its business partners must actively address environmental problems suchas resource depletion, climate change, and pollution, as well as address regional environmental
problems considering the health and safety of its relevant local community.
To Description(4-1) Environmental Permits and Reports

The NKC Group and its business partners must obtain the permits and approvals required for
conducting business as well as register and report according to local laws and regulations.

To Description(4-2) Reducing Energy Consumption and Greenhouse Gas Emissions
The NKC Group and its business partners must address energy efficiency and makecontinuous efforts for reducing greenhouse gas emissions and energy consumption.

(4-3) Air Emissions

To Description

The NKC Group and its business partners must comply with relevant laws andregulations and implement appropriate measures for reducing the emission of hazardous
substances to the atmosphere.

(4-4) Water Management

To Description

The NKC Group and its business partners must comply with laws and regulations, monitor thesource, usage, and discharge of water used, and save water. All wastewater must be tested as
required, and monitored, controlled, and processed before discharge or disposal. Sources ofpollution that may cause water pollution must also be identified and appropriately managed.

(4-5) Effective Utilization of Resources and Waste Management

To Description

The NKC Group and its business partners must comply with laws and regulations andimplement appropriate management in order to promote the 3Rs (reduce, reuse, and recycle),ensure the effective utilization of resources, and minimize waste.
To Description(4-6) Chemical Substance Management

The NKC Group and its business partners must comply with laws and regulations to identify,label, and manage chemical and other substances posing hazard to humans or theenvironment, and conduct management to ensure safe handling, transport, storage, use,
recycling, reuse, or disposal of such substances.

12

(4-7) Managing the Chemical Substances Contained in Products

To Description

The NKC Group and its business partners must comply with all laws, regulations, and customer
requests applicable to the prohibition and restriction of specific substances contained in
products.

5 Fair Trading and Ethics

To Description

The NKC Group and its business partners must conduct business activities based on highethical standards in addition to compliance with the law.
To Description(5-1) Preventing Corruption

The NKC Group and its business partners must not be involved in bribery, corruption, blackmail,or embezzlement in any form.

(5-2) Prohibiting Inappropriate Provision and Improper Benefit

To Description

The NKC Group and its business partners must not provide or accept any promises,
propositions, or approvals as a means of obtaining bribes or any other illicit or inappropriate
benefit.
To Description(5-3) Fair Information Disclosure

The NKC Group and its business partners must disclose information regarding labor, healthand safety, environmental activities, business activities, organizational structure, financial
situation, and performance according to applicable laws and regulations and industry practices.
Falsification of records or the disclosure of false information is not allowed.
To Description(5-4) Respecting Intellectual Property

The NKC Group and its business partners must respect intellectual property rights and thetransfer of technology and expertise must be performed in a manner where intellectual property
is protected. The NKC Group and its business partners must also protect the intellectual
property of third parties such as customers and suppliers.
To Description(5-5) Conducting Fair Business

The NKC Group and its business partners must engage in fair business, competition, andadvertising.
To Description(5-6) Protecting Whistleblowers
The NKC Group and its business partners must protect the confidentiality of13

information regarding whistleblowing and the anonymity of whistleblowers, and avoid retaliations
towards whistleblowers.
To Description(5-7) Responsible Minerals Procurement

The NKC Group and its business partners must exercise due diligence to ensure that theminerals such as tantalum, tin, tungsten, and gold contained in its products manufactured do notcause or contribute to serious human rights abuses, environmental destruction, corruption, or
disputes in Conflict-Affected and High-Risk Areas.

6 Quality and Safety

To Description

The NKC Group and its business partners must ensure the safety and quality and provide
correct and accurate information on provided products and services.

(6-1) Ensuring Product Safety

To Description

The NKC Group and its business partners must fulfill their responsibility as a supplier by
ensuring that products meet safety standards stipulated by national laws and conduct design,
manufacturing, and sales to ensure adequate product safety.
To Description(6-2) Quality Management

The NKC Group and its business partners must comply with their own quality standards andcustomer requirements in addition to all laws and regulations applicable to the quality of
products and services.

(6-3) Providing Accurate Information on Products and Services

To Description

The NKC Group and its business partners must provide correct and accurate
information on products and services that will not cause misunderstandings.

7 Information Security

To Description

The NKC Group and its business partners must prevent leaks of confidential
information and personal information, and enhance information security.
To Description(7-1) Defense from Cyber Attacks

The NKC Group and its business partners must implement protective measures against
threats such as cyber attacks and conduct management to prevent damage to thecompany and others.

14

To Description(7-2) Protecting Personal Information

The NKC Group and its business partners must comply with relevant laws and regulations andappropriately manage and protect all personal information of suppliers, customers, consumers,
and employees.

(7-3) Preventing Leak of Confidential Information

To Description

The NKC Group and its business partners must appropriately manage and protect theconfidential information not only of their own but also received including from customers andthird parties.

To Description

8 Business Continuity Planning

The NKC Group and its business partners must make preparations to ensure that they canquickly resume business activities in order to fulfill their responsibility of supply in the event thatthe company or a business partner becomes a victim of such as a large-scale natural disaster.

(8-1) Developing and Preparing a Business Continuity Plan

To Description

The NKC Group and its business partners must identify and assess risks to business continuity,
examine their impact on the business, and establish preparatory measures required in themedium to long term and a business continuity plan (BCP) that indicates the status of thoseinitiatives.

15

Section 2: Establishing a Management System
A Establishing a Management System

To Description

The NKC Group and its business partners must establish a management system in order tocomply with the code of conduct in Section 1.

B Supplier Management

To Description

The NKC Group and its business partners must establish a process for communicating therequirements of the code of conduct in Section 1 to suppliers and monitoring suppliercompliance.

C Proper Import/Export Control

To Description

The NKC Group and its business partners must maintain a clear management system andconduct appropriate procedures for the import and export of technologies and goods regulated
by law.

D Establishing a Grievance Mechanism

To Description

The NKC Group and its business partners must establish a grievance mechanism that can beused by stakeholders including workers and suppliers in order to prevent illicit behavior in theirinside as well as throughout the supply chain.
To Description

E Disclosing the Activities

The NKC Group and its business partners must disclose information regarding their actions
according to these guidelines and relevant laws and regulations.

16AnnexSection 1: Description of Code of Conduct
To Code of Conduct

1 Respecting the Laws and Internationally Recognized Standards[Code Interpretation]
In recent years, various laws, regulations, and policies regarding the environment, human rights,
and bribery and corruption have been introduced and adopted around the world. Companies
must understand and comply with them. Some laws and regulations also apply beyond thecountry where companies are doing their operations. With the globalization of supply chains andmarkets, companies are required to ensure compliance with laws and regulations not only in theirown company but throughout the supply chain, while also respecting international standards.
[Description of Terms]
Internationally Recognized standards refer to expectations in the behavior of a socially
responsible organization, guided by customary international law, generally-accepted principles ofinternational law, and intergovernmental agreements that are universally or near-universally
accepted (including conventions and treaties).
For example, this corresponds to documents such as the Guiding Principles on Business andHuman Rights and Sustainable Development Goals (SDGs) of the United Nations, the Guidelines
for Multinational Enterprises of the Organisation for Economic Co-operation and Development(OECD), and the MNE Declaration (Tripartite Declaration of Principles Concerning Multinational
Enterprises and Social Policy) of the International Labour Organization (ILO).

2 Human Rights and LaborTo Code of Conduct[Code Interpretation]
Worker(s) refers to anyone that works, regardless of the form of employment, including regular
employees, temporary employees, migrant workers, students, contract employees, and directly
hired employees.
International human rights standards to refer include the Universal Declaration of Human Rights
and International Bill of Human Rights of the United Nations and the Core Labor Standards of the
ILO.
To Code of Conduct(2-1) Prohibiting Forced Labor[Background]In 2016, 40.3 million people were estimated to be victims of modern-day slavery, including 16
17

million people that were victims of forced labor in the private sector. *Freedom from forced labor
is a basic human right associated with the right to freely choose one's work. Work should meetwith individual expectations and ability, and should be decent.
(*Source: Global Estimates of Modern Slavery: Forced Labour and Forced Marriage, ILO, 2017)[Code Interpretation]
Companies are prohibited from transporting, concealing, employing, transferring, and receiving
people by means of threat, coercion, abduction, or deceit. Having workers pay fees for
employment may also lead to forced labor. Forced work to pay off such a fee is also prohibited.
In particular, there are many reports of migrant workers including foreign workers being forced towork. When employing foreign workers, those workers must be provided with an employment
contract containing the employment conditions in a language that they can understand, before
they leave their home country.
Other acts that lead to forced labor include hindering workers from using their government-issued
identification, passport/visa, work permit, or immigration application (except when the law
stipulates that someone other than the worker retain such documents) by means of concealment
or confiscation, or imposing limitations on worker entry/exit to facilities or movement within
facilities.
[Description of Terms]
Forced labor refers to involuntary labor conducted under the threat of penalty, etc. Types offorced labor include the following.
(1) Abusing vulnerabilities (such as employment contracts not in the native language of migrant
workers)(2) Deception (such as employment/labor conditions not explained correctly, or replaced during
employment process)(3) Isolation (such as having workers work in locations that are difficult to access or communicate
with from the outside)(4) Threats and intimidation (such as penalizing workers for workplace complaints or demandingthat workers pay a fine when they want to terminate employment)(5) Withholding wages (such as delaying wage payments or forcibly storing or putting aside partof wages)(6) Debt coercion (such as workers having debt in order to pay off recruitment fee)(7) Excessive overtime (such as making workers work overtime in excess of what is allowed by
the law or the labor-management agreement)(8) Prohibiting movement (such as restrictions on movement not based on a reason such as
information security or health and safety, or constant monitoring of a dormitory via surveillance18

camera)(9) Physical or mental abuse (such as violence, yelling, or sexual harassment)(10)

Withholding the original copies of identification (such as when the employer holds the

passport of a worker)
Bonded labor refers to labor that workers cannot voluntarily terminate. This includes cases where
workers are forced to incur debt in order to pay recruitment fee, and not allowing the workers toleave until that debt is paid.
Exploitation refers to unfair treatment based on the abuse of a superior bargaining position, andexploitative prison labor refers to the act of making prisoners work without paying adequate
wages.
(Modern) Slavery is defined by the United States Department of State as umbrella terms withtrafficking in persons and human trafficking to refer to both sex trafficking and compelled labor. It
is also defined by Modern Slavery Act of 2015 in the United Kingdom as unfair exploitation ofpeople in a forced labor circumstances.
To Code of Conduct(2-2) Prohibiting Child Labor and Respecting the Rights of Young Workers[Background]151.8 million children are working over the world, with about half that number, 72.5 million, areengaged in hazardous work. One in five children in Africa and one in thirteen children in the Asia
Pacific region are engaged in child labor. This form of exploitation not only violates the rights ofchildren, but also leads to vulnerable economic growth and hinders equal development.
(Source (Translation from Japanese original): International Labour Standards and Sustainable
Sourcing Handbook Towards the Realisation of Decent Work through the Tokyo 2020 Olympic
and Paralympic Games, ILO 2019)[Code Interpretation]
Child labor is prohibited in all circumstances by the ILO and national laws. In particular, there is apressing need to immediately address the worst forms of child labor. The Worst Forms of Child
Labour Convention, 1999 (No. 182) of the ILO defines these as the following four forms of childlabor.
(a) all forms of slavery or practices similar to slavery, such as the sale and trafficking of children,
debt bondage and serfdom and forced or compulsory labor, including forced or compulsory
recruitment of children for use in armed conflict;(b) the use, procuring or offering of a child for prostitution, for the production of pornography or for
pornographic performances;(c) the use, procuring or offering of a child for illicit activities, in particular for the production and19trafficking of drugs as defined in the relevant international treaties;(d) work which, by its nature or the circumstances in which it is carried out, is likely to harm thehealth, safety or morals of children.
Workers (including students etc.) under the age of 18 should be guaranteed satisfactory working
conditions, and The Minimum Age Recommendation, 1973 (No. 146) of the ILO stipulates thefollowing benefits in particular.
(a) the provision of fair remuneration and its protection, bearing in mind the principle of equal pay
for equal work;(b) the strict limitation of the hours spent at work in a day and in a week, and the prohibition of
overtime, so as to allow enough time for education and training (including the time needed forhomework related thereto), for rest during the day and for leisure activities;(c) the granting, without possibility of exception save in genuine emergency, of a minimum
consecutive period of 12 hours' night rest, and of customary weekly rest days;(d) the granting of an annual holiday with pay of at least four weeks and, in any case, not shorter
than that granted to adults;(e) coverage by social security schemes, including employment injury, medical care and sickness
benefit schemes, whatever the conditions of employment or work may be;(f) the maintenance of satisfactory standards of safety and health and appropriate instruction andsupervision.
(Source (Translation from Japanese original): International Labour Standards and Sustainable
Sourcing Handbook Towards the Realisation of Decent Work through the Tokyo 2020 Olympic
and Paralympic Games, ILO 2019)
Due diligence is also required to protect the rights of children.
[Description of Terms]
Child labor refers to any kind of activity or work which, by its nature or the circumstances in which
it is carried out, is harmful to the intellectual, physical, social and moral development of young
people and undermines their education, preventing them from going to school, constraining themto abandon schooling too soon or requesting them to work and study at the same time.
(Source (Translation from Japanese original): International Labour Standards and Sustainable
Sourcing Handbook Towards the Realisation of Decent Work through the Tokyo 2020 Olympic
and Paralympic Games, ILO 2019)
Minimum age for employment shall not be less than the age of completion of compulsory
schooling and, in any case, shall not be less than 15 years according to the Minimum Age
Convention, 1973 (No. 138) of the ILO (during the transitional period, a country whose economy
and educational facilities are insufficiently developed may initially specify a minimum age of 14
20

years). The age at which employment is allowed also differs according to the nature of labor. In
regard to hazardous work, all countries must set a minimum working age of 18 years. However,such work may be allowed from the age of 16 years in cases where:・National organizations of employers and workers concerned have been consulted beforehand;
・The health, safety and morals of the young persons concerned are fully protected; and・The young persons have received adequate specific instruction or vocational training in therelevant field of activity.
Minimum age for employment
Developed countries

Developing countries

Regular work

15 years

14 yearsHazardous work

18 years

18 years

Light work

13 years

12 years(Source (Translation from Japanese original): International Labour Standards and Sustainable
Sourcing Handbook Towards the Realisation of Decent Work through the Tokyo 2020 Olympic
and Paralympic Games, ILO 2019)
Hazardous work refers to the following.
(a) work which exposes children to physical, psychological or sexual abuse;(b) work underground, under water, at dangerous heights or in confined spaces;(c) work with dangerous machinery, equipment and tools, or which involves the manual handlingor transport of heavy loads;(d) work in an unhealthy environment which may, for example, expose children to hazardous
substances, agents or processes, or to temperatures, noise levels, or vibrations damaging to theirhealth;(e) work under particularly difficult conditions such as work for long hours or during the night orwork where the child is unreasonably confined to the premises of the employer.
(Source: Worst Forms of Child Labour Recommendation, 1999 (No. 190))(2-3) Decent Working Hours

To Code of Conduct[Background]Studies of business practices clearly link worker strain to reduced productivity, increased turnoverand increased injury and illness.
[Code Interpretation]
Companies are required to assign work hours and grant sleave and rest period based on
applicable laws and regulations. They should also consider internationally recognized standards.
21

For example, as in the Hours of Work (Industry) Convention, 1919 (No. 1) and Hours of Work
(Commerce and Offices) Convention, 1930 (No. 30), international standards of the ILO (notratified by Japan) stipulate that weekly work hours must not exceed 48 hours including overtime,
except in emergency or unusual situations. The Weekly Rest (Industry) Convention, 1921 (No.
14) and Weekly Rest (Commerce and Offices) Convention, 1957 (No. 106) (not ratified by Japan)
stipulate that workers must be granted at least one full day (24 hours or longer) off or longer
weekly rest period each week (work must not exceed six consecutive days). Although the Hours
of Work (Industry) Convention, 1919 (No. 1) and Hours of Work (Commerce and Offices)
Convention, 1930 (No. 30) are important conventions, they are not the up-to-date instrument. The
ILO has also issued Reduction of Hours of Work Recommendation, 1962 (No.116), which
promotes the ratification of Forty-Hour Week Convention, 1935 (No. 47) as the social standards
to achieve (not ratified by Japan).
Several industry standards also set a weekly limit on work hours at 60 hours including overtime.
[Description of Terms]
Appropriate manage refers to the following:・Annual working days shall not exceed the maximum set by law.
・Weekly work hours including overtime shall not exceed the maximum set by law (excluding
unavoidable times of disaster or emergency).
・Workers shall be allowed the right to paid annual leave, maternity leave, and childcare leave as
stipulated by the law.
・Workers shall be allowed the break time stipulated by the law.
・Physical and mental health checks shall be conducted to ensure the health of workers.

(2-4) Adequate Wages and Allowances

To Code of Conduct[Code Interpretation]
Minimum wage refers to the minimum wage stipulated by laws regarding wages in the country
where the company is doing its operation, and employees must be paid wages at or above theminimum wage. In addition to the legally-binding minimum wage, it is also desirable thatcompanies voluntarily consider a living wage calculated as the wages required to maintain aminimum living standard.
Unfair wage deductions may be deemed to be a non-payment of wages. For example, in the
SA8000 international standard regarding labor and human rights, pay cuts must not be made forthe purpose of discipline, but as an exception, companies are allowed to do so when (1) it isallowed by domestic law and (2) doing so is agreed upon in a collective agreement that was
freely negotiated.
Furthermore, compensation for overtime work must be paid to workers at a rate higher than the22standard pay rate by hour, according to the laws and regulations of the corresponding region.
Upon payments, companies must provide a wage slip that includes information that enables thebreakdown of payments to be checked.
[Description of Terms]
Minimum wage refers to the minimum wage stipulated by laws regarding wages in the country
where the company is doing its operation. This must be paid to workers at the appropriate time
without delay, based on the law where the company is doing its operation.
Living wage refers to a level of wages that meets the needs of a worker and their family andsatisfies the dignity of that worker, according to international standards.
Unfair wage deductions refer to wage deductions that violate laws regarding labor, etc. For
example, companies cannot deduct the cost of uniforms, personal protective equipment required
for work, or the cost of cleaning uniforms from wages. However, this does not include
nonpayment of wages corresponding to time not worked due to worker's late to work or absence.

(2-5) Prohibiting Inhumane Treatment

To Code of Conduct[Background]
Inhumane treatment such as sexual harassment and verbal abuse may exacerbate in the working
environment without other people around realizing.
[Code Interpretation]
Companies are required to establish, notify workers and operate a disciplinary policy andhandling procedures, and an internal reporting system (grievance mechanism) for identifying thefacts of inhumane treatment.
Appropriate worker living conditions are required both in terms of human rights and health andsafety, and are explained separately in Item (3-7).
[Description of Terms]
Psychological abuse refers to the act of causing mental or emotional harm through psychologicalviolence to others by means, for example, of inhumane expressions or harassment, neglect, orwords that damage one's self-esteem.
Physical abuse refers to violence and work under harsh circumstances.
Coercion refers to the act of forcing others to do something against their will through intimidation,etc. For example, forcing workers to work overtime.
Harassment refers to the act of making others feel unpleasant due to pestering or bullying. This
includes sexual harassment, sexual abuse, physical punishment, physical or mental oppression,
verbal abuse, and the withdrawal of basic physical comfort (such as chairs or personal protective
23

equipment).
In addition, it also includes abuse of authority, or pregnancy discrimination and maternity
harassment.
The Violence and Harassment Convention, 2019 (No. 190) of the ILO defines violence andharassment as indicated below.
(a) the term violence and harassment in the world of work refers toa range of unacceptablebehaviours and practices, or threats thereof,whether a single occurrence or repeated, that aim at,result in, or arelikely to result in physical, psychological, sexual or economic harm,and includes
gender-based violence and harassment;(b) the term gender-based violence and harassment means violence and harassment directed at
persons because of their sex or gender, or affecting persons of a particular sex or gender
disproportionately, and includes sexual harassment.

(2-6) Prohibiting Discrimination

To Code of Conduct[Code Interpretation]
Behavior that may lead to discrimination is not allowed in wages, promotions, rewards, access totraining, hiring, and employment practices, including discrimination based on race, color, age,gender, sexual orientation, gender identify and expression, ethnicity or national origin, disability,
pregnancy, religion, political affiliation, union membership, veteran status, protected genetic
information, or marital status.
Furthermore, health checks and pregnancy tests are also regarded as discrimination if they could
harm equal opportunity or the fairness of treatment.
The grounds of discrimination are diverse.
・Race and color: Discrimination made on the basis of belonging to a specific ethnic group, which
may affect ethnic minorities, indigenous peoples, or tribal populations.
・Sex: Discrimination on the basis of biological characteristics and functions that distinguish men
and women and of social differences between men and women. It also includes discrimination on
the basis of marital status, family structure, or motherhood.
・Religion: Discrimination on the basis of membership to a certain religion or expression ofreligious belief. It also includes discrimination against atheists.
・Political opinion: Discrimination on the basis of different opinions with respect to establishedpolitical principles, membership to a particular political party, political or sociopolitical attitudes,
civic commitment, or moral qualities.
・National extraction: Discrimination on the basis of a person's birthplace, ancestry or foreign
origin. It may target national or linguistic minorities, nationals who have acquired their citizenshipby naturalization, and the descendants of migrants from other countries, etc.
24

・Social origin: Discrimination on the basis of social class, occupational category, or caste. Social
origin may affect one's career.
(Source (Translation from Japanese original): International Labour Standards and Sustainable
Sourcing Handbook Towards the Realisation of Decent Work through the Tokyo 2020 Olympic
and Paralympic Games, ILO 2019)
The principle of non-discrimination in respect of employment and occupation comprises theprinciple of equal remuneration for men and women who accomplish work of equal value.
According to the Equal Remuneration Convention, 1951 (No. 100) of the ILO, the principle refers
to all the elements of remunerations, such as salary or ordinary wage and other basic fees,
directly or indirectly paid, in cash or in kind, by the employer to the worker arising out of theemployment (Convention No. 100). Objectively determining the value of work requires theconsideration of the elements such as work components, responsibilities, skills, efforts, working
conditions, and major achievements.
(Source (Translation from Japanese original): International Labour Standards and Sustainable
Sourcing Handbook Towards the Realisation of Decent Work through the Tokyo 2020 Olympic
and Paralympic Games, ILO 2019)
Discrimination can also be based on factors such as age or disability, health (in particular
HIV/AIDS), membership of a labor union, and sexual orientation. In the United States, thefollowing factors must also be considered.
・Veteran status: United States law defines the covered veteran status as a veteran of theVietnam war, and defines employment measures, consideration, and protection. This is because
veterans are thought to face discrimination based on inability to communicate with other workers
due to being treated as a murderer, as well as disorders due to military service (such as posttraumatic stress disorder (PTSD)).
*Information on covered veteran status:
https://www.dol.gov/ofccp/regs/statutes/4212.htm
・Protected genetic information: In the United States, GINA (Genetic Information
Nondiscrimination Act of 2008) defines genetic information as the results of genetic diagnosis.
Genetic information is given as a factor for discrimination due to the possibility of discrimination
based on genetic information such as the latent risk of disease.
*Information regarding the Genetic Information Nondiscrimination Act of 2008:https://www.eeoc.gov/laws/types/genetic.cfm(2-7) Freedom of Association and Right to Collective Bargaining

To Code of Conduct[Code Interpretation]
Companies are also required to respect the right of workers to establish and join trade unions of
their own choosing, and at the same time respect the rights of workers not to join a trade union or25refrain from such activities. Furthermore, workers and their representatives must be able toengage in collective bargaining to formally gain mutual understanding with management
regarding concerns about working conditions and management practices, without fear of
discrimination, retaliation, intimidation, or harassment.
[Description of Terms]
In regard to Collective Bargaining, the Right to Organise and Collective Bargaining Convention,
1949 (No. 98) of the ILO requires that companies recognize representative organizations of theworkers for the purpose of collective bargaining, promote bona fide negotiations between bothsides, and incorporate provisions for dispute resolution into collective agreements. The following
items are recommended as concrete examples of relevant corporate activities.
・Provide such facilities as may be necessary to establish effective collective agreements.
・Enable duly authorized representatives of workers to negotiate with representatives ofmanagement who are authorized to take decisions on the matters under negotiation.
・Not threaten or suggest retribution to influence unfairly negotiations or hinder the exercise of
the right to organize.
・Provide information required for meaningful negotiations.
・When requested by the government, respond constructively with relevant information on theiroperations.
(Source: The ILO Tripartite Declaration of Principles concerning Multinational Enterprises andSocial Policy (Paragraph 47 to 63))

3 Health and Safety

To Code of Conduct[Code Interpretation]
Minimizing work-related injury and illness and maintaining a safe and healthy working
environment leads to quality of products and services, consistency of production, and worker
retention, and morale. Moreover, it is essential for companies to have worker input and provide
workers with training in order to identify and resolve safety and health problems in the workplace.
The Guidelines on occupational safety and health management systems (ILO-OSH 2001) of the
ILO and recognized management systems such as OHSAS18001 and ISO45001 were referred towhen establishing these guidelines and may contain additional useful information.
To Code of Conduct(3-1) Occupational Safety[Code Interpretation]

Companies must identify safety hazards in the workplace and their risk of occurrence, andimplement safety measures for workers. Examples of safety hazards in the workplace include
contact with chemical substances, electricity, or other energy sources, fire, vehicular accidents,
26

and fall hazards.
Example safety measures are indicated below. Companies must systematically promote suchmeasures.
・Identifying and assessing safety hazards, including their risk of occurrence
・Designing an appropriate workplace that eliminates safety hazards and considers safety
・Implementing safety communications (including the handling of personal protective equipment)
It is also necessary to take reasonable measures to protect pregnant women and nursing
mothers from conditions with high hazards.
[Description of Terms]
Risks regarding occupational safety refer to the potential risk of health problems and accidents
that occur during work, due to factors such as electricity or other energy, fire, vehicles or moving
objects, floors that are slippery or prone to tripping, and falling objects.
Proper design, engineering, and administrative controls refer to the elimination or reduction ofrisks according to the hierarchical control of (1) Elimination of risk factors or substitution to safer
options, (2) Engineering control (such as monitoring dangerous places using sensors andshutting down the power source of machinery or equipment (lock out)), (3) Administrative control(such as signs indicating prohibition of energy shutdown equipment operation during shutting
down of the power source (tag out)), and (4) Providing personal protective equipment (safety gearsuch as protective goggles, helmets, and gloves).
Reasonable steps to protect pregnant women and nursing mothers from conditions with highhazards includes avoiding risks such as lifting/moving heavy objects, exposure to infectious
diseases, exposure to lead, exposure to poisonous chemical substances, physically demanding
work, exposure to radioactive substances, threats of violence, long work hours, extreme
temperatures, and extreme noise.
For one year after childbirth, if it is necessary for a worker to nurse a child, it is desirable for acompany to provide an appropriate break time for nursing or milking, and to implement measures
such as providing a safe and clean place to do so, that colleagues and the general public cannot
enter and cannot see.

(3-2) Emergency Preparedness

To Code of Conduct[Background]
Evacuation routes are sometimes not accessible in times of emergency by locks and obstacles.
Workers are dying by inhalation of flame and smoke or falling and jumping down in case of fire
accident occurs because they cannot escape from a building. That is why it is important to ensure27

an evacuation route that enables workers to escape, to maintain systems that all workers surely
can evacuate in safe and to conduct adequate evacuation drill.
[Code Interpretation]
Emergency plans refer to, for example, emergency reporting, communication to employees,
clarifying evacuation procedures, installing evacuation equipment, ensuring easily identifiable
exits without obstruction, providing appropriate exit facilities, storing medical supplies for
emergency, installing fire detection systems, installing fire extinguishers, fire shutters, andsprinklers, securing external communication methods, and maintaining recovery plans.
Dissemination of emergency plans within the workplace is also required. This involves, forexample, providing emergency training (including evacuation drill) to workers, and placing/posting
emergency procedures in the workplace in an easily accessible location.
To Code of Conduct(3-3) Occupational Injury and Illness[Background]Companies must prioritize worker health and safety and also consider occupational injury.
[Code Interpretation]
Companies must record occupational injury and worker illness, provide necessary medical
treatment, investigate cases, identify and eliminate causes, implement corrective actions
including preventing, managing and reporting.
It is also necessary to define rules for promoting worker's return/restart to work and to report
implementation thereof.
[Description of Terms]
Appropriate countermeasures refer to systems and measures for promoting worker's reporting,classifying and recording injury and illnesses, providing medical treatment when necessary,investigating injury and illnesses, implementing corrective actions to eliminate causes, andfacilitating worker's return to work. This also includes implementing the required administrative
procedures stipulated by the law and taking out industrial accident insurance.
To Code of Conduct(3-4) Industrial Hygiene[Code Interpretation]

The possibilities of hazard must be eliminated or controlled according to the appropriate designand engineering and administrative control. When hazard cannot be adequately controlled
through such methods, it is necessary for workers to be provided appropriate personal protective
equipment that is well managed and maintained, and to use that equipment appropriately.
28

[Description of Terms]
Hazardous agents include substances that are poisonous, radioactive, or cause chronic illness(such as lead and asbestos). These substances may exist in smoke, steam, mist, or dust form.
Noise and odors may be deemed hazardous to the human body if they are significantly strong.
Appropriate control refers to the establishing and implementing management standards, andproviding the appropriate training and personal protective equipment to workers.

(3-5) Physically Demanding WorkTo Code of Conduct[Description of Terms]
Physically demanding work includes long hours of work in an unnatural position, long hours ofrepetitive or continuous work such as data entry or assembly work that causes physical exertion,and heavy labor such as the manual handling of heavy raw materials or manual transport ofheavy objects.
Appropriate management includes providing working circumstances based on humanengineering, regular breaks, providing supportive tools, and the sharing and coopering works
among multiple workers. (It is also effective to maintain circumstances that enable people tomove around properly and efficiently, and consider the reduction of accidents and mistakes.)
Ergonomics, or Human Factors is a field of research utilized in the actual design of objects andenvironments to ensure that humans can use them in as natural state as possible and withmovements as naturally as possible. (This also includes the reduction of accidents and mistakes
by maintaining circumstances that enable people to move around correctly and efficiently.)
To Code of Conduct(3-6) Machine Safeguarding[Description of Terms]

Appropriate safeguarding refers to management for preventing injuries and accidents that occur
during work, safety mechanisms such as failsafe, foolproof, interlock, and tagout, and protective
barriers in place, as well as regular inspection and maintenance of machinery.

(3-7) Health and Safety at Facilities

To Code of Conduct[Code Interpretation]
Maintaining health and safety refers to maintaining the cleanliness and sanitation of facilities, andrequires the following points to be considered.
・Drinking water: Water quality tests compliant with laws and regulations, and safe drinking water(provided by a water cooler, etc.)
・Sanitary food preparation: Clothing cleanliness and health checks for kitchen workers, pest
control, temperature control of food storage, effective cafeteria business licenses, etc.
29

・Toilets: Clean toilet facilities of a sufficient number, providing toilet paper, etc.
・Dormitories: Fire response plan, emergency exit routes (egress), secured accommodations forstoring personal items (providing lockable storage), adequate living space (3.3 m2 or more perperson), ventilation, temperature control, adequate lighting, etc.
To Code of Conduct(3-8) Health and Safety Communication[Code Interpretation]

Companies must provide appropriate workplace health and safety information and training
regarding all the workplace hazards that workers will be exposed to (including but not limited tomachinery, electricity, chemicals, fire, and physical hazards).
Occupational health and safety information should be clearly posted in facilities or placed in alocation identifiable and accessible by workers. It also must be provided in a language that theworkers can understand.
Training must be provided to all workers before starting work and regularly after that. It is also
encouraged that safety concerns from workers are raised. Items for training include the correct
use of personal protective equipment, emergency response measures, safe operation ofmachinery, and preparations before entering hazardous environments.
Paragraph 43 of the ILO Tripartite Declaration of Principles concerning Multinational Enterprises
and Social Policy also contains information concerning the fostering of a preventative culture
based on labor-management dialog.
To Code of Conduct(3-9) Worker Health Management[Description of Terms]

Appropriate health management refers to conducting health checks at least at the level stipulated
by law, and working on the prevention and early detection of worker illness.
It is also necessary to adequately consider treatment such as mental healthcare and theprevention of health problems due to overwork.

4 Environment

To Code of Conduct[Code Interpretation]
The responsibility to consider the environment refers to the promotion of measures for minimizing
negative impacts on regional society, the environment, and natural resources, and prioritize
maintaining the health and safety of not only workers, but all people in the local community.
Recognized management systems such as ISO14001 were referred to when establishing theseguidelines, and may contain additional useful information.

30

(4-1) Environmental Permits and Reports

To Code of Conduct[Code Interpretation]
Examples in Japan include the obligation to assign a manager that has obtained the qualifications
stipulated by the law, such as laws on waste disposal (a specially-controlled industrial waste
manager), energy saving (an energy manager in plants that use a certain level of energy), andthe control of air pollution (a pollution prevention manager at plants that emit chemical
substances, dust, or smoke).
Furthermore, companies may be obligated to assign a manager responsible forpoisonous/deleterious substance management, designated chemical substance management,
and hazardous substance management, depending on the chemical substances used inbusiness.
It may also be necessary to receive permission for facilities that handle hazardous substancesand environmental impact assessments, depending on the type of business conducted and thelocation of plants.
To Code of Conduct(4-2) Reducing Energy Consumption and Greenhouse Gas Emissions[Code Interpretation]
Improving energy efficiency involves minimizing energy consumption and the related scope 1 andscope 2 greenhouse gases (GHG), and companies must track and document energy efficiency ateach facility or business site.
[Description of Terms]
There are various types of greenhouse gases, but the term greenhouse gas generally refers to
the six groups of substances defined in the Kyoto Protocol, which are carbon dioxide, methane,
nitrous oxide, HFC, PFC, and SF6.
Continuous efforts for reducing greenhouse gas emissions refer to the process of setting
voluntary reduction targets for the above six types of greenhouse gases, and making andexecuting plans to achieve them.
Scope 1 greenhouse gas emissions are direct emissions caused by a company, and scope 2
greenhouse gas emissions are indirect emissions caused by the use of electricity, heat, andsteam provided by another company.
To Code of Conduct(4-3) Air Emissions[Code Interpretation]

Hazardous substances discharged to the atmosphere include volatile organic chemicals,
aerosols, corrosives, microparticles, ozone depleting substances, and combustion by-products.
Companies must strive to analyze and monitor these substances prior to discharge, and only31

discharge them after conducting the required control and treatment based on the results of thatanalysis and monitoring. Program includes routine monitoring of treatment systems for the
performance and the handling of substances to discharge.
To Code of Conduct(4-4) Water Management[Code Interpretation]

Water management requires monitoring water sources, use, and discharge, seeking opportunities
to conserve water, and controlling channels of contamination.
Controlling channels of contamination includes confirming that site water channels are free fromcontamination and are protected from contamination (such as confirming that there are no poolsof standing water and grease/oil slicks near storm drains) and that the emergency response
equipment is in place (shutoff valves and stopcocks must be installed to prevent outflow orleakage of clean water and sewage due to a plant accident or natural disaster, and street
inlets/sewage inlets and storage reservoirs installed to contain leaks or overflows are deemed to
be insufficient), etc.

(4-5) Effective Utilization of Resources and Waste Management

To Code of Conduct[Code Interpretation]
Companies must identify and manage wastes not identified to be hazardous even when
disposing, implement a systematic approach for responsible disposal or recycling, and work forreducing waste.
Companies must implement measures for disposing substances according to local laws andregulations, and minimizing the disposing substances, and ensure that natural resources are notwasted.
Programs include changing the production equipment at the source, using alternative materials,
and reusing and recycling resources. Companies should also settle voluntary targets for the helpof complying with laws and regulations. Natural resources refer to water, fossil fuels, minerals,
virgin forest, and the products of virgin forest, etc. The prevention of environmental pollution leads
to the saving of natural resources and is closely related to the sustainability of the planet.

(4-6) Chemical Substance Management

To Code of Conduct[Code Interpretation]
In Japan, companies must perform management based on the Chemical Substance Control Law,
Poisonous and Deleterious Substances Control Law, Industrial Safety and Health Act, Fire
Service Act, and PRTR (Law Concerning Reporting, etc. of Releases to the Environment ofSpecific Chemical Substances and Promoting Improvements in Their Management). It is also
necessary to consider chemical substance management in manufacturing processes.
32

(4-7) Managing the Chemical Substances Contained in Products

To Code of Conduct[Code Interpretation]
Companies must also consider customer demands regarding the chemical substances containedin products.
・Companies must follow the laws and regulations of the countries where the products are sold.
・Companies must take responsibility for the components included in the end products, andupstream companies must provide the required information to downstream companies.
For example, when exporting to the EU, the relevant laws and regulations include the RoHS
Directive and the REACH Regulation.
It is also necessary to consider the substances that are added, contaminated, or adhere during
the manufacturing process.

To Code of Conduct

5 Fair Trading and Ethics[Code Interpretation]

Companies must comply with the laws and regulations not only of Japan but also of all thecountries where they do business. Furthermore, all employees must conduct business withhighest stantards of integrity and obtain trust from all stakeholders, with senior management
setting an example.
To Code of Conduct(5-1) Preventing Corruption[Code Interpretation]

Companies must uphold a policy of prohibiting any and all forms of bribery, excessive
entertainment or gifts, corruption, blackmail, or embezzlement, and maintain continuous
compliance.
Continuous compliance requires not only establishing policy, but also appropriately training
employees and continuing to ensure that policy is implemented.

(5-2) Prohibiting Inappropriate Provision and Improper Benefit

To Code of Conduct[Code Interpretation]
Companies are prohibited from directly or indirectly providing or receiving something valuable, or
promising or proposing to do so, in order to gain business or obtain inappropriate benefit.
It is necessary to clarify policies and procedures and monitor in order to comply with laws
regarding the preventing of corruption.

33

(5-3) Fair Information Disclosure

To Code of Conduct[Code Interpretation]
Companies are required to actively provide and disclose information to stakeholders.
The information to provide and disclose to stakeholders includes the details of business activities,
financial situation, ESG (environmental, social, and governance) information, risk information(such as damage due to large-scale disasters, adverse impacts on the environment and society,and the discovery of significant legal violations), and information regarding the supply chain.
Disclosing information on critical risks in a timely manner, and communicating to customers arealso one of the examples actively providing information.
Companies are not allowed to tamper records, misrepresent information, or disclose false
information.
To Code of Conduct(5-4) Respecting Intellectual Property[Code Interpretation]

The protection of intellectual property applies not only to a company, but also to third parties suchas customers and suppliers.
[Description of Terms]
Intellectual property includes trade secrets and technical know-how in addition to intellectual
property rights.
Intellectual property rights are rights defined by law, and include patent rights, utility model rights,
design rights, trademark rights, and copyrights.

(5-5) Conducting Fair Business

To Code of Conduct[Code Interpretation]
Companies must comply with laws regarding fair business, including fair competition andsubcontract law, and must not conduct illegal acts such as cartel agreements to restrict
competition, unfair business practices, or misleading representation.
It is also necessary to avoid forces that pose a threat to the order and safety of civil society, andcomply with laws, regulations, and all social standards. In the catalog presentations andadvertising of products and services, companies must not express untruths or mislead consumers
and customers, and must also make sure not to include information that slanders or infringes therights of other companies or individuals.
[Description of Terms]
Fair competition refers to complying with local laws regarding fair competition and fair trading andpromoting free and fair competition while avoiding cartel agreements to restrict competition, unfair
34

business practices, and misleading representation.
Fair advertising refers to advertising that provides factual information that is not for unfair
purposes.
To Code of Conduct(5-6) Protecting Whistleblowers[Code Interpretation]

In a grievance mechanism available to related parties including employees of the company andits suppliers, the company must ensure the anonymity of the whistleblower such as the supplieror employee, and the confidentiality of what was reported, and whistleblowers must be protectedfrom disadvantageous treatment by the company or an individual due to the act of whistleblowing.
[Description of Terms]
Whistleblowing refers to reporting or disclosing unfair practices in one's company or supply chain.
Whistleblower refers to a person who reports or discloses inappropriate activity by an employee
or director of a company or a public official or public institution.
Disadvantageous treatment refers to acts that harm the working circumstances includingharassment, as well as changes to working conditions such as unfair performance evaluation,
rewards, dismissal, or reshuffling.

(5-7) Responsible Minerals Procurement

To Code of Conduct[Code Interpretation]
Due diligence regarding responsible minerals procurement refers to companies establishingpolicies, communicating expectations to suppliers (and incorporating them in contracts where
possible), identifying and reviewing risks in the supply chain, and establishing and implementing
strategies to handle the identified risks.
The following five steps are included in the internationally-recognized OECD Due Diligence
Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas
document regarding due diligence for responsible mineral procurement.
Step1：Establish strong company management systems
Step2：Identify and assess risks in the supply chain
Step3：Design and implement a strategy to respond to identified risks
Step4：Carry out independent third-party audit of smelter/refiner's due diligence practices
Step5：Report annually on supply chain due diligence
Related laws include Section 1502 of the Dodd-Frank Wall Street Reform & Consumer Protection
Act in the United States and the Conflict Minerals Regulation of the European Union.

35

6 Quality and Safety

To Code of Conduct[Code Interpretation]
The safety, quality, and accuracy of information on products and services may have a profound
impact on not only customers but a wide variety of stakeholders.
Recognized management systems such as ISO9001 were referred to when establishing theseguidelines, and may contain additional useful information.
To Code of Conduct(6-1) Ensuring Product Safety[Code Interpretation]

When companies design products, they must ensure adequate product safety and consider their
responsibility as a manufacturer when providing products. They must also consider the safety thatthe product should ordinarily provide, in addition to legal compliance.
Example Japanese laws regarding product safety include the Electrical Appliance and Material
Safety Act, Consumer Product Safety Act, and Household Goods Quality Labeling Act. Safety
standards are defined in bylaws and JIS standards, etc. Overseas safety standards include UL,
BSI, and CSA standards, etc.
Effective measures for ensuring product safety include management such as traceability (historyof materials, components, and processes, etc.) and swift handling to solve problems.

(6-2) Quality Management

To Code of Conduct[Code Interpretation]
Companies must comply with all laws and regulations that apply to the quality of products andservices, and are also required to establish appropriate frameworks and management systems
for complying with their own quality standards and customer requirements.

(6-3) Providing Accurate Information on Products and Services

To Code of Conduct[Code Interpretation]
Companies are required to provide information to customers and consumers that is correct,
accurate and does not lead to misunderstandings. They must not provide false information or
information that has been falsified.
[Description of Terms]
Accurate information refers to the following, for example.
・Accurate information regarding the specifications, quality, and handling method of products andservices.
・Accurate information on the substances contained in the materials and components used in
products, etc.
36

7 Information Security

To Code of Conduct[Code Interpretation]
With the development of the advanced information technology society in recent years, information
management is becoming more and more important. Problems with information management
such as the leak of confidential information and personal information can have a profound effecton various stakeholders including the supply chain, in addition to the company itself and its
customers.
Recognized management systems such as ISO27001 were referred to when establishing theseguidelines, and may contain additional useful information.
To Code of Conduct(7-1) Defense from Cyber Attacks[Code Interpretation]

Companies are required to prevent trouble caused by cyber attacks, such as the leak or
modification of information and the stopping of information systems. Since attackers can expand
their target of attack based on customer and client information they obtain, the scope of damage
from cyber attacks is not limited to the company in question. The devices subject to cyber attacks
are expanding from conventional computers and servers to industrial systems and devices part of
the IoT (Internet of Things), and countermeasures must also be implemented for such devices. It
is also important to establish a plan for quickest recovery from a remedy of cyber attack. Plans
include data back up and redundancy of data server or data center.
[Description of Terms]
Example of cyber attacks include targeted e-mail that leads to malware infections or malicious
sites, which can cause the leak of personal information, customer information, client information,and confidential information such as trade secrets, as well as other harm such as important files
becoming encrypted and held for ransom.
To Code of Conduct(7-2) Protecting Personal Information[Code Interpretation]

Companies are required to comply with local laws and regulations to carefully handle thepersonal information of suppliers, customers, consumers, and employees. Personal informationmust only be collected, stored, processed, transmitted, and shared within the scope required toachieve the specified purpose it is used for.
[Description of Terms]
Personal information is information regarding a living individual, and contains information that37

enables that particular individual to be identified, such as name, date of birth, or other attributes(including information that can be easily matched with other information to identify a particular
individual).
Appropriate management refers to establishing and implementing a general management
framework for personal information, and includes establishing rules and policies that workers
must comply with, establishing plans, and implementing of measures, as well as audits andreviews.
Appropriate protection includes preventing personal information from being wrongfully or unfairly
retrieved, used, disclosed, or leaked.

(7-3) Preventing the Leak of Confidential Information

To Code of Conduct[Code Interpretation]
Companies are required to establish an appropriate framework and management system for
managing the confidential information collected by the company or received from third parties.
This includes defining information management levels and employee training.
[Description of Terms]
Confidential information generally refers to information disclosed according to a written
confidentiality agreement (including digital information recorded magnetically or optically) or
information disclosed orally upon confidential notice.
Appropriate management refers to establishing and implementing a general management
framework for personal information, and includes establishing rules and policies that workers
must comply with, establishing plans, the implementing of measures, as well as audits andreviews.
Appropriate protection involves preventing confidential information from being wrongfully or
unfairly retrieved, used, disclosed, or leaked.

To Code of Conduct

8 Business Continuity Planning[Code Interpretation]

The occurrence of large-scale natural disasters such as earthquakes and typhoons as well as
terrorism, riots, infectious disease, and accidents may cause a major impact on business
continuity. Companies must make appropriate preparations for such events to ensure that
production operations can quickly resume, and thereby minimize impact on the supply chain.
Recognized management systems such as ISO22301 were referred to when establishing theseguidelines and may contain additional useful information.

38

(8-1) Developing and Preparing a Business Continuity PlanTo Code of Conduct[Code Interpretation]
Business continuity risks include large-scale natural disasters (such as earthquakes, tsunamis,
floods, heavy rainfall, heavy snowfall, and tornadoes) as subsequent power outages, water
outages, and traffic obstructions, accidents (such as fires or explosions), the spread of infectious
and contagious diseases, and terrorism or riots.
Advance countermeasures required include local recovery strategies indicating how to protect,
mitigate, and recover the various elements of production sites from estimated damage. It is also
important to secure alternative methods of recovery from damage when it takes longer than
expected.
Companies must provide continuous training to employees so that they can act in the event of an
actual disaster, and establish a manual for quickly recovering business according to a business
continuity plan (BCP).
[Description of Terms]
A business continuity plan (BCP) is a plan created in advance that enables production activities tobe swiftly resumed so that a company can fulfill its responsibility of supply when the company or
its suppliers are affected by a disaster such as a large-scale natural disaster.
Manual for quickly recovering business is documenting activities from establishing to recovery,
and the process and procedures until recovery is complete.

39Section 2: Description of Establishing a Management System
A Establishing a Management System

To Code of Conduct[Code Interpretation]
The following points must be considered when establishing a management system for achieving
the various items in Section 1: Code of Conduct.
・Whether it complies with the laws, regulations, and customer requirements regarding businesspractices and products
・Whether it is according to the content of these guidelines
・Whether it identifies and reduces the risks regarding the content of these guidelines
・Whether continuous improvements can be expected based on the above[Description of Terms]
A management system is establishing a framework for continuous improvements through thePlan-Do-Check-Action (PDCA) cycle regarding policy compliance, implementation systems,
corrective actions, and stakeholder engagement. This is not necessarily for the purpose of
acquiring certification. Furthermore, a management system includes the following.
・Company commitment
・Management accountability and responsibilities
・Legal and customer requests
・Risk identification and risk management
・Improvement objectives
・Training・Communication
・Worker feedback, participation, and grievance・Audits and assessments of identified risks
・Corrective Action Process・Documentation and recording
Examples of well-known management systems are indicated below.
・Health and safety management systems such as ILO Guidelines on occupational safety andhealth management systems, OHSAS18001, and ISO 45001
・Environmental management systems such as ISO 14001 and Eco-Action 21
・Quality management systems such as the ISO 9000 family, IATF16949, and ISO13485
・Information security such as ISO/IEC 27001
・Business continuity such as ISO22301

40Due diligence guidelines regarding all corporate conduct include the OECD Due Diligence
Guidance for Responsible Business Conduct.
This guidance includes the following six processes.
(1) Embed responsible business conduct into policies and management systems(2) Identify and assess actual and potential adverse impacts associated with the enterprise's
operations, products or services(3) Cease, prevent and mitigate adverse impacts(4) Track implementation and results(5) Communicate how impacts are addressed(6) Provide for or cooperate in remediation when appropriate
Due diligence is the process enterprises should carry out to identify, prevent, mitigate andaccount for how they address these actual and potential adverse impacts in their own operations,
their supply chain and other business relationships, as recommended in the OECD Guidelines for
MNEs. Effective due diligence should be supported by efforts to embed RBC into policies andmanagement systems, and aims to enable enterprises to remediate adverse impacts that theycause or to which they contribute.
(Source: OECD Due Diligence Guidance for Responsible Business Conduct)
The ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy
defines due diligence in the field of labor as indicated below, and emphasizes stakeholder
engagement (the process for actively engaging with stakeholders via dialog, etc. in order toachieve mutually acceptable results as a company fulfills its social responsibility) andharmonization with host country development.
10. (e) In order to gauge human rights risks, enterprises - including multinational enterprises should identify and assess any actual or potential adverse human rights impacts with which they
may be involved either through their own activities or as a result of their business relationships.
This process should involve meaningful consultation with potentially affected groups and otherrelevant stakeholders including workers’ organizations, as appropriate to the size of theenterprise and the nature and context of the operation. For the purpose of achieving the aim of
the MNE Declaration, this process should take account of the central role of freedom of
association and collective bargaining as well as industrial relations and social dialogue as an
ongoing process.
11. Multinational enterprises should take fully into account established general policy objectives of
the countries in which they operate. Their activities should be consistent with national law and inharmony with the development priorities and social aims and structure of the country in which
they operate. To this effect, consultations should be held between multinational enterprises, thegovernment and, wherever appropriate, the national employers’ and workers’ organizations
41

concerned.
(Source: The ILO Tripartite Declaration of Principles concerning Multinational Enterprises andSocial Policy)

To Code of Conduct

B Supplier Management[Code Interpretation]

In the Guiding Principles for Business and Human Rights of the United Nations and OECD
guidelines, companies are required to take the same responsibility for CSR in their supply chain
as they do at their own company. Therefore, it is necessary to communicate the requirements in
Section 1: Code of Conduct to suppliers, monitor the status of compliance, and promote
improvements.
Supply chain management is covered in Chapter 2 of International Labour Standards andSustainable Sourcing Handbook Towards the Realisation of Decent Work through the Tokyo 2020
Olympic and Paralympic Games by the ILO. This handbook provides specific examples ofrecommended practices, points of attention for each process, and supply chain management
process, in order to promote the implementation of sustainable supply management according tointernational labor standards, particularly regarding aspects of labor and human rights.
・Supply chain management process (role of in-house expertise, etc.)
・Human rights/labor due diligence process for new suppliers, etc.
Preliminary research → on-site due diligence → agreement on action plan → contracting andmonitoring
・Assessing human rights and labor risks
Risk indices/factors, examples of questions to suppliers
・Dialogue/communication with suppliers
Content and method of discussions in dialogue process, interviewees and interviewing
techniques
・On-site occupational safety and health check・Consultation with third parties regarding labor issues
Things to keep in mind for consultation with trade unions, employers' organizations, and NGOs,
sources of information, etc.
(Source (Translation from Japanese original): International Labour Standards and Sustainable
Sourcing Handbook Towards the Realisation of Decent Work through the Tokyo 2020 Olympic
and Paralympic Games, ILO 2019)[Description of Terms]
A supply chain refers not only to the process starting from raw materials and to the end when42

products and services arrive at the consumers, but all relationships including such as worker
dispatch agents and contractors, regardless of the individual roles of each company.

To Code of Conduct

C Proper Import/Export Control[Code Interpretation]

Companies must understand and comply with the various national laws and regulations forimporting and exporting.
Technologies and goods regulated by law refer to components, products, technologies,
equipment, and software subject to import/export control according to laws and regulations basedon international agreements, etc. (such as the Wassenaar Arrangement).
It may be necessary to obtain permission, etc. from the competent authorities regarding importingand exporting.

D Establishing a Grievance Mechanism

To Code of Conduct[Code Interpretation]
In order to comply with Section 1: Code of Conduct, it is important to establish a mechanism forprocessing grievances from stakeholders including workers and suppliers, and enable treatingproblems as a continuous process. In order to ensure that the grievance mechanism functions
effectively, it is useful to conduct awareness surveys to see the level of understanding and to ask
for participating continuous improvements by collecting suggestions, etc.
[Description of Terms]
A grievance mechanism is a framework that enables related parties to report acts suspected to bein violation of Section 1: Code of Conduct to promote corrective action. It is important thatcomplaints can be lodged via anonymous reporting. Whistleblowers must not be treateddisadvantageously due to their complaints
Example of grievance mechanism include a suggestion box, telephone, e-mail, or hotline
managed by an external organization.

E Disclosing the Activities

To Code of Conduct[Code Interpretation]
Companies must not only disclose information as stipulated by the law, etc., but also disclose
information regarding efforts for these guidelines to stakeholders including customers.
Examples types of information disclosure include CSR reports and sustainability reports via
43company websites and printed media.
Guidelines to refer to include GRI Standards and Environmental Reporting Guidelines from the
Ministry of the Environment.

44