Visiting Professor. Graduate School of Economic Science. Saitama University
The Sojitz Group Demonstrated a Good Conceptual Understanding of CSR
No matter what kind of work a company undertakes, in order to produce worthwhile results it must first build a foundation: an appropriate conceptual understanding about where to focus its efforts. CSR initiatives are no exception. One of the most noteworthy aspects of the Sojitz Group’s report on its CSR activities this year is that the Group clearly demonstrated a good conceptual understanding of how to fulfill its corporate social responsibility.
“Two Types of Value” That Show the Way to the Future
I believe that Sojitz’s “two types of value” and the ideas contained in its annual report express the essence of CSR. That is, “value for Sojitz” and “value for society” are positioned as two separate types of value, which do not necessarily overlap completely.
If the totality of “value for the company” is “value for society” – in other words, if we think of the former as a subset of the latter – then CSR becomes the only explanation as to how business can remain socially significant. That may be the ideal situation, but I am not sure whether we can derive the future trajectory of business from this explanation. The reasons are as follows.
“Value for Society” Enables Self-Examination and Opening Up of New Business Frontiers
The significance of the “two types of value” approach in regard to the future is twofold.
First, it makes self-examination possible. Every business of every company leaves a footprint, be it environmental or social. Initiatives to link businesses in a supply chain are one example of how companies work to reduce their negative impact. In efforts like these, it is essential to be aware that value for society is not always automatically achieved through the business.
The other way in which this approach demonstrates its significance is in how it can turn resolving social problems into a new business frontier. The current needs of customers and the needs of society are not necessarily the same. Companies should start by creating shared value in a dynamic way, by creating solutions to social problems and anticipating future customer needs, and in doing so, understand that these actions are equivalent to “value for society.”
In both of these aspects, the concept of “two types of value” is meaningful.
Noteworthy Case Studies
From this perspective, I was deeply interested in two case studies covered in this year’s report. The first one is a project to meet demand for grain in Asia by converting barren land to cropland through soil improvement, opening up a new overland route, and combining Asian distribution networks. This story of shared value creation on a scale unique to a general trading company is well worth reading.
Evaluation of Response to Supply Chain Issues and Remaining Challenges
As for individual initiatives, I would like to focus on how Sojitz is addressing supply chain issues in both environmental and social terms. One trend that has become increasingly apparent in recent years is that the scope of social responsibility expected of companies has been spreading beyond companies in the narrow sense to include the problems of partner companies that form their supply chains. In terms of supply chains, I first want to commend Sojitz for becoming a member of the Roundtable on Sustainable Palm Oil (RSPO) in the year ended March 31, 2014. I also want to recognize the company for calling attention to problems and promoting practical solutions with training, exchanges of ideas, and other approaches.
The next challenge will be actually putting this into practice. This means pinpointing what and where both real and potential problems exist in the supply chains in which the Sojitz Group is involved – in other words, recognizing and assessing the impact the Group’s supply chains have on society and the environment – and then creating a system to manage supply chains in terms of both their environmental and social aspects and working to improve problem areas in cooperation with partners in the supply chains.
Expectations for the Sojitz Group (1): Confront Diverse Issues and Diverse Values
However, new issues constantly arise in various areas in Sojitz’s relationship with society, including, of course, problems within supply chains. Because Sojitz is a trading company, the fields and issues are diverse, ranging from forest conservation issues concerning lumber procurement to human rights issues in outsourced processing. On the other hand, the resources that companies can dedicate to CSR are limited. It is therefore necessary to identify, to some extent, the issues that Sojitz will focus on. The four CSR focus areas listed on page 83 provide a good guide. Moreover, the more diverse the issues, the more important it is to maintain ongoing dialogue with outside stakeholders. Such dialogue will help to more clearly define what form these “two types of value” will take and provide suitable focal points for CSR initiatives. Although publicly disclosing all dialogue with outside related parties sometimes ends up impeding progress, I would also like Sojitz to increase transparency as much as possible. In connection with that, it would be worth considering facilitating greater dialogue with stakeholders in the future – in forms such as roundtable meetings that bring together NGOs – in order to promote dialogue with stakeholders with diverse values.
Expectations for the Sojitz Group (2): View Business as Reshaping Society for Sustainability
In conclusion, the Sojitz Group’s CSR efforts are steadily progressing, including the concepts I first explained. As I said before, looking at the long term, reshaping society for greater sustainability will likely become a new business frontier. To realize the vision of “The Next 10 Years” discussed on page 13 of this annual report, Sojitz must take the lead in resolving the various issues confronting the world. I sincerely hope that further evolution of the Sojitz Group’s CSR efforts will magnify Sojitz’s social and economic importance.
Comment on Third-party Opinion
I sincerely thank Professor Fujii for once again providing his esteemed opinion on the Sojitz Group’s CSR initiatives described in Annual Report 2014.
In this year’s report we laid out our concept of “two types of value”: “value for society” and “value for Sojitz.” In his opinion, Professor Fujii noted that this concept will help to show the future trajectory of business, enable self-examination, and make resolving social issues into a business frontier. We are very grateful to have him share his comments with us again this year.
As he pointed out, our business activities extend across diverse fields – machinery, energy and metal, chemicals and the consumer lifestyle industry – and the social and environmental issues involved in our businesses are also diverse. Demands for sustainable business activities are increasing each year, coming from business partners, investors, internationally active NGOs and other stakeholders, as are demands to incorporate environmental and social considerations into our businesses. These demands are becoming ever more specific.
Sojitz has instituted policies and systems for environmental and social considerations. In particular, we have taken steps such as identifying CSR focus areas in which we will concentrate our efforts. However, I think we have now reached the point where a Group-wide review is necessary to respond to rising international demands. We intend to increase opportunities for dialogue with stakeholders as Professor Fujii recommended, and will address priority issues and carry out reviews to improve our policies and systems concerning the environmental and social impact of our existing businesses.
Like the grain value chain project that Professor Fujii reviewed, our businesses are created in response to regional issues around the world, with many of our businesses contributing to resolving these issues. Going forward, we will create opportunities throughout the Group to discuss the concepts of “value for society” and “value for Sojitz” in terms of our businesses and the possibility of “making the resolution of social issues a business frontier.” We will also work to instill these concepts in employees, and by doing so, pursue CSR that leads to the practice of the Sojitz Group Statement: “The Sojitz Group creates value and prosperity by connecting the world with a spirit of integrity.”
Executive Vice Predident
CSR Comittee Chair Sojitz Corporation.