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Social Challenge 4
Establish shared ethical standards

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Why it matters

As maintaining high ethical standards with society and sharing those high ethical standards with business partners is an essential part of resolving social issues and ensuring sound corporate activities, a range of initiatives will be implemented for establishing and sharing such ethical standards.

What can be accomplished

We set high ethical standards for ourselves and share them with our business partners.

Future vision

The NTT Group is committed to contributing to the development of society by acknowledging diverse cultures, and thus we will contribute to solving social issues by connecting people, goods, and cultures, including communities, nations, and society, while promoting high ethical standards, diversity, and inclusion in fair and equitable ways, and work towards creating a better workplace through powerful and new digital technologies.

Business Activity 12-13
Establishing and thoroughly complying with ethical standards /
appropriately managing conduct risk

Our commitment

We set high ethical standards for ourselves and share them with our business partners

Our objectives

100%

Participant rate of training of corporate ethics policy

0

Cases of legal actions for anti-competitive behavior, bribery

Policies and Concepts

It is imperative to conduct business in compliance with laws and regulations in the jurisdictions where we operate, and maintain high ethical standards in order to promote sound corporate activities. Recognizing this, NTT established the "NTT Group Corporate
Ethics Policy."

These standards, which apply to all officers and employees of the NTT Group, lay out the basic principles of corporate ethics and provide specific guidelines for ethical behavior. These stipulations are intended to remind everyone of their duty as members of a corporate group that bears significant responsibility to society in terms of preventing dishonesty, misconduct, and the disclosure of corporate secrets, as well as refraining from exchanging excessive favors with customers and suppliers, and ensuring that they conduct themselves
according to the highest ethical standards in both private and public activities.

Organization for Implementation

NTT has a Corporate Ethics Committee with a senior executive vice president as chair. The committee meets twice a year with the aim of thoroughly promoting the NTT Group's corporate ethics and maintaining discipline. It reports to the Board of Directors twice a year, particularly concerning the status of reports made to the Corporate Ethics Help Line, and the Board of Directors discusses reported matters when necessary.

The NTT Group has Corporate Ethics Committees and corporate ethics officers at Group companies. We foster a corporate climate of observing laws and corporate ethics, investigate wrongful acts and scandals based on our Corporate Ethics Help Line operational rules, hold regular meetings for the compliance officers of Group companies, and work across the Group to promote compliance.

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NTT Group Corporate Ethics Policy

  1. Recognizing the establishment of corporate ethics as one of its most important missions, top management shall exert its leadership to ensure that the spirit of these Standards is adopted throughout the Company, and shall assume full responsibility for solving any problems when any event inconsistent with that spirit occurs.
  2. Every person with subordinate employees shall not only act in a self-disciplined manner, but shall also always provide guidance and assistance to his/her subordinate staff to ensure that their conduct is in conformity with our corporate ethics.
  3. Every officer and employee of the NTT Group shall not only comply with all laws and regulations, social standards, and internal company rules whether in Japan or overseas, but officers and employees shall also hold the highest ethical philosophy within himself/herself both in public and in any private situations. Among other things, each officer and employee, as an officer or employee of a member of a Global Information Sharing Corporate Group, shall keep himself/herself fully aware that any disclosure of customer or other internal privileged information constitutes a materially wrongful act. Also, as a member of a group of companies which holds great social responsibilities, he/she shall strictly refrain from giving or receiving from customers, business partners, and other interested parties excessive gratuities. Furthermore, when interacting with public officials and politicians, officers and employees shall not commit bribery or commit any other acts that cause the other party to violate the National Public Service Ethics Act/Code of Ethics and the Ministerial Code, or that cause suspicion that such a violation has occurred.
  4. Each NTT Group company, at the first opportunity, shall take initiatives to provide training programs in order to help its officers and employees enhance their awareness of our corporate ethics.
  5. Every officer and employee of the NTT Group shall direct his/her efforts to prevent wrongful or scandalous acts which may potentially occur as specialization and advancement of our business proceeds. Each NTT Group company shall improve its system to prevent such acts, including, for instance, the re-assignment of contract representatives who have remained with the same customers for a long period of time, and the improvement of monitoring tools to protect customer and other information.
  6. Any officer or employee who may come to know of the occurrence of any wrongful act or any scandal shall promptly report the wrongful act or scandal to his/her superior or other appropriate persons. If he/she is not able to make such a reporting, he/she may contact the Corporate Ethics Help Line (External Contact Point). It should be noted that every officer and employee who reports the occurrence of any wrongful act or scandal shall be protected so that the reporting party shall not suffer any negative consequences due to such reporting.
  7. In the event of an occurrence of any wrongful act or scandal, each NTT Group company shall be committed to the settlement of the problem by taking appropriate steps through a speedy and accurate fact finding process, and responding in a timely, suitable, and transparent manner in order to fulfill its social accountability.

Main Initiatives

Prevention of Bribery

The NTT Group Corporate Ethics Policy mandates compliance with all laws and regulations, social standards, and internal company rules whether in Japan or overseas. With regard to the prevention of bribery, we have an Anti-Bribery Handbook containing important matters to be understood and complied with by our employees. The contents of this handbook are
made known to all employees in Japan and overseas through emails and other means.

In addition, NTT, NTT East, and NTT West stipulate that taking bribes is forbidden under the Act on Nippon Telegraph and Telephone Corporation, etc. (hereafter "the NTT ACT") and that breaches are punishable by law. Following the Act on Prevention of Unjust Acts by Organized Crime Groups, contributions and other types of support are only given to charitable organizations deemed suitable by the NTT Group. We have a zero tolerance approach to corruption. In fiscal 2020 no illegal conduct associated with bribery or contribution/support was confirmed within the NTT Group.

Political Contributions

As a holding company, and in compliance with Japan's Political Funds Control Law, NTT does not make political contributions, while a few Group companies make political contributions at their own discretion and in accordance with the relevant laws and regulations as well as the companies' respective codes of corporate ethics.

Request to Business Partners for Compliance and Risk Assessment

The Guidelines for Sustainability in Supply Chain, the operational guidelines we issue to our suppliers, clearly outlines fair trade practices and business ethics (nine articles). With respect to critical suppliers, we conducted a survey on the status of Sustainable procurement. We checked activities concerning compliance in general, including their response to preventing corruption, illegal political contributions and antisocial
forces, and also requested further improvements where necessary.

Compliance with Anti-Monopoly Laws

The NTT Group has adhered to the Anti-Monopoly Act to ensure its business activities align with a fair and competitive business environment. These initiatives have been effective, as evidenced by the fact that continuing from the previous fiscal year, we were not fined for violation of anti-monopoly regulations in fiscal 2020.

Initiatives to Promote Awareness of the NTT Group Corporate Ethics Policy

At NTT, top management demonstrates that compliance requires the NTT Group to comply with laws and conduct business with everyone having strong ethics. Also, the presidents of each NTT Group company have declared their commitment to identify risks related to illegal or illicit activities and never tolerate any form of impropriety. To ensure the effectiveness of the NTT Group Corporate Ethics Policy, we offer training sessions on corporate ethics to employees and, through a website for employees, we explain the declaration in detail and give examples of corporate ethics issues. Employees are reminded of the importance of ethics in June and December each year in an effort to raise their level of understanding. Furthermore, NTT conducts annual surveys of employees to measure their awareness, and the results are then used for awareness enhancement initiatives.

Corporate Ethics and Compliance Training

Corporate ethics training is conducted as part of continuous educational activities for all officers and employees. This training is tailored to meet the specific compliance and corruption risks of each company throughout the NTT Group. Furthermore, training for officers is also conducted every year.

Anti-Bribery Handbook

As a tool to help employees prevent corruption, we created the new Anti-Bribery Handbook in fiscal 2014, which is made known to all employees at NTT Group companies inside and outside of Japan through emails and other means. Along with a message from the president, the Anti-Bribery Handbook provides examples regarding the basics of bribery and facilitation payments to instill correct knowledge and understanding in all employees.

Competition Law Handbook

The NTT Group created a Competition Law Handbook in fiscal 2019 as a tool for ensuring compliance with competition law among employees and it has been made known to all employees at NTT Group companies inside and outside of Japan. The handbook contains the basics regarding compliance with competition law within a Q&A format, as well as specific examples that might be found within the Company's business activities, in order to instill correct knowledge and understanding of competition law compliance in employees.

Check System for Penetration of Corporate Ethics

NTT conducts an annual survey that includes NTT Group companies in order to ascertain the extent to which employees are aware of compliance. At each NTT Group company, monitoring is performed under four different functions, comprising the departments in charge of business operations, compliance and internal auditing, as well as the Audit and Supervisory Board members, to ensure neutral and multifaceted checks are being performed.

NTT checks the status of compliance audit implementation at NTT Group companies with an internal auditing department and directly confirms the status of compliance initiatives inside NTT and at NTT Group companies without an internal auditing department.

Establishment of Corporate Ethics Help Line Contact Point

To prevent illegal conduct or a scandal, each Group company has set up an internal consulting center to handle reports of improper activities. In addition, NTT has established the Corporate Ethics Help Line as an external contact point for NTT Group companies and outsources its operation to a law firm. The help line also handles consultations and reports related to human rights issues. The NTT Group Corporate Ethical Standards clearly state that people who file reports with these help lines will be protected from any disadvantage arising from the fact that they filed a report. The content of the consultations and reports are investigated and handled by the staff member in charge, and a report is submitted to the Corporate Ethics Committee of each Group company. All reports are collected at least once a year by NTT, where the response status is ascertained and reported to the Board of Directors.

In addition, since the contact point is independent from management, there is an independent reporting route to Audit & Supervisory Board members. Reports made through our Corporate Ethics Help Line (external contact point) are in principle sent directly to Audit & Supervisory Board members at the same time; reporting only to Audit & Supervisory Board members is also possible.

Number of Reports Received by the Corporate Ethics Help Line (External Contact Point)

We monitor the number of reports received by the Corporate Ethics Help Line, and publish this number in our Sustainability Report and on the NTT Group's Sustainability website. The Whistleblowing Mechanism Guidelines, revised in December 2016 by the Consumer Affairs Agency, recommend that neutral and fair third-party assessments be carried out. We had such an assessment carried out in May 2017 and received the comment that overall, a whistleblowing mechanism is in place and is being administered appropriately.

Reports to the corporate ethics help line by type of violation

Details of assessment

  • Investigation of the mechanism and operational status of the help line in order to verify its effectiveness in terms of utilization and reliability.
  • Sample survey on the establishment of regulations and responses to whistleblowers, etc.
  • Confirmation of compliance with the Whistleblowing Mechanism Guidelines.
  • Interviews with administrators and discussion about operational issues.

Disciplinary Actions against Confirmed Violations

A compliance violation or breach of the NTT Group Corporate Ethical Standards is dealt with using the disciplinary measures taken in accordance with the disciplinary code established at each Group company. This includes pay cuts and work suspension, and may also be reflected in assessments (evaluations) and personnel transfers.

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Business Risk Management

The NTT Group faces a rapidly changing business environment, including intensified competition in the information and telecommunications sector. In this context, NTT Group companies are exposed to an increasing amount of business risk. The NTT Group strives to minimize the impact of losses that could result from the materialization of risk by anticipating and preventing the occurrence of potential risks. As part of these efforts, NTT has formulated the NTT Group Business Risk Management Manual and has distributed it to all Group companies so that the entire Group can work together to conduct risk management. This manual contains policies for addressing various forms of risk facing the NTT Group's business operations and approaches to coordination among NTT Group companies.

In addition, each Group company has formulated its own manuals and other guidelines, which reflect its specific business operations, business environment, and other factors, and is using these materials to control business risks.

Organization for Implementation

At NTT, Risk Management Regulations are in place, which define fundamental policies concerning inhouse risk management for effective and efficient business operations. Risk management is carried out based on a continuous PDCA cycle under the leadership of the Business Risk Management Committee, chaired by the representative director and senior executive vice president, and comprised of heads of departments and offices as committee members. At the NTT Group, the representative director and senior executive vice president of NTT is assigned ultimate responsibility for risk management, while each executive officer serves as the risk officer for the business area they are placed in charge of.

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Identifying Material Risks

From time to time, NTT reviews assumed risks and management policies based on changes in the social environment.

In the identification of Companywide risks, the Business Risk Management Committee leads analysis processes for the risks faced by the NTT Group are formulated and periodically implements risk analyses in accordance with these processes. In addition, after a correlation analyses on these risks, it specifies those risks with the potential to have the greatest impact as material risks, and we decide on countermeasures.

Matters pertaining to risk management are discussed at meetings of the Business Risk Management Committee. As part of risk monitoring, each department in charge reports on the status of monitoring and risk mitigation effects to the Business Risk Management Committee, while the Internal Control Office conducts individual audits on the status of initiatives to address material risks and reports results to the Board of Directors in the subsequent fiscal year.

Among other things, risks are also identified by focusing on the perspective of conduct risk--where customers and other stakeholders suffer negative consequences as a result of actions taken by the NTT Group--by ensuring better planning and implementation of appropriate measures.

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Business Activity 14
Thoroughly reinforcing corporate governance and compliance

Our commitment

We set high ethical standards for ourselves and share them with our business partners

Our objective

0

Cases of legal actions for anti-competitive behavior, bribery

Basic Policy

As the holding company of the NTT Group, NTT believes that raising the effectiveness of corporate governance is an important management issue for meeting the expectations of various stakeholders, including shareholders and other investors, as well as customers, business partners, and employees, and for maximizing corporate value. Accordingly, NTT is working to strengthen corporate governance based on the purpose of the principles of the Corporate Governance Code promulgated. Based on NTT's "Your Value Partner 2025" Medium-Term Management Strategy, which was formulated and announced, in order to work together with all its partners to promote initiatives to resolve social issues in its role as "Your Value Partner," NTT will work toward ensuring sound management, executing appropriate decision-making and business activities, clarifying accountability, and maintaining thorough compliance as basic policies.

NTT is implementing all the principles of the Corporate Governance Code it revised in June 2021.

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Corporate Governance System

NTT, in order to strengthen functions for appropriately supervising and auditing business execution, seeks to strengthen its auditing system by appointing several outside independent Members of the Board, and by establishing an Audit & Supervisory Board, of which outside independent Audit & Supervisory Board Members make up a majority. With our adoption of an executive officer system, we are also configured to clearly separate the functions of managerial decision-making / supervision and business execution, and we are working to improve our business mobility. Additionally, NTT has voluntarily established the Nomination Committee and Compensation Committee, which consist of five members, including three outside independent Members of the Board, to further increase the objectivity and transparency of decisions related to appointments and compensation for directors, and it has determined that the governance functions of the Audit & Supervisory Board structure are thoroughly effective. In addition, NTT has established various meetings and committees as has been deemed necessary on important business execution, in order to ensure that appropriate decisions are made for facilitating Group management.

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Tax Policy

Basic Policy

All directors and employees of NTT Group have declared their commitment to complying with all laws and regulations (including their spirits), social standards, and internal company rules, whether in Japan or overseas, and acting in accordance with the highest ethical standards in both private and public activities. In tax-related operations, we also strive to maintain and enhance tax compliance by setting up guidelines and educating our employees.

Governance Structure

NTT has established a basic policy of internal control systems for NTT Group to deal with various risks including tax risks which has been approved by NTT's board. We define each company's roles in tax-related operations as shown on the right.

Optimizing Tax costs

NTT and its consolidated subsidiaries should strive to utilize appropriately and effectively the tax relief measures with a view to maximizing shareholder value of NTT Group. NTT and its consolidated subsidiaries shall not implement any measures which may be considered or interpreted as tax evasion by regulators.

Tax Risks

When undertaking international transactions, NTT and its consolidated subsidiaries should ensure such transactions are given due consideration in advance of execution. NTT and its consolidated subsidiaries should consult with tax advisors and seek advice as necessary. Furthermore, measures regarding transfer pricing taxation and controlled foreign companies rules are indicated to the right.

Transfer Pricing Taxation

Prices that are applied to NTT Group's international transactions will be calculated in accordance with the laws and regulations of each country or region and the Transfer Pricing Guidelines published by the OECD and also in accordance with the "arm's length principle."

In cases where the documentation of the price calculation method is obligatory, or where such documentation is necessary due to factors such as transaction size and potential taxation risks, we will generate the documents in an appropriate manner.

Controlled Foreign Companies Rules

NTT and its consolidated subsidiaries shall not use a low-tax country for tax avoidance. When investing in a low-tax country for business reasons, we will make appropriate tax payments in accordance with the laws and regulations of the relevant country or region.

Relationship with Tax Authorities

NTT Group aims to maintain good relationships with tax authorities through communication with them. All explanations given to tax authorities should be based on facts. NTT and its consolidated subsidiaries should work with them in a sincere and appropriate manner. If tax authorities were to notify NTT and its consolidated subsidiaries of tax adjustments, NTT and its consolidated subsidiaries should determine the cause of such issue(s) immediately, and take appropriate measures to prevent similar recurrences, unless NTT and its consolidated subsidiaries file a petition of objection or tax lawsuit.

Business Activity 15
Sharing high ethical standards with business partners

Our commitment

We set high ethical standards for ourselves and share them with our business partners

Our objective

0

Cases of legal actions for anti-competitive behavior, bribery

Prevention of Bribery

Understanding that it is essential to comply with laws and regulations and to operate its business with high ethical standards, NTT Group prohibits all forms of corruption, including bribery, improper benefits and facilitation payments*1 . In particular, with respect to the prevention of bribery, NTT Group has created a "Anti-Bribery Handbook" and distributed it to employees of Group companies, including its overseas subsidiaries, and has also posted the handbook on its internal website to ensure thorough awareness.

Furthermore, for NTT, NTT East, and NTT West, bribery is prohibited pursuant to the NTT Act, and any violations are subject to legal penalties.

NTT Group CSR Conferences*2

In order to share superior CSR initiatives horizontally across the NTT Group, we have held the NTT Group CSR Conference every year since fiscal 2013. This initiative involves having each operating company implement various measures in line with the CSR Priority Activities and announce their results in a conference setting. In addition to the best measures being commended as "superior CSR measures" at the conference, the single best measure is also awarded a President's CSR Award by the NTT Group Presidents' Meeting.

With COVID-19 infections continuing to spread around the world, CSR Conferences for fiscal 2020 were held in an online format. There were 69 submissions by group companies in Japan and overseas, with the Grand Prize going to three of those measures.

A People's Choice Award was created specifically for this online conference, where employees could offer their direct support of measures submitted by each company. The People's Choice Award was eventually given to two measures as a result of voting. The voting system was particular valuable increasing employee awareness as it allowed them to better understand each particular measure before submitting their vote.

In addition to holding the conference in the next fiscal year and beyond, we also aim to further spread CSR awareness among employees by improving the content of initiatives and enhancing measures that involve employee participation.

Details of successful examples are also released outside the company so that they can be viewed by business partners.

  1. Facilitation payments: Small payments used only for the purpose of ensuring ordinary administrative services are processed smoothly
  2. The name is planned to be changed to NTT Group Sustainability Conferences in the future

NTT DATA Romania and NTT Ltd. Australia won the Grand Prize in the social contribution section

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NTT EAST won the Grand Prize in the CSR section

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