Omron 2013 Annual Report Download - page 40

76 Omron Corporation Integrated Report 2013 77
Corporate Value Foundation
Corporate Governance, Internal Controls,
and Compliance and Risk Management
Promoting Sound and Proper Corporate Management
Omron is committed to maintaining and exercising a proper corporate governance system while increasing manage-
ment transparency. To fi rmly establish a high standard of corporate ethics, we will continue to enhance our compliance
system and strengthen the risk management framework that supports ongoing improvement in corporate value.
Basic Policies
At Omron, senior management was quick to realize the
importance of corporate governance and has progressively
developed foundations for supporting good corporate gover-
nance. As such, Omron has worked to drive the spread of
such foundations in Japan and other countries by having
offi cials assuming principal posts in relevant external organi-
zations and through other means.
Omron’s basic policy is to fortify corporate governance
based on the belief that the most crucial factor in earning
stakeholders’ support is building an optimal management
structure and conducting fair business operations while
enhancing the mechanism (a super visory system) for such
verifi cation and realizing sustainable growth.
In line with this basic policy, Omron has adopted an execu-
tive offi cer system and clearly separates management over-
sight and business execution. Under an internal company
system, Omron is realizing faster decision making and ef-
fi cient business operations by delegating substantial authority
to the president of each internal company. Moreover, autono-
mous individual business units that can specialize in creating
value for customers take the initiative in conducting business.
At the same time, through commitment-based management,
we clarify roles and responsibilities and practice corporate
value management based on shareholder value.
Management and Oversight Frameworks
Omron is a “Company with Audit & Supervisory Board.”
The corporate governance regime has a supervisory and
observational function pertaining to the actions of the Board
of Directors and also involves auditing carried out by the
Audit & Supervisory Board.
Omron has set the number of members of its Board of
Directors at seven to encourage effi cient and meaningful
discussion. Since June 2013, the Company has begun in-
creasing the number of directors serving concurrently in
positions related to business execution. This revision will
effectively expedite decision making by directors and improve
the effi ciency of business execution. In addition, the
Company has appointed outside and independent directors,
thereby ensuring that directors concurrently fulfi lling busi-
ness execution roles do not represent a majority in the
Board of Directors. In this manner, we are simultaneously
improving corporate governance functionality.
To increase objectivity in management, the positions of
chairman and president and CEO are separated. At the same
time, every effort is made to bolster management oversight
functions. The chairman of the Board of Directors monitors
business execution activities as a representative of the
Company’s stakeholders. Furthermore, Omron has estab-
lished the Personnel Advisory Committee, the CEO Selection
Advisory Committee, the Compensation Advisory Committee,
and the Corporate Governance Committee, all chaired by
outside directors. In this manner, the Company is working to
increase the transparency and objectivity of management’s
decision-making process.
By incorporating the best aspects of the Companies
with Committees system, we have created a type of hybrid
corporate governance regime that we feel is the most
appropriate for the Company.
Auditing Functions
The Audit & Supervisory Board, composed of four audit &
supervisory board members, audits governance practices
and monitors the everyday management activities of the
Board of Directors and other management staff as well as
the nature and operational conditions of the corporate gover-
nance regime. The Internal Audit Division, which reports
directly to the president and CEO, periodically conducts
internal audits of accounting, administration, business risks,
and compliance in each headquarters division and in each
business company as part of its internal auditing function.
Moreover, the Internal Audit Division offers specifi c advice
for improving business functions.
Appointment of Outside Executives
To allow the Board of Directors to monitor business execution
as a representative of the Company’s stakeholders, two of
the seven directors are outside directors and two of the four
audit & supervisory board members are outside members.
Emphasizing the independence of outside executives,
Omron has formulated its own original Outside Executive
Eligibility Criteria in addition to the requirements under Japan’s
Corporate Law.
Also, the Corporate Governance Committee takes steps to
confi rm the Outside Executive Eligibility Criteria do not pose
any problem with respect to determination criteria concerning
independence formulated by the appropriate securities ex-
change. After obtaining a resolution of the Board of Directors,
notifi cations are submitted with the appropriate securities
exchange for all outside executives as independent offi cers.
Corporate Governance
Observance of International CSR Standards
and Guidelines
Omron considers such international standards and guidelines
as the Universal Declaration of Human Rights, the UNGC,
ISO 26000, and the OECD Guidelines for Multinational
Enterprises and has formulated CSR Practice Guidelines as
a framework for the Groupwide code of conduct. In 2008,
Omron declared its support for the 10 Principles of the
UNGC, which are universally accepted principles in the areas
of human rights, labor standards, the environment, and
anti-corruption. Accordingly, Omron joined the Global
Compact Japan Network (GC-JN), a local Global Compact
network. Omron will continue to uphold the UNGC’s 10
principles and sincerely implement them to meet the
expectations of stakeholders.
July 2013
Omron Corporation
Fumio Tateishi
Chairman of the BOD
Promotion of CSR throughout
the Value Chain
The Omron Group aims to create products that customers
can trust while fulfi lling its social responsibilities in all of its
business activities. In order to accomplish this, it is not
enough for us to act alone; cooperation will be required from
our customers, suppliers, and other partners throughout all
areas of the value chain.
As one facet of these efforts, Omron has developed a
self-analysis checklist based on the Electronics Industry
Code of Conduct (EICC), which is used primarily at produc-
tion sites in China and the Asia Pacifi c region. This checklist
is utilized as a means of evaluating the current progress of
CSR initiatives, uncovering issues, and formulating respons-
es to these issues.
Further, in fi scal 2012, we included a “request for non-use
of confl ict minerals” among our requests to suppliers.
Accordingly, we now make requests to suppliers with regard
to the following nine areas.
(1) Compliance with laws, regulations, and social norms
(2) Assurance of the best quality
(3) Best pricing for parts and materials
(4) Consideration of the global environment
(5) Request for non-use of confl ict minerals
(6) Stable supply of parts and materials
(7) Technical capabilities
(8) Sound business operation
(9) Thorough information management
<Response to Confl ict Mineral Issues>
Profi ts from the trading of minerals mined in the Democratic
Republic of Congo and its neighboring nations have been
used to fi nance armed rebel groups, allowing them to con-
tinue fi ghting and encouraging ongoing inhumane acts, such
as violence, plunder, abuse, human traffi cking, and child
labor. For this reason, such minerals, which include tin,
tantalum, tungsten, and gold, are called “confl ict minerals.”
Aiming to bring confl ict to an end by cutting off the source
of funds for armed groups, the U.S. Dodd-Frank Wall Street
Reform and Consumer Protection Act was signed into law on
July 21, 2010. Section 1502 of the Dodd-Frank Act has man-
dated that companies registered with the Securities and
Exchange Commission (SEC) must publicly disclose their use
of confl ict minerals.
By upholding the purpose of the Dodd-Frank Act and fulfi ll-
ing its corporate social responsibility, Omron is determined to
promote the procurement of minerals in a responsible man-
ner. In fi scal 2012, we began conducting investigations of
suppliers to determine whether or not they use confl ict
minerals, and we also asked our suppliers to avoid the use of
confl ict minerals. Should the use of any confl ict minerals in
Omron Group products be discovered, we will take corrective
action as quickly as possible.