Compliance

Basic stance

We believe that key actions to earn the trust and understanding of society are DENSO's observance of all applicable national and regional laws and all Group employees' fair and faithful conduct with the highest ethical standards. We see compliance as not only the observance of laws but also a responsibility to meet the expectations of stakeholders. In this sense, we consider it to be the cornerstone of all conduct.

Together with the declaration of CSR management in 2006, which developed out of this approach, we adopted the Code of Conduct for DENSO Group Associates, which is used as the yardstick against which employees measure their behavior to meet stakeholders' expectations in their daily conduct. The Code resulted from a complete revision of the previous Code of Conduct enacted in 1997. The new Code is based primarily on the principle of legal compliance. The document is a simple one, designed so that even new employees can understand and put its provisions into practice. Furthermore, for an understanding of the Code to permeate each employee's awareness, it includes a self-review sheet that every employee uses to refl ect on his or her daily behavior.

While developing the Code of Conduct for DENSO Group Associates, we consulted the United Nations Universal Declaration of Human Rights, United Nations Global Compact, OECD Guidelines for Multinational Enterprises and the Charter of Corporate Behavior formulated by Nippon Keidanren (Japan Business Federation). Since the Code was adopted, all executives and employees refl ect on their daily conduct each year, and we strive to steadily improve employees' CSR awareness and conduct.

In an effort to ensure thorough compliance, domestic Group companies share the Code of Conduct for DENSO Group Associates. Correspondingly, overseas Group companies use a regional version of the Code of Conduct for DENSO Group Associates formulated by their regional headquarters in accordance with national and regional laws and customs.

Key items in the Code of Conduct for DENSO Group Associates

I.Your conduct as a member of the DENSO Group: Recognizing your role in society / Integrity as the foundation of trust / Compliance with laws and ethical principles
II.Creating a vibrant workplace: Understanding DENSO's philosophy and values and pursuing personal development / Respecting human rights, ensuring open communication and respecting the privacy of others / Maintaining mental and physical health and maintaining a healthy workplace / Maintaining order and ethics in the workplace / Maintaining a clear distinction between public and private matters
III.Earning trust and meeting the expectations of customers: Remembering to express appreciation, providing ureshisa (consideration) and yasashisa (fulfillment), and providing timely and sincere solutions / Complying with laws and regulations and acting as a globally minded individual
IV.Building win-win relationships with our suppliers: Developing trust with a fair, open-minded approach toward suppliers and maintaining humility / Respecting intellectual property rights
V.Living up to the trust and expectations of our shareholders: Managing corporate assets effectively and preventing risk / Practicing proper accounting / Managing inside information
VI.Upholding the best interests of society: Pursuing eco-friendly practices / Serving as a member of your community / Taking a forceful stand against anti-social organizations and ensuring moderate relationships with governmental authorities / Serving as a member of the automotive industry

End of booklet: Personal Declaration Form (pledge and signature)

*Scope: The Code applies to all executives and employees (including contract employees, temporary employees, part-time employees and all other employed individuals) at DENSO Corporation, domestic companies subject to our managerial consolidation rules and companies in which DENSO is the largest shareholder.

DENSO Group Declaration of Corporate Behavior and Code of Conduct for DENSO Group Associates

Promotion structure

DENSO sees thorough compliance as an important part of our internal control system, and in 1997 DENSO Corporation created a Business Ethics and Compliance Committee chaired by a director to provide oversight in that area (now integrated into the CSR Promotion Meeting). The committee works to develop frameworks in each country and region to contribute to law-abiding structures and pursue related activities. In 2003, DENSO Corporation established an internal whistle-blowing system in the form of the Business Ethics Hotline, which places employees in contact with external lawyers and the Legal Department. In fiscal 2007, the Company appointed CSR leaders to spearhead initiatives in each workplace as part of its education and enlightenment activities. Domestic Group companies use promotion structures based on DENSO Corporation's system.

For overseas Group companies, regional headquarters develop organizational systems, introduce and operate reporting systems, and pursue enlightenment activities that take into consideration the characteristics of their country and region. In North America, Group companies are working to prevent unlawful conduct by assigning compliance officers to each operating base and administering a 24-hour helpline (reporting system) and audit system. The status of these activities is regularly reported to base managers and used in efforts to prevent recurrences and improve activities. In Europe and China, Group companies have conducted a compliance program that includes a helpline that is appropriate to the circumstances endemic to each country.

In addition, regional headquarters employees responsible for legal affairs in Japan, North America, Europe, China and Southeast Asia regularly share information and issues. The gatherings seek to ensure and maintain compliance by sharing information and issues.

Education and enlightenment

Ongoing education and enlightenment activities are important tools for improving employees' awareness of compliance issues. DENSO Corporation began providing compliance education by employee level in 2002 and introduced education and enlightenment activities led by CSR leaders by workplace in 2006 (including contract, temporary and other employees). In fiscal 2010, a total of 3,400 employees participated in educational programs by employment level. In addition, with the aim of increasing awareness at the individual level, we have been holding e-learning twice a year since fiscal 2009 targeting approximately 23,000 personnel with PCs (including temporary employees). In fiscal 2010, an average of 97% completed the training. We will continue providing the courses going forward.

Legal Department initiatives include raising employees' awareness by means of the Business Ethics Newsletter and information pages on the corporate intranet, as well as holding group legal education classes and visiting local sites to provide legal education. Overseas, we are working to share and raise awareness of the most up-to-date legal information by regularly publishing the bulletin Legal News in locations such as North America and China.

Internal whistle-blowing system

DENSO Corporation's internal whistle-blowing system provides an effective means of preventing and promptly addressing improper and illegal behavior. The system (in the form of the Business Ethics Hotline), which allows anonymous reporting, is independent from the normal chain of command at the Company and is administered by outside attorneys and the Legal Department in accordance with Japan's Whistleblower Protection Act. We passed out cards listing the hotline number and expanded the scope of the program in May 2006 to include principal suppliers (300 companies). In fiscal 2010, the hotline received 168 reports and requests for advice in areas such as employment, labor, work environment, information management, business transactions and accounting, all of which were addressed after staff investigated the situation and confirmed the facts.

Number of consultation calls to hotline

	FY2006	FY2007	FY2008	FY2009	FY2010
Number of calls	78	141	114	188	168

Overall procedure for business ethics activities

Activity reviews and improvements

Since 2003, we have set aside each October as DENSO Group Business Ethics Month. We organize awareness-raising activities such as workplace discussions and conduct an annual Business Ethics Survey to assess awareness of policies and latent risks. The survey in fiscal 2010 targeted around 4,000 workers, including temporary employees.

There was an increase in the number of respondents who thought that it was easy to consult with superiors at work, indicating good communication in the workplace. This result confirms steady progress in efforts to enhance communication.

Compliance officers (16 departments in sales, administration, technical and production divisions) were sent to respective workplaces to hold meetings aimed at gathering and exchanging opinions with division heads and workplace leaders on compliance policies and activities. The meetings indicated the need to (1) expand information with which everyone is familiar to enable independent consideration by each site, (2) offer e-learning to all employees, and (3) provide face-to-face explanations on site rather than merely transmitting information via booklets or computer to permeate compliance awareness. We will further expand educational and enlightenment programs in fiscal 2011 in view of these results.