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3.1

Governance structure of the organisation, including major committees under the board of directors that are responsible for setting strategy and for oversight of the organisation

7, 19

For the structure of the organization please see indicator LA 11 and the organizational chart.

Our governance structure comprises four committees: An integrated committee deciding about integrated aims (like health, safety, environment and quality), which have to be implemented as a standard. A work safety committee responsible for the ergonomic aims concerning the workplace, and a Kaizen team that is in charge of the development of the processes and tools. Our 5S committee is completing the structure and is responsible for the operability as well as compliance of the 5S system.

3.2

Percentage of the board of directors that are independent, non-executive directors

This is not applicable since DMHU does not have a board of directors.

3.3

Process for determining the expertise board members need to guide the strategic direction of the organisation, including issues related to environmental and social risks and opportunities

This is not applicable since DMHU does not have a board of directors.

3.4

Board-level processes for overseeing the organisation’s identification and management of economic, environmental, and social risks and opportunities

This is not applicable since DMHU does not have a board of directors.

3.5

Linkage between executive compensation and achievement of the organisation’s financial and non-financial goals (e.g., environmental performance, labour practices)

7

There is no linkage between the executive compensation and the achievement of the organization’s goals.

3.6

Organisational structure and key individuals responsible for oversight, implementation, and audit of economic, environmental, social, and related policies

7

The headquarters in Japan centrally sets our environmental and social policies. Afterwards, the implementation is done by the top management at DMHU, followed by the realization conducted by the middle and low management.

3.7

Mission and values statements, internally developed codes of conduct or principles, and polices relevant to economic, environmental, and social performance and the status of implementation

4

Internally Developed Principles

• Economic principles: Our annual and long-term business plan, which is supported by the parent company Denso Japan.
• Social principles: Work instructions and the associate handbook are applied and implemented at DMHU.
• Environmental principles: The 5S method as well as EcoVision 2005 are applied and implemented throughout the whole corporation.

3.8

Mechanisms for shareholders to provide recommendations or direction to the board of directors

This is not applicable since DMHU does not have a board of directors.

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3.9

Basis for identification and selection of major stakeholders

7

The procedure for the selection of the suppliers includes a three steps negotiation process comprising of an audit of the relevant company, the negotiations of the conditions and the examination of the availability of corresponding regulatory permissions.

3.10

Approaches to stakeholder consultation reported in terms of frequency of consultations by type and by stakeholder group

7

Suppliers

Our integrated management system places great emphasis on regularly monitoring and assessing the performance of suppliers.

Employees

Every month there is a meeting of the management representatives and the employee representatives concerning the working conditions.

3.11

Type of information generated by stakeholder consultations

7

Stakeholder consultations are taking place with all our stakeholders in order to receive information as: obtaining suggestions and reclamations from the customers; proposals of the employees using the idea box; complaints and proposals of the community etc.

3.12

Use of information resulting from stakeholder engagements

7

Suppliers

During the supplier consultations minutes are taken as well. Based on the minutes, it can be ascertained if everything is adhere to the agreed terms. A specific period for reconsideration is given.

Employees

On the management-employee meetings minutes are taken and afterwards sent to the responsible departments where actions will be taken on the particular subject within a given period.

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3.13

Explanation of whether and how the precautionary approach or principle is addressed by the organisation

7

At Denso headquarters in Japan all the strategic planning regarding precautionary principles is done. DMHU as a subsidiary is receiving those principles and is responsible for taking measurements for the realization of the activity.

3.14

Externally developed, voluntary economic, environmental, and social charters, sets of principles, or other initiatives to which the organisation subscribes or which it endorses

8

There are four ongoing projects with the non-profit organization KÖVETINEM Hungary – for six years we are in the membership – based on a voluntary contract. These projects are: Life Cycle Assessment of all our products, an Environmental Performance Evaluation of our operations, the implementation of an Environmental Accounting System and an Energy Efficiency Project.

3.15

Principal memberships in industry and business associations, and/or national/international advocacy organisations

7

DMHU is a stakeholder of the Global Reporting Initiative (GRI), a member of the Hungarian Chamber of Commerce and Trade (MKIK), the Hungarian-Japanese Friendly Society Association, the Business Council for Sustainable Development Hungary, the Public Foundation for the Progress of the Industry (IFKA), the Hungarian Quality Association (MMT), the Hungarian Business Leaders’ Forum (HBLF), and the Environmental News Service (Greenfo).

3.16

Policies and/or systems for managing upstream and downstream impacts, including:

• supply chain management as it pertains to outsourcing and supplier environmental and social performance; and
• product and service stewardship initiatives

8

For all the impacts policies have been implemented, like an integrated policy and special procedures. The environmental impacts are also documented in our Integrated System Manual.

3.17

Reporting organisation’s approach to managing indirect economic, environmental, and social impacts resulting from its activities

7

Our operations cause indirect economic, environmental and social impacts as well as create impacts upstream and downstream. In order to reduce and even to remove those impacts, we keep a close collaboration with our stakeholders, especially with the suppliers and customers.

3.18

Major decisions during the reporting period regarding the location of, or changes in, operations

In 2005 there were no decisions about major changes in our location or operations.

3.19

Programmes and procedures pertaining to economic, environmental, and social performance. Include discussion of:

• priority and target setting;
• major programmes to improve performance;
• internal communication and training;
• performance monitoring;
• internal and external auditing; and
• senior management review

8

Our Programs and Procedures

• Priority and target setting: The DENSO headquarters in Japan centrally sets the targets. Please see the presidential greeting as well.
• Major programs to improve environmental performance: EcoVision 2005 and 2015 respectively.
  Please see 3.7.
• Internal communication and training: Compare with LA 4 and LA9
• Performance Monitoring: We use the Japanese 5S Method.
• Internal and external auditing
  Internal audits:
  Our trained internal auditors do internal audits twice a year. We examine the results of the controls and the proposals for development each month on our Integrated Committee meetings as well as on our management meetings held every six months.
  External audits:
  Compare with 3.10.
• Senior management review:
  As a part of our integrated system we are conducting a management review (including all management levels) one to two times a year.

3.20

Status of certification pertaining to economic, environmental, and social management systems

8

Our Management System (Integrated System)

DMHU started the integration process of environment, economy and society back in 2002.

Then in 2003 it introduced the ISO/TS 16949 system, which is integrated with the already available ISO 14001 and OHSAS 18001 systems. The integration process continued with the 5S System in 2004. The integrated system was successfully certified by Lloyd’ s Register Quality Assurance.