We conduct internal control and legal compliance inspections annually as a voluntary initiative at each work site.
We inspect each business operation to ascertain compliance with Group-wide rules (internal control standards) and whether the corporate culture values integrity and ethics. In addition, given the rapidly changing management environment, we use a risk control matrix to ascertain whether risks have been appropriately identified and assessed, and whether effective controls for these risks have been developed and implemented.
We also utilize interviews of all staff by managers to identify compliance issues, including questions and concerns, in order to prevent legal violations and to identify and correct any issues at an early stage.
The Group identified approximately 640 compliance issues, questions, and concerns in fiscal 2023. None of the issues significantly impacted management. The Group resolved 80% of the issues within the fiscal year and is taking steps to promptly address the remaining 20% of unresolved issues.
The compliance inspection systems at the Company and ENEOS were revised in April 2024 to allow departments and business sites to conduct inspections more autonomously and effectively by enabling each department or business site to inspect the status of compliance under the direction of the officer in charge and in accordance with its own specific risks.

Deficiencies under the High Pressure Gas Safety Act at ENEOS

In fiscal 2023, the Ministry of Economy, Trade and Industry cited deficiencies under the High Pressure Gas Safety Act and on June 9, 2023, revoked certification of ENEOS Corporation as an Accredited Completion Inspection Executor for the Ukishima North Area and Ukishima South Area of the Kawasaki Refinery (including certification of the Ukishima North Area as a Specified Accredited Completion Inspection Executor under the Regulation on Safety of Industrial Complexes). To prevent recurrence of a similar situation, ENEOS is implementing prevention measures, including steps to ensure a high level of safety awareness and strengthen the safety management system. As part of these efforts, the company is implementing measures such as training on the High Pressure Gas Safety Act and overall compliance for all refinery staff, including staff at business sites certified to handle high-pressure gas.
We are also working to restore trust as quickly as possible by broadening and strengthening compliance initiatives throughout the Group.

Strong awareness among all officers and employees is an important element in achieving thorough compliance. To this end, we issue ENEOS Group Philosophy cards and ENEOS Group Code of Conduct handbooks to all personnel and regularly provide compliance training for officers and employees.
We will continue to provide training based on select topics as part of our ongoing efforts to ensure thorough compliance.

Compliance Training Conducted in Fiscal 2023 (Partial List)

• Company-wide training on the necessity of compliance, competition laws, anti-bribery, the Act on the Protection of Personal Information, and insider trading regulations
• Harassment prevention training and training on the Subcontract Act and prevention of disguised contracting for branch offices, refineries, and plants
• Anti-monopoly law training for sales departments
• Compliance awareness training for officers (human rights and compliance training, mandatory participation in compliance training for employees)

The Group maintains a policy that the entire Group must thoroughly comply with competition laws in Japan and other countries. We have put into place necessary company rules, and all officers and employees work under a clear commitment by management to ensure compliance with competition laws.
Specifically, we have established the ENEOS Group Competition Law Compliance Policy, which strictly prohibits officers and employees from engaging in any activity, including cartels, that violates competition laws of any country. The policy clearly states that no activity that would violate competition laws shall be justified by any reason of business custom, the authority or position of the violator, maintaining or expanding business or making profits.
The legal divisions of the Company and ENEOS check each department every year for planned interactions with business competitors, assess those interactions for competition law risks, and request the submission of meeting records detailing the interactions. Through these and other efforts, we work to prevent competition law violations before they occur.
We also conduct competition law compliance training for officers and employees on a regular and ongoing basis.

The Group participates in the United Nations Global Compact, and puts the 10 principles, including anti-corruption, into practice. We have established and published the ENEOS Group Anti-Corruption Policy, which clearly states that the Group will not engage in corrupt practices. With regard to anti-corruption, the Group does not tolerate bribery in any form. We have internal regulations in place to prevent bribery at our Group companies, and all officers and employees actively work under a clear commitment by management of all Group companies to prevent bribery. ENEOS requires overseas subsidiaries where it has ownership of more than 50% to establish and comply with anti-bribery guidelines.
The Company, ENEOS, and its overseas subsidiaries have a mechanism to check for bribery involving travel expenses, business entertainment, gift giving, and donations, taking into consideration the laws and regulations of each country.
We also implement third-party due diligence procedures to prevent our involvement in bribery through a third party such as an agent, agency, or distributor.
Employees can access relevant internal regulations at any time via the Company intranet or other means. They also undergo various forms of compliance training on the prevention of bribery. In this manner, we are working to raise employee awareness of this important issue.
Internal controls, legal compliance inspections, and internal audits are used to continuously monitor whether these mechanisms are functioning properly. The results of monitoring are reported to the Company’s Board of Directors.
The Company, ENEOS, and its overseas subsidiaries also maintain risk screening systems for domestic and overseas business partners using services provided by specialized vendors, and conduct risk checks in a timely manner. In addition, we conduct risk surveys at the commencement of business relationships with new business partners, and if risks are indicated, we take necessary risk mitigation measures and determine whether or not to commence the business relationships. We also have a system in place to promptly detect and rectify problems through our whistleblower systems.
In fiscal 2023, there were no serious violations and no fines, administrative monetary penalties or settlements imposed regarding corruption or bribery. In addition, no internal disciplinary action was taken in connection with corruption or bribery.

Companies have a corporate social responsibility to appropriately honor their tax liabilities in the countries and areas in which they conduct their business activities. Therefore, we have formulated the ENEOS Group Tax Matters Policy to ensure that tax liabilities are appropriately honored throughout the entire Group.

• Tax Matters Policy