Developing Fair, Transparent and Sound Business and Anti-Corruption

Intellectual property strategy

The Group’s intellectual property activities are based on the PDCA cycle of identifying patent strength, identifying and avoiding risks, and acquiring rights with an awareness of how to link these activities to the growth of GS Yuasa’s business. During the period from the Fifth to Sixth Mid-Term Management Plans, we emphasized transformation to strategic business, creation of intellectual property that is closely related to business units, clearance activities, and elimination of foreign competition and produced a certain degree of results. In fiscal 2024, which is the mid-point of the Sixth Mid-Term Management Plan, we set “reforming the intellectual property right acquisition process further, increasing the intellectual property that is essential for improving business value, and creating the steps for using intellectual property” as our policy and focused our efforts on the following three points.

Under the Sixth Mid-Term Management Plan, we will focus on the three points described below with the objectives of ensuring the growth of existing businesses as well as new fields by using intellectual property rights and acquiring and capitalizing on intellectual property rights that other companies need from the perspectives of both goods and services to encourage activities that will lead to growth by the Group.

❶Calculation of patent scores and patent inventory

We used a patent power analysis tool introduced in fiscal 2023 to analyze our patents and those of other companies and calculate patent scores to measure the degree of contribution by intellectual property activities to medium- to long-term growth and expansion of profits. As a result, we were able to visualize the positioning of the Group’s intellectual property rights from an objective perspective and share this with management, business, and development divisions. As for future measures, we plan to use of this patent score information to investigate our patent inventory and areas of focus and link this to the effective use of promising patents.

❷Reforming the rights acquisition process by using specialized and intellectual property information

The technologies on which development divisions focus were examined from the perspective of the Intellectual Property Department and those that are likely to have a major impact on future business were designated as “important technologies.” Following coordination with development and business divisions, decisions were made on implementation of special responsive measures. Specifically, this process is differentiated from the ordinary patent application process, and after consulting with in-house experts, we not only filed defensive applications for our own technologies, we also examined the possibility of implementation by other companies and technologies for avoiding our patents and initiated measures to build a robust patent network. In fiscal 2023, we identified four technologies and submitted patent applications, and we plan to expand and enhance these initiatives in the future.

❸Acquisition of patent rights in new business fields

To achieve our long-term vision, the Group is focusing on the provision of koto (solutions and services) in addition to the provision of mono (products). To achieve this, we have started measures to identify patents related to such provision of koto (solutions and services) at an early stage. These activities will lead to the development of patent assets that will be necessary not only for conducting business independently, but also collaborating with other companies. Twelve percent of the patent applications filed by GS Yuasa in FY2023 related to koto-zukuri (service creation) business. This fiscal year, we plan to raise this figure to 16%.

Communication with management

At the beginning of each fiscal year, we hold a business policy meeting to discuss activity policies with management as well as corporate executive management meetings twice a year to report on these policies, new issues, and the status of disputes.

Rewards for inventions and DX

To enhance the incentives for invention, we have an annual award system that encourages inventions throughout the Company including the Outstanding Invention Award for the patent that has contributed the most to business and the Best Inventor Award for those who have created inventions that are outstanding both in quality and quantity.

In fiscal 2024, we also updated our patent management database for the first time in about 10 years, not only making it possible to visualize patents, but also linking with domestic and overseas patent offices and enabling workflow to be performed on the database, thereby substantially improving operations.

Global activities

In addition to applying for foreign patents for most domestic patent applications, the Group is also focusing on business defense through patent rights in order to curb competition from emerging companies overseas. Regarding trademarks, we are suppressing counterfeit businesses by identifying and initiating litigation to seek injunctive relief and compensatory damages against counterfeiters in China, ASEAN, and other regions. In cases where significant results are achieved, we publicize the results on the Company website as well as the websites of overseas affiliates to serve as a restraint against other businesses.

Number of patent applications and patents held (FY2023)

Items	Domestic	Overseas	Total
Number of patent applications	246	135	381
Number of patents held	2,115	1,866	3,981

Good Communication with Society

We believe that for the GS Yuasa Group to achieve sustainable growth and increase corporate value, it is necessary that we undertake business activities while gaining understanding through positive dialogue with various stakeholders.

In recent years, the asset investment of shareholders and investors has become increasingly diversified and strong interest in the environmental initiatives and stakeholder relationships of investment targets has developed. The GS Yuasa Group appropriately discloses not just financial information, but also material information relating to sustainability and works to enhance the transparency of management.

Through our disclosures on this Sustainability website, we seek to deepen mutual understanding and build trusting relationships through communications with a wide range of stakeholders by publicly disclosing accurate, understandable, and highly useful information regarding the Group’s material impacts on society and the environment.

Communication with stakeholders

We endeavors to communicate with shareholders, investors, and other stakeholders through various channels.

As investor relations activities, in addition to quarterly financial results briefings for institutional investors and analysts, we regularly hold individual interviews, conferences sponsored by securities companies, briefings for individual investors, and other events. Furthermore, we make use of investor relations sites to actively transmit information. We provide feedback concerning the opinions received through these investor relations activities to the management team as appropriate, submit semi-annual reports to the Board of Directors and quarterly reports to the Corporate Executive management meetings, and strive to reflect these opinions in management and business activities.

As means of disseminating information internally, the director responsible for investor relations provides video presentations of financial results to managers on a half-year basis, regularly publishes internal newsletters with financial results information, and investor relations column on the PR portal site, and conducts in-house training programs.

Record of main IR activities (FY 2023)

Approach to Anti-corruption

Extending money or corporate hospitality, exchanging gifts or offering other benefits and favors to public officials, and acts of receiving goods or corporate hospitality from business partners that exceeds socially accepted norms (referred to as “corrupt acts”) restrain economic growth and distorts competition, posing serious legal risks^*1 and reputational risks^*2.

The Group’s CSR Policy and the CSR Code of Conduct, which embodies this policy, prohibit corrupt practices. A manual (the CSR Manual) which explains the Group’s fundamental approach to anti-corruption in an easy-to-understand manner is distributed to all employees, ensuring that they are fully cognizant of the Group’s anti-corruption policy.

*1Risks to the company of incurring losses due to violation of laws and regulations, breach of contract, infringement of rights of third parties, etc.

*2Risks to the company of losses incurred due to a drop in corporate credibility and brand value arising from the spread of negative valuation of the company

Anti-Corruption Policy (excerpts from the CSR Policy and CSR Code of Conduct)

1. Developing Fair, Transparent, and Sound Business, and Anti-Corruption

   GS YUASA conducts a transparent business policy which aims to earn the trust of customers, business partners, shareholders, and of local communities as a top priority. And to adhere to laws and regulations of each country and region. Furthermore, we address to prevent any kind of corruption, will not tolerate any illegal political contribution, bribery of public officials, and will not have relationships with personnel or organizations of organized crime.

   1. 1-8.　Legal compliance for political funds control

      We will not contribute for political funds, requesting some business advantage in return, such as acquisition or maintenance of trading, or access to nondisclosure information. Also, we will comply with the conditions stipulated by the laws and regulations of each country and region in which we operate before making political contributions.

   2. 1-9.　Prohibition to offer entertainment or gifts to public employees

      We will not offer money, entertainment, gifts, or other economic benefits, nor provide advantages to public employees or equivalent persons perceived as a conflict of interest.

   3. 1-10. Sound relationship with business partners

      We will endeavor to maintain sound business relationships with our business partners; therefore we will not receive money, gift or entertainment offered from business partners exceeding commonly accepted limits.

 In this Policy, corruption refers to abuse of one’s power or position to secure undue benefit and includes bribery,^*1malfeasance,^*2 and conflicts of interest.^*3

1In this Policy, bribery refers to a promise to provide or the provision of improper benefit or gain to public employees and equivalent persons (public officials, etc.) in order to secure improper business benefit. This includes facilitation payments whereby small amounts of money that otherwise need not be paid are paid to public officials in order to facilitate or accelerate normal operations.

2In this Policy, malfeasance refers to a promise to provide or the provision of improper benefit or gain to persons other than public officials, etc. (business partners and others) in order to secure improper business benefit. This includes obtaining business through improper means.

3In this Policy, conflict of interests refers to a situation where there is a conflict between corporate responsibilities and the interests of an individual. This includes situations where directors or employees attempt to influence the Company’s decision-making for personal gain and situations where a relationship with a business partner or family member impedes objective decision-making.

Fundamental Approach to Anti-corruption

• The company does not engage in offering, receiving or extending corporate hospitality, exchange of gifts or other favors with customers, suppliers, or business partners, in excess of socially accepted norms.
• We enforce thorough legal compliance with laws and regulations, including strictly prohibiting any offering or receiving of corporate hospitality, exchanging of gifts, or other economic benefits to public officials in Japan or overseas.
• We do not engage in offering or receiving of corporate hospitality, exchange of gifts, financial benefits, or other similar benefits to government officials other than public officials (i.e., those working for organizations equivalent to the government) for the purpose of preferential treatment or for any benefit that may be regarded as such.
• Political contributions are prohibited, in principle.

Basic Approach

The GS Yuasa Group believes that risk management is essential for the lasting growth of the company. As our basic approach, the Group thinks that the following two points are important so that crises stemming from the escalation of risks do not exert a serious impact on the Group or on society. First, by predicting and understanding risks and adopting appropriate preliminary measures, the escalation of risks (outbreak of crises) can be prevented. Second, effective measures can be taken beforehand so that even if a crisis does occur, the loss is kept to a minimum. Based on this approach, to properly promote risk management, our Group has formulated risk management rules that stipulate the responsibilities of employees and our risk management promotion setup.

Risk Management under the Group Risk Management Committee

The Group Risk Management Committee, headed by the president and consisting of the chairs of departmental Risk Management Committees, holds semiannual meetings to promote group-wide risk management and to encourage the sharing of key information related to risk management. In addition to making decisions on measures to promote risk management, the Risk Management Committee confirms that the appropriate risk management measures have been implemented, and the committee chairs report on progress in this area. We also actively exchange opinions and share information on the different styles of risk management and so on.

Risk Management Based on Risk Management Sheets

In accordance with the risk management rules, each department assesses risk using a risk management sheet. The following is an outline of these activities:

• Step 1: Identification of risks by departments and employees
• Step 2: Determination of risks that need to be intensively managed through risk management activities and determination of preventive measures
• Step 3: Monthly confirmation by each department of the status of implementation of related measures

The department also fills in the details of any critical events that occurred, measures are taken for early resolution and normalization of operations and efforts are made to strengthen management by identifying root causes, implementing and expanding preventive measures, and confirming their status each month using a risk management sheet.

The risk management sheets produced by departments are compiled on the divisional level with the director in charge of the division and the corporate auditor verifying and assessing the status of responses through the Risk Management Committee. The deliberations by the committees are summarized and then fed back to each department as required, to enhance the effectiveness of risk management.

System for Dealing with Crises

To prepare for the possibility that a risk materializes, we have established a system that includes an emergency contact network to swiftly implement crisis management. If a serious crisis occurs, members from the Group Risk Management Committee will be appointed to organize a crisis management headquarters, under the president, to minimize corporate losses, and an effective response will be implemented swiftly and with appropriate care.

Refer here for a summary of the Group’s risk information