Exercise of Ethical Management

Ethical Management System

3Cs Ethical Management

Coway pursues ethical management based on the 3Cs (Code of Conduct, Compliance Check Organization, and Consensus by Ethics Education). To strengthen ethical awareness among all employees, Coway avoids the ethical management risks based on its Corporate Ethics Code and through the compliance check organization and provides employees and business partners with ethics education on a regular basis.

Code of Ethics

To practice ethical management, Coway added to the Code of Conduct the standards for ethical conduct and judgment for the internal and external stakeholders. Coway’s Code of Ethics consists of the Ethics Charter, Ethics Regulations and Ethics Practice Guidelines, all of which apply to all employees, business partners and stakeholders who engage in various transactions with Coway, helping them to actively adhere to the Code of Ethics. As the English version of the Code of Ethical Conduct was published in 2021, it was posted on the websites of major foreign local entities in Malaysia, the United States, Thailand, Indonesia, Vietnam, China, Japan, and Europe in 2022, to spread the culture of ethical management alongside global business expansion.

Charter of Ethics
Regulations of Ethics
Code of Ethics

Compliance check organization

The Ethical Management Team and Diagnosis Team under the Compliance Division functions as the compliance check organization, planning, training, campaigning, monitoring, and auditing, with regard to ethical management. The Ethical Management Team controls risks to Coway’s sales and service organizations, while the Diagnosis Team controls risks in other organizations. The 2 Teams collaborate with and mutually complement each other to strengthen internal controls, and carry out training and campaigns.

Operation of the Ethical Management Committee

Coway recognizes the importance of acting ethically and operates the Ethical Management Committee, a body directly reporting to the CEO, to strengthen internal ethical management and ethical sales management. The Ethical Management Committee is comprised of the heads of the Business Division and Offices, and strives to make prompt decisions and promote improvements on the issues for each Division. The Ethical Management Committee held 5 meetings in 2023, which discussed 7 issues and sought to make immediate improvements.

Organization of the Ethical Management Committee

Ethics Diagnosis and Monitoring

Strengthening of Ethics Diagnosis and Monitoring

Coway conducts scheduled and non-scheduled business diagnoses to ensure the company's soundness and transparency and prevent ethical risks. In addition, Coway operates a full-time monitoring system; regularly notifies the employees of the health of the company-wide organization, and the status of risks; and prevents abnormal sales practices and unfair transactions. In 2023, the company advanced monitoring indicators by upgrading the address-cleaning system and developing abnormality avoidance indicators; and strengthened monitoring to prevent fraudulent orders. Coway strives to strengthen the sales transparency of field organizations by setting ‘management of abnormal sales/service risk’ as a KPI.

Operation of the Ethics Reporting Center

The employees of Coway must make reports to the organization-in-charge as prescribed by Chapter 3 of the Ethics Regulation when they recognized a violation of the Code of Ethical Conduct or heard of such violation from a third person. Coway prepared the report channels, such as the online reporting channel, e-mail, post mail, etc., that are open at all times. The Ethical Management Center, an online reporting channel, is divided into a reporting channel for customer complaints related to products, services, and sales; and a reporting channel for employees and business partners to report corruption and unreasonableness. The matters received via the reporting channels are processed quickly and fairly. Coway established a new English web page for the Ethical Management Center (https://company.coway.com/en/company/ethical) in November 2022, so that global stakeholders can also file reports. Since then, the company has been strengthening control over the overseas subsidiaries by expanding and activating reporting channels.

Reporting and Handling Procedures

01

Receipt

  • A report is received by the Ethical Management Center
    (via e-mail or post mail).
02

Investigation

  • After reviewing the report, an investigation is carried out
    (by the Compliance check organization).
03

Notification

  • The result is notified to the reporter
    (who disclosed his/her real name, upon his/her request).
04

Resolution

  • An arrangement is made to prevent recurrence.

Items subject to report

  • Receipt of valuables or entertainment

  • Disclosure of confidential information

  • Unfair trade acts

  • Embezzlement or misuse of company assets

  • Bullying/sexual harassment

  • Other irregularities

Guidelines on whistleblower protection and rewards

To protect the reporters, Coway guarantees strict confidentiality of the reporters’ identity and the contents of the report, and establishes and applies guidelines for reporter protection and rewards. In addition, the company operates a reporter reward system and a leniency program to encourage reporting and improve the employees’ awareness of compliance. Under the reporter reward system, the reporter is rewarded up to KRW 50 million within 60 days from the date when his/her report is confirmed to be true after an investigation on the reported issue has been fairly conducted.

Principle on Protection of Reporters

  • Protection of Identity

    If an employee is a reporter, he/she shall not be subject to disciplinary action, any disadvantage in terms of status, or discrimination in working conditions because of his/her reporting, statements related thereto, or submission of other materials.

  • Personal protection

    The compliance check organization for ethical compliance must guarantee the confidentiality of the reporter and the contents of the report. When processing the report, the identity of the reporter must not be revealed or implied without the reporter's consent, and the reporter's identity must be processed anonymously and not be disclosed internally.

  • Prohibition of retaliation

    If the reporter is retaliated against by the reported person or a related third party, the reporter shall immediately notify the compliance check organization for ethical compliance of such fact, and the compliance check organization for ethical compliance shall immediately investigate the notified event, and may take steps against the employees involved in the retaliation according to the relevant regulations.

  • Protection of collaborators

    The company must impose no disadvantage, and must provide personal protection to persons other than the reporter, who made statements related to the reported event or collaborated with the audit or investigation on the reported event in other forms, such as submitting information.

  • Reduction of liability

    If an unfair act, such as negligence of the reporter (collaborator), is discovered by his/her report, the disciplinary action may be reduced or exempted.

Anti-corruption and Risk Management

In order to practice ethical management, Coway conducts regular diagnosis every year to check and prevent corruption risks and irregular diagnosis based on information reported to the Ethical Management Center. Violations identified as a result of the diagnosis are subject to internal disciplinary action determined by the HR Committee, and civil/criminal legal action is also taken when necessary.

Ethics Practice Guidelines

Category Description
Bribery Under no circumstances shall the employee accept any money or gift from a companion or stakeholder or offer or promise any money or gift to a companion or stakeholder in connection with work.
Improper solicitation Under no circumstances shall employees make any improper solicitation to companions, stakeholders, public officials, etc., directly or via a third party; or make unfair demands or receive compensation by taking advantage of their superior or dominant position related to work.
Gifts and entertainment Under no circumstances, shall employees accept souvenirs or gifts that exceed the socially acceptable level. If an employee inevitably receives such gifts, he/she shall take action in accordance with the Ethics Practice Guidelines.
Payments to government and public officials Transaction amounts resulting from transactions with a government or a governmental institution must be paid in accordance with the terms of contract and in writing, which must be reviewed in advance by the Compliance Division.

Internalization of Ethical Culture

Ethical Management Training for Employees

Coway conducts ethical management campaigns to create a healthy organizational culture and establish a sound sales culture. In addition, Coway provides an integrated learning platform website through which employees can train themselves with the contents related to various aspects of ethical management, such as workplace bullying, whistleblowing, and abnormal sales. By doing so, all Coway employees are continuously making efforts to practice ‘ethical management together.’ To prevent the heads of organizations taking advantage of their positions to engage in unfair transactions, Coway conducted online training for prevention of unfair transactions for the sales organization in August 2023. A total of 1,481 leaders of organizations, including Directors-General, completed the training. Coway regularly conducts preventive training to prevent unfair transactions.

Raising Awareness of Ethical Management

To raise employees' awareness of ethical management, and establish a culture of ethical practice, Coway promotes regulations and cases related to ethical management once per month through the Coway e-JeongDo Magazine. The Coway e-JeongDo Magazine covers various cases and related issues employees may experience, focusing on the company's ethical management policy and principles, and continuously provides information to raise employees' awareness of ethical management. The magazine plays an important role in strengthening the employees’ ability to practice ethical management.

CASE

Hosting of the Ethical Management Forum

Coway has launched the Ethical Management Forum, the first which of which was held in July 2023, to lead the company to healthy growth through ethical management shared by the entire company — and to raise awareness of ethical management among company employees. Coway holds the Ethical Management Forum annually, gathering all executives and employees at or above the Team Leader level, to self-diagnose the ethical management risks in each organization, make public the risks in the organization that lie beneath the surface, and invite all attendees to come up with improvement plans. At the 2023 Ethical Management Forum, the company pledged to practice ethical management through the ethical management declaration ceremony and the presentations, prepared improvement plans through discussions on a total of 5 topics, and took follow-up actions.