Sustainability

Governance(G)

Compliance and Anti-Corruption

Sustainability

Approach to Compliance

The Brother Group considers 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 set up our standards for employee behavior based on one of the Codes of Practice of 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 to fulfill it.

Compliance promotion structure

Brother Industries, Ltd. (BIL) established the Compliance Committee and set up the Employee Hotline for Compliance issues to prevent violations, take prompt action in the event of a violation, and prevent reoccurrence. In addition, each group Company, including those overseas has established their own Compliance Committees and employee hotlines.
Critical issues are reported not only to the Compliance Committees of the respective Group companies, but also to the BIL Compliance Committee, thereby establishing a system for group-wide responses.

Compliance promotion structure

Employee Hotline for Compliance Issues

The Compliance Committee operates the Employee Hotline for Compliance Issues to handle discussions and whistleblowing by employees of group companies and others, and responds according to the criticality and urgency. In addition, when risks with critical impact on the management of the Brother Group has occurred or is expected to occur, the Compliance Committee deliberates and determines the response policy, and responds swiftly. In FY2020, a total of 117 reports were made to compliance hotlines throughout the Brother Group (breakdown: 9 at BIL, 61 at domestic group companies, and 47 at overseas group companies).

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

Compliance Handbook and Card

With the aim of raising employees' awareness of compliance and ethics, we issued the Compliance Handbook (handbook). This handbook is distributed 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 dither over it in their daily life.

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 oversea 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 so forth, and strive to reinforce education activities based on the check results.
In accordance with the recent trends of laws and regulations, we also look into laws and regulations and promote education and enlightenment activities for respective group companies in order to ensure compliance with each country's bribery prevention laws, antimonopoly laws, etc.

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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