Code of Conduct

Definition

A Code of Conduct describes how a company should act based on the company's values and ethics and acts as a guideline for the company's management, employees and group companies and sometimes its part-time workers and trading partners. A Code of Conduct is an essential element for ensuring company's regulation compliance and CSR.

The European Commission's Green Paper promoting a European framework for corporate social responsibility published in 2001 defines Code of Conduct as "a formal statement of the values and business practices of a company and sometimes its suppliers. A code is a statement of minimum standards together with a pledge by the company to observe them and to require its contractors, subcontractors, suppliers and licensees to observe them. It may be a sophisticated document, which requires compliance with articulated standards and have a complicated enforcement mechanism" *1. However, this is just one of a various ways to define Code of Conduct. The fundamental elements include "compliance of laws, social norms and internal rules",

"commitment to stakeholders", and a "company mission statement" *2. The Japan Research Institute, Ltd. survey on CSR in 2006 found that more than 90% of the valid responses indicated their companies had adopted ethical code of conduct, indicating that Codes of Conduct have been widely adopted in Japan. Application of Codes of Conduct is spreading beyond a single company to blanket corporate and industry groups as well as supply chains. Companies are also beginning to implement measures to enhance the effectiveness of the codes of conduct, such as holding training and explanatory meetings and conducting internal audits and assessments, to ensure the company and individual staff understand and act in accordance with the code.