Promoting Compliance

Following the principle that compliance is a top priority, Komatsu will ensure that it fully understands and complies with business rules while promoting structural improvements.

Frameworks for Promoting Compliance

To make certain that the entire Komatsu Group complies with the rules of the business community, Komatsu has appointed at the Head Office an executive officer in charge of compliance and established the Compliance Department to handle this issue exclusively. The Compliance Committee, chaired by the President and CEO, deliberates the Group's action policies and important issues, while regularly reporting the state of compliance related activities to the Board of Directors.

Komatsu's Worldwide Code of Business Conduct

The company has formulated Komatsu's Worldwide Code of Business Conduct (established in 1998 and revised eight times to date) as a compilation of best business practices to be observed by officers and employees of Komatsu Group companies all around the globe. The code addresses items such as free and fair business practices, appropriate relationships between the company and its employees, endeavors for the global environment, the handling of information, and the establishment of an internal control structure. The text of the code has been released to the public in its entirety.
Komatsu considers CSR as a key responsibility and Komatsu's Worldwide Code of Business Conduct clearly conveys its policy of giving full weight to CSR. The pillar of Komatsu's CSR activities is based on constant repetition of the following process, outlined in the Code of Worldwide Business Conduct: (1) Establish the Code of Business Conduct, (2) Implement the Code of Business Conduct, (3) Determine the Code's current status and (4) Address inadequacies.

Process for Compliance Activities

  • (1) Establish the Code of Business Conduct:
    Formulate Komatsu's Worldwide Code of Business Conduct as a foundation for compliance activities and revise this code (currently in its 9th edition) as required to reflect social change.
  • (2) Implement the Code of Business Conduct:
    Implement the Code of Conduct through education that corresponds to employee rank and the types of operations in which they are involved, and by communicating information in accordance with Komatsu's Worldwide Code of Business Conduct.
  • (3) Determine the Code's current status:
    Determine the level at which Komatsu's Worldwide Code of Business Conduct is being applied by having all business units regularly report on their use of the code and by conducting audits and enhancing the Internal Reporting System.
  • (4) Address inadequacies:
    Any issues identified during the above activities will be addressed in accordance with Komatsu's Worldwide Code of Business Conduct and preventive measures will be implemented.

Upholding Thorough Compliance

In order to achieve continual awareness among employees about compliance, the Group is working to raise their consciousness of best business practices by displaying in every Komatsu Group business unit posters listing The Five Principles of Compliance, a condensed version of Komatsu's Code of Worldwide Business Conduct. The Group fully engages in awareness- raising initiatives through a permanent web page dedicated to compliance on its intranet along with well-developed compliance-related education and training tailored to employees' ranks and the types of operations for which they are responsible. The Group pursues early detection of risks and reforms at Komatsu business units and Group companies through monitoring during the course of financial audits and compliance and risk audits. This monitoring covers compliance in important areas such as safety and environmental practices.

Internal Reporting System

Komatsu has established consultation offices both internally at Komatsu Group companies and externally at law firms, collectively known as the Compliance Hotlines, to respond to consultations or reporting from Group company employees pertaining to best business practices or questionable actions. The Group fosters active consultations and reporting by clearly stating in Komatsu's Worldwide Code of Business Conduct, the Five Principles of Compliance and Group companies' workplace rules that employees who use the system for appropriate reporting will not be treated unfairly in any way as a result of that action.

The State of Compliance in FY2013

We revised Komatsu's Worldwide Code of Business Conduct (on April 1st, 2014). In this (9th edition) revision, the anti-corruption rules have been made stricter, particularly in regards to bribery of foreign public officials. The Five Principles of Compliance have also been revised in conjunction with Komatsu's Worldwide Code of Business Conduct. For both the Five Principles of Compliance and Komatsu's Worldwide Code of Business Conduct, we plan to use tools such as e-Learning to ensure that every person in the organization is very familiar with both.

Ms. One Akiyama Integrex Inc President and Chief Executive Officer

Expectations for Your Response to Global Change

Ms. One Akiyama
President and Chief Executive Officer, Integrex Inc.

Komatsu's compliance and risk management initiatives are supported by the values, attitudes, and behaviors passed down and embodied in the “KOMATSU Way,” by Komatsu's Worldwide Code of Business Conduct which delineates the rules of the business world, and by firmly having in place risk management procedures that detail proper responses to various situations that put sustainable development of business at risk.
The most notable characteristic of Komatsu is that, because its many activities are backed by the firmly instilled corporate value of, “We are the summation of the amount of trust placed in us by all our stakeholders,” it is difficult to be formalized or to become a mere facade.
For example, from conducting compliance-related education and training that includes group discussions and corresponds to employee rank so that “the KOMATSU Way” is thoroughly understood by all employees worldwide, to revising the Komatsu's Code of Business Conduct established in 1998 eight times in order to be in line with social changes, to compliance activities being seamlessly carried out while going through the cycle based on the Code of Conduct of activity development, situation assessment, and deficiency correction, and in the CSR guidelines-based approach toward partner companies and the way issues such as conflict minerals is handled by the entire supply chain as a whole, it seems that all compliance and risk management activities are very functional and practical.
However, as globalization and the resulting localization continue to develop and changes happen faster and at a greater scale in countries all over the world and in every region, the need for strong group discipline will grow. It is absolutely imperative that Komatsu continues to be ever more innovative in every area, including compliance and risk management.

·Komatsu's Worldwide Code of Business Conduct