Internal Control System and Risk Management

FANCL Group has created an internal control system as a mechanism to ensure the efficacy and efficiency of operations, the reliability of financial reports, and compliance with laws an regulations.
In April 2015, FANCL Group made improvements to this internal control system and revised its basic policies in accordance with revisions to the Companies Act and the Ordinance for Enforcement of the Companies Act. In May 2022, the "Compliance Committee" and "Internal Control Committee" were merged to form the "Group Risk and Compliance Committee" with the aim of ensuring the adequacy of internal controls and improving company-wide risk and compliance management. The "Group Risk and Compliance Committee" and the "Sustainability Committee" together with the "Group Management Conference" under the jurisdiction of the Corporate Planning Department, manage risks related to their respective scopes.
Once a year, a review is conducted by these committees/conference bodies and related divisions, to identify "business and other risks," which are then decided upon by the Board of Directors. The Board of Directors reviews the measures taken to address the risks, verifying the feasibility of the measures, and taking further actions with regard to risks that have not been resolved.

The entire FANCL Group obtained external certification for the ISO 9001 international quality management standard in November 2000 and for the ISO 14001 international standard in November 2002. Although we have withdrawn from both certifications (ISO 9001: withdrawn in November 2015, ISO 14001: withdrawn in November 2014), we continue to maintain the risk assessment systems developed during this period, and have established and operate our own management system, including the implementation of quality audits.

Group Risk and Compliance Committee

Under the Group Risk and Compliance Committee are the Quality Control Working Group, Corporate Ethics Working Group, Internal Control Working Group (Financial and IT control), and IT Security Working Group. Each Working Group analyzes and examines countermeasures mainly with respect to risks associated with physical changes when using our products, violations of laws and regulations in our business, quality assurance, finance and accounting, personal information and trade secret management, laws and regulations, lawsuits, bribery, and information security, and reports regularly to the Board of Directors through the "Group Risk Compliance Committee" regarding such risk analysis and countermeasures and the status of legal compliance.

Sustainability Committee

The Sustainability Committee was established in October 2021 with the purpose of placing sustainability at the core of management, and to enhance corporate value over the medium to long term by achieving the targets established to address key issues. Chaired by the President and CEO, the committee is composed of directors, executive officers, and corporate officers, and meets quarterly and reports to the Board of Directors twice a year. To ensure that the Board of Directors can fulfill its supervisory and monitoring functions, the Committee deliberates in advance on policies and strategies that are to be resolved by the Board, managing and evaluating progress against targets, and reviewing individual measures.
The Sustainability Committee deliberates on the status of the PDCA cycle of identifying and assessing risks and opportunities from the perspective of the environment, including climate change, and implementing countermeasures, and reports back to the Board of Directors.
In the fiscal year ended March 2023, the Committee managed and evaluated its progress in enhancing information disclosure based on TCFD recommendations, including reducing CO2 emissions (introducing carbon neutral gas and improving the accuracy of Scope 3 calculations), expanding product container collection and recycling to reduce plastic use, and procuring certified palm oil, and reported to the Board of Directors.