Sustainability

Governance(G)

Compliance and Anti-Corruption

Sustainability

Approach to Compliance

The Brother Group considers that compliance with laws and ethics is indispensable for upholding the foundation of its CSR management and avoiding various risks. To ensure compliance on a group basis, we have set standards for employee behavior based on one of the Codes of Practice in the Brother Group Global Charter, Ethics and Morality; and the Brother Group Principles of Social Responsibility, which clearly define our corporate social responsibility and guide us in fulfilling it.

Compliance promotion structure

Brother Industries, Ltd. (BIL) established the Compliance Committee and set up the Employee Helpline for Compliance Issues to prevent violations, take prompt action in the event of a violation, and prevent reoccurrences thereof. In addition, each group company, including international affiliates, has established their own employee helplines.
When a compliance risk that greatly affects the management of the Brother Group arises or is expected to arise, the respective group company will report it to the BIL Compliance Committee in a timely manner for consultation to determine the response policy, thereby establishing a system for prompt group-wide responses.
BIL has established the internal Employee Helpline for Harassment Issues that is dedicated to harassment behavior—such as sexual and power harassment—in an effort to create workplace environments where employees can work while respecting each other. BIL has also set up a Quality Compliance Helpline with the aim of preventing quality compliance violations and scandals, and improving and correcting violations.In addition, an external helpline for compliance issues has also been established with affiliated lawyers outside the company to allow employees to directly report violations.

Compliance promotion structure

Brother Group Global Policy for Helpline for Compliance Issues

For the purpose of developing a mechanism to ensure that each group company receives and deals with inquiries and reports internally and thereby improves the company's ability to govern itself and mitigates reputational risks or the like (such risks may be caused by reporting outside the company), the Brother Group has established a contact point to receive inquiries and reports related to compliance and has established and operates the Operation Standards of Helpline for Compliance as regulations of the Brother Group.
In addition, inquiries and reports received by group companies are regularly reported to the Secretariat of the BIL Compliance Committee to centralize information and thereby implement control related to compliance across the entire Brother Group. Particularly, inquiries and reports that are likely to greatly affect the management of the group will be reported to the Secretariat of the BIL Compliance Committee by each group company when the primary investigation is commenced and also when the investigation is completed.

1) Scope of Application

This policy will be applied to the establishment and operation of the Helpline, which receives inquires and reports from Directors, Corporate Auditors, employees or others who work for Brother Industries, Ltd. or any of its subsidiaries.

2) Individuals Allowed to Make an Inquiry or Report

Any worker who works for Brother Group may make an inquiry or report. An inquiry or report may be made to the contact point established in each group company or an external contact point designated by each group company.

3) Appointment of Persons in Charge

Each group company will appoint persons in charge of compliance who serve full-time or concurrently. The persons in charge are provided with necessary training on their duties such as receiving and dealing with inquiries or reports and conducting investigations.

4) Prohibition of Detrimental Treatment of Whistleblowers

We will not treat whistleblowers in a detrimental way due to their making inquiries or reports.

5) Protection of Anonymity of Whistleblowers

We will protect whistleblowers' anonymity to prevent them from being identified. We will not disclose whistleblowers' real name, department name or any other information that identifies whistleblowers without their consent or a justifiable reason for doing so. In addition, we will establish the necessary rules to protect anonymity, manage information and, when conducting investigations, take care to prevent whistleblowers from being identified.

6) Elimination of Interested Persons from Persons Conducting Investigation

The persons in charge of receiving and dealing with inquiries or reports and conducting investigations must not be involved in the handling of cases in which they are concerned with.

7) Remedial Actions

If any violation or breach of laws or internal rules is revealed as a result of investigations, we will take remedial and/or recurrence prevention measures promptly. When needed, we will give appropriate responses such as disciplinary actions toward concerned parties through appropriate internal process. Further, we will make a report to relevant governmental agencies as required.

8) Notification to Whistleblowers

With respect to investigation results, we will notify whistleblowers of whether there is any compliance problem and the summary of any remedial actions taken. We will also feedback an outline of the progress of the investigation to whistleblowers as needed.

9) Recording and Storage

We will record the series of steps from receiving an inquiry or report to dealing with it so that the records may be verified later. These records will be retained and managed to ensure that they are not easily available for unauthorized individuals to access in consideration of the protection of anonymity of whistleblowers.

10) Follow-up

After the process to deal with an inquiry or report is completed, we will conduct verifications to find if remedial and recurrence prevention measures are adequately working. We will also take a follow-up action as needed by checking that whistleblowers are free from any detrimental treatment.

FY2020 FY2021
Number of cases handled by the Helpline for Compliance Issues 117 89
(Breakdown: BIL) 9 11
(Breakdown: domestic group companies) 61 56
(Breakdown: international group companies) 47 22

Approaches to Raising Employees' Awareness of Compliance among Brother Group Companies

Compliance Handbook and Card

With the aim of raising employees' awareness of compliance and ethics, we have issued the Compliance Handbook (handbook) and distributed it to employees in BIL and group companies in Japan.
The handbook, composed of compliance codes of conduct, case examples, and quiz-based learning sections, encourages employees to think and learn on their own. We also distribute the Compliance Card, which helps employees decide what action to take when they are unsure about what is the right thing to do in their daily life. This card also includes contact information for the Helpline for Compliance Issues.

Compliance Education

In Japan, we provide employees with group training programs (orientation for new employees, periodic basic training, and a seminar for those who will be on an international assignment) and online training courses via our e-learning system. Outside Japan, meanwhile, we check the situation of education at our manufacturing facilities in China, Vietnam, the Philippines and elsewhere, and strive to reinforce education activities based on the check results.
In accordance with recent trends in laws and regulations, we also look into laws and regulations and promote education and awareness-raising activities for respective group companies in order to ensure compliance with each country's laws in areas such as bribery prevention and antimonopoly.

Brother Group Anti-Corruption Global Policy

Brother Group is committed to complying with relevant laws and regulations in the countries and regions in which we operate in our Brother Group Code of Conduct.

Bribery and corruption are prohibited by the laws and regulations in most countries where we operate as acts that hinder economic and social development. In our Brother Group Principles of Social Responsibility, we promise our stakeholders that we shall not engage in any form of corruption, extortion or embezzlement. However, in recent years, laws and regulations governing bribery and corruption have become increasingly stringent, and in consideration of such circumstances, we are implementing this policy to further promote our anti-corruption efforts.

1) Scope

This policy applies to all officers, employees, part-time employees, expatriate employees, and temporary employees of Brother Group (hereinafter referred to as "Brother Group Officers and Employees").

2) Compliance with Applicable Laws

Brother Group Officers and Employees shall comply with the laws and regulations related to prevention of bribery that is applied in the countries and/or regions in which Brother Group operates.

3) Prohibition of giving bribery to government officials, etc.

Brother Group Officers and Employees shall not, for the purpose of improperly influencing or rewarding the behavior of someone to obtain or retain business or a commercial advantage, or for any other improper purpose, directly or indirectly through third parties, corruptly give, offer, promise, or authorize payments of money or anything of value, including gifts, hospitality, entertainment, and other benefits (including kickbacks), to a government official. A government official includes local or foreign government officials, employees of government-owned or -controlled entities, officers and employees of public international organizations, any political party official or candidate, members of royal families or persons in a similar position acting in an official capacity on behalf of a national, state, or local government, including uncompensated officials if they have actual influence in awarding government business or technical or marketing consultants who also hold a government position.

4) Prohibition of giving bribery to non-government officials

Brother Group Officers and Employees shall not, for the purpose of improperly influencing or rewarding the behavior of someone to obtain or retain business or a commercial advantage, or for any other improper purpose, directly or indirectly through third parties, corruptly give, offer, promise, or authorize payments of money or anything of value, including gifts, hospitality, entertainment, and other benefits (including kickbacks), to any person other than a government official, unless the giving of such money or anything of value are within bounds of good standard business practice, the Brother Group policy, and the applicable laws or regulations of the country or region concerned.

5) Prohibition of accepting bribery

Brother Group Officers and Employees shall not, for the purpose of obtaining personal gain or advantage, or for any other improper purpose, directly or indirectly through third parties, demand any person to give money or anything of value, including gifts, hospitality, entertainment, or other benefits (including kickbacks), unless the accepting of gifts, hospitality, entertainment, or other benefits are within bounds of good standard business practice, the Brother Group policy, and the applicable laws or regulations of the country or region concerned.

6) Accurate Records

Brother Group Officials and Employees shall properly maintain and manage accurate and complete records of all payments and other expenses made to third parties and shall endeavor to detect and promptly report fraudulent activity or the possibility of such misconduct.

7) Violation

Brother Group Officials and Employees who violate this policy will be subject to disciplinary proceedings based on employment rules and other internal rules and policies of the respective Brother Group company.

Anti-Corruption Measures

In the "Brother Group Principles of Social Responsibility" and the "Brother Group Anti-Corruption Global Policy," Brother Group employees are prohibited from engaging in corruption or bribery. Such policies are communicated to all Brother Group employees by posting on the external Brother Industries, Ltd. ("BIL") internet site and on the Brother Group intranet site.

In Japan, we engage in anti-corruption by distributing a compliance handbook that introduces specific examples of bribery and entertainment to all of Brother Group companies in Japan and provide compliance trainings for new hires and employees who are assigned overseas in BIL, as well as some of the other Brother Group subsidiaries in Japan.

In Asia, we introduced an anti-bribery checklist from FY2020 to be used by our sales companies in Asia. This checklist requires our sales companies to check various red flags that may involve bribery risks when they use or deal with third parties such as distributors, consultants and other service providers, etc., checking for example, whether there is any conflict of interest, abnormal payment or improper sales rebates or discount, or if there is any improper gift and entertainment exchanged between our sales companies and the third parties. By utilizing the checklist, our legal department will work with our sales companies to check and monitor regularly if there is any anti-bribery risk when dealing with third parties especially if any such dealing involves government entities or officials.
In addition, in order to raise the awareness of compliance, we also conduct individual online anti-bribery trainings for the management and staff for each of our Asian companies that include the explanation of the purpose and use of the checklist, and how to use it to minimize bribery risks.

In the Americas, Brother International Corporation (U.S.A.) ("BIC(USA)"), our sales subsidiary in the United States, conducts online anti-bribery training sessions introducing examples of anti-bribery red flags for employees in the Americas.
Furthermore, BIC(USA) communicates its strong anti-corruption policy externally through inclusion of anti-corruption language in international contracts with third parties such as new business partners, contractors, and agents.
As for third party due diligence, BIC(USA) conducts screening for potential and new business partners that purchase from, sell to, or otherwise act on its behalf if those business partners are located outside of the United States, or are in the United States but act on its behalf outside of the United States. The due diligence screening is based on risk-scoring criteria that reflects anti-corruption, adverse media, political exposure, and other high-risk factors. Potential new business partners that are determined to have a high-risk profile after the initial review must complete a compliance questionnaire after a mandatory viewing of an anti-corruption video.
All business partners are continuously monitored on an ongoing basis, and BIC(USA) is alerted if any problems or risks are detected by the due diligence screening software. Based on the results of the initial or ongoing due diligence screening, BIC(USA) makes a determination about whether to conduct new or continued business with each respective business partner and whether any additional diligence and/or mitigating controls are needed.

In both FY2018 and FY2020, there were 0 (zero) employees who were fired or terminated for corrupt practices in Japan.
The cost of fines or penalties related to corruption in Japan was 0 (zero) yen.
In BIL, the total amount of political contributions made was also 0 (zero) yen.

Brother Group Competition Law Global Policy

Under the Brother Group Global Charter, Brother Group promises to conduct fair transactions with business partners in order to promptly deliver superior value to customers.
Cartels and other restrictions on competition may be prohibited as acts that hinder market competition under the laws and regulations of the countries or regions where Brother Group conducts business activities.
All officers and employees of the Brother Group, including officers, employees, contractors, seconded employees, and dispatched employees shall, in accordance with the Brother Group Global Charter and this policy, carry out free and fair business activities in compliance with the applicable competition laws in the countries and regions in which we operate.

1) Prohibition of unlawful information exchange with competitors

-Brother Group shall not engage in price-fixing, restricting quantities, allocating sales territory or customers, and other unlawful agreements or information exchange with competitors in violation of applicable competition laws in the countries and regions in which we operate.

-Furthermore, Brother Group shall not exchange information with competitors regarding costs, sales terms, customers, production capacity, suppliers, technology, or any other information that may hinder competition; provided, however, that information exchange performed only to the minimum extent necessary for a legitimate purpose in accordance with internal rules or guidelines shall not be prohibited.

2) Prohibited acts with business partners, etc.

-Brother Group shall not impose restraints on distributors, retailers, customers, and other business partners in violation of applicable competition laws in the countries and regions in which we operate.

-Specifically, where such actions are prohibited under the applicable laws, Brother Group shall not impose unlawful restrictions on business partners regarding sales territory, customers, sales methods, and other terms of sale, or unlawfully determine resale price of our products and services by our business partners (excluding agents who engage in transactions on behalf of the respective Brother Group company).

3) Prohibited acts when Brother Group has a dominant position

-When Brother Group has a high market share (i.e., 50% or more), in many countries, Brother Group holds a special responsibility not to act in a way that limits the competition in the relevant market. Under such circumstances, Brother Group shall not, without objective justification, engage in actions that reduce market competition in violation of applicable competition laws in the countries and regions in which we operate. Examples of such actions are illustrated below:

-Setting unreasonable low prices below cost and other unreasonable sales conditions
-Forcing customers to purchase products and services that they do not wish to purchase as a condition for purchasing our products and services (tying)
-Unreasonably rejecting a transaction with a specific customer or business partner
-Treating similar customers or business partners differently without legitimate reason

Based on this policy, Brother Group implements various training programs to foster compliance with applicable competition laws. Brother Group officers and employees who violate this policy are subject to disciplinary proceedings based on employment rules and other internal rules and policies of the respective Brother Group company.

Competition Law Compliance

At Brother Group, we are committed to complying with the competition laws of all countries and regions in which we operate.
First, Brother Group establishes internal rules and policies regarding compliance with competition laws. Such rules and policies are made known to all Brother Group employees by posting on the intranet. In Japan, we also establish guidelines to prevent cartels, and have conducted online seminars and e-learning courses on competition laws.
In addition, Brother Industries' Risk Management Committee conducts an annual questionnaire on legal compliance (including competition law) in order to assess the risk of competition law for the entire Brother Group and to prevent competition law violations.

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