Sustainability Management
Compliance
TOTO Group Compliance Policy
The TOTO Group complies with laws, regulations and social rules in all its corporate activities, and aims to achieve customer satisfaction through fair and transparent behavior.
Compliance Promotion System
PDCA Cycle for Promoting Compliance
Top Management Roles and Responsibilities
- Creating and ensuring awareness of a compliance management system
- Confirming and evaluating the validity of the compliance management system
- Providing the needed management resources to achieve the above
- Ensuring appropriateness of granting of authority
Compliance Committee Roles and Responsibilities
- Establishing standards and procedures
- Establishing a management system
- Ensuring thorough training and information communication
- Establishing a monitoring, auditing and reporting system
- Enforcing appropriate penalties for violations
- Dealing appropriately with legal violations and preventing repeat incidents
Strengthening the Compliance Management System
The TOTO Group has demonstrated its resolve to take a stronger approach toward compliance promotion activities in terms of making a global response to the demands of society regarding compliance and by reflecting the spirit of the United Nations Global Compact, which the Group joined in 2011. The Group has achieved this by expressly stating its opposition to corruption, bribery and monopolistic business practices in the TOTO Group Compliance Policy and it has also strengthened its compliance management system with reference to the approach taken towards sentencing guidelines in the United States. The roles and authority of the Compliance Committee and the Legal Control Division are clearly stipulated in order to establish a more robust compliance system, which ensures the activities are steadily implemented. Additionally, the Compliance Committee, which meets four times a year, is aiming to carry out more effective and transparent compliance promotion activities by adopting a process to confirm and approve annual plans and implementation results for global compliance education and monitoring as reported by the Legal Control Division.
TOTO Group Business Conduct Guidelines
The TOTO Group Business Conduct Guidelines, which outline the conduct expected of TOTO employees and include the TOTO Group Corporate Philosophy, top commitment, and various guidelines for conduct, were drawn up in FY2013 (translated into 13 languages) and distributed to all Overseas Group Companies so as to ensure awareness among TOTO Group employees in every country and region. We use these Business Conduct Guidelines to promote activities for cultivating a greater awareness of compliance.
Developing an Organization and Employees That Respect Compliance
To prevent any violations, we have given training within the group based on an idea that we need to not only enhance management system but also develop as an organization that respects compliance. Interactive Compliance Training is being used to promote better workplace communication in individual workplaces. The training course focuses on one particular compliance-related theme through which employees, who are sometimes from different departments, can share and become more aware of diverse values and attitudes by conversing with each other.
We will continue to foster a culture of compliance in the workplace. Managers take the lead in promoting compliance by conveying its importance in their own words, using actual cases of potential violations as examples. In addition, we provide opportunities for employees to engage in dialogue on rule adherence, thereby encouraging proper conduct in accordance with internal regulations. We will continue to promote these training courses in order to embed "organizational culture" and to establish conduct that shows respect for compliance in all workplaces.
In order to prevent violations, it is also important to link individual remuneration and performance. The TOTO Group defines and operates the roles of individuals and their linkage with business performance according to regulations. In addition, we take strict measures based on the definition regarding the response in case of violation. We have obtained ISO9001 certification for our quality management system, including our compliance management system.
Education and Training Programs to Enforce Compliance
To thoroughly ground each employee in compliance, education and e-training programs are being expanded to target new General Managers and Section Managers as well as new Group company presidents and new employees. Moreover, departments that control a variety of laws and ordinances including antitrust law, subcontracting low, labor contract law, personal information security law, copyright law, Pharmaceutical Affairs law, and patent law themselves are conducting compliance training for employees from departments undergoing training. Together with this training, Legal Control Departments visit each Department to conduct lecture-format seminars. Since fiscal year 2014, we have been conducting e-learning on insider trading for all our employees so that they can fully understand the nature of the problem.
Response to the New Antimonopoly Act
Regulations for management of competition law (available in Japanese-, English- and Chinese-language versions) are established to uphold Japanese antitrust laws as well as competition laws of all countries, and a management system is under construction to prevent illegal action before it takes place, check and detect such action early, as well as appropriately mitigate risk in the event of an illegal occurrence. These regulations clearly stipulate the strict disciplinary action that violators must undergo based on the regulations of the companies at which they hold positions. TOTO distributes a compliance guide at domestic Japanese sites, and key personnel have also been assigned in each division concerned to work in coordination with the Legal Affairs Department to prevent violations. Furthermore, those in management and sales positions at Sales Offices must take tests every year to increase their understanding of antitrust law. The Legal Department also visits each location to hold seminars. Overseas Group companies are making progress in organizing compliance programs to prevent violations of antitrust law and bribery.
Effort for anti-corruption
In order to comply with anticorruption laws in each country that include the Unfair Competition Prevention Act in Japan, and engage in fair and transparent business activities, the Risk Management Committee investigates any compliance violations as critical risks and promotes preventive activities against violations of anti-corruption laws. Matters identified as serious risks by the Risk Management Committee are reported to the Board of Directors and their responses are deliberated. To be more specific, we included Improper Payment to Public Employees and Prohibition of Any Bribery into the TOTO Group Business Conduct Guidelines, distributed it across the group, including overseas group companies, and are engage in activities to raise awareness of anticorruption. As for sales activities by the Sales Division of overseas group companies, we have interviews to understand anticorruption laws in each country and to provide internal training. Also, we appoint a legal manager in all overseas group companies and establish networks with local law firms. In preparation for legal risks, we gather legal information on a regular basis and organize Emergency Response Manual that includes procedures and system to monitor the status of compliance with laws and regulations.
Concept of Global Tax
In order to comply with the tax laws of countries around the world, TOTO Group will ensure tax transparency by establishing a tax policy. TOTO aims to increase value for shareholders by eliminating tax risks on a global basis.
Thorough Export and Import Management
The Business Group has established an export management system for the purposes of international security and the prevention of the illegal export of goods and technology in accord with relevant laws and regulations. Import control systems are also being reorganized to ensure proper payment of import duties and consumption tax. In addition, as for the extraterritorial application of OFAC and other regulations, we verify internal and external partners to prevent transactions with regulated parties. The Export Management Committee meets to report on the status of commerce control list compliance judgments, catch-all controls and import valuation reports. This information is shared within the Business Group and the Committee Secretariat also holds seminars in each workplace. We will continue to maintain and improve export management.
Number of violations of laws and regulations
The number of violations that had a significant impact on corporate management, including the following important laws and regulations that require us to strengthen our response, was zero in the previous fiscal year.
About Antimonopoly Act, Anti-Corruption Act, and export and import management
| FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | |
| Antimonopoly Act Violations | 0 | 0 | 0 | 0 | 0 |
| Anti-Corruption Act Violations | 0 | 0 | 0 | 0 | 0 |
| Export and import management violations | 0 | 0 | 0 | 0 | 0 |
| Human rights infringement (discrimination, serious harassment, etc.) | 0 | 0 | 0 | 0 | 0 |
| Violations of the privacy policy of TOTO or its customers | 0 | 0 | 0 | 0 | 0 |
| Violations of conflict-of-interest rules | 0 | 0 | 0 | 0 | 0 |
| Money laundering and insider trading | 0 | 0 | 0 | 0 | 0 |
Establishment of Hotlines
If employees encounter compliance issues that have occurred or are about to occur in the workplace and they cannot be resolved through consultation with their supervisor, the TOTO Group has a whistle-blowing system through which they can report the issue and seek solutions. This system is available to all Group companies in Japan and overseas. The Compliance Committee Secretariat is in charge of the system under the supervision of the Compliance Committee (Chairperson: Director, Senior Managing Executive Officer) and has established an internal reporting desk as well as an external reporting desk, the latter of which is operated by an independent third-party organization. In response to the reports received, the Secretariat implements the necessary measures of fact-finding and corrective actions and determines measures to prevent recurrence in consultation with the concerned and related departments. Depending on the importance and impact of the issue, it may be discussed at the Compliance Committee or other meetings. Once the necessary measures have been implemented, the whistleblower will be promptly notified of the results to the extent that it does not interfere with protecting the privacy of the interested parties etc. The system is intended for all TOTO Group employees and those who have retired within one year. We endeavor to raise awareness and promote understanding of the system through training for new hires and e-learning. Suppliers related to our business can also use the system. A whistle-blowing report can be submitted via email, web form, phone, or other means. If requested, the confidentiality of the whistle-blower’s name and other information will be strictly maintained. Anonymous reports are also accepted. The system guarantees that whistle-blowers who justifiably used the system to make reports will face no retaliation or unfavorable treatment. After addressing the issue, the system confirms whether there has been any attempt to identify the whistle-blower or retaliate against them. If such action is observed, strict measures will be taken, including disciplinary action.
Overview of Speek-up System
Using the Result of Employee Awareness Survey
The TOTO Group conducts an annual employee awareness survey so that we continue to make improvements towards becoming the ideal company. We conduct multifaceted analyses of the survey results and identify problems throughout the Group by comparing the survey results with those of the previous year to facilitate Check and Action (C and A). Each division uses the feedback in the same way to carry out C and A on its own issues, which is incorporated into draft plans for the following financial year. The results of the survey combined with the use of the PDCA cycle are used to promote the establishment of compliance initiatives in the workplace.
Result of Compliance Awareness Survey
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