Foundations of CSR Management

The system of corporate governance adopted by Panasonic separates the Board of Directors, which determines all important business matters affecting Panasonic and oversees execution of business by Directors, from the Board of Corporate Auditors, which monitors execution of duties by Directors through audit activities. The Group is organized into business domain companies that are empowered by the delegation of authority in business matters within the relevant field. Panasonic also employs an Executive Officer System whereby Executive Officers have responsibility for day-to-day business activities spanning operations both inside and outside Japan. This approach aims to facilitate the development of optimal corporate strategies that integrate the Group's comprehensive strengths. To maintain a healthy balance between swift, strategic decision-making and proper monitoring and oversight with respect to business matters affecting the entire Group, there is an explicit separation between functions of Directors and Executive Officers. At the same time, taking into consideration the diversified scope of global operations, the Board of Directors is structured to benefit from the active participation of Executive Officers possessing a high degree of familiarity with operational specifics.

Guided by its management philosophy and the basic policy adopted relating to the construction of internal control systems, Panasonic continues to develop a system of internal controls to provide a safe, reliable management platform to support global business strategy and activities. Specifically, three entities with complementary functions (the Compliance Committee, the G&G (Global&Group) Risk Management Committee, and the Disclosure Committee) coordinate ongoing efforts to develop internal controls. They are working not only to organize management-level systems for internal control, but also to raise employee awareness, establish behavior aligned with the internal control system and cultivate the necessary corporate culture.

This code establishes common group-wide standards to guide employees in the practical implementation of Panasonic's management philosophy. Formally adopted by board resolution at each company within the Group, the code applies to 330,000 Directors, Executive Officers and employees of Panasonic worldwide. We have also developed an educational and training framework and related initiatives to support increased internal compliance with the code.

In addition to the collection and assessment of risk information gathered through the Company's global network in an integrated and comprehensive manner, Panasonic maintains a management cycle that links risk management activities with other business management initiatives. These activities are coordinated by the G&G Risk Management Committee, which consists of Directors and Executive Officers representing related job functions and divisions. Panasonic has also established similar functional committees at business domain companies and subsidiaries to formulate appropriate countermeasures on a global, Groupwide basis. Specifically, all business domain companies and Group subsidiaries conduct risk assessments once a year as part of the formulation of annual business plans. Risks are evaluated and prioritized, and appropriate countermeasures are developed promptly. The progress made in implementing such measures is monitored on an ongoing basis.

Panasonic is in the process of formulating Business Continuity Plans (BCPs) in order to mitigate the risks of large-scale natural disasters. Group companies that are located in a region where the probability of such disasters happening is rated high (defined as at least an 80% chance of occurrence in the next 50 years) are required to complete BCP formulation by fiscal 2010.

Besides natural disasters, Panasonic also plans to formulate BCPs to guard against the risk of any dangers with the potential to interrupt business activities, such as a global influenza pandemic.

As part of ensuring an open and transparent corporate culture, Panasonic operates six head office-based hotlines in Japan covering the areas of business ethics, fair trade, equal opportunities, fair business, global business ethics, and auditing or accounting issues. Business domain companies, subsidiaries and regional headquarters have also established and operate separate hotlines to aid swift resolution of issues.

Find more on Panasonic's Corporate Governance.

• Corporate Governance