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Policy Proposals  csr Keidanren Charter for Good Corporate Behavior

September 14, 1991


Since Japanese corporations have tremendous influence both at home and abroad, they also have great responsibilities with respect to their behavior. With this in mind, the recent series of incidents relating to the securities and financial industries have set the scene for the establishment of good corporate behavior which will, in turn, inspire public confidence and acceptance by the international arena. These "recent series of incidents" have again brought attention to the role which top management must focus on in order to develop the currect corporate image and behavior. It is also strongly desired that the top management examine and discipline their own behavior and exercise leadership in keeping moral standards high in their corporations.

The corporate social environment is changing through the need for corporations to co-exist with consumers and the public. Also corporate respect for individuals and consideration of stockholders' rights, as well as progressive globalization, must be met. We must not forget either the changing responsibilities that society expects the corporations to meet. Today's business firms, although economic entities seeking to earn appropriate profits through fair competition, are expected to be entities that serve to help people live lives of plenty as well as being of some use to society. Toward this end, corporations must not merely obey the law but also bring a social conscience to bear on their undertakings. As employees are constituent members of corporations who also participate in society as individual consumers and residents, it is clear that from now on corporation must demonstrate their ability to meet society's demands and show themselves as trusted corporate citizens.

From this perspective, Japanese corporations need to rigorously reconsider traditional business practices and their own behavior. So as not to give grounds for the criticism that Japanese business practices are exclusionary and opaque, it is urgent for us to work to achieve a free, transparent, fair market and establish international confidence in Japan's economic system. In doing so, we should pay particular attention to recent criticism that the principles of corporate behavior deviate from social norms and are difficult to understand from the outside. In response to such criticism, corporations must make an effort to regulate their own behavior in a manner that can be seen from the outside.

Individual corporations and industries have already made various efforts to introduce rules and regulations. At this juncture, however, we are requesting that the top management of individual firms and industry organizations take the lead in securing total observance of the spirit of this charter within their corporations and industries and that they conduct an overall review of their corporate behavior and business practices. The goal of a free, transparent, and fair market can be achieved only with repeated efforts by corporations to review their overall behavior and with the establishment of the principle that corporations must assume responsibility for their own acts and decisions.

We hope that this charter will be a reference for member corporations as they engage in overall reviews that take into account their individual circumstances and the nature of their businesses. In addition to following up on the results of these reviews, Keidanren intends to work on topics like the reconsideration of business practices. In addition, we will endeavor to deepen communication with consumers and residents through open forums and other public relations and policy dialogue activities so as to close the gap between corporate behavior and social norms.

Keidanren Charter for Good Corporate Behavior

Good Corporate Citizenship: Seven Principles

  1. Endeavor to offer excellent goods and services that are useful to society.

  2. Strive to make it possible for employees to lead comfortable and plentiful lives, and respect them as human beings.

  3. Conduct corporate activities in a way that takes environmental protection into consideration.

  4. Endeavor to make an active contribution to society through philanthropic and other activities.

  5. Work to improve social welfare in the community through business activities.

  6. Firmly refrain from behavior that is counter to social norms, including having anything to do with the activities of organizations that have an adverse influence on social order and safety.

  7. Always promote communication with consumers and residents through public-relations activities and open hearings, and strive to make the principles of corporate behavior conform to social norms.

Fairness: Five Principles

  1. Abide by the letter and spirit of all laws.

    In particular, secure total understanding within the company of the spirit of the Antimonopoly Law, which is a fundamental rule of a free market economy, and create an antimonopoly compliance program.

    Also, arrange a setup whereby employees can obtain advice on legal questions pertaining to business activities.

  2. Make corporate behavior as a whole both fair and transparent.

    Refrain not only from illegal acts, but also from excessive competition lacking economic rationale and the use of unfair means in pursuing profits, as well as opaque behavior that cannot be explained in the international arena.

  3. Secure total observance of the principle that the corporation must assume responsibility for its own acts and decisions.

    The results of market activities when cultivating business opportunities through fair, transparent, free competition should be reflected fairly in the profits and losses of each economic entity; one is not to shift to others the risks and losses that are properly one's own.

    Furthermore, refrain from any reliance on government organs that could be mistaken for collusion.

  4. Obtain and use information fairly.

    Obtain information through legal means and store and use it under appropriate management standards.

  5. Strive to formulate business practices that are internationally acceptable.

    Actively reconsider, from the perspective of fairness and transparency, systems and practices that have long been considered a matter of course and endeavor to make them internationally acceptable.

Top Management: Three Principles

  1. Corporate executives are to work personally to see that the spirit of this charter is accomplished and to secure the interest of all relevant stakeholders including shareholders.

  2. Secure total observance of relevant laws and of the spirit of this charter within the corporation.

    Improve employee education and other systems so that corporate personnel do not deviate from social norms when acting in their capacity as employees; deepen employees' understanding of the company's social role.

    In doing so, give a positive valuation to activities that contribute to society or improve the company's social esteem.

  3. Set up a division to perform in-house checks of corporate behavior, appoint a director in charge of such checks, or make other organizational arrangements suited to the corporation's own circumstances.

    Improve auditing functions and, through confirmation of the facts, make corporate behavior that is illegal, unfair, or in violation of social norms subject to punishment.