CSR Report : Management and Compliance

CSR Report 2020

Management and Compliance To gain and secure the trust of our stakeholders, we exercise fair and sound judgment when running our business, and emphasize corporate compliance and risk management.

Corporate Governance

We make concerted efforts to build transparent and robust corporate governance systems, to enable optimization of corporate value continuously over the long term, while considering how to bring benefits to everyone involved with Nintendo.

Corporate Governance System

For the purpose of strengthening the supervisory function of the Board of Directors and further enhancing the corporate governance system, Nintendo Co., Ltd. has chosen the governance structure of a Company with an Audit and Supervisory Committee. We adopt the Executive Officer System for the purpose of clarifying the responsibility for the execution of operations and establishing a more flexible management structure which can appropriately and swiftly respond to the rapidly changing business environment. The foregoing will be enabled through separating the management decision-making and supervisory functions from the execution of operations as well as by accelerating the delegation of authority to execute operations.
The Board of Directors consists of five Directors (excluding Directors who are Audit and Supervisory Committee Members) and four Directors who are Audit and Supervisory Committee Members (including three Outside Directors). The term of office of Directors (excluding Directors who are Audit and Supervisory Committee Members) is one year, and the term of office of Directors who are Audit and Supervisory Committee Members is two years.
In addition to the meetings of the Board of Directors, which are generally held monthly, Nintendo Co., Ltd. also holds meetings of the Executive Management Committee consisting of the Directors (excluding Directors who are Audit and Supervisory Committee Members) twice a month in principle, in order to strongly drive management activities and thereby ensure prompt and efficient decision-making. Furthermore, Nintendo Co., Ltd. maintains a system in which Executive Officers appointed by the Board of Directors every year perform their respective duties under the President's supervision and instructions.
Furthermore, as a non-mandatory advisory body to the Board of Directors, the Nomination Advisory Committee, which consists of the Representative Director and President and all Directors serving on the Audit and Supervisory Committee, deliberates on matters related to the nomination and compensation of Directors and reports to the Board of Directors.
The Audit and Supervisory Committee consists of one full-time Internal Director and three Outside Directors. All Outside Directors meet the standards for independent officers established by Tokyo Stock Exchange, Inc. The Audit and Supervisory Committee Members attend meetings of the Board of Directors and other important meetings, inspect important documents, have regular meetings with the President and hold monthly meetings of the Audit and Supervisory Committee as a general rule to share audit opinions. Furthermore, the full-time Audit and Supervisory Committee Member conducts fieldwork auditing over each division of the Company, etc., based on the annual audit plan.
With respect to internal auditing, the Internal Auditing Department, under the direct supervision of the President, conducts internal auditing from a fair and unbiased perspective independent from business divisions, and works on the promotion and improvement of internal control including that of subsidiaries and affiliates.
The Accounting Auditor maintains close coordination with the Audit and Supervisory Committee, as well as the Internal Auditing Department, regarding accounting auditing, including the report on the audit plan and audit results, as well as information and opinion exchanges as necessary even during the accounting period, in order to ensure effective and efficient auditing.

Internal Controls

Nintendo Co., Ltd. and its domestic and overseas subsidiaries operate and maintain an internal control system according to legal and regulatory circumstances, and the actual state of each organization in the Nintendo Group. For more information on our system of internal controls, please refer to this link.

Corporate Governance System

Corporate Governance System Status (as of the end of June 2020)

Organizational Structure	Company with Audit and Supervisory Committee
Board of Directors (excluding Audit and Supervisory Committee Members)	Number of Directors	5 persons
	Term	1 year
	Implementation of Incentives to Directors	Performance-based compensation
Directors (Audit and Supervisory Committee Members)	Number of Internal Directors who are Audit and Supervisory Committee Members	1 person
	Number of Outside Directors who are Audit and Supervisory Committee Members	3 persons (Independent Officers as provided by Tokyo Stock Exchange, Inc.)
	Term	2 years
	Implementation of Incentives to Directors	–

Corporate Governance Report

https://www.nintendo.co.jp/ir/en/management/governance.pdf

Compensation to Directors

Compensation limits for each Director (excluding Audit and Supervisory Committee Members) and Audit and Supervisory Committee Members are determined by resolution of the General Meeting of Shareholders. Compensation for Directors (excluding Audit and Supervisory Committee Members) consists of a fixed component of compensation and a performance-based component of compensation designed to raise incentives for higher performance. The compensation for Directors who are Audit and Supervisory Committee Members consists only of fixed compensation.

Compliance

In order to build and maintain trust as a company that aims for persistent growth and expansion, Nintendo realizes the crucial importance of adherence to laws, social norms, and Nintendo's internal rules and conventions. To base its business operations firmly on compliance, Nintendo has established and implemented region-specific codes of conduct.

Activities of the Compliance Committee

Nintendo Co., Ltd. has established the Compliance Committee, under the supervision of the Executive Management Committee, to develop measures and policies for facilitating compliance. The Compliance Committee periodically updates the Compliance Manual, which sets out the basic rules that all employees are expected to follow.
Although no legal or other violations were found in fiscal year 2019 audits, the Compliance Committee stays informed about current global issues and makes appropriate improvements to foster a firmly rooted awareness of compliance.

Compliance Code of Conduct

Abide by all laws and regulations.
We strictly abide by all laws, Nintendo's internal rules and conventions, and social norms. We participate in fair and open competition. Our work rests on high ethical standards.
Strive to create a highly transparent business.
We promote the appropriate disclosure of information to our shareholders and our communities as we work to create a highly transparent business.
Maintain a resolute stance against anti-social forces.
Our position on anti-social forces is unwavering.
Strive to be a trusted corporate citizen.
We fully recognize the social scope of our business. We strive to be a company that society, including first and foremost our users, can trust as we perform sound business expansion activities.

Extract from the Compliance Manual

Promotion System for Compliance in the Group

To enhance and promote compliance throughout the Nintendo Group, we set up, under the Compliance Committee, the Global Compliance Committee (GCC), comprising executive management and core personnel responsible for legal affairs and compliance from Nintendo Co., Ltd., and our major overseas subsidiaries. Specifically, this Committee holds global meetings twice a year for core personnel at the major group companies. These meetings also serve as a practical channel for the GCC to establish a common understanding and share information, while exchanging opinions about compliance-related issues and future legal risks that may affect each of our companies.

Employee Comment

Tammo Godel

Legal Department

Nintendo of Europe GmbH
(Germany)

Global Cooperation for Legal Compliance

As a global company, with products and services being distributed and offered in many countries around the world, Nintendo is required to comply with each of these country's laws and regulations.
We maintain close cooperation between our legal teams in the different group companies to coordinate compliance matters, ensure our products and services are compliant, and to detect and tackle any upcoming potential risks.
Besides steady communication on a daily basis among our different Nintendo group companies all over the world in legal, regulatory and compliance matters, we hold global meetings twice a year with legal colleagues from all major group companies. Here we share the latest relevant legal developments that might affect Nintendo and discuss current and future plans and legal strategies. For particular global legal topics, which require stronger coordination and education, we hold additional global meetings with legal experts from the group companies together with stakeholders of the affected business departments.
Compliance is essential for business and an important part of our work!

Compliance Hotline

Nintendo Co., Ltd. has established a system, called the Compliance Hotline, for the internal reporting of compliance-related issues. Using the Hotline, employees can confidentially report suspected illegal actions or other misconduct directly to the President, the Audit and Supervisory Committee, or both if desired. It is established to protect employees from any disadvantage when they use this Hotline. Information about the Hotline is shared with new recruits during orientation training.
Our major subsidiaries also have established similar reporting systems, adapted to the laws and regulations of their respective regions. In the unlikely event that employees at one of our subsidiaries become aware of any misconduct by a member of their executive management, the system in place enables any employees to report the incident directly to the President of Nintendo Co., Ltd.
Furthermore, through the Compliance Manual at Nintendo Co., Ltd., in addition to establishing rules which prohibit bribery of public officials and set limitations on the acceptance or exchange of gifts, we are working to prevent corruption through the internal Compliance Hotline system.

Protecting and Managing Information

Nintendo Co., Ltd. has established in-house standards, including the Information Management Standards, the Personal Information Management Standards, and the Information Security Policy to ensure that various types of important information are handled appropriately. We have established the Information Security Committee, with the General Manager of the Platform Technology Development Division as the committee chair, and conduct periodic audits in an effort to continually improve our level of information security. We employ physical and technological measures, including access controls, to facilitate proper management of confidential and personal information. In addition, we conduct internal seminars and self-learning tests to supplement and establish employee awareness of the importance of information security.
Our overseas subsidiaries also have established information management policies. Each organization employs physical and technological measures based on its policy and conducts internal training sessions in order to increase awareness of information security. Training sessions on personal and confidential information management are held periodically at various subsidiaries' offices.

Nintendo Co., Ltd.

Working with the Social Security and Tax Number System

Nintendo Co., Ltd. has revised policy and internal guidelines to implement controls that allow us to work with the social security and tax number system that was introduced in fiscal year 2015. Part of this effort has been to limit the addition of employees who need to handle social security and tax numbers as a part of our business. Non-related personnel are unable to interact with the systems we created. Data is encrypted and stored on trusted, dedicated servers external to the company, and there are new terminals designed to exclusively access those servers. Users of those terminals are also limited, and our safety protocols include the use of dedicated lines for connecting to and exchanging data with those servers. We also created an internal bulletin to ensure that employees have a proper understanding of the national I.D. number system. It summarizes the system and includes points of caution to be aware of in handling national identity numbers.

Internal Seminars

Nintendo Co., Ltd. focuses heavily on compliance training. In fiscal year 2019, a total of 81 new recruits took part in compliance training as part of the orientation training program. Each department is given a questionnaire requesting suggested topics for the seminar; seminar planning is based on departmental needs and the results of these surveys.
Our overseas subsidiaries work to provide compliance seminars based on regional requirements and employee requests.

Compliance Seminar Data of Nintendo Co., Ltd. (FY 2019)

Theme	Target Audience	No. of Participants
Compliance Basics	FY 2019 new recruits	81
Recent Compliance Trends and Responses	Compliance Officers	35
Anti-Harassment Seminars	All employees	400 (As of the end of March 2020^*1)
Seminar on Payment Services Act	Members of divisions whose work is related to this law or may be in the future	171 (Includes Nintendo Sales Co., Ltd.)

*1 Anti-harassment seminars have been conducted for all employees since FY 2019, with 400 employees participating as of the end of March 2020. These seminars will also continue to be held after FY 2020.

Nintendo of America Inc.Nintendo of Europe GmbH (Germany)Nintendo Australia Pty Limited

Promotion of Employee Understanding of the Code of Conduct

Nintendo of America's Code of Business Conduct sets forth clear professional and ethical guidelines for the conduct expected from all employees. In an effort to ensure that employees remain familiar with the Code of Business Conduct, all employees are required annually to complete an online Code of Business Conduct Review. After the deadline for responses has passed, correct responses and detailed analyses are published.
In addition to employee Code of Conduct training for new recruits, Nintendo of Europe regularly provides training for all European subsidiaries. The training is conducted through intranet e-learning.
With each reissue of the employee Code of Conduct at Nintendo Australia, the human resources department sends each employee an email containing a Code of Conduct questionnaire and requires them to sign off to acknowledge their understanding and compliance with the new version. This process was undertaken in September 2019 and all employees consented to the new employee Code of Conduct.

Environmental Management System

Nintendo Co., Ltd. established an Environment Committee in September 2011, with the company President serving as the committee chair, to promote environmental activities across the organization as a whole, and introduced a system based on our ISO 14001^*2 certification. We established an Environment Policy and set specific environmental targets to guide our environmental activities, and by implementing a plan-do-check-act (PDCA) cycle, we strive for continuous improvement. The Environment Policy is approved by the President, the Environment Committee chair, and is shared with employees through posters and Environment Cards on which the Environment Policy is printed.
Some of our subsidiaries abroad have also established groups to promote environmental activities and are actively involved in those activities.

Nintendo's Environment Policy poster

*2 ISO 14001: An international standard for environmental management systems that requires environmental protection activities to be conducted while achieving a balance between social and economic needs.

Environment Policy

Environment Principle

Nintendo is committed to preserving a healthy planet to bring smiles to future generations.

Action Guidelines

1. Pursue a better environment: We endeavor to offer environmentally-friendly products and services, and to prevent environmental pollution while maintaining balance in social and economic development.
2. Comply with the rules: We carefully comply with a wide variety of laws and regulations that are related to production and office activities around the world, so that we can create a better environment.
3. Make continuous improvements: We work together to identify where we can improve and where we are not doing enough to act in environmentally-friendly ways. We have mechanisms for sharing feedback, and we are all involved in continuous improvement.

ISO 14001 Certification Scope

Nintendo Co., Ltd. Corporate Headquarters
Nintendo Co., Ltd. Development Center
Uji Plant

* This represents 95.3% of the in-scope offices of Nintendo Co., Ltd. on an employee number basis.

Environmental Management System

System Based on the ISO 14001 Standard

Nintendo Co., Ltd. received certification for ISO 14001:2004 in February 2013, and we have since advanced our environmental management system according to this ISO 14001 standard. When the ISO 14001 standard was revised to the 2015 version, we underwent and passed a transition audit for that version in March 2018. As this new version better integrates with other business activities, we are moving forward with even more effective environmental initiatives.

*3 Internal Environmental Audit Structure

Internal environmental auditors appoint competent employees from among Environment Committee members and in-scope business offices.
Audits are conducted from the perspectives of: (1) Is it in compliance with ISO 14001? (2) Are the rules/laws and regulations obeyed? (3) Is the environmental impact increasing? (4) Is there effective implementation and maintenance?

Employee Comment

Masanori Yano

(Environment Management Officer)
Quality Assurance Department

Nintendo Co., Ltd.

Nintendo Co., Ltd.'s Environmental Management System

Starting in fiscal year 2017, we transitioned our activities for the environmental management system at Nintendo Co., Ltd. to ISO 14001:2015, which has strengthened our environmental activities related to our main work responsibilities. Under the leadership of our company President, we have aligned our environmental objectives, from a lifecycle perspective, with the business plans compiled by the Corporate Planning Department. The lifecycle perspective identifies environmental impacts on a continuous and mutually related level in each stage for products and service systems, including everything from the acquisition of raw materials, and the output of natural resources, to final disposal. As each department performs its day-to-day work, the employees carry out activities to reduce environmental impacts that could stem from any product or service, regardless of whether that work is a direct or an indirect contributor. Some examples include incorporating environmental concerns into hardware design, promoting download sales for content and reviewing transportation routes for the sales departments.
The new activities can offer a sense of accomplishment for contributions to the environment from our main work responsibilities. As a result, we are witnessing an even greater level of engagement from our employees.
Continuous improvement to our activities moving forward will promote environmental activities that will help keep our consumers smiling.

Internal Environmental Audits

Nintendo Co., Ltd. carries out internal environmental audits based on ISO 14001 every year, and in fiscal year 2019, they were carried out in all 15 in-scope departments at our corporate headquarters and elsewhere. The audit teams, which comprise employees qualified to serve as in-house environmental auditors, carried out audits that focused on the legal compliance status and the effectiveness of environmental activities in each department. These audits have been instrumental in taking a precautionary approach to environmental risks.

Compliance

Nintendo Co., Ltd. creates lists of applicable environmental laws and regulations related to our products, office buildings and equipment. With these lists, we established systems to periodically ensure compliance with all applicable laws and regulations. We share environment-related information relating to office buildings and equipment among the various business sites, and remain up to date on the latest information regarding bills, law enforcement and revisions to laws and regulations.

Environmental Education

We believe that it is indispensable to raise employee awareness of the environment to carry out activities that contribute to environmental preservation.
Nintendo Co., Ltd. undertakes environmental education for all employees, raising awareness by producing Environment Cards that show our environmental policy, by disseminating environment-related information through the company intranet, etc.
Our overseas subsidiaries also work to increase employees' awareness of the environment, and some of them hold educational events.

Risk Management

Nintendo recognizes the importance of identifying, understanding and evaluating the various risks affecting the company in order to thoroughly reduce and avoid such risks, and the importance of seeking prompt resolution in the event of an incident or accident.

Risk Management

Nintendo gives each division of the Nintendo Group companies direct responsibility for the management of its own risks. Nintendo Co., Ltd.'s Internal Auditing Department verifies the risk-management system of each division and Group company and suggests policy changes and offers advice as needed.
We consult outside lawyers and professionals on important legal or compliance issues to ensure that they are handled with due consideration. In addition to standard accounting audits, we consult the Accounting Auditor to discuss and investigate important accounting issues to ensure that they are handled with due consideration. We have a policy of taking a resolute stand against antisocial forces which pose threats to the social order and safety, and have established responsible departments as a system to act on behalf of the company.
The Compliance Committee promotes compliance measures in every department throughout the company, maintaining the Compliance Manual based on our Compliance Program (Legal Risk Management Policy) and conducting seminars featuring external experts for employees and Directors. We have established a Product Safety Committee, which maintains the Product Safety Assurance system to prevent product-related problems and facilitate prompt action in the event a problem should occur.

Risk Management for Potential Emergencies

In preparation for emergencies, including natural disasters, Nintendo Co., Ltd. has created the Emergency Action Plan, which outlines the company's initial response to an emergency, and the Business Continuity Plan, which provides a strategy for business recovery and continuation. In addition, Nintendo Co., Ltd. has created and published the Crisis Management Manual for all employees (available on the company intranet), which defines the fundamental actions employees should take in the event of an emergency. Furthermore, Nintendo Co., Ltd. has introduced a system for confirming employee safety in the event of an emergency. We periodically conduct drills to administer the system in addition to carrying out fire drills to ensure that employees can quickly evacuate the building.
Our overseas subsidiaries also have created manuals for responding to emergencies in their various regions. For example, Nintendo of America has a Business Continuity Plan that takes into account regional risks and defines corresponding plans for business recovery and continuity. Employees receive periodic training on these plans and conduct evacuation drills and other exercises.

The Crisis Management Manual is the size of a business card so that employees can carry it at all times.

Information Disclosure

To gain and secure the trust of our shareholders and investors, Nintendo works to ensure the fair, appropriate and timely disclosure of information. We also work to improve on an environment for the exercise of voting rights.

Financial Results Briefings and Corporate Management Policy Briefings

At Nintendo, we believe that it is vital to not only provide information about our business performance, but to also make sure that our corporate management policy is well understood. After the announcement of our financial results for the second and third quarters, and the full-year term, Nintendo Co., Ltd. holds Financial Results Briefings (conference calls) to explain the outline of the financial results and the future outlook and conduct a Q&A session for securities analysts and institutional investors. A Corporate Management Policy Briefing is also held once a year.

Financial Results Briefing

Smooth Operation of Shareholders' Meetings

To provide our shareholders with even more time to exercise their voting rights, Nintendo Co., Ltd. issues the Convocation Notice three weeks prior to the General Meeting of Shareholders (one week earlier than the legal requirement) and shareholders can vote via the Internet. In addition, for the benefit of our overseas shareholders, we have made the Convocation Notice available in English and have adopted the Electronic Voting Platform system for institutional investors.

* Information regarding the General Meeting of Shareholders: https://www.nintendo.co.jp/ir/en/stock/meeting/

Nintendo Co., Ltd.

Information Disclosure

We strive to provide all stakeholders with prompt access to information provided at these meetings by posting reports from the meetings, including the Q&A sessions, on our website in both Japanese and English.
In addition, since fiscal year 2010, we have posted summaries of the Q&A sessions from the General Meeting of Shareholders on our website as a part of our efforts to achieve broader disclosure.

CSR Report 2020