Internal reporting systems are attracting increased attention as one method of compliance. Today, amidst the never-ending stream of corporate scandals, internal reporting is the starting point for identifying untoward events. Also, how internal reporting clarifies facts and background factors makes it possible to prevent further spread of damage. In many cases, this leads to the appropriate enforcing of the liability and prevention of recurrence. Currently, discussions are being held for revision of the Whistleblower Protection Act. Furthermore, the Consumer Affairs Agency revised guidelines for private businesses on December 9, 2016, and revised guidelines for administrative agencies on March 21, 2017. (Guidelines for administrative agencies consist of two parts: guidelines related to coping with reporting by internal employees, etc., and guidelines related to coping with reporting from external laborers, etc. Furthermore, guidelines related to coping with reporting from external laborers, etc. possess the function of creating competition among systems for internal reporting inside of a business entity and external reporting to administrative agencies. This is important from the perspective of incentives for enhancing internal reporting systems.)
Internal reporting systems based on conventional compliance have been lacking perspective of dialogue with whistleblowers. Instead, they have generally been viewed as one-way anonymous reporting from whistleblowers to business entities. In this respect, when discussing internal reporting systems, there has been a tendency to overemphasize the protection of anonymity and other forms of protection for whistleblowers (of course, the importance of such protection cannot be denied). Moreover, conventional compliance focuses on the prevention of scandals. Therefore, based on the idea that there is no need to protect individuals involved in scandals, systems such as internal leniency systems have often been viewed as unnecessary.
In contrast, compliance intended to increase corporate value emphasizes a dialogue between business entities and whistleblowers (in this case, whistleblowers can be viewed as representatives of stakeholders). In this case, the basic concept for designing internal reporting systems is to realize two-way communication. In that sense, internal leniency systems should be actively recognized and utilized. Business entities and whistleblowers cooperate to protect corporations. Two-way involvement in internal reporting systems facilitates better communication at corporations, and this corporate climate is the essence of compliance. Indeed, the new guidelines for private businesses have significantly shifted their orientation toward promoting the spread of internal reporting systems based on dialogue. Specific examples include clarifying the responsibility of top executives, touching upon the necessity for top executives to continually communicate a clear message to core managers and all other employees, enhancing the development of an environment which enables reporting with peace of mind, recognizing the value of appropriately evaluating contributions by whistleblowers, etc. who have contributed to the implementation of compliance management, and recommending the development of internal leniency systems.
In this way, it is now necessary to change the design of internal reporting systems from the conventional anonymous reporting to dialogue. As the ideal future form of systems, I propose dialogue internal reporting systems based on compliance intended to increase corporate value.