Address the emerging global challenges,
and contribute to a sustainable world
—Focus on the SDGs and how they tie in with our business—
We hold stakeholders' meetings in order to objectively evaluate our initiatives and take on board feedback from outside experts regarding our management activities. This year we held our eighth meeting, focusing on the Sustainable Development Goals (SDGs). The experts involved exchanged opinions regarding the importance of viewing the external environment from a more long-term perspective, creating corporate value, and thinking about sustainability, and also touched on business strategy and our approach to an integrated report.
|Date||Thursday, 23rd March, 2017, 13:00-16:00|
|Venue||Meeting Room, JA Building (Otemachi, Tokyo)|
the Mitsubishi Materials Group
|Osamu IidaExecutive Vice President (Assistant to the President; President, Metals Company; Production Engineering, Aluminum Business)|
|Naoki OnoExecutive Vice President (Assistant to the President; President, Cement Company; Environment, CSR, Resources)|
|Yasunobu SuzukiSenior Managing Executive Officer (General Manager, Corporate Strategy Division)|
|Yoshihiko KimuraManaging Executive Officer (System Strategy, Corporate Research & Development)|
|Yoshio MatsunoGeneral Manager, Environment & CSR Department|
|Takashi IwataGeneral Manager, CSR Division, Environment & CSR Department|
|Facilitator||Nobuyasu TanakaManager, alterna Institute, alterna (Operating Officer, Sun Messe Co., Ltd. )|
* The names of departments and titles are as of the date of the meeting.
The SDGs represent a universal language when your company sends out information on how to tackle social issues through business. I think they will become a new yardstick to easily compare global companies with one another. Now we have an urgent sense of crisis, as a result of various phenomena around the world being inextricably linked to the infinite nature of resources, climate change, and other social issues.
It is important to take in this sense of crisis and work out how to link the SDGs to your own activities, so that you can enhance your presence and significance as a company and make the information widely available to society. Global companies that have taken the initiative in terms of tackling the SDGs, including Unilever and Nestle, are highly adept at showcasing that fact to the general public. With forward-thinking, high-impact initiatives such as becoming the world's leading processor of E-Scrap, I think it would make sense for you to link your business activities directly to the SDGs, in order to communicate your activities more effectively.
For instance, some of the more advanced companies in terms of the SDGs are moving towards creating de facto standards for solving the social issues identified in the SDGs through standardization or certification. It would also be wise for your company to consider the SDGs further from a strategic point of view. I find the idea of linking the SDGs to an Integrated Report fascinating, as a way to establish an overview of the external environment on a more long-term timeline.
You will use the SDGs to set out a vision, then measure progress in your Integrated Report… These two steps could play an integral role as you push ahead with your business activities. The SDGs are a useful tool for linking your business activities to universal social issues on a worldwide scale. There are countless areas of business that relate to the SDGs too. It is important to use your imagination and tell people about your vision for the future from the point of view of the SDGs. The fact that you have vision like that will help to draw people in.
The UN's report on the SDGs was entitled "Transforming the World." While feasibility is obviously still an important factor, companies also need to set out visions that are geared towards making significant transformation.
What many global companies began to seek is reform of the supply chain, in an effort to address social issues. Prime examples include the Toyota Environmental Challenge 2050, and Apple signing up to RE100 (Renewable Energy 100%), an initiative where companies set themselves the target of running their business using 100% renewable energy. With companies expected to face increasing demands with regard to initiatives in areas such as the environment and human rights in the future, they need to acknowledge the social issues they face, and be aware of the background of the SDGs.
Investors also view the SDGs as a tool that can bridge the gap between companies and social issues, and are looking to them as a means of evaluating companies from a long-term standpoint. While investors tend to fall into one of two categories, focusing either on the long or short term, there is expected to be a further increase in ESG investment in the future, as investors look towards long-term returns.
In Japan, ESG investment initiatives have gathered pace since the Government Pension Investment Fund, Japan (GPIF) signed up the UN Principles for Responsible Investment (PRI) in 2015. If long-term investment becomes more widespread, based on factors such as dividends and business growth rather than share prices, then quarterly reports could be expected to have less of an impact on companies. From a corporate point of view too, it is going to be increasingly important to set out a long-term vision, highlight the company's strengths, and engage in active communication, in order to appeal to long-term investors. I was impressed to see that, while feeling their way around with their limited knowledge on the SDGs at first, members of staff from each of your divisions have been looking into links between changes in the business environment and the SDGs. The SDGs provide a new "lens" through which we can clearly map out issues from a long-term perspective. With that in mind, the next step would be to ask "what are our most important values?". I would recommend starting by discussing the aims of your predecessors when they founded the company, and by exploring where you want to be in 100 years' time.
As part of that process, it is important that you steer clear of a short-sighted linear approach, merely playing the cards you have been dealt. Instead, you need to adopt a quadratic outlook that goes beyond the current state of affairs. In that sense, enabling free exchanges of opinions between young researchers at the Central Research Institute is a fantastic initiative. It might seem absurd and impossible at first, but I would like you to adopt a more ambitious attitude, aimed at supporting the ideas of younger members of staff.
I think the SDGs could be used as a sort of "weapon" for companies around the world to compete with one another. That's why it would be beneficial for you to take a long, hard look at how to arm yourselves with the SDGs.
One thing you need to bear in mind when doing that is that interpretations of, and approaches to, CSR and the SDGs differ considerably between Japan and the West. The most common approach in Japan tends towards after-the-fact justification, based on tying in the SDGs with existing CSR activities. This means that companies focus on achievable goals and on accumulating results that way. The approach in Western countries meanwhile tends more towards backcasting. Companies adopt a more idealistic approach to tackling social issues, setting themselves seemingly unrealistic targets and working towards achieving them from a long-term perspective, by creating new businesses or changing values for instance. They also have good communication skills to express their strategies as story.
From a Japanese point of view, the Western approach may initially seem irresponsible. However, achieving ambitious targets and creating new value is difficult if you're merely building on what you already have. In order to make real progress in a global business environment however, it is sometimes necessary to be "strategically irresponsible," combining both perspectives from Japan and from Western countries.
While it's great to be able to disclose and publicize the company's initiatives in their integrated reports, I believe that the most important thing is your business strategy. With integrated reports which give a stronger message of "what the company will do next" becoming the mainstream of company reports, companies are going to have to rethink their frameworks for innovation. There are limitations to the conventional approach to innovation, based on a two-tiered framework consisting of products and services, and markets. In the future, innovation will be based on a four-tiered structure, consisting of products and services, markets, systems and rules, and public perception. Of those, the key will be how companies go about transforming the two lower tiers - systems and rules, and public perception. Products and services capable of transforming existing concepts and systems tend to lead to genuine innovation, as in the case of Uber, which has become a huge success with its ride sourcing services.