At the "K" Line Group, the objective of our corporate social responsibility (CSR) activities is to embody our Corporate Principles. To fulfill our social responsibilities, we are taking a number of steps in accordance with our Charter of Conduct for "K" Line Group Companies to meet the expectations of stakeholders all over the world.
 
 
Corporate Governance Structure
Structure of Our Business Operation, Management Monitoring, and Internal Control
 
Structure of Business Operation
Striving to improve corporate value under a governance structure
We apply the Executive Officer System, under which we streamline our management through the transfer of authority and prompt decision-making.
Board of Directors
The Board of Directors meets at least once every month. At the Board, our Directors make decisions on basic management policies, matters stipulated by laws and regulations, and other significant management issues. They also supervise the performance of duties by Executive Officers and our staff members. Of the 13 Directors, two are Outside Directors stipulated by the Companies Act of Japan.
Executive Officers' Meeting
This Meeting is held twice a month, in principle, and is attended by Executive Officers and Auditors. Participants help the President to make decisions through frank discussions, in addition to sharing information and ensuring compliance.
Auditors / Board of Auditors
Three of the five Auditors are Outside Auditors specified in the Companies Act of Japan. The audit policy, audit plans, and other related matters are determined by the Board of Auditors, aiming for a fast, functional auditing process. Among other activities, auditors attend meetings of the Board of Directors and other important meetings and inspect documents showing final decisions, auditing the work of Directors as an independent organization. We also appoint dedicated staff to assist auditors.
Management Conference
The Management Conference holds discussions and exchanges opinions every week, in principle, and is attended mainly by Senior Managing Executive Officers and higher-level Executive Officers. Depending on the agendum, others may be invited to the Conference.
 
Internal Control System
Ensuring effective internal controls
The Board of Directors, and the Executive Officers and General Managers in charge of specific business operations under the supervision of the Board establish the framework of internal controls, evaluate its effectiveness, and ensure that it functions properly. The Internal Audit Office assists Directors in performing their duties with respect to the establishment and maintenance of internal controls by providing feedback from internal audits and suggesting improvements. Auditors oversee the processes by which Directors build an internal control structure and confirm that it is functioning effectively.
 
 
 
Risk Management
Risk management system
Four Committees set up for four types of risks
We need to recognize diverse management risks, prepare for them, and fulfill our corporate social responsibility when the risks become reality. To this end, we have established our own system for managing crises and risks. Specifically, we have established four Committees for responding to four different types of risks: risks in ship operations, risks of disasters, risks concerning compliance, and other risks related to management. We have also set up the Crisis Management Committee as an organization to unify the four Committees and facilitate overall risk management.
 
Risk Management System
 
See "Safety Navigation" for information regarding management systems related to "Safety in Navigation and Cargo Operations".
 
Responding to Management Risks
Responding to diverse risks
Management risks are not limited to those concerning ship operations, major disasters, or compliance. There are many other risks, including terrorism, threats from anti-social forces, harmful rumors, fluctuations in exchange/interest rates, fluctuations in the fuel oil price, changes to the tax systems or economic policies of major trading partners, including North America, Europe, China and Japan. The adoption of protectionist trade policies are also among the risks we confront.
To deal with the risk of terrorism, we participate in the C-TPAT program, a U.S. Customs' program aimed at preventing terrorism. The measures we take under this program include strict identification of persons who visit ships, the appropriate installation of fences and lights at self-managed terminals, and measures for ensuring information security.
With respect to anti-social forces, we declare in the Charter of Conduct that we will "resolutely confront" such forces. We will deal with specific incidents in cooperation with the relevant authorities and our corporate lawyers.
Concerning fluctuations in exchange rates and changes in polices, we constantly monitor the trends and hedge against risks appropriately. If our operations are likely to be affected by the risks, our Management Risk Committee will take preventive action and respond appropriately when an impact actually occurs.
 
C-TPAT (Customs Trade Partnership against Terrorism): A customs-trade initiative aimed at building cooperative relationships to prevent terrorism and ensure security. U.S. Customs encourages parties involved in trade with the United States (shipping lines, port operators, inland transporters, manufacturers, cargo owners, warehousemen, and others) to participate in C-TPAT.
 
 
Response to Large-Scale Disasters
Establishing a BCP and data backup system, etc.
We have established BCPs for two different types of disasters: an inland earthquake in the Tokyo metropolitan area and a pandemic involving a highly virulent new influenza.
We give top priority to the lives of people, and aim to continue important operations as an entity that is part of the social infrastructure by transferring operations to our domestic and overseas branches and subsidiaries or by shifting to telecommuting. Also, to avoid the loss of data in a disaster, we have set up a system in which backup data can be stored remotely. The Great East Japan Earthquake damaged an office belonging to a Group company located at a port in the disaster-hit area. However, our business continuity was not threatened by the disaster because Tokyo, where our nerve center is located, was not seriously damaged.
 
BCP: Business Continuity Plan
 
 
 
Compliance
Promotion of Compliance
Group-wide efforts for developing a compliance system
Compliance forms the foundation for our corporate governance, CSR activities, and risk management. In 2003, we set up a dedicated internal organization for compliance (now called the CSR & Compliance Division), established the Compliance Committee as the organization responsible for investigating and responding to alleged compliance violations, and introduced the Hot Line System, which also involved seven Group companies (later increased to nine companies, including "K" Line). In 2004, we set up the Internal Audit Office, which helps to ensure compliance. Group companies are obliged to report their compliance issues to "K" Line.
The Compliance Committee handles compliance issues of Group companies as well as those of "K" Line and submits an activity report to the Board of Directors every quarter.
 
Compliance Training
Striving to give training to all staff members
As training on insider trading, we gave a seminar to Executive Officers in December 2010. We also started to provide staff members with training sessions using e-learning in March 2011, and a total of 541 staff members had completed the training as of May 2011. We started general training on compliance using e-learning in FY2009 and are planning in the near future to introduce it to domestic Group companies as well. We are also preparing to give training on competition law, such as the Antimonopoly Act of Japan and European Union Competition Law, both in Japan and overseas.
Training on compliance using e-learning
 
Training using e-learning: A method of training using the internet, which permits trainees to study in the office or at home whenever it is convenient for them.
 
 
Response to Violations
Response by the Compliance Committee
If an alleged compliance violation has occurred, whether at "K" Line or at a Group company, the issue is referred to the Compliance Committee, which is chaired by the President. Following the "Detailed Rules for Responding to Compliance Matters," which sets out the procedures to be followed, the Compliance Committee conducts an investigation and then issues instructions to correct or cease the violation, in the name of the Chairman of the Committee. If necessary, the Committee will report to government authorities.
If the issue concerns "K" Line, the Executive Officer in charge of personnel affairs will propose any disciplinary action to be taken under the working regulations. Note that we never disclose the names, departments, or any other information that would permit identification of the persons involved in the matter, and we protect their rights by permitting them to consult with attorneys, for example. Under the "Rules on Operation of Compliance Committee," the Compliance Committee is obliged to keep strictly confidential the names of whistleblowers and the details of deliberations. In FY2010, two new issues were handled by the Compliance Committee.
 
Whistle-Blowing System
An external contact set up in February 2011
"K" Line has introduced a whistle-blowing system called the "Hot Line System."
This system encompasses nine companies, including our Company and other "K" Line Group companies. Under the system, internal personnel (including Executive Officers, employees, contract/dispatched workers, and contractors) of member companies are able to be whistleblowers. In the past, the information would be received only by the Chairman and President of our Company and the head of the General Affairs Group. In February 2011, however, a law firm was designated as an additional external contact for whistle-blowing. Whistleblowers are permitted to remain anonymous, but if they use the external contact, their names will not be disclosed to internal personnel even if they don't remain anonymous. Instead of making judgments on their own, the recipients instruct the Compliance Committee to investigate the problem and determine how to deal with it.
Some Group companies have their own whistle-blowing systems, and those that don't are encouraged to introduce appropriate systems on their own.
 
Flow Chart of the Hot Line System
 
Initiatives for Protecting Personal Information
Privacy policies established
To comply with the "Act on the Protection of Personal Information," we have developed a set of privacy policies and a personal information management code. Details of the privacy policies are disclosed on our website. We identify and classify information that we will handle as personal information. We also undertake related training and education to further refine our system for protecting personal information.
 
 
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