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Governance

The Sumitomo Chemical Group places governance at the bedrock of its corporate management. As we engage in business around the world, we work hard at staying in compliance with not only all applicable laws and regulations, but also with all ethical principles.

More than ever, companies are expected to fulfill their responsibilities to society. For Sumitomo Chemical, both the spirit and the letter of compliance have been enshrined in our business principles since our beginnings. Our commitment to compliance is embodied succinctly in our “Sumitomo Chemical Charter for Business Conduct,” which serves as a guide to conduct for all employees, and constitutes the backbone of our day-to-day compliance activities.

The Sumitomo Chemical Charter for Business Conduct and Code of Ethics Embody the Sumitomo Spirit and Business Philosophy.

Sumitomo Chemical has established the Sumitomo Chemical Charter for Business Conduct to embody the Sumitomo Spirit, Business Philosophy, and Basic Principles for Promoting Sustainability.

We believe it is our responsibility to conduct business to the highest ethical standards. The “Sumitomo Chemical Charter for Business Conduct” spells out the basic guiding principles on which our compliance system is built:

  1. We will respect Sumitomo’s business philosophy and act as highly esteemed good citizens.
  2. We will observe laws and regulations, both at home and abroad, and will carry out activities in accordance with our corporate rules.
  3. We will develop and supply useful and safe products and technologies that will contribute significantly to the progress of society
  4. We will engage in voluntary and active initiatives to achieve zero-accident and zero-injury operations and preserve the global environment.
  5. We will conduct business transactions based on fair and free competition.
  6. We will endeavor to make our workplaces sound and energetic.
  7. Every one of us will strive to become a professional and achieve advanced skills and expertise in our field of responsibility.
  8. We will actively communicate with our various stakeholders, including shareholders, customers, and local communities.
  9. As a corporate member of an international society, we will respect the culture and customs of every region of the world and contribute to the development of those regions.
  10. We will strive for the continued development of our Company through business activities conducted in accordance with the guiding principles described herein.

RESPECT FOR HUMAN RIGHTS

Sumitomo Chemical regards respect for human rights as essential for ensuring sustainability of its business. In 2019, we established the “Sumitomo Chemical Group Human Rights Policy” and the “Human Rights Promotion Committee.” The latter is tasked with overseeing the Group’s sustainability promotion activities, based on the Universal Declaration of Human Rights, the International Labor Organization Declaration on Fundamental Principles and Rights at Work, the Ten Principles of the United Nations Global Compact, and the United Nations Guiding Principles on Business and Human Rights.

SUMITOMO CHEMICAL GROUP HUMAN RIGHTS POLICY (EFFECTIVE APRIL 1, 2019)

Sumitomo Chemical Group (Sumitomo Chemical Co., Ltd. and its Group Companies) has put in place this Human Rights Policy (“Policy”) to demonstrate its commitment to international standards on human rights. All directors, executive officers and employees (“Personnel”) of the Sumitomo Chemical Group will uphold this Policy.

1. Our Position on Human Rights

  1. Compliance with Standards, Laws and RegulationsWe support and respect international standards on human rights, such as the Universal Declaration of Human Rights, International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work, and promote respect for human rights in line with the United Nations Guiding Principles on Business and Human Rights. Sumitomo Chemical Co., Ltd. is a signatory to the United Nations Global Compact and supports its Ten Principles, which include human rights and labor.We comply with applicable laws and regulations in countries and regions where we operate, and where local laws and regulations conflict with international standards, we will seek ways to honor the principles of internationally recognized human rights.
  2. Respect for Human Rights in Our Business ActivitiesWe do not discriminate against individuals based on employment status, age, sex, ethnic or social origin, ancestry, nationality, disability, religion, beliefs, marital status, or any other status. We do not tolerate any form of harassment, including sexual harassment or workplace bullying. We also respect fundamental labor rights including freedom of association and the right to collective bargaining, and prohibit forced labor or child labor.We are committed to respecting human rights in our business activities and also strive to avoid contributing to infringement of human rights. In order to prevent and mitigate human rights risks related to our business activities, we will take necessary measures, including ensuring compliance with the Compliance Manual (the Sumitomo Chemical Code of Business Conduct) and other relevant policies and guidelines.We are also committed to understanding our impact on local communities and aim for harmonious coexistence with these communities.We expect our business partners, including our suppliers, and other relevant stakeholders to act in line with the principles in this Policy, and we will seek ways to work with them to promote respect for human rights.

2. Our Approach to Human Rights Issues

  1. Providing Education and Raising Awareness: We will provide appropriate education and training to our Personnel so that this Policy is understood and effectively implemented.
  2. Human Rights Due Diligence: We will identify adverse human rights impacts, and seek to prevent or mitigate such impacts though our human rights due diligence framework.
  3. Responding to Identified Human Rights Impacts: We will engage with relevant stakeholders in order to address actual or potential adverse human rights impacts.
  4. Remedy: Where we identify that we have caused or contributed to adverse human rights impacts, we will endeavor to remediate such impacts through appropriate processes.
  5. Grievance Mechanisms: We have grievance mechanisms in place in the form of the Speak-Up Reporting System (whistle-blowing channels) in order to address concerns about activities that may adversely impact human rights or any other concerns raised about our business activities. These channels are available for anyone having involvement in Sumitomo Chemical Group’s business activities, including their business partners as well as Sumitomo Chemical Group Personnel and their families. We will continuously seek to optimize our grievance mechanisms.
  6. Disclosure: We will report on our efforts to respect human rights including through our website, integrated report, Sustainability Data Book, and other relevant channels.

MEASURES AGAINST SLAVERY AND HUMAN TRAFFICKING

Sumitomo Chemical Group has launched the following statement, which clarifies our group-wide business/operation and measures against modern slavery and human trafficking. Our position is in compliance with international laws and regulations relevant to the prevention of modern slavery and human trafficking and with respect for human rights.

SUMITOMO CHEMICAL GROUP STATEMENT AGAINST MODERN SLAVERY AND HUMAN TRAFFICKING

  1. About the StatementThis statement is made pursuant to Part 6, Section 54 of the Modern Slavery Act 2015 (the United Kingdom), the Modern Slavery Act 2018 (Australia) and the U.S. California Transparency in Supply Chains Act of 2010 with consideration for the requirements of the other laws and regulations in relation to modern slavery, human trafficking, forced labor, child labor and respect human rights and constitutes the slavery and human trafficking statement for Sumitomo Chemical (“SCC”) group of companies in scope for purposes of such Acts (“SCC Group”) for the financial year ending March 2020. The statement is approved by the board of directors of SCC.
  2. Our BusinessSCC Group, comprising of 170 subsidiaries, operates businesses worldwide, including the United Kingdom and Australia, in five sectors – petrochemical, energy & functional materials, IT-related chemicals, health & crop sciences and pharmaceuticals – and provides products worldwide that support a wide variety of industries and help people’s daily lives.
  3. Our Supply ChainAs SCC Group’s supply chains span and cover worldwide, wherever it engages in business, SCC Group considers that an appropriate management of the supply chains is vital for operating its sustainable business.
  4. Our Philosophy and Initiatives against Modern Slavery and Human Trafficking
    1. Our Philosophy With the Sumitomo Spirit as its cornerstone, SCC Group has steadily forged ahead for more than 100 years. Sumitomo Chemical’s Corporate Philosophy is based on Sumitomo’s Business Principles and is composed of the Business Philosophy, which integrates the company’s business principles, mission and values; the Corporate Slogan and Statement, which outlines the commitment and pride to be shared in common by directors, officers and employees; and the Sumitomo Chemical Charter for Business Conduct, which lays out the code of behavior serving as the basis for the Company’s compliance system.
    2. Initiatives to Ensure Compliance by SCC Group and its Supply Chains To ensure compliance with applicable laws, regulations and ethical standards against modern slavery and human trafficking in SCC Group’s operation or its supply chains, SCC Group has been vigorously carrying out the following initiatives.
      1. Policy SCC Group has in place in each of the companies a code of conduct, which sets forth a requirement that all relevant personnel must respect human rights of others and comply with applicable laws, regulations and ethical standardsIn April 2019, SCC Group has established the “Sumitomo Chemical Group Human Rights Policy” based on the Universal Declaration of Human Rights, the International Labor Organization Declaration on Fundamental Principles and Rights at Work, the Ten Principles of the United Nations Global Compact and the United Nations Guiding Principles on Business and Human Rights, that includes the prohibition of forced labor and child labor.
      2. Risk Assessment and Due DiligenceSCC Group has been undertaking a human rights due diligence, assessing and rectifying the human rights violation risk within its business activities in accordance with the Guiding Principles on Business and Human Rights with the aim of ensuring respect for human rights through business activities. In the due diligence, first, SCC Group identifies human rights risks within its business by establishing risk indicators based on the nature of our business and the regional characteristics of the SCC Group’s business activities and scoring those risks. Second, SCC Group, together with external experts, will conduct follow-up investigations into those company and businesses that ranked high risk scores including additional on-site investigations as necessary.If, as a result of this human rights due diligence process, it is determined that the SCC Group’s business activities may be causing or contributing to adverse human rights impact, we will engage with relevant stakeholders and rectify and remediate such impact through appropriate measures.
      3. Supply Chain Management
        It is SCC Group’s policy to procure supplies such as raw materials and packaging materials from suppliers that operate their business in a socially responsible manner, including operating their business free from modern slavery or human trafficking. SCC Group has been encouraging the existing suppliers and future candidates to enhance their efforts on Sustainability activities through various initiatives.As part of these initiatives, SCC Group have set a procurement standard under which SCC Group will preferentially procure from suppliers who are most active in Sustainability activities. This policy is set out in the Group Business Standard of Procurement, which provides guidelines for procurement operating activities for SCC Group companies in Japan and overseas. Also, SCC Group has compiled five categories in the Sumitomo Chemical Group Sustainable Procurement Guidebook. The second category of this Guidebook prescribes “Human Rights and Labor” and expressly prohibits forced labor and child labor. This Guidebook address further issues such as “Respecting human rights”, “Regulating working hours”, “Paying appropriate wages”. This Guidebook establishes the overarching guidelines encompassing our commitment to combating modern slavery and human trafficking.Furthermore, SCC has formulated the Sumitomo Chemical Group Sustainable Procurement Check Sheets to enable suppliers to demonstrate their consistency with our Sustainability policies. SCC monitors the implementation of Sustainability measures by all new suppliers and by current suppliers of raw materials, especially those who locates outside Japan, via the Sustainable Procurement Check Sheets.Every year, SCC monitors around 10 to 20 new suppliers and around 30 to 40 current suppliers in cooperation with each group companies. For suppliers who need to follow-up on problems revealed by the monitoring, SCC Group provides feedbacks, including focused requests for improvement and providing guidance and training. By seeking to raise awareness and cooperate in ensuring responsible procurement, SCC Group aims to prosper alongside our suppliers. However, this monitoring process is not an independent and unannounced audit.We are currently in the process of revising our standard contractual terms to incorporate a human rights clause that requires to promise and certify to comply with laws and regulations in respect of management of human rights risk including prohibition of modern slavery, human trafficking, forced labor and child labor.
      4. Compliance Education and TrainingAll companies of SCC Group have been devoting earnest efforts to ensure strict compliance with applicable laws, regulations and ethical standards on modern slavery and human trafficking, and periodically providing its members with educational training sessions by utilizing both face to face seminars and e-learnings.
      5. Speak-up SystemSCC Group places high importance on building an internal system, in order to capture at an early stage sign of compliance violation, including any concern of SCC Group’s business having been involved in modern slavery or human trafficking, and to make those issued detected are removed promptly and appropriate measures are taken swiftly. SCC Group has adopted a dual-channel Speak-Up System equipped with an internal Speak-Up hotline and an external Speak-Up hotline, which accept reports not only from a headquarter of Sumitomo Chemical Company, but also all Group companies as long as relevant laws of their respective countries permit it. Under the System, any employee can report any violation or suspected violation of compliance to his or her company’s compliance committee or other similar governing committee via either its internal hotline, or an external hotline. External hotline is usually operated by an outside lawyer appointed by the company. Suppliers in our supply chains or anyone having any involvement in the company’s business activities can also report their concerns. SCC Group, all combined, receive approximately 140 cases of speak-up reporting in total.
    3. Corporate Social Responsibility InitiativesTo resolve serious global issues such as modern slavery and human trafficking, SCC Group believes that it is important to collaborate with international institutions along with promoting its own Sustainability initiatives against modern slavery and human trafficking. For that reason, since 2005, SCC Group has been participating in the UN Global Compact, an initiative that seeks to advance universal principles (the “Ten Principles”) on human rights, labor, environment and anti-corruption. Also, in light of the contributions made and its firm commitment, SCC Group has later joined the UN Global Compact LEAD, an exclusive group of sustainability leaders from across all regions and sectors that represent the cutting edge of the UN Global Compact, when it was launched in 2011. Through these initiatives, the SCC Group will contribute to the sustainable development of society, and also help achieve the UN Sustainable Development Goals (SDGs) that are to be resolved across the globe by 2030, which includes taking immediate and effective measures to eradicate forced labor and end modern slavery and human trafficking as one of the goals.
  5. Looking AheadSCC Group believes that the promotion of respect for human rights and ensuring compliance with applicable laws, regulations and ethical standards, including those relevant to modern slavery and human trafficking, is vital for operating its business in a sustainable manner. As such, SCC Group will continue its initiatives as described above, to identify and address any issues associated with modern slavery and human trafficking throughout its global operations and supply chains.
  6. Process of ConsultationThe SCC Group’s overall human rights program including modern slavery and human trafficking initiatives are developed and implemented group-wide under the leadership of the Human Rights Promotion Committee, which reports to the Board of Directors. Through the committee, a crossfunctional team together with the respective internal business units representing each business sectors work closely together to integrate group level measures of accountability for promoting respect for human rights risk including prohibition of modern slavery, forced labor and child labor and to embed our initiatives and supporting processes across the SCC Group.

1st April 2020

Keiichi Iwata
Representative Director & President, Sumitomo Chemical Company, Limited

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