Governance

Under the philosophy of the Cycle of Goodness^®, we strive to enhance our corporate governance system in an effort to further enrich our corporate value. Based on an organizational system in which the Board of Directors serves to make decisions on important matters, such as the company's management policy, and serves an oversight function, while the Audit & Supervisory Board serves as the company's auditing organization, we have adopted an Operating Officer System, a framework that helps the company undertake the execution of business and operations.

In order to raise awareness of ensuring consistency between sustainably increases in corporate value and paying stable dividends to shareholders, as well as improving business performance, YKK AP's basic policy is to set compensation for directors in consideration of the company's results and to determine the appropriate level of compensation for each director in accordance with their responsibilities. Specifically, directors' compensation consists of base salary and officers' bonuses as short-term compensation and retirement benefits as long-term compensation.

Compliance in the YKK Group refers to "not only observing laws, regulations and internal rules, but also complying with the social norms expected of us in the course of our corporate activities."
Through our compliance initiatives, we will manage risk appropriately, conduct sound corporate management, and further enhance our corporate value.

The YKK Group Code of Conduct was formulated in 2008 as the code of conduct to be implemented by YKK Group employees around the world. Its foundation is the YKK Philosophy and Management Principle. The Code was revised in FY 2021 in light of recent changes in the demands of society and increased importance of sustainability. It applies to all YKK Group corporate officers and employees.
The YKK Group Code of Conduct consists of seven principles and 29 bylaws. These principles and bylaws take into consideration and are compliant with the ten principles of the United Nations Global Compact and the eight fundamental Conventions of the International Labour Organization (ILO), and contribute to achievement of the SDGs as well. We will work to ensure that every one of our employees around the world implements the YKK Group Code of Conduct and to gain the trust of all of our stakeholders.

YKK AP introduced the YKK Global Criteria of Compliance (YGCC), the YKK Group's compliance standards based on the YKK Philosophy and ISO 26000, and the adoption of the YKK Global Criteria of Compliance at major sites in Japan and overseas was completed in FY2021. From FY2022 onward, we have been promoting the establishment of YGCC operation while accommodating new business sites. We regularly carry out YGCC audits such as self-inspection and internal audits. Standardized monitoring contributes to reduction of on-site workloads by eliminating duplicate monitoring items.

The YKK Group implemented the "YKK Group Whistleblowing System" in 2006, establishing a system that enables individuals to consult with/report to consultation desks inside and outside the company anonymously regarding behavior that violates laws, work regulations, or internal rules. In addition, the principle of whistleblower protection prohibits the disadvantageous treatment of any individual for making a consultation.
We are also committed to the mental and physical health of our employees, and have established a consultation service to address workplace environment problems, mental health concerns, and other health issues. Whistleblowing systems have also been established at overseas companies, with systems for consultation and notification put in place.
Furthermore, in July 2023, a new "YKK Group Supplier Reporting Contact Point" was established to provide redress for those involved with the company from human rights violations that may arise in the course of corporate activities.

In order to develop the people and culture that will support sustainable business growth, YKK AP is actively engaged in activities to instill the Management Principle.
In addition to the YKK philosophy Cycle of Goodness, and the Management Principle "YKK seeks corporate value of higher significance," the principles covered by our activities to foster the Management Principle includes the Core Values and YKK AP's Purpose, "We Build a Better Society Through Architectural Products."
The Core Values are three basic values compiled by the YKK Group in 2007 through interviews with many employees.
A 2021 project led by young YKK AP employees defined our unique Purpose, or the reason the company exists from the perspective of society, as "We Build a Better Society Through Architectural Products."
Through activities to instill these management principles in all employees, we strive to foster a sense of unity throughout the entire company and divisions.
Specific activities in Japan include "talking sessions" and the "Core Value Practice Level Check Sheet." At the talking sessions, each division head discusses the management principles with employees in their own words. The sessions are held annually at all of our locations in Japan to raise awareness through communication. In FY2023, talking sessions were held at all of the approximately 2,000 divisions in Japan (sales, development, technology, manufacturing, and administrative). In addition, the "Core Value Practice Level Check Sheet" is used during internal interviews to create opportunities for each employee to reflect on their own actions and think about the company's Core Values.
YKK AP's overseas operating companies are also actively engaged in activities to foster the Management Principle. For example, in the U.S.A., "Fundamental Behaviors" have been defined for 25 themes, and examples of employee conduct consistent with each theme are shared with all employees via internal bulletin boards and e-mail. These examples are presented at the beginning of major meetings to encourage more in-depth discussions.

In order to strengthen the risk management system and establish a governance system for emergencies, YKK AP has formed five risk committees (Quality Committee, Trade Management Committee, Crisis Management Committee, Information Security Committee, and Technical Asset Management Committee), under the guidance of the Chief Risk Management Officer (CRO), to conduct risk management. Rules and regulations have been established for each committee and are in operation accordingly.
In FY2024, the Crisis Management Committee, which has jurisdiction over natural disasters, fires, explosions, and social incidents, was renamed the Business Continuity Management (BCM) Committee to put a greater focus on business continuity.We will enhance our resilience by strengthening cooperation between individual divisions and the Risk Committees (5), preparing a business continuity plan (BCP) in normal times, and ensuring smooth operations in an emergency.

We assess the risks surrounding the business and create a risk map according to changes in the environment, the urgency of response to the risks, and the expected scale of damage.
Risks that have a significant impact on management are designated as key risk items, and policies and initiatives for damage estimates, proactive countermeasures, education and training, etc. For FY2024, we have added "labor issues and human resources strategy risks" and "violations of laws and regulations (subcontracting and anti-monopoly laws)" as key risk items.

To ensure business continuity, we hold study sessions for committee members (corporate officers) in charge of BCM, hold training sessions for core managers in charge of BCP and crisis management activities, provide e-learning programs such as video streamings to all employees, disseminate information for BCM awareness, and promote the acquisition of qualifications such as "Disaster Management Specialist.

YKK AP is engaged in initiatives to protect information assets from various threats to ensure business continuity and minimize damage to the business in the event of an emergency. In recognition of the fact that information security is the most significant risk, we will ensure sustainable growth by strengthening security across our businesses, including domestic, overseas, and affiliated companies, thereby maximizing return on investment and business opportunities.

The Information Security Committee has been established for promoting the information security system at YKK AP. We are implementing company-wide information security measures along two axes: a vertical functional promotion system covering all divisions, and a horizontal specialized subcommittee system to promote measures in each area of specialization.

In order to manage and use customers' personal information appropriately, YKK AP has established a system to authorize companies for properly handling personal information. With the aim of preventing leaks of personal information, the system to authorize companies involves training sessions for these companies to improve and enhance their management skills to handle personal information provided to them and the signing of a written agreement.
Monitoring is conducted to verify the effectiveness regarding handling personal information, ensuring that personal information is properly managed.

YKK AP provides education to employees to raise and instill awareness of information security.
The education includes e-learning on the risks we face as a company, such as information security breach and examples of potential threats that could arise in everyday situations, and provides accurate knowledge of information security and proper responses. We are also working to improve IT literacy of our employees by encouraging them to obtain information security-related certifications.
Furthermore, through WPS (Workplace Security) -based inspections of the work environment in which all employees participate, we are striving to put information security into practice.