Our CSR efforts center on faithfully fulfilling our social responsibilities by strengthening corporate governance, establishing a compliance framework, and respecting human rights.

Corporate Governance

• Governance Structure (as of June 28, 2007)

  ■Governance Framework

  

  Governance Framework opens in another window.

  We aim to strengthen corporate governance by drawing on the Board of Directors and Board of Statutory Auditors.

  The Board of Directors has 15 members, including two independent external directors. In principle, this board meets once monthly to ensure adherence to laws and ordinances, our articles of incorporation, and the rules governing that body, and to decide on important management matters. We strengthened oversight to ensure fair business practices by having the president chair this board and appointing two external directors to it.

  The Board of Statutory Auditors comprises three external people. They attend meetings of the Board of Directors and all other important gatherings, as well as holding their own meetings. The auditors assess the activities of the Board of Directors. The Board of Statutory Auditors has its own staff and organization to optimize efficiency and reinforces oversight by working closely with accounting firms and sharing information on audit plans and results with them.

  In June 2006, we replaced our directors’ retirement benefits program with a setup in which we more closely link the remuneration of internal directors to business performance. The remunerations of external directors are not related to operational performance to maintain their independence.

  We have established several councils and committees to discuss important management issues for NTT Communications and Group companies and thereby accelerate decision-making. The Executive Council met 53 times in 2006. The Market-In Council gathered 40 times. Other bodies include the CSR Committee, the Com?pliance Committee, the Business Risk Management Committee, the Human Rights Awareness Com?mittee, and the Work-Life Committee.

• Internal Controls

  The NTT Group formulated new basic policies to develop internal controls in response to the May 2006 implementation of the Corporation Law. NTT Communications’ Board of Directors resolved to take the necessary steps for the Group in line with these policies. We plan to bolster internal controls for financial reporting in line with the Financial Instruments and Exchange Law, which went into effect in June 2006.

  Basic Stance on Creating Internal Controls

  1. NTT Communications will maintain a system of internal controls to comply with laws, operate properly and efficiently, and to prevent, minimize, and otherwise appropriately manage losses.
  2. The Legal and Internal Audit Department shall assess the above system. We will make improvements as needed based on the department’s audits and special audits of high-risk areas common to the NTT Group in keeping with the auditing criteria of Nippon Telegraph and Telephone Corporation.
  3. We will cooperate with Nippon Telegraph and Telephone Corporation to ensure the system’s conformance to the Sarbanes-Oxley Act of the United States.
  4. As chief executive officer, the president must ensure the establishment, maintenance, and operation of the system.

• CSR Committee

  ■CSR Committee

  

  CSR Committee opens in another window.

  A senior executive vice president of the Company chairs the CSR Committee, which we created to clarify our management structure from economic, environmental, and social perspectives. We also established the Social Contribution Sub-committee and the Global Environmental Protection Sub-committee.

  The CSR Committee met twice in fiscal 2006, with representatives of 18 Group companies attending. In the first gathering, the committee completed the NTT Communications Group’s Basic CSR Policy. The committee also issued CSR and activity reports and resolved on future activities after discussing issues that it should address. The committee will continue working to foster the NTT Communications Group’s CSR initiatives.

  Domestic Group Company Activities

  

  NTTPC Communications, Inc.

  NTTPC Communications, Inc. instituted the President’s Commendation Program for CSR Activities to recognize and encourage grassroots employee initiatives that contribute to CSR.

  One special award under the program in fiscal 2006 included attending a seminar at the Ritz-Carlton, Osaka. Participants learned that employee satisfaction is the key to customer satisfaction.

Compliance (Corporate Ethics and Business Risks)

• Corporate Ethics Framework

  For the NTT Communications Group, compliance goes well beyond merely adhering to laws and ordinances. We believe that it is essential to establish a framework that ensures that our operations follow a strong ethical compass so we can fulfill our social obligations. We have accordingly deployed various initiatives to heighten the ethical consciousnesses of everyone from senior executives to employees and Group companies, drawing on the NTT Group Corporate Ethics Charter, which shows how to prevent or deal with unfair and improper actions. We set up the Compliance Committee and have appointed a director, department, and officials in all business units to oversee corporate ethics.

  See the following website for details:http://www.ntt.com/obp_e/torikumi/

• Raising Ethical Consciousnesses

  

  Our Business Principles card for employees

  

  Our Business Principles booklet

  We constantly foster consciousness of corporate ethics issues through seminars for all employees, training sessions for various management levels, and lectures from external experts. We also offer classes on compliance in the workplace.

  We distribute the Our Business Principles booklet to all NTT Communications Group employees to promote ethical behavior. This publication has been an important guideline since we began operations. We will continue to use Our Business Principles as central to our CSR activities.

  See the following website for details:http://www.ntt.com/obp_e/

• Consultation Hotline

  We established the NTT Communications Group Hotline with the Compliance Committee. All Group employees in all countries can access the hotline. The NTT Group established an external consultation and reporting liaison desk, staffed with legal experts. These organizations are part of our commitment to a transparent corporate culture.

• Business Risk Management

  We established the Business Risk Management Committee, which a senior executive vice president chairs, to better oversee risks associated with our operations. Members include presidents of Group companies and members of relevant divisions. This committee assesses and formulates policies to safeguard against significant Group risks, among which are such external factors as natural disasters and terrorism and internal risks, notably dishonesty and scandals.

  We created a system to swiftly collect risk information and ensure fast and proper decision-making in response to major risks. If such events occur, we inaugurate the Disaster (Accident)/Risk Response Headquarters, which the president or a senior executive vice president may head depending on the situation. We have prepared and distributed a companywide manual to help Group companies address risk management issues, and also hold regular training sessions.

  We will continue to strengthen our systems to tackle business risks for the entire Group. Respect for Human Rights

Respect for Human Rights

• Cultivating Human Rights Respect

  As a global business, NTT Communications Group has made combating discrimination and respecting human rights a top priority. We follow a basic policy to tackle these issues through our daily business activities based on a corporate constitution that forbids discrimination. We established the Human Rights Awareness Committee to educate parent and Group company employees and business partners.

  Initiatives

  • Basic policy and activity plans for human rights initiatives
  • Planning and implementing human rights measures, promoting diversity, and soliciting human rights slogans
  • Planning and implementing human rights education, including training seminars for top executives, middle management, and employees, and courses on sexual harassment and power abuses
  • Consultation and response desk for human rights problems