Basic Policy and Features

Achieving higher levels of sound and transparent corporate management

Basic Policy

In order to sustainably enhance corporate value over the long term while working to realize a Kirei World in which all life lives in harmony, which is our purpose of our corporate philosophy “The Kao Way”, and to become an essential company in a sustainable world, Kao positions corporate governance as a top-priority management issue and continuously strengthens governance in both systems and operations. Kao’s corporate governance is a framework for transparent, fair, prompt and decisive decision-making. It takes into account the perspectives of all stakeholders and responds in a timely and appropriate manner to changes that are increasingly diverse, complex, and difficult to predict so that we can contribute to society and continuously enhance corporate value. The foundations of our efforts to achieve this are establishing and operating the necessary management structures and internal control systems, implementing the necessary measures in a timely manner, and demonstrating accountability. In addition, we work to understand social trends at all times and actively engage in dialogue with stakeholders to review the status of corporate governance from time to time and implement appropriate and necessary countermeasures and improvements.

Features of Kao’s Corporate Governance

To realize a Kirei
World in which all
life lives in
We position the establishment of effective corporate governance systems as the foundation and a driver
for achieving our Purpose to realize a Kirei World in which all life lives in harmony.
Integrity as the
only choice
We practice corporate governance that places our corporate philosophy, the Kao Way, at the core of our
business management, and with a consistent focus on Integrity as the only choice, which is one of values of
the Kao Way. Employees work together based on mutual respect and fairness, bring an attitude of sincerity
and diligence, and conduct themselves lawfully and ethically, and by so doing we are able to maintain the
support and trust of all stakeholders and engage in sound and honest business activities.
Innovation for today
and tomorrow
We constantly seek the optimal structure to respond to changes in the business environment, social
demands, and other factors.
We are striving to enhance corporate value by reviewing our systems and operations to achieve a higher level
of governance.
Use of outside
We have put in place a system of governance able to maintain a high degree of objectivity, the ratio of
Outside Directors on the Board of Directors is half or more, and having an Outside Director serve as
Chairperson of the Board of Directors, to ensure that the Board of Directors is able to appropriately perform
management oversight. Outside Directors and Outside Audit & Supervisory Board Members are designated
with priority placed on their independence as well as their expertise and high-level insight. They oversee
and audit planning and execution of business strategy and the like from their diverse viewpoints, facilitating
effective and judicious decision-making.
internal control
The Internal Control Committee leads discussions on compliance, risk and crisis management, and related
topics across the Kao Group to improve the effectiveness and efficiency of our business processes, ensure
the credibility of our financial reporting, comply with laws and regulations in our business activities, and
preserve our assets, and we are strengthening internal control throughout the Kao Group.

The Path toward Strengthened Governance

We have also practiced Innovation, which is one of Values of the Kao Way, in the area of corporate governance from an early stage. We have pursued creation of the most optimal structure to respond to changes in the business environment as well as social demands, and will continue to take steps to reform our governance.

Standards for Independence of Outside Directors/Audit & Supervisory Board Members

Kao has established the “Standards for Independence of Outside Directors/Audit & Supervisory Board Members of Kao Corporation” to clarify the standards for independence of an outside director/Audit & Supervisory Board Member.

Kao Group Tax Policy

The Kao Group has implemented a “Tax Policy” aiming to improve its tax governance framework, reflecting the group’s tax code of conduct and its consistent standards for approaching tax matters throughout the group.

The publication of this strategy statement is regarded as satisfying the duty under Paragraph 16(2), Schedule 19, Finance Act 2016 in UK.

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