Compliance

The Nippon Soda Group ensures thorough corporate conduct based on compliance with laws and ordinances and corporate ethics by raising awareness of the Nippon Soda Group Code of Conduct. We practice compliance management through the establishment of the Compliance Committee and proper operation of the internal reporting system.

The Nippon Soda Group Code of Conduct

Compliance Promotion System

Nippon Soda has established a Compliance Committee, chaired by the director in charge of compliance and with legal departments serving as the secretariat, to ensure thorough corporate conduct based on compliance with laws and ordinances and corporate ethics throughout the Group. An effective governance system for the committee has been established, with the Board of Directors receiving reports on the committee’s meetings and overseeing amendments and abolition of its regulations, and the representative director overseeing the appointment and dismissal of the chair and vice-chair.
Furthermore, to ensure thorough implementation of the Nippon Soda Group Code of Conduct, the Company has assigned compliance officers to each department, worksite, and subsidiary.
The Nippon Soda Group has established an internal reporting system (consultation desk) whereby employees of the Group who have committed acts that violate the Nippon Soda Group Code of Conduct, or who become aware of violations by other employees, can consult directly with the Compliance Committee Secretariat, an external attorney or members of the Audit and Supervisory Committee.

Compliance Promotion and Education

We have formulated the Nippon Soda Group Code of Conduct, which specifies matters to be observed by the Nippon Soda Group in order to carry out sound corporate activities. In addition to introducing and promoting awareness of this Code of Conduct throughout the Company, as well as at our subsidiaries both in Japan and overseas, we provide ongoing training to ensure thorough compliance with laws and ordinances. We conduct legal education and training related to our operations once per year or more. In addition, we have e-learning programs aimed at promoting awareness of the Code of Conduct among all Company and subsidiary executives and employees, and the current completion rate stands at 97%. Moreover, for staff members in charge of compliance at the Company and its subsidiaries, we conduct seminars on responding to internal reports. Furthermore, we conduct an annual compliance survey of all employees to monitor the level of awareness of the Code of Conduct.

Identifying and Preventing Compliance Risks

Establishment of the Anti-Trust Law/Competition Law Global Guideline for Nisso Group

The Nippon Soda Group recognizes that maintaining a fair and transparent competitive environment is fundamental to a sustainable society. As such, it positions strict compliance with antitrust laws as a priority issue in its management.

Although we had already established antitrust compliance requirements in the Nippon Soda Group Code of Conduct, in 2025 we established the Anti-Trust Law/Competition Law Global Guideline for Nisso Group, recognizing compliance risks such as cartels and bid-rigging as critical management issues for our Group. This guideline, which is intended for all employees of our Group, both in Japan and overseas, outlines the principles for compliance with antitrust laws. With a particular focus on preventing cartels and bid-rigging, it clarifies specific criteria for maintaining appropriate relationships with competitors, and aims to ensure thorough compliance.

Through these efforts, we aim to contribute to maintaining a fair competitive environment and earn the trust of society.

Inclusion of bribery prevention clauses in contracts

At Nippon Soda, as an organization operating on a global scale, we recognize that corruption is a major compliance risk. To reduce this risk, we have included bribery prevention clauses in our sales and purchasing contracts with overseas business partners. These clauses prohibit any bribery by our business partners, provide for termination of the contract in case of violation, and stipulate requirements for the disclosure of accounts and records and the acceptance of on-site audits. Through these clauses, we are aiming to raise awareness of anti-corruption both in-house and among our business partners, and in turn reduce compliance risks.

Political contributions

As outlined in the Nippon Soda Group Code of Conduct, political contributions are only made in compliance with relevant laws and ordinances and using appropriate methods and procedures. In FY 2025/3, Nippon Soda did not make any political contributions.

Main Compliance Results

Significant fines, etc., for violations of laws and regulations, etc.

In FY 2025/3, there were no fines for any of the following compliance violations.

• Fines for violations of laws and regulations associated with the provision and use of products and services.
• Fines, penalties, or settlements for the violation of laws and regulations associated with corruption and bribery.
• Fines for violations of laws, regulations, and clauses associated with the environment.

Dismissal of or disciplinary action against employees who have committed compliance violations

In FY 2025/3, Nippon Soda conducted rigorous investigations into cases of violations of internal regulations and took appropriate disciplinary action in seven cases in accordance with internal regulations. There were no cases of dismissal.

Internal reports related to compliance

In FY 2025/3, the internal reporting hotline received seven reports of violations of the Nippon Soda Group Code of Conduct.
(Scope: Nippon Soda and domestic subsidiary executives and employees)

Significant deviations from legal requirements

(Including environmental, occupational safety and health, chemical substance regulations, and other legal requirements related to business operations)

In FY 2025/3, there were 26 deviations at Nippon Soda (including two legal violations) and 3 deviations at a Nippon Soda Group company.

(Legal violation)

1. 1.Violated the Poisonous and Deleterious Substances Control Act (Nihongi Plant)
1. (1)Overview
   It became apparent that at the Nihongi Plant, the address of Nippon Soda’s Head Office displayed on containers for OEM products of the deleterious substance metal sodium had not been updated after relocation, and was still listed as the former location. This was confirmed to be a violation of the Poisonous and Deleterious Substances Control Act.
2. (2)Cause
   The containers for the product in question, including the labeling, are supplied by our OEM partner. However, when Nippon Soda relocated its Head Office, these containers were overlooked and not included in the items requiring confirmation and modification. Also, while we had notified the OEM partner about our relocation, we failed to request a change to the labeling on these containers (specifically, the address of our new Head Office). Consequently, products with non-compliant labeling were distributed to the market.
3. (3)Recurrence prevention measures
   In addition to clarifying in Nippon Soda’s packaging specifications that our Head Office address must be indicated at the time when the containers are supplied by the OEM, we also clearly stipulate the handling of supplied containers and labeling in the agreement with the OEM to prevent oversights. Moreover, we conducted training for those responsible at the Nihongi Plant regarding the details of this violation and the measures to prevent recurrence.

1. 2.Violated the Poisonous and Deleterious Substances Control Act (Mizushima Plant)
1. (1)Overview
   It became apparent during transportation that a 20 kg can of potassium cyanide, a toxic substance, was labeled “sodium cyanide” on the can itself and “potassium cyanide” on the lid. This was confirmed to be a violation of the Poisonous and Deleterious Substances Control Act.
2. (2)Cause
   The facility producing this product alternates between using sodium cyanide and potassium cyanide, and empty cans for product filling are moved via a conveyor system. When production ended and unused cans were being moved and removed via the conveyor, a malfunction in the conveyor caused unused sodium cyanide cans to remain inside the equipment. Subsequently, when production switched to potassium cyanide, the unused sodium cyanide cans left in the conveyor got mixed in with the empty potassium cyanide cans and were used in potassium cyanide production.
3. (3)Recurrence prevention measures
   We have strengthened our checking system by ensuring the complete removal of unused cans during production changeovers and conducting thorough visual inspections inside conveyors, as well as by adding new confirmation items to the work records. Moreover, we conducted training for those responsible at the Mizushima Plant regarding the details of this violation and the measures to prevent recurrence.

(Violation of environmental laws and regulations, etc.)

1. 3.Exceeded agreed wastewater discharge limits (Takaoka Plant)
1. (1)Overview
   On June 5, 2024, we sampled factory wastewater discharged into the Oyabe River, a public waterway, and conducted BOD analysis. The results revealed that the BOD value exceeded the agreed-upon limit (daily average) set with Takaoka City (measured value: 26 mg/L; agreed-upon limit: 25 mg/L). We promptly reported this to Takaoka City’s section responsible for environmental conservation.
2. (2)Cause
   Although no facility malfunctions, hazardous substance leaks, or other issues were identified (cause unknown), the decrease in total wastewater volume associated with the shutdown of production equipment for scheduled factory maintenance was presumed to be the factor causing the increase in BOD values.
3. (3)Recurrence prevention measures
   We took steps to manage discharge volume by increasing the dilution water volume during periods of reduced water discharge, thereby gaining the understanding of Takaoka City’s section responsible for environmental conservation.

1. 4.Exceeded exhaust gas standards (Aizu Plant, Nisso Metallochemical Co., Ltd.)
1. (1)Overview
   Measurements of soot and smoke emissions from a fixed-bed furnace conducted on September 20, 2024 revealed that the emission levels for zinc compounds exceeded the standards set by the prefectural ordinance as of October 1, 2024. As an emergency measure, operation of the fixed-bed furnace was suspended, and the relevant authorities were promptly notified.
2. (2)Cause
   An investigation into the cause revealed that the zinc content in the waste oil processed on the day of measurement of soot and smoke emissions was high, suggesting that the discharge standard for zinc compounds was temporarily exceeded.
3. (3)Recurrence prevention measures
   We prohibited the treatment of the waste oil in question using fixed-bed furnaces and decided to process waste oil containing zinc compounds using rotary kiln furnaces. Regarding this matter, we have received notification from the Aizu Development Bureau that there are no issues under either the Air Pollution Control Act or the Act on Waste Management and Public Cleaning.

1. 5.Exceeded standard values in monitoring well water (Nihongi Plant)
1. Overview/Response
   On November 28, 2024, we conducted groundwater sampling at the monitoring well on the north side of the plant premises for voluntary in-house analysis. The results showed 1,2-dichloroethane at 0.022 mg/L (environmental standard: 0.004 mg/L) and benzene at 0.031 mg/L (environmental standard: 0.01 mg/L), both exceeding the standard values. We notified Joetsu City’s section responsible for environmental conservation of this fact on December 12, and submitted a Soil (Groundwater) Contamination Status Report to the section on December 16. On December 17, Joetsu City conducted groundwater surveys at five locations in the surrounding area. On December 26, we received a report stating that no hazardous substances were detected and no guidance was required. We are currently conducting ongoing analysis and monitoring of the situation.