Compliance

The Sumitomo Riko Group is developing and operating a compliance structure based on the Sumitomo Spirit. We hope to fulfill the aim of practicing management that meets the expectations of all stakeholders by seeking "Creation of Social Value" with the enhancement of our "Corporate Value" and "Public Value." We are placing particular importance on responding to the risk of violating laws and regulations which accompany the globalization of business and development in new fields, and creating an open and transparent corporate culture that forms the foundation of compliance.

Our Group maintains a compliance framework based on its Basic Policy on Internal Control. We have established a Compliance Committee, with a chairperson appointed from among the directors, and regularly report on its activities to the Board of Directors. In addition, we appoint department managers, section managers, and unit leaders across all workplaces as Compliance Leaders (CLs) and work to instill a culture of compliance at the operational level.
Group companies are also developing their own compliance structures suited to their risk situations, based on the Basic Regulations on Group Compliance.

We have established the "Sumitomo Riko Group Global Compliance Code of Conduct" (hereinafter referred to as the "Code of Conduct") as a guideline for compliance practices and are working to ensure its adoption throughout the Group through regular employee training. The Code of Conduct is revised periodically; the most recent revision incorporated key elements essential to the Group's fulfillment of its social responsibilities, such as "S.E.C.Q." (Safety, Environment, Compliance, and Quality)—the foundation of our business operations—as well as "Bad News First & Thanks*" and "ensuring the reliability of records and reporting." Additionally, following our 2018 signing of the "Tokyo Principles for Strengthening Anti-Corruption Measures," we have incorporated initiatives to prevent corruption in all its forms.
In addition to onboarding training, our Group conducts systematic compliance education tailored to specific roles, covering everyone from general staff to executives. We provide annual training—customized to reflect actual circumstances—for employees across all Group companies worldwide, and hold workplace compliance meetings once a year at every base. By having each workplace plan initiatives tailored to its specific risks, we contribute to fostering compliance awareness among individual employees.

*Bad News First & Thanks
The Sumitomo Riko Group's slogan means that managerial personnel and managers should feel free to report bad news first and not fear repercussions because management and executives should appreciate swift reporting of bad news. In light of lessons learned from the problem at the Matsusaka Plant after-mentioned, Sumitomo Riko is working to inculcate this practice throughout the Group.

In the event of a significant compliance issue, the matter is immediately reported to the Compliance Committee and relevant departments in accordance with our compliance regulations.
We have established a system to track reported issues until all corrective measures have been completed. Additionally, all company departments and Group companies worldwide (including all consolidated entities) report the status of compliance issues to the Committee on a quarterly basis. Guided by the motto "Bad News First & Thanks," the Committee facilitates the prompt sharing of information regarding compliance issues between frontline staff and management, working to reduce legal violations across the Group and foster an open corporate culture.

To receive internal reports, the Company has established reporting channels both at an External contact office and internally for the Company and its domestic group companies. We have also set up a global hotline to serve as a reporting channel for overseas group companies. Furthermore, we have provided a reporting channel on our website that is accessible to external parties, such as business partners, former employees, and job applicants. Please be assured that no whistleblower will suffer any disadvantage as a result of making a report.

	FY2023	FY2024	FY2025
Number of cases	42	49	63

On January 25, 2012, the Company and its employees were reported to the Public Prosecutor's Office on the grounds of violating the notification obligation under the Industrial Safety and Health Act at the Matsusaka Plant. The issues raised included prioritizing production over legal compliance, and delays in reporting and responding to violations of laws and regulations that were recognized in the worksite.
In order to keep the lessons learned from this experience alive, we have designated January 25 of every year since that incident as "Compliance Review Day," and have taken measures such as sending out a message from the President, lectures by outside experts, reporting the results of a compliance survey of all employees in Japan, and providing basic knowledge education.
In 2016, two subsidiaries of the Company were subject to suspension for three months by the Acquisition, Technology & Logistics Agency because of erroneous entries in the inspection record for hose products manufactured and processed by the two subsidiaries. This was identified by internal inspections triggered by an employee report. Sumitomo Riko reported to the Agency voluntarily.
In this issue, the lessons of "Bad News First & Thanks" were used to apply prompt reporting and response to the authorities. On the other hand, the problem of insufficient recognition by some employees of the need to ensure reliability of records and reports became apparent.
Therefore, since 2017, in addition to "S.E.C.Q. (Safety, Environment, Compliance, and Quality)" and "Bad News First & Thanks," which are the basics of our business operations, we have also made thoroughness in "reliability of records and reports" an objective of "Compliance Review Day" to strengthen efforts to learn from past incidents.

We became a signatory to the UN Global Compact (UNGC) in 2014 and to the "Tokyo Principles for Strengthening Anti-Corruption Measures" of Global Compact Network Japan in 2018; we are actively implementing anti-corruption measures as part of our management's commitment. Progress on these initiatives is reported to the Board of Directors through regular activity reports from the Compliance Committee.
Our anti-corruption policy is clearly set forth in the "Sumitomo Riko Group Global Compliance Code of Conduct," and specific measures are established through internal regulations, with efforts made to ensure these rules are understood and implemented across the entire Group worldwide.
When initiating business with third parties such as agents or consultants, we verify the appropriateness of the engagement (due diligence) and also conduct checks from an anti-corruption perspective during routine payment management processes.
The Sumitomo Riko Group accepts reports regarding actual or suspected acts of corruption through the aforementioned compliance reporting hotline and has established a system to respond promptly should such a report be made. To date, there have been no reports of serious acts of corruption that would impact the continuity of our business operations.