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Corporate Social Responsibility

With rapid globalization, corporate mergers and restructurings, and increasing concern for the global environment, business conditions and public attitudes toward corporations are undergoing major change. In this context, the Kobe Steel Group is working in various ways to fulfill its corporate social responsibility (CSR) and serve its stakeholders, including customers, business partners, shareholders, investors, administrative agencies, employees, and local communities.
Toward the Further Promotion of CSR
The Kobe Steel Group has established a CSR Committee that is in charge of determining policies related to corporate social responsibility and providing centralized implementation of CSR activities.

To facilitate discussion, make proposals and conduct follow-up verification, we have also established a Compliance Committee and an Environmental Administration Committee to advise the Board of Directors. We also have an Environmental Management Committee to advise the Executive Council.

The CSR Committee's Report Production Subcommittee compiles information concerning these CSR activities and publishes it each year in the form of a Sustainability Report.
CSR Promotion Structure
CSR Promotion Structure

Director's Message
Keiji Koyama
CSR Committee Chairman
(Executive Vice President of Kobe Steel)


Kobe Steel has long operated according to its Corporate Code of Ethics and has worked to earn the trust of its stakeholders. Similarly, the Kobe Steel Group Corporate Philosophy serves as the basis for further efforts on the part of the Group as a whole to engage in CSR activities and enhance stakeholder satisfaction, with the aim of achieving sustainable development for both the Group and society in general.

In 2006, we established the CSR Committee, which decides the Group's basic CSR policies and centralizes their implementation. The promotion of CSR is one of the Group-wide themes of our Fiscal 2006-200 Medium-Term Business Plan. We therefore plan to further intensify our CSR activities while providing the public with information in various forms, including this Sustainability Report.
Keiji Koyama CSR Committee Chairman 
(Executive Vice President of Kobe Steel)
Strengthening and Enhancing Corporate Governance and Compliance
Based on the understanding that executive decision-making and day-to-day operations are inseparable, Kobe Steel has adopted a system that places corporate officers in charge of company operations. These officers bear legal responsibility toward stockholders and business partners for the business operations pursued by all major business divisions in the Kobe Steel Group.

The Board of Directors currently consists of 11 directors from top management, including directors in charge of major operations at headquarters, heads of divisions or companies that have a important impact on Group operations, and others at a comparable level. To ensure transparency and fairness, and to reinforce oversight functions, two of the 11 are outside directors. Corporate officers in charge of company operations are appointed by the Board and are entrusted by the President and CEO to fulfill their duties.

Kobe Steel has also adopted an auditing system that employs five corporate auditors, three of whom come from outside the company. Internal audits are conducted by auditors who maintain their autonomy by belonging to an independent Audit Department. By further strengthening auditing functions in this way, we have heightened the efficacy of corporate governance.

Note: Shareholders were consulted concerning the appointment of outside directors at the 155th General Meeting of Stockholders.
Corporate Governance System
Corporate Governance System
Corporate Code of Ethics
Kobe Steel adopted its Corporate Code of Ethics in June 2000, and has refined and modified them as needed in the years since. Comprised of three parts: Corporate Ethical Principles, Standards of Corporate Conduct, and Implementing the Corporate Code of Ethics. The Corporate Code of Ethics contains principles and specific policies that help to ensure that we operate as an ethical corporation in strict conformity with all laws, ordinances and social norms. All of the main companies in the Kobe Steel Group also abide by these principles.

The Corporate Ethical Principles define a set of guidelines that Kobe Steel Ltd., including all officers and employees, must follow when conducting its diverse business activities. The Principles express our commitment to corporate compliance and concern for the environment, and is intended to help us fulfill our corporate social responsibility by governing our interaction with our many stakeholders, including customers, business partners, shareholders, investors, administrative agencies, employees and local communities.

Top company executives in particular play an especially important role in implementing the Principles and are expected to both take the initiative and set an example for others. As such, they are responsible for doing everything in their power to thoroughly disseminate understanding of and adherence to the Principles. We are also committed to listening to suggestions by people both inside and outside our organization to create an effective in-house system that thoroughly enforces ethical behavior. If at any time we discover that people's health and safety are being threatened by our business activities, we pledge to quickly and accurately provide the public with all pertinent information.
Corporate Code of Ethics

Kobe Steel will:
1.
Operate business fairly and honestly and comply with applicable laws, rules, and principles of society.
2. Contribute to society by offering excellent products and services; in particular, pay particular attention to product safety and protection of personal information of customers and partners.
3. Create a safe, comfortable and productive workplace and respect the individuality and differences of employees.
4.
Respect the interest of stakeholders. Maintain a friendly and healthy relationship with its stakeholders including customers, suppliers, employees and shareholders.
5.
Be a good corporate citizen that contributes to local communities.
6. Devote itself to protecting the environment and creating a comfortable society.
7. Respect the culture and customs of other nations and contribute to the growth and development of their communities.
(Excerpt from the Corporate Code of Ethics)

The Standards of Corporate Conduct provide specific standards that underlie particularly important company activities in the course of day-to-day operations. To ensure that all employees thoroughly understand these standards, we have also formulated manuals that provide detailed explanations of all cited items.

The section on Implementing the Corporate Code of Ethics defines the systems that are needed to implement both the Corporate Ethical Principles and the Standards of Corporate Conduct.

We have built our compliance system, established our internal reporting system, and implemented our compliance education program in accordance with these guidelines.
Compliance System
Kobe Steel has a Compliance Committee that advises the Board of Directors. Four of its members are company directors; five come from outside the company and are appointed in order to maintain fairness and neutrality. The Committee proposes recommended plans, checks on progress, and deliberates cases reported through the internal reporting (whistle-blowing) system.

In addition, one of the company directors is placed in charge of corporate compliance, and we have established the Compliance Planning & Administration Section in our Legal Department. This section maintains contact with administrative departments in the internal companies and compliance leaders (i.e., line general managers) in the departments.
Diagram of Kobe Steel's Compliance System
Internal Reporting System
The internal (whistle-blowing) reporting system is one method we use to prevent the emergence and expansion of risks associated with legal violations or unethical behavior, and to enable us to quickly grasp a problem and formulate appropriate countermeasures. If an employee discovers unfair practices within the Company that violate the law, or if it is reasonable to believe that such practices are happening, this system allows the employee in question to report the matter directly to lawyers outside the Company.

Diagram of Kobe Steel's Internal Reporting System
Compliance Manuals
The various items cited in the Standards of Corporate Conduct (part of the Corporate Ethical Principles) are explained in greater detail in the Conduct Guide for Employees, which is familiar to all officers and employees. An even more detailed breakdown of the content is presented in a series of operational manuals, which introduce relevant laws and company regulations and provide easy-to-understand explanations of points that should be kept in mind when performing one's company duties.

Detailed Manuals
- Manual for Complying with the Antitrust Law
- Compliance Manual for the Subcontractors Law
- Intranet for Intellectual Property Information
- Manual for Managing Personal Information
- Corporate Secrets Guide and Management Manual
- Web site for Security Trade Control
- Manual to Reject Extortion Against Companies
- Manual for Dealing with Public Officials
- Manual for Preventing Sexual Harassment
The Conduct Guide for Employees
Compliance Education
Every year, Kobe Steel holds a "Compliance Top Seminar" and conducts compliance training sessions aimed at Kobe Steel's directors and management personnel working at Group companies. In addition, e-learning programs focusing on legal and statutory education are provided to all directors, managers and planning staff, and compliance education programs are conducted in various personnel training programs for employees at all company levels. In this way, we work to ensure that the issue of compliance is thoroughly understood by all employees. Compliance Top Seminar
Compliance Top Seminar
Protecting Personal Information
Kobe Steel has established a Privacy Policy and Personal Information Management Regulations as part of a management system we are creating, which also includes an officer in charge of personal information protection and managers responsible for personal information in each department.

Personal information is managed appropriately on the basis of the Personal Information Management Regulations and the Personal Information Management Manual. Adherence to the regulations and manual is confirmed through regular monitoring.
Group-Wide Measures
All Kobe Steel Group member companies* are establishing their own compliance committees, formulating corporate codes of ethics, and introducing internal reporting systems. They are also establishing the posts of "compliance director" and "compliance promotion manager," who pursue compliance programs while maintaining contact with Kobe Steel itself.

In addition, our Japanese-language in-house magazine, KOBELCO Newsnet, for employees of Kobe Steel and all Group companies, runs a comic section dedicated to compliance themes. Kobe Steel organizes training sessions within the Group for personnel responsible for promoting compliance. In these and other ways, we are making sure that all Group employees are aware of the importance of corporate compliance.
Compliance comics in KOBELCO Newsnet
Compliance comics in KOBELCO Newsnet
Diagram of the Kobe Steel Group's Compliance System
Diagram of the Kobe Steel Group's Compliance System

* Kobe Steel Group companies include Japan-based, consolidated subsidiaries and equity-valued affiliates in which Kobe Steel is the largest shareholder.


Director's Message
A Commitment to Compliance

Takashi Matsutani
Company-wide Compliance Director
(Senior Managing Director, Kobe Steel, Ltd.)

The year 2007 was in many ways the "year of fraud" in Japan, with many scandals such false food labeling undermining public trust. There were also cases of companies facing crises stemming from actions that were not necessarily illegal. As these new and emerging problems attest, companies are called upon to renew their commitment to compliance.

A commitment to compliance is by its very nature a steady and unglamorous undertaking. Companies are nevertheless expected and indeed required to stay aware of their social responsibilities and to strictly review all of their actions on an ongoing basis to ensure that they comply with all laws and regulations.

There is no end to this commitment. We will continue our unflagging efforts to conduct business honorably and to deserve the trust that our stakeholders have placed in us.
Takashi MatsutaniCompany-wide Compliance Director
(Senior Managing Director, Kobe Steel, Ltd.)