Sumitomo Chemical realizes that assuring the observance of sound principles and practices in the conduct of business in a manner that serves the interests of shareholders and other stakeholders amid changing social and economic conditions is the very foundation of corporate governance, and has endeavored to improve its approaches.
To further bolster these efforts, the Company will expedite important decision-making, define more clearly executive officers' responsibilities pertaining to the execution of duties, enhance and strengthen the compliance system and internal audits, and promote timely disclosure of information.
Corporate Governance Organization
Sumitomo Chemical has established its "Basic policy for Enhancement of the Internal Control System" through the resolution of Board of Directors to comply with the requirement stipulated in the Companies Act as "Establishment of the system to ensure the proper conduct of businesses".
As stated in Fundamental Principles of the Basic Policy, Sumitomo Chemical recognizes the development and enhancement of the internal control system as a necessary process in maintaining a sound organization, and believes this system should be actively utilized for the achievement of business objectives. For strengthening the internal control system of Sumitomo Chemical Group continuously, Sumitomo Chemical has formed an "Internal Control Committee" (chaired by the President) which members consist of Executive officers representing all business sectors and corporate departments.
This Internal Control Committee is implementing a PDCA cycle, in which the Committee deliberates various initiatives based on the aforementioned Basic Policy and review the implementation status of the initiatives, and enhances the internal control system of Sumitomo Chemical Group in response to changing circumstances.
The Internal Control and Audit Department, which is independent from Sumitomo Chemical's business sectors and other corporate departments, administers the Committee and reports the results of assessment and monitoring of the internal control system of the Sumitomo Chemical Group to the Board of Directors.
Internal Control Committee
Sumitomo Chemical seeks to improve and enhance our risk management system to detect risks at an early stage that have the possibility of hindering the achievement of business objectives and to prevent them from occurring as well as to respond quickly and appropriately on their occurrence.
Each organization of the Sumitomo Chemical Group takes various measures to appropriately manage risk. To support and ensure the risk management measures of each organization, the Internal Control Committee determines Group-wide risk management policy and deliberates initiatives pertaining to collection of risk information and its dissemination throughout the Group.
For enhancing the risk management system, each organization of Sumitomo Chemical Group including Group companies
both in Japan and abroad conducts a risk assessment every fiscal year in terms of the probability of risk occurrence and its possible impact, and the Internal Control Committee determines based on the assessment results Group-wide priority risks that are to be implemented across the Group. Each organization takes appropriate measures based on the Groupwide risk response plans, which are developed by Sumitomo Chemical’s risk response coordination departments designated for each priority risk.
We also establish a Risk Crisis Management Committee to deliberate the Group’s response policies and plans, pertaining to the individual risk crisis in order to make prompt responses in the event that a significant risk is realized, such as large-scale disasters (earthquakes, storms, floods and other), pandemics, and a deterioration in security (terrorism, riots and wars and other).
Risk Management Initiatives
We continually implement a PDCA cycle, in which risks are evaluated based on current circumstances, measures are formulated and implemented in light of the results of the evaluation, and the progress and results of those measures are checked. Then appropriate improvements are made.
We conduct risk evaluations across about 120 organizations, prioritizing countermeasures for risks with a high possibility of occurrence, or whose degree of impact would be significant.