Post on 26-Jun-2020
transcript
ISSN 1346-9029
FRI Research Report No.437 March 2017
Senior Research Fellow, Takafumi Ikuta
Japanese Companies̓ Activities in the Age of the SDGs
This is an English summarized version of FRI Research Report No.437 “Corporate Strategy in the Age of the SDGs” (2017) by Takafumi Ikuta (URL http://www.fujitsu.com/jp/Images/no437.pdf : available in Japanese only), edited for overseas readers.
FUJITSU Research InstituteEconomic Research Center
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1 Trends surrounding companies and SDGs
It has been more than a year since the United Nations launched the Sustainable
Development Goals (SDGs) in January 2016. SDGs are goals which the
international community should achieve by 2030 with the aim to achieve
sustainable development mainly with focus on economic growth, social inclusion,
and environmental conservation. SDGs have replaced the Millennium Development
Goals (MDGs), which were established in 2000 with a timeline set for 2015. The
MDGs had 8 goals and 21 targets, while the SDGs are far more extensive with 17
goals and 169 targets. The SDGs will serve as a global “common language” for a
long period, until 2030, in planning measures for addressing social challenges.
All U.N. member states including Japan are required to report their progress
towards achievement of SDGs and expected to establish domestic frameworks,
such as SDGs-related policies and indicators. Accordingly, the Japanese
government set up the SDGs Promotion Headquarters chaired by the prime
minister in May 2016, and laid down the SDGs Implementation Guiding Principles in
December 2016 based on the following vision: “Become a leader toward a future
where economic, social and environmental improvements are attained in an
integrated, sustainable and resilient manner while leaving no one behind.”1 As a
consequence, initiatives toward the achievement of SDGs are expected to begin in
earnest also in Japan.
Businesses will not be obliged to make efforts toward SDGs. However, business
communities, as well as governments of various nations, international
organizations, academic institutions, and NGOs, were involved in the SDGs
formulation process, and SDGs define the role of the private sector toward their
achievement. The international community can benefit significantly if major global
companies, which are rich in human resources, technology, and financial resources,
work on addressing social challenges in the entire supply chain. There are thus
great expectations for companies. Japan’s SDGs Implementation Guiding Principles
state that “it is critical that the private sector contributes to solutions for the public
agenda.”
In addition, the SDGs Implementation Guiding Principles stipulate the
government’s policies toward private sector engagement that the government will
1 http://www.kantei.go.jp/jp/singi/sdgs/
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consider incentive measures, such as sharing good practices of private-sector
businesses on advanced implementation measures and giving awards, as well as
making efforts for creating an environment conducive for companies in the private
sector to foster innovation in their businesses. In addition, the Ministry of the
Environment has been working on the formulation of guidance designed to promote
efforts for SDGs made by small- and medium-sized companies, with completion
targeted by the end of FY2017. Meanwhile, the Japan International Cooperation
Agency (JICA) has conducted projects aimed to promote base of the pyramid (BOP)
business that contributes to solving issues faced by the poor. Beginning from 2017,
JICA expanded the range of target businesses and started to provide support to
companies which are considering contributing to the achievement of SDGs through
business in developing countries2.
Consideration of SDGs, a common language for solving social challenges, is
essential for companies in planning their future corporate activities. There is a good
chance that corporate activities will inhibit the achievement of SDGs, and
companies will have to put weight on business activities that take SDGs into
consideration from the viewpoint of risk management. In addition, there will be an
increasing tendency that the perspective of SDGs will be incorporated in corporate
evaluation, etc. Many goals and targets are set out under SDGs, which suggests
that there are ample global business opportunities that can be addressed. The
desired course of action for companies is to review their business activities
including value chains from the perspective of SDGs to identify factors that could
have a positive impact and a negative impact, respectively, on society, and examine
new business opportunities and reduce risks.
According to the report by the Business and Sustainable Development
Commission (BSDC)3, achieving the SDGs will open up US$12 trillion of market
opportunities worldwide by 2030 in four sectors: “food and agriculture,” “cities,”
“energy and materials,” and “health and well-being.” The Japanese government’s
SDGs Implementation Guiding Principles set out eight priority areas: 1)
Empowerment of all people, 2) Achievement of good health and longevity, 3)
Creating Growth Markets, Revitalization of Rural Areas, and Promoting Science
2
http://gwweb.jica.go.jp/km/FSubject9999.nsf/3b8a2d403517ae4549256f2d002e1dcc/85bbeffde3b5679149258059002b561d/$FILE/%E2%96%A0JICA's%20Position%20Paper%20on%20the%20SDGs.pdf
3 Business and Sustainable Development Commission (2017) “Better Business, Better World”
(http://report.businesscommission.org/report)。
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Technology and Innovation, 4) Sustainable and Resilient Land Use, Promoting
Quality Infrastructure, 5) Energy Conservation, Renewable Energy, Climate Change
Countermeasures, and Sound Material-Cycle Society, 6) Conservation of
Environment, including Biodiversity, Forests and the Oceans, 7) Achieving Peaceful,
Safe and Secure Societies, and 8) Strengthening the Means and Frameworks for the
Implementation of the SDGs, as well as concrete measures under those areas. It is
possible for companies to explore new business opportunities in Japan and
overseas in relation to those measures4.
4 http://www.kantei.go.jp/jp/singi/sdgs/dai2/siryou1e.pdf
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2 Status of efforts by Japanese companies
2.1 Reference to SDGs
Figure 1 shows the status of reference to SDGs by 1,408 Japanese companies,
published in “2017 CSR Companies Complete Guide” (Toyo Keizai Inc. 2016). Of the
1,408 companies surveyed, 218 companies (15% of the total) make reference to
SDGs and 99 companies (7% of the total) are considering doing so. Totaling these
figures, about 23% of 1,408 companies either make, or are considering, reference
to SDGs. Given that it was from January 2016 that SDGs came into force, SDGs
have gained great attention from companies. The figure also indicates that the
percentage of companies that make, or are considering, reference to SDGs is higher
in manufacturing industries (including agriculture, forestry and fisheries, mining,
and construction) than in non-manufacturing industries.
Figure 1. Status of Reference to SDGs by Japanese companies
(Source) Created by FRI based on data from “2017 CSR Companies Complete Guide”
(Toyo Keizai Inc. 2016)
A comparison of percentages of companies that make, or are considering,
reference to SDGs in key industries show, as seen in Figure 2, that the
transportation equipment industry had the highest percentage (37%), followed by
the electronics (33%), foods (29%), finance/insurance (29%), and
chemicals/pharmaceutical (27%). On the other hand, percentages were relatively
low in industries, such as wholesale (9%), retail (10%), and iron &
Manufacturing
(733 companies)
Non-manufacturing
(675 companies)
Total
(1408 companies)
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steel/nonferrous metals (15%). Among manufacturing sectors, industries that
deliver goods to final consumers tend to have high percentages of companies that
make, or are considering, reference to SDGs. This indicates that a high percentage
of companies in those sectors place emphasis on explaining their engagement in
social challenges to consumers. Among non-manufacturing companies, the
finance/insurance industry has a high percentage of companies that make, or are
considering, reference to SDGs. The possible reason is that companies in this
industry place emphasis on screening companies for making investment, such as
through ESG investments, or providing loans by taking into account their
environmental, social and governance factors, which may have led to an increased
awareness of SDGs among them. On the other hand, the wholesale and retail
industries are characterized by a very large number of companies surveyed,
including small-size companies. This may be the reason that these industries had
low percentages of companies which make, or are considering, reference to SDGs.
Figure 2. Status of Reference to SDGs by Japanese companies by key
industry
(Source) Created by FRI based on data from “2017 CSR Companies Complete Guide”
(Toyo Keizai Inc. 2016)
(Note) Figures (%) shown on the right of the bars are the ratios of companies that
make, or are considering, reference to SDGs.
23%
29%
27%
15%
20%
33%
37%
20%
19%
9%
10%
29%
18%
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2.2 Efforts of major companies
Figure 3 shows the result of a survey of 219 Japanese companies ranked on the
2016 Forbes Global 2000 list5 on whether they make reference to SDGs, based on
the information publicly available on their websites, etc. (as of December 31, 2016),
to closely examine the efforts of major companies. Of the companies surveyed, 72
companies (33% of the companies surveyed) made statements about SDGs, and
11 companies (5% of the companies surveyed) disclosed that they had received
external indication on SDGs6.
Figure 3. Status of mention of SDGs by Japanese companies listed on the
Forbes Global 2000 (As of December 31, 2016)
(Source) Created by FUJITSU RESEARCH INSTITUTE based on “Forbes Global 2000”
(2016) and publicly available information of each company
Compared to the companies on the CSR Ranking of Companies surveyed as
described in 2.1, these 219 companies surveyed tend to be limited to large-size
companies7, 8. In addition, one would expect that the ratio of companies which
5 https://www.forbes.com/global2000/list/#country:Japan
6 Companies whose CSR Reports included third-party opinions “requesting consideration of SDGs”
(Companies which received external indication on SDGs and made mention of SDGs were classified under “companies that made mention of SDGs”.) These companies did not express their views or make mention of their direct/indirect efforts regarding SDGs but they expressed their recognition of SDGs. For this reason, they were distinguished from “companies that made no mention of SDGs”.
7 Forbes Global 2000 is a list of top 2000 publicly traded companies in the world, as measured
comprehensively by revenues, profits, assets, and market value. Accordingly, size of a company is not a selection criterion, but many of the companies on the list are large-size companies.
8 The difference between the survey of companies on the CSR Ranking of Companies and that of
Japanese companies ranked on the Forbes Global 2000 is that companies surveyed in the former are those which responded to the questionnaire conducted by Toyo Keizai Inc., while in the latter survey, the subject of the survey was publicly available information on all the 219 Japanese companies ranked
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responded that they made reference to SDGs when specifically asked about it, as
was the case in the survey for the CSR Ranking of Companies, is higher than the
ratio of companies which mention SDGs in publicly available information sources.
Considering these, the fact that the ratio of Japanese companies ranked on the
2016 Forbes Global 2000 that made statements about SDGs (33%) is higher than
the ratio of companies on the CSR Ranking of Companies that make reference to
SDGs (15%) indicates a very high level of interest on SDGs among major Japanese
companies.
Of the 219 Japanese companies, 56, which account for 57% of the 99 companies
ranked high (companies in the top 1,000), made statements about SDGs, while
only 16, or 13%, of the 120 low-ranked companies (companies ranked 1000 to
2000) did so, indicating a large gap between upper-ranked companies and
lower-ranked. A comparison of the 105 manufacturing and 114 non-manufacturing
companies ranked on the Forbes Global 2000 indicates a tendency that the ratio of
companies which made statements about SDGs is higher for manufacturers (47%)
than that for non-manufacturers (20%).
Figure 4 shows categorized statements about SDGs made by 72 companies,
which were among Japanese companies ranked on the Forbes Global 2000. The
most common case was statements about SDGs in messages from top
management (or director in charge) of a company included at the top-page of a
CSR report, etc., and 40 companies out of the 72 companies are classified to this
case. In Japan, we can see from this that “statements about SDGs” often means
under present circumstances that top management make statements that their
companies are aware of SDGs or are hoping to contribute to SDGs.
Some companies have already launched concrete measures. Specifically, there
are 10 companies which have reflected SDGs in their CSR policies and principles.
For instance, FUJIFILM Holdings Corporation relates their CSR plan promotion
policy to SDGs by conducting a review of the Medium-Term CSR Plan, whereby they
go over the progress in addressing their initially-set priority issues by taking into
account the perspective of SDGs9. NTT identifies CSR issues with a view to SDGs in
revising the NTT Group CSR Charter10. ANA plans to reflect SDGs in their following
CSR Policy11.
on the Forbes Global 2000.
9 http://www.fujifilmholdings.com/en/sustainability/valuePlan2016/process/index.html
10 http://www.ntt.co.jp/csr_e/groupcsr/csr_policy.html
11 https://www.ana.co.jp/group/en/csr/group/activity.html
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Figure 4. Details of statements about SDGs by 72 Japanese companies
ranked on the Forbes Global 2000 (As of December 31, 2016)
(Source) Created by FRI based on “Forbes Global 2000” (2016) and publicly available
information of companies surveyed
(Note) The total number of companies (total of the figures shown on the right of the
bars) exceeds 72 since there are companies which made different types of
remarks about SDGs.
There were 18 companies that made reference to SDGs when they analyzed their
materiality (priority areas and priority issues), which was the second most common
case following the case in which companies’ top management made statements
about SDGs in their messages. For instance, Bridgestone Corporation makes
reference to SDGs to identify social issues in examining priority areas for addressing
sustainability issues, and specifies areas in which they can contribute to SDGs12.
Asahi Group Holdings, Ltd. has renewed CSR priority themes by reflecting SDGs13.
Some companies are working to relate their businesses to SDGs. There were 13
companies which were comprehensively examining relevance between all 17 goals
of SDGs and their businesses. Since details of businesses differ among companies,
some companies indicated relevance between part of the 17 goals and their
businesses, while others showed relevance between all the 17 goals and their
businesses. For instance, Ricoh Company Ltd., after indicating top priority areas
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http://www.bridgestone.com/responsibilities/index.html 13
http://www.asahigroup-holdings.com/csr/philosophy/theme.html (Japanese)
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based on the materiality analysis, has set out goals for SDGs and concrete
initiatives related to the top priority areas14. Daiichi Sankyo Co., Ltd. has disclosed
a list of their comprehensive initiatives toward achieving goal for each of the 17
goals of SDGs 15 . There were 15 companies which picked out some of their
businesses and showed their relevance to SDGs, although they did not indicated
relevance between all of their businesses and SDGs. Ajinomoto Co., Inc., for
instance, has explained their nutrition improvement projects in developing nations
in relation to SDGs16. Toppan Printing Co., Ltd. relates SDGs to their support for
literacy rates improvement17 and calculation of water resources protection effects
of wood from forest thinning18.
There were three companies which disclosed their efforts for getting SDGs across
in the company. For example, ITOCHU Corporation has introduced their workshop
program on SDGs for their Group companies19, 20. Sekisui Chemical Co., Ltd. has
disclosed that SDGs were brought up in discussion at a presidents’ meeting of
overseas affiliates21.
In addition, there were eight companies which disclosed that they had made
indirect efforts for SDGs through participation in the UN Global Compact and the
World Business Council for Sustainable Development (WBCSD), etc. or through
initiatives by corporate foundations, although no direct action had been taken. One
unique example is the global advertising campaign to support SDGs, rolled out by
DENTSU INC. jointly with five major global advertising groups22.
14
http://www.ricoh.com/csr/strategy/materiality.html 15
http://www.daiichisankyo.co.jp/corporate/csr/gc/#gc_list (Japanese) 16
http://www.ajinomoto.com/jp/activity/csr/report/ (Japanese) 17
http://www.toppan.co.jp/library/japanese/csr/files/pdf/2016/csr2016.pdf (Japanese) 18
http://www.toppan.co.jp/news/2016/12/newsrelease161214.html (Japanese) 19
https://www.itochu.co.jp/en/csr/itochu/office_penetration/index.html 20
http://blog.unic.or.jp/entry/2016/06/22/143159 (Japanese) 21
http://www.sekisui.co.jp/csr/csr_manage/management/index.html (Japanese) 22
http://www.dentsu.co.jp/news/release/2016/0627-008973.html (Japanese)
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3 Toward Strategic Utilization of SDGs
We may safely say that SDGs initiatives achieved sufficient results in 2016, the
first year of SDGs, considering that companies expressed their awareness of SDGs.
However, if companies do not plan or implement new initiatives with an eye to
contributing to SDGs nor do they make efforts for utilizing SDGs in corporate
management, being satisfied that they have explained their existing initiatives in
relation to SDGs, or the so-called ex-post labeling, there is a possibility that SDGs
initiatives will only be a temporary trend among companies. Amid the growing
interest in the relationship between companies and society, companies may face
increasing risks and lose market opportunities if their efforts for SDGs will be only
be temporary, considering that SDGs will continue to be a global common language
for discussing social challenges until 2030.
The following main challenges for SDGs were revealed as a result of examination
of Japanese companies’ previous efforts, or the status of consideration of SDGs: 1)
clarification of purposes, 2) organizational response, and 3) correct understanding
of SDGs. These challenges are interrelated in many cases, and companies’ efforts
for taking proactive action toward SDGs with great interest could lead to problems.
Under these circumstances, it is desirable that companies clarify the purposes of
utilizing SDGs. Possible examples are to avoid risks they assumed, create business
opportunities, improve understanding and evaluation from stakeholders, or utilize
for innovation of internal management. What they should avoid is to make public
their awareness of SDGs and disclose relevance between their businesses and SDGs
without going through sufficient discussion on their purposes for utilizing SDGs.
If companies clarify the purposes of their activities for SDGs to a certain degree,
it will lead to improvement in organizational response to SDGs. SDGs
comprehensively cover social challenges, and therefore stakeholders involved are
varied. Activities for SDGs may require involvement by a wide range of divisions,
such as IR, public relations, labor management, environment, CSR, corporate
planning, product development, and procurement, and thus it is desirable to
establish a cross-organizational framework. Discussion and examination about
SDGs by specific divisions, or individual responses by two or more divisions23,
23
In the case of Japanese companies, in particular, there are cases in which the environmental division takes interest in and studies SDGs ahead of other divisions (e.g., the CSR division) because they have engaged in discussion on sustainability (mainly from the environmental viewpoint), such as preparation
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should be avoided.
If companies readily indicate reference between their businesses and SDGs
without adequate understanding of SDGs, they will be unable to show contribution
to SDGs in the end, which can lead to undermining of trust in them. SDGs cover
many, but not all, social challenges. In addition, SDGs are essentially goals set for
governments. Therefore, corporate activities can contribute to some but not all of
them. Accordingly, companies should not explain all their initiatives related to
solving social challenges in relation to SDGs just because they want to utilize SDGs
proactively.
These challenges have occurred partly because companies’ interest in SDGs has
risen sharply and they have rushed in too quickly. However, those challenges can be
improved if companies will make trials and errors in efforts for contributing to SDGs
and accumulate knowledge and know-how.
As mentioned above, there is a rapidly growing interest in SDGs among Japanese
companies. Companies, centering on large companies, have expressed their
awareness of SDGs, and some companies have started to take concrete action with
consideration to SDGs. The interest of Japanese companies is shifting gradually
from “What? (What are SDGs?)” to “How? (How to utilize SDGs)”. The question will
be “whether SDGs have been established firmly in corporate management” in 2017
and thereafter. Amid the progress of penetration of SDGs as a global common
language, the competitiveness of a company will depend significantly on whether
they can utilize SDGs well to continue their business activities based on providing
solution to social challenges through their core businesses. The key points in
examining strategic utilization of SDGs by companies are to consider “relations
between their businesses and SDGs” and “how to utilize SDGs” on the basic
premise that they “understand SDGs”. It is desirable, further, to “evaluate their
efforts from the perspective of SDGs.”
What is necessary for Japanese companies to show their presence in the global
society in 2030, the target year of SDGs, is backup from the entire business sector
and the government to take advantage of their strengths, in addition to individual
efforts of Japanese companies toward the achievement of SDGs. The Japanese
government’s SDGs Implementation Guiding Principles may seem that they were
created by reflecting all measures being implemented or examined by ministries
and agencies in the context of SDGs. We need to pay close attention to prevent the
of an environmental report. However, it is difficult for the environmental division to cover all the areas of SDGs, and it is desirable that companies consider establishing a top-down, company-wide system.
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implementation guiding principles from being reduced to “ex-post labeling”, just
like efforts by Japanese companies. The Japanese government needs to make
continuous efforts, such as support and information provision to companies and
raising their awareness, so that companies’ interest in and efforts on SDGs will not
end up being a temporary trend.
FUJITSU Research Institute, Economic Research Center
New Pier Takeshiba South Tower, 1-16-1 Kaigan, Minato-ku, Tokyo 105-0022, JapanTelephone:+81-(0)3-5401-8392 Facsimile:+81-(0)3-5401-8438
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