Investor Relations

Risk Management

Effective Risk Management

Effective Risk Management

Basic approach

For the Fuji Oil Group, Risk Management* is intrinsic to implementation of its management strategies. In order to continue to contribute to society through food, we consider Risk Management to be indispensable from the perspective of business continuity, conforming to laws and responding to the expectations and demands of society, including our shareholders and investors. By promoting Risk Management, we aim to become a highly reliable enterprise that earns the trust of society.

*Risk Management: Preventing the occurrence of risks related to corporate management and minimizing losses and impact when risks occur, to achieve business plans and targets

Positioning of Risk Management in the Fuji Oil Group

Positioning of Risk Management in the Fuji Oil Group

Promotion System

Promotion System

The parties at FUJI OIL HOLDINGS INC. responsible for Risk Management are the Chief Financial Officer (CFO) and the Governance Subcommittee of the ESG Committee, which is an advisory body of the Board of Directors.
Reports and studies regarding Risk Management are conducted by the ESG Committee. The status of Risk  Management in the Fuji Oil Group is regularly reported to the Board of Directors via the ESG Committee to promote Risk Management with the involvement of management.

Education and awareness-raising activities

We conduct education and awareness-raising activities related to Risk Management through regular visits to group companies, video conferences and other measures, and are working to establish and improve their risk management PDCA activities. In addition, we provide education regarding the fundamentals of risk management and the risk management system of the Fuji Oil Group in pre-assignment training for employees who will be newly posted overseas.

Highlights: Incentives for Employees
As of 2016, we have established a CSR category in our management awards program to recognize departments and group companies that have made excellent efforts to contribute to society through their business activities. In this category, we present awards to group companies and departments that have fulfilled their social responsibilities by effectively conducting risk management.

Objectives

  • By 2020, each group company should independently and autonomously go through the PDCA cycle for Risk Management and each function of FUJI OIL HOLDINGS INC. should provide comprehensive support for optimal response to risks by each group company, based on the holding company structure.
  • By 2020, main group companies should complete formulation of BCP.

Progress

  • Held a semiannual Risk Management PDCA meeting with each group company and improved the quality of their risk assessment results
  • Provided Risk Management Committees at each group company with information on environmental (climate change) risk, human rights risk and region-specific risks
  • Conducted safety confirmation drills and other activities at business sites in Japan to strengthen response capabilities in emergency situations (such as large-scale disasters)

The Fuji Oil Group’s Risk Management System

PDCA

Our group has been working to establish a global Risk Management system appropriate for the holding company structure to which we shifted in October 2015.
Specifically, we have defined the respective roles of the holding company, regional headquarters/regional representative and each group company, and established a Risk Management Committee at each company. Each Risk Management Committee plays a leading role in the annual implementation of the PDCA cycle: Plan (identify all possible risks and select major risks) → Do (implement countermeasures) → Check (conduct checks) → Act (take action for improvement toward the next fiscal year). We are promoting risk management through close collaboration among the holding company, regional headquarters/regional representative and each group company.
In the event of an emergency, an Emergency Headquarters will be established within the Risk Management Committee, which promotes risk management activities in ordinary times, so that the entire Group can respond to an emergency quickly and appropriately.

The Fuji Oil Group’s Risk Management

The Fuji Oil Group’s Risk Management

Risk assessment method

The Risk Management Committee of each group company takes the central role in identifying as many of its own company’s risks as possible and assessing them by plotting them on a risk map (vertical axis: degree of damage/impact on the company; horizontal axis: possibility of occurrence). As a result of the assessment, the Committee specifies risks that would have a significant degree of damage/impact on its company as “significant risks” and decides how to respond to all “significant risks.” Through this process, each company conducts risk management that makes clear which risks it should manage on a priority basis and works to prevent risks, minimize loss when risks occur, and maintain business continuity.

Specific risk countermeasures

Climate Change Risk

For details, see the “Climate Change Risk” section of the “Environment” page of our website.

https://www.fujioilholdings.com/en/csr/environment/climate/

Business Continuity Plan (BCP)

Basic approach

The Fuji Oil Group Management Philosophy sets forth our Vision to “contribute to society by creating the future of delicious and healthy foods” and our Value to “work for people.” Business continuity is a prerequisite for achieving these goals, and we believe that a business continuity plan (BCP) is indispensable for that purpose. We will promote our BCP under the following basic policies to ensure employee safety and minimize damage to business assets in order to enable the continuation or early restoration of core businesses.

  • Give priority to the lives of employees and visitors.
  • Prevent secondary disasters and do not inconvenience local communities.
  • Fulfill our responsibility as a company to supply products.

Initiatives

Revision of BCP based on the scenario of a major disaster

Fuji Oil Co., Ltd. is revising and restructuring the BCP formulated in 2012 to make it more effective. The revisions are scheduled for completion in FY 2018.

Ensuring information system continuity in the event of a natural disaster (ICT-BCP)

In the event of a natural disaster or other incident, information systems are the foundation of business continuity. The Fuji Oil Group has installed its core systems and other systems for important operations at a secure data center. In addition, assuming a scenario of damage to the data center, we have secured operating system continuity with the construction of a DR site at a remote location. As a result, even if the data center is affected, operations can resume at the DR site within a few hours to half a day. Moreover, we are preparing for prompt response in the event of a disaster by conducting DR site switchover exercises once a year.

See “Sustainable Procurement” for our response to procurement risks due to climate change or large-scale disasters.

https://www.fujioilholdings.com/en/csr/sustainable/

*DR site: Disaster Recovery site

Information security

Basic approach

To ensure information security, the Fuji Oil Group is working to raise its security level in terms of both rules and technology. Regarding rules, we formulated Information Management Basic Regulations and Information Security Regulations as group policies. We will continue employee education to ensure the regulations are thoroughly known by all. Regarding technology, we are taking multilayered measures including mechanisms to prevent unauthorized access from outside the Group’s information systems and to protect against computer viruses. We will continue to verify the information security level.

Information security management system

In response to threats to information security, the Fuji Oil Group has established an information security management system under the Governance Subcommittee of the ESG Committee, which is an advisory body of the Board of Directors. For information security management, we have a CSIRT (Computer Security Incident Response Team) and deployed a person in charge of information security to promote faster response in the event of an emergency as well as employee understanding and awareness of the risks of accidental information leaks, targeted e-mail attacks and virus infections.

Information security education for employees

In FY 2017, in addition to educating new employees and employees being posted overseas about information security, we conducted a targeted e-mail attack drill at FUJI OIL HOLDINGS INC. and Fuji Oil Co., Ltd. We will continue working to improve employee information security literacy through education, training, drills and other measures.

Protection of Intellectual Property

Obtaining intellectual property rights and establishing a system to prevent the Fuji Oil Group’s infringement of such rights owned by other companies

Based on the Fuji Oil Group Management Philosophy, the Group has set forth rules on matters including the handling of intellectual property rights associated with inventions and other creative works made by its employees while on duty in the Regulations on the Handling of Employee Inventions and the Fuji Oil Group Regulations on Intellectual Property Management. We protect intellectual property by obtaining patents and other intellectual property rights for employee inventions and other creative works and by strictly managing our technological know-how to ensure its confidentiality. We also routinely keep a close watch on information regarding patents and other intellectual property rights of other companies to avoid infringing on them.

Educational activities

Fuji Oil Co., Ltd. holds study sessions whenever necessary as part of its efforts to spread correct understanding of intellectual property. During FY 2017, a training seminar on intellectual property was held in February for new employees involved in research and development who had joined the company six months earlier with the intention of spreading basic knowledge regarding intellectual property. The participants were briefed about intellectual property rights and their significance, as well as rules applied to in-house inventions. Moreover, intellectual property training held from August to October 2017 for mid-level employees in development departments focused on a review of the intellectual property system and practical education in intellectual property through preparation of a patent specification.

Creation of a Corporate Governance System

Basic approach

Through the realization of effective corporate governance, FUJI OIL HOLDINGS INC. aims to prevent situations that would harm corporate value, such as violation of laws and regulations, fraud or misconduct, and to strive for sustainable growth and improvement of corporate value over the medium to long term. We have positioned corporate governance as an important mechanism for decision-making that is transparent, fair, prompt and resolute in order to meet the expectations of stakeholders such as shareholders, customers, other business partners, our officers and employees, and society.
To ensure the confidence of shareholders, we consider it important to conduct flexible and rational decision-making and business execution and to enhance the functions for monitoring and supervising management. To this end, we appoint multiple outside directors and outside Audit & Supervisory Board members, and take care to ensure the independence of the Audit & Supervisory Board and the effectiveness of audits by the members.
To expedite decision-making, the Fuji Oil Group shifted its management structure to a pure holding company structure through an incorporation-type company split, and separates management from execution, thereby promoting delegation of authority to its regional headquarters, which are operating companies. Meanwhile, as the global headquarters, FUJI OIL HOLDINGS INC. is engaged in formulating strategies for group management and for managing group subsidiaries.

Fuji Oil Holdings Corporate Governance Guidelines PDF(76KB)

Objectives

  • By 2020, internal control processes should be established in each group company and frameworks for increasing business process efficiency and reducing the occurrence of losses should be created and upgraded.

Progress (Measures to achieve these objectives)

  • Based on the results of an evaluation of the effectiveness of the Board of Directors (including an interview survey by a third-party organization) conducted in the previous fiscal year, improvement activities were systematically implemented toward the ends desired.

Specific initiatives

Holding Company Structure and the Fuji Oil

Group Management Philosophy

On October 1, 2015, the Fuji Oil Group shifted its management structure to a holding company structure under a pure holding company. Under this new structure, we aim to enhance our strategic functionality, achieve sustainable growth, and increase our earning capacity.

Fuji Oil Group Management Structure (as of June 2018)
Fuji Oil Group Management Structure (as of June 2018)

Purposes of the holding company structure

1. Strengthening governance

As centralized oversight becomes more important due to the increasing diversity in employee nationalities and other factors, we will strengthen governance functions, primarily in FUJI OIL HOLDINGS INC.

2. Enhancing the Group’s strategic functionality

We will implement strategies, especially global strategies that enable the entire Group to achieve sustainable growth, with FUJI OIL HOLDINGS INC. as the core.

3. Hitozukuri (fostering people)

People devise strategies and implement governance. Believing it important to recruit people on a global basis and develop them optimally based on Group-wide allocation, we will change the way we evaluate people and the way we work.

4. Creating new businesses

To realize our desired vision for "How we want to be in 2030", we will implement a business expansion strategy, including M&A, and a growth strategy to create new businesses by making technological innovations.

Establishment of the Fuji Oil Group Management Philosophy

The Fuji Oil Group Management Philosophy states principles of action that should be observed by all group managers and employees around the world in order for our group to achieve sustainable growth, inheriting the DNA of our foundation and fulfilling our social responsibilities. Established together with the shift to a holding company structure on October 1, 2015, the Management Philosophy is a unifying force for Group management.

See the following web page for more details on the Fuji Oil Group Management Philosophy.

https://www.fujioilholdings.com/en/about/constitution/

Corporate Governance Functions

Corporate Governance Structure(As of June 22 2018)

Corporate Governance Structure

Board of Directors

Based on the rules of the Board of Directors, meetings of the Board of Directors are held once a month in principle, and extraordinary meetings are held from time to time as necessary. Matters stipulated by laws and regulations and other important matters are deliberated and resolved, and the status of the directors’ execution of duties is reported.

Audit & Supervisory Board

The Audit & Supervisory Board discusses and decides on audit policies and audit plans, and reports, resolves and decides on other important matters relating to auditing. It is composed of two internal members and two outside members, and held 12 meetings during the 90th term (April 1, 2017 to March 31, 2018).

Nomination and Compensation Advisory Committee

In October 2015, we established the Nomination and Compensation Advisory Committee as an advisory body to the Board of Directors for transparency in the processes of officer appointments and executive compensation decisions. As of June 21, 2018,the committee is composed of three members: outside director Kazuhiro Mishina, who is the chairperson; outside director Yuko Ueno; and the president. Meetings were held a total of seven times during the 90th term (April 1, 2017 - March 31, 2018).

ESG Committee (Members and Number of Meetings Held)

The ESG Committee was established in October 2015 as an advisory body to the Board of Directors to accelerate and promote activities relating to ESG (Environment, Social, and Governance). It has Safety, Quality and Environment, Human Resources Development, Sustainable Procurement, Governance and Solutions through Creation of Foods subcommittees, which discuss and make reports to the Board of Directors regarding these areas.
As of June 21, 2018, the committee is composed of CFO and director in charge of Corporate Governance Tomoki Matsumoto, who is the chairperson; director, and CSO Mikio Sakai; and director, and CQO Takashi Kadota; leader and sub-leader of each subcommittee. One external expert also participates as advisor. Meetings were held a total of 5 times during the 90th term (April 1, 2017 - March 31, 2018).

Approach to Selection of Director Candidates

We select internal and outside director candidates with superior character and knowledge. Particularly for outside directors, we select persons with superior knowledge in specialized fields such as corporate management and management strategy so that they contribute to the improvement of FUJI OIL HOLDINGS INC. corporate value by participating in the formulation of its management strategy and the supervision of business execution from a variety of perspectives.

Results of the Analysis and Evaluation of the Effectiveness of the Board of Directors

Effectiveness of the Board of Directors To further enhance the objectivity of the Board of Directors and improve governance, we conducted an evaluation of the effectiveness of the Board of Directors in FY 2017.

1. Overview of evaluation

  • Subjects: Directors and Audit & Supervisory Board members (total of 12, including four outside officers)
  • Evaluation process: Preliminary questionnaire and interviews by third-party institution and analysis of results with anonymity guaranteed

2. Question items:

  • 1. Composition and Structure of Directors
  • 2. Management and Duties of the Board of Directors
  • 3. Items for Deliberation by the Board of Directors
  • 4. Supervision of the Board of Directors
  • 5. Supervision of the Board of Directors by Audit & Supervisory Board Members
  • 6. Participation at Board of Directors Meetings
  • 7. Respecting the Opinions of Shareholders

3. Results of evaluation

Through this evaluation of the Board of Directors with the involvement of a third-party organization, we confirmed (a) proactive efforts to improve governance, (b) the vitalization of the Board of Directors through the president's leadership and the insight of outside directors, and (c) free and vigorous discussion by the Board of Directors with a culture of respect for outside officers.

On the other hand, we identified points for expected future improvement or functional upgrade, including (a) enhancement of the supervision of the Board of Directors of the holding company, (b) clarification of the role of the Nomination and Compensation Advisory Committee and further enhancement of its functions, and (c) greater diversity of the Board of Directors.

As a policy for the future, based on the report from the third-party institution on this evaluation of the effectiveness of the Board of Directors, it was decided at Board of Directors meetings in FY 2018 to begin formulating an action plan for the tasks listed in the evaluation results. It was also decided to continue discussing medium-to-long-term tasks within the Board of Directors. The Board of Directors of FUJI OIL HOLDINGS INC. plans to continue to evaluate its effectiveness in order to further upgrade its functions.

Officer Remuneration

Remuneration for Directors and Audit & Supervisory Board members in FY 2017 was as follows.

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Classification Total Amount of Remuneration
Directors
(including outside members)
¥295 million
Audit & Supervisory Board Members
(including outside Audit & Supervisory Board members)
¥64 million
Total(Outside Members of the Board and Outside Audit & Supervisory Board Members ) ¥360 million (¥41 million)

Notes:
1. The above includes compensation for four Members of the Board and a member of the Audit & Supervisory Board who retired at the conclusion of the 89th Ordinary General Meeting of Shareholders.
2. The above includes officer bonuses for FY 2017.
3. The above total remuneration of Members of the Board does not include the portion of salary received as an employee of our company.

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