Governance

Basic Approach to Corporate Governance

Our corporate philosophy is defined as follows:
“Through the provision of superior thermal energy conversion technologies and services, we contribute to the realization of an environmentally friendly and sustainable society. At the same time, we pursue the enduring prosperity of the company, along with the happiness of our customers, shareholders, employees, business partners, and local communities.”
Guided by this philosophy, and with our corporate vision of becoming “a company trusted by stakeholders,” we have established our management objective of enhancing corporate value while ensuring sustainable growth. To achieve this, we are strengthening our corporate management framework, enhancing auditing and supervisory functions, improving transparency in management activities, and, above all, embedding compliance as a core element of our corporate culture. We are proactively implementing various initiatives to further reinforce corporate governance.
As part of these efforts, and to demonstrate our commitment to compliance, we have established and disseminated the “T.RAD Code of Conduct” as a behavioral standard for all employees across the T.RAD Group in their daily activities.

Corporate Governance Framework

■Board of Directors

The Board of Directors, in accordance with the Board of Directors Regulations, deliberates and resolves important matters of the Company, including those stipulated by laws and the Articles of Incorporation, while also supervising the execution of duties. Chaired by the Representative Director, the Board comprises two internal directors and three outside directors, thereby reinforcing the Company’s governance and oversight framework.
All directors, including the Representative Director, as well as all Audit & Supervisory Board Members, attend Board of Directors meetings, which are convened monthly in principle and on an ad hoc basis as necessary. At these meetings, Audit & Supervisory Board Members receive reports on key matters such as compliance, management strategy, business risks, and financial conditions. They also directly verify the execution of operations by requesting explanations and information from directors and executive officers.

■Audit & Supervisory Board

The Audit & Supervisory Board maintains close collaboration with the Internal Audit Department to ensure the timely receipt of information necessary to understand and monitor internal controls and related matters, and has established a framework to discuss issues as they arise. Furthermore, in order to conduct independent and impartial audits, two of the four Audit & Supervisory Board Members are appointed from outside the Company.

■Executive Committee

The Executive Committee, in accordance with the Executive Committee Regulations, establishes the Company’s overall management policies and makes decisions on important matters. The Committee is composed of full-time Directors and Senior Executive Officers, with relevant members participating as necessary, and is convened in principle once a week.

■Nomination and Compensation Committee

As an advisory body to the Board of Directors,the Company has established the Nomination and Compensation Committee,the majority of which consists of Outside Directors. With respectto the nomination of Directors and Executive Officers as well as the remuneration of Directors, matters are first referred to the Committee for deliberation prior to discussion by the Board of Directors,thereby ensuring fair and appropriate decision-making.

Compliance Initiatives

■T.RAD Code of Conduct

We believe that the faithful implementation of the “T.RAD Corporate Philosophy” is the very means by which our Company fulfills its social responsibilities. In putting this philosophy into practice, our employees are expected to fully understand the Code of Conduct in advance and regard it as the highest priority in their actions. Through such conduct, we are confident that the value of our Company and the outcomes of our business activities will be further enhanced, thereby earning the trust of all our stakeholders.

■Compliance Training Initiatives

Compliance Education and Training
At our Company, compliance-related training is provided to new graduates and mid-career employees upon joining the Company and again after six months. The training covers a wide range of topics, starting from general concepts such as compliance and adherence to rules, to specific legal and regulatory matters including information management, the Subcontract Act, internal controls, J-SOX, and intellectual property management. Each training session is continuously improved based on feedback from participant surveys.
For our corporate officers and presidents of overseas subsidiaries, compliance training is conducted by legal professionals, enabling management to stay up to date with the latest compliance-related information and further strengthen their awareness and commitment to compliance.

■Ensuring Compliance with Labor Regulations through Mutual Audits

Labor Compliance Audits
In accordance with internal regulations, each site conducts a self-assessment of its compliance status using the “Labor-Related Legal Compliance Evaluation Sheet.” Following this, cross-audits are carried out by General Affairs Managers and responsible staff members. Across all sites, no significant non-conformities have been identified. For any issues for improvement, follow-up audits are conducted within the same fiscal year and continued annually until corrective actions are completed.
To further strengthen our compliance framework, we will continue to advance these initiatives going forward.

Overview of the Whistleblower System

The Company has introduceda whistleblowing system under its internal regulations (Compliance Regulations and Compliance Management Rules) in order to facilitate the early detection and resolution of illegal or improper activities. In addition to reporting to Compliance Promoters within each department, employees may also make direct reports at any time via adedicated website accessible by PC or smartphone to the President and the Internal Audit Office. Furthermore, an external contact channel has been established through the Company’s legal counsel.
Anonymous reporting is permitted, and the Company’s regulations stipulate that no disadvantage or retaliation shall be imposed on whistleblowers under any circumstances.
To ensure awareness and accessibility, information regarding the whistleblowing system is posted on the Company’s intranet (Compliance Information) and included in the HANDBOOK distributed annually to employees. In addition,details of the system are explained and reinforced through compliance training programs.

Risk management

■Basic Philosophy (Principles)

In order to realize its corporate philosophy, T.RAD Co., Ltd. and T.RAD Group appropriately manage the wide range of risks that may arise in the course of business activities, including economic, social, and environmental risks. We strive to eliminate risks as much as possible, and in the event that a risk does occur, we will promptly implement appropriate countermeasures tailored to the characteristics of the risk.
Furthermore, we will continue to provide education and awareness-raising activities so that each and every employee is able to take timely, appropriate, and accurate action when risks arise.

■Basic Policy (Code of Conduct)

• Ensure the safety of human life and health, and respect human rights.
• Comply with all applicable laws and internal regulations, and promote transparent and sound management and business operations.
• Strive to ensure the quality and safety of products and services, as well as their stable supply.
• Act in good faith to eliminate or mitigate factors that may hinder the interests of stakeholders surrounding the Company.
• Each employee shall take responsible action in addressing risks.

Risks related to business activities

We conduct a comprehensive risk analysis once a year to identify risks related to our management and business activities, and to categorize them into critical risks and significant risks. These risks are visualized for clarity and prioritization.
Risk mitigation activities for critical and significant risks are incorporated into our medium-term management plan and annual business policies. The progress of these activities, as well as the outcomes, are monitored under the Business Continuity Subcommittee of the Sustainability Committee to ensure effective implementation and tangible results.

Business Continuity Plan (BCP)

At our company, we regard not only “manufacturing” but also emergency preparedness as an essential aspect of quality. To this end, we focus on the following three pillars to ensure business continuity and minimize losses to our stakeholders in the event of any emergency:

• Implementation of the PDCA cycle centered on training (spiral-up improvement through continuous enhancement)
• Promotion of disaster-mitigation measures at factories, offices, and in IT-related areas
• Strengthening of supply chain systems and information sharing

■Systematic Execution of Emergency Response Training

Our company prepares not only for natural disasters but also for various emergencies such as equipment failures, fires, and disruptions in distribution routes. Each site formulates and implements annual plans tailored to its specific risks. In addition, we utilize hazard maps published by local governments to identify potential regional disaster risks, thereby enhancing awareness and strengthening preparedness on a daily basis.