Compliance

Approach and Policy

The SMM Group has established the SMM Group Code of Conduct to facilitate the realization of its Corporate Philosophy of contributions to society and the fulfillment of its responsibilities to its stakeholders through the performance of sound corporate activities, aiming to thereby make the Group an increasingly trusted corporate presence. Within this Code of Conduct we have established specific guidelines on conduct for officers and employees, and indicated compliance as fundamental to our corporate activities. Together with the Code of Conduct, the Basic Compliance Regulations set out a fundamental framework for compliance. Further, we have established the following policies and regulations regarding individual focus areas such as human rights and procurement, which are shared across the Group.

• Sumitomo Metal Mining Group Policy on Human Rights
• Sumitomo Metal Mining Group Sustainable Procurement Policy
• Sumitomo Metal Mining Group Basic Policy on Taxes
• Sumitomo Metal Mining Group Basic Policies for Anti-Bribery
• Regulations on insider trading prevention and information management
• Regulations on the safeguarding of personal information
• Regulations for export control
• Regulations for observance of competition law
• Regulations on the Whistle-blowing System (Speak Up System)

Compliance-Related Management Framework

With the president bearing ultimate oversight responsibility for compliance, we strive to promote compliance through our organizational structure. The Compliance Working Group, which operates under the Sustainability Committee and is served by the Legal Department as secretariat, regularly conducts deliberations and exchanges information on material issues related to compliance.
A system is in place whereby measures and case studies shared in the Working Group are communicated through Working Group members to respective divisions, and we are currently consolidating the framework to use this information in daily operations.
In FY2023, the Group-wide compliance goal of “Zero compliance violations that may seriously damage business” was set. Based on this goal, the following priority initiatives were identified as focus areas and implemented sequentially and promoted within each department: 1) review of our compliance management system, 2) thorough line management to eradicate intentional fraudulent acts that may result in serious damage to the business, and compliance violations that can lead to rescission of permits, and 3) departments in charge of laws and regulations sequentially develop measures, starting with those that can be initiated, for items posing a serious threat to operations or high reputation risk.

■ Management Framework Chart

Compliance Issues and Their Responses

If a compliance issue (including GRI 2-26,“Responsible corporate conduct in organizational business activities and business relationships”) occurs or is likely to occur in our Group, it must in principle be promptly reported to the General Manager of the Legal Department and other relevant departments through our organizational structure. Further, a system is in place whereby the issue is reported to the Representative Director, standing Audit & Supervisory Board member, etc. through the General Manager of the Legal Department, and finally to the Board of Directors. When an incident occurs, measures are taken to identify the cause of such incident, formulate measures to prevent recurrence, and if necessary deployed horizontally.
Further, the Compliance Working Group promotes compliance across the entire Group by analyzing causes of incidents, and shares information aimed at preventing recurrence.
The results of checking the statuses in the occurrence of compliance issues in 2023 show that there were no serious legal or regulatory violations, including those related to the environment, products, service, marketing, tax, anti-corruption, and anti-competitive behavior. In addition, there were no fines or penalties reported in the consolidated financial statements or in the financial information submitted to public institutions for FY2023, and there are also no fines or penalties that are currently pending and could be recorded in the provisions of the balance sheet in financial statements.

Whistle-blowing System (Speak Up System)

For our Whistle-blowing System, detailed stipulations on matters pertaining to the handling of whistleblower reports and reports to the Board of Directors, etc. of violations of laws and regulations brought to light because of such reports are provided in our regulations on whistleblowing. Employees of our Group (excluding certain employees of affiliated companies which operate their own whistle-blowing systems) can provide information directly to the internal reporting hotline, SMM Group Speak Up System (Internal: General Managers of the Legal, Safety & Environment Control, or Internal Audit Departments; External: Attorney. However, depending on the matter, further responses may be conducted by the Audit & Supervisory Board) for not only matters that are in violation of laws and regulations, but also concerns or questions in line with the SMM Group Code of Conduct. The source of the information is always kept secret and if, for any reason, the informant is treated unfairly, the person who initiated the unfair treatment will be punished appropriately.
The Whistle-blowing System covers not only matters experienced by individuals, but also those that are raised for the purpose of seeking advice regarding responsible corporate conduct within the business’ activities and transactions (including those related to GRI 2-26).
In FY2023, a total of 12 incidents were reported through the internal reporting hotline across the Group, including those reported to affiliated companies’ independent hotlines. In addition, 12 consultation requests were fielded from employees through channels other than the Speak Up System.
Further, to understand whether the Whistle-blowing System is instilled throughout the Group, an employee awareness survey asks questions regarding whistleblowing and compliance, the results of which are analyzed. In addition, the General Manager of the Legal Department gives lectures on compliance and the Whistle-blowing System during regularly held training sessions.

■ Flowchart of the Whistle-blowing System

■ Number of Reports Received (FY2023)

One matter related to GRI 2-26 (systems for seeking advice and raising concerns) was raised, which was in duplicate of the abovementioned consultation
All reports were handled appropriately

■ Participants of Compliance Education (FY2023)

Initiatives on Preventing Corruption

The SMM Group engages in initiatives to prevent corruption. Based on the SMM Group Basic Policies for Anti-Bribery and regulations for the prevention of bribery, we introduced a prior approval system (mandating approval by an authorized person in cases of entertainment or gifts, etc. to public officials, whether in Japan or overseas), while prohibiting bribery by officers or employees at each of the Group’s companies in Japan and overseas. Further, an anti-bribery manual was formulated based on the characteristics of each business and country/region, as well as legal and regulatory conditions. Each business division and the Legal Department work together to prevent corruption under the supervision of the officer overseeing compliance.
We have furthermore made it mandatory for all employees to attend e-learning training seminars on anti-corruption legislation in advance of their promotion to certain managerial positions.

Compliance with Competition Laws

The SMM Group has established the Basic Policy for Compliance with Competition Laws and regulation for observance of competition law, while also having established, and is currently operating, a prior notification system (a system that in principle requires prior notification when contacting competitors) in addition to establishing rules governing contact with competitors. Furthermore, we have prepared a manual on regulations for the observance of competition law, to provide specific overviews on the content of the basic policy and regulations, with education on competition law also provided in the course of various training seminars and e-learning programs.

Initiatives on Export Control

Based on the regulations for export control, the SMM Group has established the Export Control Committee and strives for compliance with the Foreign Exchange and Foreign Trade Act and other laws and regulations related to exports, which includes consolidating internal procedures for export and technology transactions, internal audits, in-house education, and provision of guidance to each Group company.

SMM Group Code of Conduct (Revised on October 1, 2022)

All officers and employees shall act in accordance with the following Code of Conduct so as to live up to the SMM Group Corporate Philosophy.

1. Compliance: Abidance by Laws and Rules

• We will comply with foreign and domestic laws and rules, and conform to social norms.
• We will never under any circumstances commit an infraction of the law or act counter to social norms, even if doing so would seem to be in the company’s interests.

2. Respect for Individuals

• We will accept diversity and respect the individuality and rights of people.
• We will never violate human rights, engage in discriminatory conduct, or contribute to such conduct.

3. Assurance of Health and Safety

• We will give highest priority to ensuring the physical and emotional health and safety of all persons affected by our operations.

4. Development of Human Resources

• We will strive to nurture junior colleagues and successors through systematic training and by providing them with opportunities to play an active role, and will take steps to help them shape their careers.
• We will pursue self-improvement with an awareness of our own growth.

5. Risk Management

• We will strive to identify risks, prevent their occurrence, and if risks occur, minimize the effects.

6. Adherence to a Progressive Stance

• We will approach transformation with a positive and progressive attitude without clinging to conventions and practices.

7. A Prideworthy, Rewarding, and Joyful Workplace

• We will place high value on teamwork, in the form of cooperation both with other organizations and with fellow employees.
• We will contribute to creating a free and open-minded workplace conducive to the smooth transfer of required information and the timely performance of reporting, liaison and consultation.
• We will strive to foster a corporate culture in which people accept and believe in each other and respect diverse values.

8. In Harmony with Society and Local Communities

• As members of society, we will participate in social contribution activities in accordance with our personal beliefs.
• We will strive toward a harmonious and mutually beneficial relationship with local communities.

9. Separation of Corporate Business and Personal Affairs

• We will at all times conduct ourselves based on sound judgment, and make a clear distinction between corporate business and our personal affairs.

10. Collection, Management and Usage of Information

• We will collect information swiftly, properly and lawfully, manage it appropriately, and use it effectively.
• We will utilize information acquired in conjunction with corporate business expressly for that purpose only, and will not leak such information to any third party.

11. Handling of Intellectual Property

• We will nurture and maintain conscious recognition of the importance of intellectual property as a vital asset of the Group, and strive toward the creation of such property.
• We will strive to properly protect and effectively use all corporate intellectual properties; we will also respect intellectual properties of other parties.

12. Assurance of Quality

• We will nurture and maintain conscious recognition of the importance of intellectual property as a vital asset of the Group, and strive toward the creation of such property.
• We will strive to properly protect and effectively use all corporate intellectual properties; we will also respect intellectual properties of other parties.

13. Stance toward Performance of Sales and Purchasing

• We will comply with competition laws and conduct sales and purchasing activities based on fair competition.

14. Stance toward Entertainment and Gifts

• We will entertain and present gifts to others, and accept entertainment and gifts, within the proper limits of both the law and social acceptability.
• We will comply with laws against bribery and will maintain healthy and proper relationships with government and political organizations.

15. Severance of Relationships with Socially Disruptive Forces

• We will staunchly eliminate socially disruptive forces and have no relations whatsoever with them.

16. Concern for the Global Environment

• We will act in a manner that enables us to contribute to solving global environmental problems by reducing greenhouse gas emissions, taking biodiversity into consideration, and making effective use of water resources so as to create a decarbonized society, an advanced Sound Material-Cycle Society, and a society in harmony with nature.

17. Attitude in the Performance of Global Business Activities

• We will strive to interact with people in the countries or regions where we undertake business and engage in conduct that respects local culture and practices as well as globally accepted norms and their spirit.