CSR Report > CSR Report 2016 - Reliable and Trustworthy Business Practices

CSR Report

Reliable and Trustworthy Business Practices / 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.

Reliable and Trustworthy Business Practices

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.

CSR Management

CSR Management

 For Nintendo, as a business, to be loved and trusted by everyone we interact with, it is important that we maintain business practices that are thorough from a compliance perspective and highly transparent at the same time. We continue to develop systems that enable our implementation of CSR policies that focus on bringing smiles to everyone Nintendo is involved with.

How Nintendo Promotes CSR

 Nintendo Co., Ltd. sees the promotion of CSR as not just the responsibility of a single department. Rather it is something that must be promoted through the work of all departments involved. To that end, we established in 2007 a CSR Promotion Project Team to coordinate and support CSR activities.
 To ensure that CSR activities proceed at the global level, there are CSR promotion teams and CSR promotion leads within our largest subsidiaries. Information on activities across the world are shared within the group, and there is a system for reporting to Nintendo Co., Ltd. executives when the need arises.

(CSR Promotion System)

Stakeholder Communication

 At Nintendo, we see the relevant departments and local offices acting as points of contact for our stakeholders. These venues offer not only a broader channel of communication for our ideas, but they also allow us to solicit and receive key feedback.

Our Stakeholders What We Communicate How We Communicate
Consumers Our top priority is ensuring that each and every one of our consumers can fully enjoy our products. To achieve this, we listen closely to them, learning from what they tell us. We then commit ourselves to creating products of the highest quality. Customer Contact Locations, Nintendo Service Center, retailers, Nintendo support and marketing websites, social media and websites for reporting counterfeit products etc.
Business Partners We are continually working to build better relationships with all of our business partners to better bring smiles to our consumers. CSR procurement, third party monitoring, new product information sessions, the CSR report etc.
Employees We are committed to creating and maintaining an environment where all employees take advantage of their strengths and realize their maximum potential. The President's Address, a health affairs office, periodic reviews, health and safety committees, Organizational Development, and information sharing via corporate intranet sites etc.
Future Generations One of Nintendo's goals is to put smiles on the faces of children both today and in the future. So that we might hand down a better environment to future generations, we are committed to maximizing environmental protections in our product design processes and in our business around the world. ISO 14001 certification, internal environmental audits, green procurement, chemical substance management, the CSR report etc.
Communities Nintendo is committed to being a responsible corporate citizen, recognized for our unique contributions to society. Programs designed to give back to local communities around the world such as Ngiving at Nintendo of America
Shareholders and Investors We strive to maximize our corporate value, to build positive, satisfying, and trusting relationships with our investors and shareholders through returns on profit, and to disclose important information in timely and appropriate ways aimed at creating long-term partnerships. Shareholder meetings, financial results briefings, management policy briefings, information disclosures on the Nintendo website and in the annual report

Priority Areas

 Nintendo implements its own rating methodology for our CSR work, based on rating standards we created after reviewing a wide variety of international CSR standards. We continue to refine our focus on areas needing particular attention through employee surveys, the opinions of external consultants, and results from our ratings.
 For more information, see the digest edition of the 2016 CSR Report.

Promoting Internal Understanding

 CSR promotion staff in each region regularly exchange opinions and engage in a variety of activities to ensure that an understanding of the importance of CSR works its way through to all employees.
 At Nintendo Co., Ltd., the connections between individual employees' work and CSR are explained in a regular CSR Letter through employee interviews. We also hold a range of seminars to promote CSR understanding.
 At Nintendo of America, the CSR Committee plays a central role in training new employees and regularly issuing information through new employee orientation, events and articles shared on an intranet site.
 At Nintendo of Europe, a CSR Committee was founded in 2015. This group has taken the lead in providing easy access to CSR information through the intranet and providing chances for the executive team to speak directly with employees about the importance of CSR. We continue to encourage our employees to actively participate in CSR work.
 Nintendo Ibérica has set up a CSR Promotion Team and held a seminar for selected employees from each department to understand the importance of CSR and its relation to Nintendo's supply chain. Materials from that seminar were made available to all employees.
 The CSR Promotion Team at Nintendo Australia arranged a diversity event and environmental protection activities, in addition to issuing a newsletter highlighting the CSR activities of Nintendo Australia and other subsidiaries to raise employee interest in CSR.
 Nintendo France, Nintendo Benelux, and Nintendo of Europe's UK and Italy branches also have CSR promotion staff who work to raise awareness of CSR among employees, collaborate with NGOs on various events, and hold volunteer activities that employees can attend.
 For more information on involvement around the world, see the digest edition of the 2016 CSR Report.

Employee comment

Martina Franke

European General Counsel

Nintendo of Europe GmbH

 I am proud to work in the Nintendo of Europe family – a group of people dedicated to ensuring that our products and our company bring smiles to the faces of everyone we deal with.
 Operating in Europe means we stringently comply with and closely monitor developments in legislation and regulation. To this end we have complied with the EU Toy Safety Directive and have consistently been improving accessibility and breadth of knowledge available to parents.
 It is imperative that we continue to integrate the Nintendo Group CSR values in all that we do.
 Looking forward there's more we can and will be doing, but we've built strong foundations within Nintendo of Europe.

Corporate Governance

Corporate Governance

 At Nintendo, we strive to maximize long-term corporate value while carefully considering the benefits for everyone we touch. We are working to achieve a highly transparent and sound system of corporate governance; we also educate our employees about our policies, including good corporate ethics.

Corporate Governance Structure

 Nintendo Co., Ltd. transitioned to a Company with Audit and Supervisory Committee following the resolution at the 76th Annual General Meeting of Shareholders held on June 29, 2016, for the purpose of strengthening the supervisory function of the Board of Directors, and thereby further promoting corporate governance. At the same time, the Company has introduced the Executive Officer System for the purpose of clarifying the responsibility for, and thereby accelerating, the execution of operations through the separation of 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 the system where executive officers appointed by the Board of Directors every year perform their respective duties under the President's supervision and instructions.
 The Audit and Supervisory Committee consists of one full-time Internal Director and three Outside Directors; all of the Outside Directors are designated as independent officers. 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 Members conduct 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 subsidiaries and associates.
 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 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, please refer to the annual report.

Corporate Governance System

Compliance and Governance System Status (as of the end of June 2016)
Organizational Form Company with Audit and Supervisory Committee
The Board of Directors (excluding Directors who are Audit and Supervisory Committee Members) Number of Directors 5 persons
Term 1 year
Implementation of Incentives to Directors Performance-based compensation
Directors who are 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 (an Independent Officer as provided by Tokyo Stock Exchange, Inc.)
Term 2 years
Implementation of Incentives to Directors Fixed compensation

Corporate Governance Report (Japanese only)
http://www.nintendo.co.jp/ir/management/governance.pdf

Compensation to Directors and Auditors

 An upper limit on compensation for each Director is determined by a resolution of the General Meeting of Shareholders. Compensation for Directors (excluding Directors who are Audit and Supervisory Committee Members) consists of base compensation, which is a fixed component of compensation, and variable compensation, which is 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

Compliance

 As a company with the goal of persistent growth and expansion, Nintendo realizes the importance of building and maintaining trust, which requires adherence and compliance 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 maintains 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 2015 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, plus Nintendo's internal rules and conventions. We participate in fair and open competition. Our work rests on high ethical standards.
  • 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.
  • Eliminate anti-social forces
    Our position on anti-social forces is unwavering.
  • 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 grow our business in sound ways.

Extracts from our Compliance Manual

Promoting Compliance in the Group

 To enhance and promote compliance throughout the Nintendo Group, we set up 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. This Committee holds global meetings for core personnel at the major group companies bi-annually, as a practical channel for sharing and exchanging information about compliance-related issues and future legal tasks that may affect each of our companies.

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 report suspected illegal actions or other misconduct directly to the President. Our standards explicitly protect employees from any disadvantage when they use this Hotline. Our major overseas 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.

Protecting and Managing Information

 Nintendo Co., Ltd. has established in-house standards, including the Information Management Standards and the Personal Information Management Standards, to ensure that important information is handled appropriately. 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 increase employee awareness of the importance of protecting and managing information.
 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 protection. 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. revised policy and internal guidelines to implement controls that would allow it 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 brief employees for a proper understanding of the social security and tax number system with an overview and cautions on handling national identity numbers.

Internal Seminars

 Nintendo Co., Ltd. focuses heavily on compliance training. In fiscal year 2015, a total of 103 participants took part in compliance training and educational programs. 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.
 To further employee awareness of the importance of compliance in fiscal year 2015, we created communication on the topic, using our intranet to share that awareness.
 Our overseas subsidiaries also hold compliance seminars based on regional requirements.

Compliance Seminar Data of Nintendo Co., Ltd. (FY 2015)

Nintendo of America Inc.

e-Learning Code of Conduct Review for Employees

 Nintendo of America's Code of 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 Conduct, all employees are required annually to complete an online Code of Conduct Review. The review completed in May 2016 included fictional scenarios meant to illustrate various aspects of the Code of Conduct. Each scenario described realistic situations and included examples of proper conduct.

Risk Management

Risk Management

 Nintendo recognizes the importance of having systems in place to identify, understand and evaluate the various risks surrounding the company, and we take every measure to avoid or reduce such risks. In the event of an incident or accident, we believe it is important to seek prompt resolution.

Risk Management

 Nintendo gives each division of the Nintendo Group 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, as needed, suggests policy changes and offers advice.
 We consult outside lawyers and professionals on important legal or compliance issues to ensure that they are duly handled. In addition to standard accounting audits, we consult the Accounting Auditor to discuss important accounting issues. We have a policy of taking a resolute stand against antisocial forces, and have established responsible departments to act on behalf of the company.
 Based on our risk management policy, the Compliance Committee promotes compliance measures throughout the company by maintaining the Compliance Manual and conducting seminars for employees and Directors. The Product Safety Committee maintains the Product Safety Assurance system to prevent product-related problems, and to 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 restoration. In addition, Nintendo Co., Ltd. has created and published the Crisis Management Manual for all employees, 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 flee from the building. Our overseas subsidiaries also have created manuals for responding to emergencies in their various regions. For example, Nintendo of America has defined basic actions for employees at each of its branch offices and conducts periodic training, evacuation drills and other exercises.

The Crisis Management Manual

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

Utilization and Protection of Intellectual Property

Utilization and Protection of Intellectual Property

Utilization of Intellectual Property

 Nintendo announced that starting in fiscal year 2014, it would move toward an approach of actively utilizing its abundance of character IP, including Mario. We aim to further increase the value of our character IP, so they are loved for a long time, by having them come into contact with more consumers in places other than video game platforms and creating new connections.
 Our first step in this approach is the global launch of game-compatible character IP figures called "amiibo" with which we seek to create new connections with consumers.

Intellectual Property Protection

 Intellectual property is the fruit of Nintendo's research and development, and serves as the foundation of Nintendo's success. Recognizing the critical importance of protecting our intellectual property, Nintendo takes anti-counterfeiting protection measures in cooperation with industry groups and investigative agencies in many regions. We continue to take legal action against those who infringe upon our intellectual property. We also educate the public about the importance of intellectual property protection. To improve the ability of consumers and other stakeholders to help us identify and pursue counterfeit products, each major company in the Nintendo Group has a page on its website that enables individuals to provide information on the sale and distribution of counterfeit products. We have been able to act on information received to combat piracy by taking actions such as sending out warning letters to infringers, removing counterfeit products listed on Internet auction sites and filing criminal complaints.

Nintendo Co., Ltd.

Prevailing in Our Suit to Prohibit and Seek Compensation from Illegal Game Copying Devices

 Nintendo Co., Ltd. won a lawsuit in February of 2009 in which it sought to make the importation and sales of game copying devices illegal in Japan. Subsequently, and based on Japan's Unfair Competition Prevention Act, suits were filed, seeking injunctions and compensation from businesses importing and selling those devices. Japan's Supreme Court decided in January of 2016 that Nintendo Co., Ltd. shall receive a total of more than 95 million yen as compensation for losses from the defendants.
 Although the court decision in February of 2009 recognized the importation and sales of game copying devices as illegal, the January of 2016 decision broke new ground in that it recognized that we should be compensated for losses incurred as a result of that importation and sales, activities that had negative impact on us as a seller of legitimate game software. This was an extremely important decision and result for the industry as a whole. We are determined to continue to pursue legal action, both in civil and criminal suits, against such illegal devices.

Nintendo Co., Ltd.

Seminars for Internal Developers about Intellectual Property

 At Nintendo Co., Ltd., it is growing increasingly important for each employee involved in product development to be equipped with knowledge about intellectual property. Therefore, we hold a few seminars for developers every year to cover related topics.
 We believe these efforts let our employees take a more active role in applying and protecting intellectual property rights. This prevents cases where the product ideas that we work so hard to produce might be used by a third party because we failed to protect them, as well as cases where we might unknowingly use intellectual property that belongs to a third party.

Information Disclosure

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 have created a corporate environment that facilitates the exercise of voting rights.

Financial Results Briefings and Corporate Management Policy Briefings

 At Nintendo, we believe that it is vital not only to provide information about our business performance, but also to make sure that our corporate management policy is well understood. After the announcement of our financial results, Nintendo Co., Ltd. holds Financial Results Briefings for securities analysts and institutional investors (fiscal year 2015: three briefings) and an annual Corporate Management Policy Briefing that all Representative Directors attend.

Corporate Management Policy Briefing

Smooth Management 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 enables shareholders to vote via the Internet. In addition, for the benefit of our foreign investors, we have made the notices 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.

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