[Feature: Corporate Sociality in the SDGs Era] Roundtable Discussion: What is the Corporate Sociality Essential for Sustainable Management?

Nowadays, it is safe to say that not a day goes by without hearing the term "SDGs (Sustainable Development Goals)."

There is a general definition of sustainability as meeting the needs of today's generation without compromising the ability of future generations to meet their own needs. I believe that working toward the SDGs for that purpose has become a common theme for humanity. That is why there are 17 goals and as many as 169 targets, but I personally feel that a company saying it is "working on the SDGs" actually says nothing at all. This is because I believe it is impossible for a single company to tackle all 17 goals concretely.

According to one survey, listed companies are working on an average of 11 goals. Therefore, it is important to see where the weight is placed in their SDG efforts. Within that context, I would like to ask everyone today how the traditional concepts of corporate social character and Corporate Social Responsibility (CSR) are changing.

First, I would like to hear about the current initiatives at each of your companies. Mr. Murata, shall we start with you?

Due to our business format as a retailer, there are themes among the 17 SDG goals and 169 targets that we are strongly involved with. However, we do not prioritize them. That said, since our management philosophy is "Always, starting with people," it can be said that we focus primarily on the aspect of human rights.

Furthermore, as a retailer, we emphasize the safety and security of our customers and the job satisfaction of our employees. For example, recently the employment of foreign workers has been increasing, so we have issued various declarations regarding the acceptance of and collaboration with such individuals.

Also, by the nature of our business, we address environmental issues such as food loss and the global problem of clothing waste as an industry close to consumers. I believe a major challenge is how we, as a retail business rooted in consumption, can work toward creating a circular economy.

Another point is urban development and the role companies play in the community. While our management philosophy is "Always, starting with people," our major strategic policy lists "urban development."

We have two urban development policies. One is to become a core tenant of urban development as part of the overall regional infrastructure, combining stations, hospitals, and retail. That is one form of wide-area urban development.

The other is to view the shopping center (SC) itself as a single town where customers can move around. Today, the nature of next-generation shopping centers is being questioned, and they are changing from their traditional forms. For example, they are now expected to function as disaster prevention bases and lifestyle hubs. In terms of urban development that includes proposals for customers to visit and lead fun, rich lives, I think we could rephrase "SC" as a "Sustainable & Community" center.

Such next-generation urban development is also included as one of the SDGs.

"Sustainable & Community" sounds wonderful.

If you look at "Tamagawa Takashimaya S・C" in Futako-Tamagawa, you can see our strategy of developing that area to create a single community. We are proceeding with the idea that the department store, Takashimaya, is the core tenant. Recently, we have also been carrying out such base developments in areas like Nagareyama Otakanomori.

I go to Tamagawa Takashimaya S・C quite often because it's close by car, and that area has changed dramatically.

That's true. It has been 53 years since Tamagawa Takashimaya S・C opened in Futako-Tamagawa, and it continues to evolve. It is said to be the first suburban shopping center in Japan, and now we are working with the Tokyu Group on attractive urban development on both sides of the station.

Next, I would like to hear from Mr. Mogi of Kikkoman.

Since our company is also quite old, we have held the spirit of social responsibility—valuing the community—since our founding, long before the talk of SDGs emerged. I feel that most companies considered "long-established" in Japan have been able to continue their businesses precisely because they possess such a spirit.

Kikkoman itself was formed in 1917 through the merger of eight privately managed businesses, but its origins can be traced back to the 1600s. For nearly four centuries, we have operated in the Noda area of Chiba Prefecture with the coexistence and mutual prosperity of the region in mind.

When the eight families merged, an injunction regarding the merger was presented to the employees. It stated that as the business grew through the merger, the responsibility of each individual employee would also grow, and that they should conduct business considering the interests of society as their own. Additionally, it mentioned fulfilling social responsibility as a company through responsible business operations, the provision of valuable products and services, and harmony with society.

In fact, in the past, we built elementary schools, and Kikkoman actually supplied the water for Noda City from the time we built Chiba Prefecture's first waterworks in 1923 until we transferred it to Noda City in 1975. Also, what is now the Tobu Noda Line was originally a Kikkoman affiliate. In short, we maintained the infrastructure that served as the core of the region.

That founding philosophy is still passed down today. We still have the corporate-run Kikkoman General Hospital, and we take pride in the fact that it contributes significantly to regional medical care. Our management philosophy is "to become a company whose existence is meaningful to global society," and our long-term vision, "Global Vision 2030," clearly states that we will "further enhance our significance in global society."

This applies not only to Japan but also overseas. It has been 50 years since we built our first factory in Wisconsin, USA, and since then, our overseas production bases have returned a portion of their profits to the local community. We aim to contribute to society primarily through environmental conservation activities, cultural preservation activities, and the promotion of mutual exchange between different cultures.

In light of the SDGs, we have organized our contributions internally into three major fields.

First, as a food manufacturer, how we contribute to the fields of food and health. Second, as we have always paid attention to the environment as I mentioned earlier, how we support the global environment. Third, since the products we provide are closely tied to the daily lives of individual consumers, how we can contribute to people and society.

We are currently organizing what kind of activities we can do within these areas and proceeding with the idea of properly realizing several of the 17 goals.

Listening to both of you, it seems the concept of SDGs is a matter of course for long-established companies. I'm starting to feel that the terminology has finally just caught up.

Recently, the Omi merchants' term "Sanpo-yoshi" (Good for three sides) has been highlighted, and we also have four items in our founding spirit known as the "Store Motto." Most of those items apply to the SDGs or ESG management. As you said, it feels like the concepts and words caught up later.

I have heard that Kikkoman has family precepts.

The founding families—the Mogi, Takanashi, and Horikiri families—each have their own family precepts. These are not necessarily incorporated directly into the company management as they are, but the core idea can be summarized as "living together with the community."

They contain everything from specific instructions like "eat the same food as your employees" to grand statements like "Virtue is the root, wealth is the branch. Do not forget the root for the branch." I believe all old companies practiced such steady management and lived in a way that was properly recognized by society.

When the SDGs emerged, they were used like a scorecard by Japanese companies, saying "we've already done this goal, but not this one." I thought the approach was completely different from the process European and American companies use to tackle the 17 goals. While each company took pride in having worked hard on coexistence and mutual prosperity with society, there may have been a part of them that viewed the SDGs with the mindset of "we've already done quite a bit of this."

At the heart of business is the Japanese spirit of valuing "Gi" (duty/honor)—the idea that business only succeeds by contributing to the region and being supported by customers. I believe there is a mindset that profit does not follow without that.

Your stories are very similar. Mr. Konuma, you are at the stock exchange, so your perspective might be a bit different. What do you think?

As everyone has said, for Japanese companies, the SDGs are largely things they have been doing for a long time. Comparing the overseas companies and securities markets I have seen with those in Japan, I feel that Japan has been working on regional and social contributions for a long time.

Overseas, especially in the US, there was an excessive trend toward shareholder primacy, where the only stakeholder was the shareholder, but now the pendulum is swinging back. Conversely, some Japanese companies had a tendency not to be strongly conscious of shareholders as stakeholders. That might not have been a problem in the past, but as the Japanese stock market has opened up to overseas investors—to the point where foreign investors now hold about 30% of shares—we must also be conscious of our relationship with overseas shareholders.

Overseas shareholders have various attributes. Nowadays, fewer people trade for the short term, and there is a significant increase in investors who value governance and want the companies they invest in to grow from a long-term perspective.

In that context, we are proposing mechanisms to incorporate good opinions while engaging in dialogue with shareholders, including those overseas, so that companies can grow sustainably. With 3,800 listed companies, some are still in the process of building their systems, but we want to encourage future efforts.

The term "SDGs" has permeated society, but if the 17 goals are to be indicators, companies must be able to logically explain their initiatives to foreign shareholders. Even if things are understood through "A-un no kokyu" (unspoken mutual understanding) in Japan, foreign investors won't be convinced unless you explain the logic and show numerical results.

Particularly from a market standpoint, environmental issues—especially climate change—are in a state of global urgency. We are asking companies in the "Prime Market" after the Tokyo Stock Exchange market restructuring to enhance the quality and quantity of their disclosures based on the TCFD (Task Force on Climate-related Financial Disclosures) or an equivalent framework.

On the other hand, since most companies listed on the TSE are Japanese, there are social issues within the Japanese community that are not as widely recognized overseas, such as the aging population and medical issues. It is important to clearly explain the importance of these uniquely Japanese themes and create dialogue channels that overseas shareholders can understand.

I want to focus on both what is required globally and what is unique to Japan.

Regarding the TCFD, I feel the standards are very vague. Various companies issue environmental reports, but because the reporting standards aren't clear and everyone says things differently, I feel it's impossible to compare them.

A few years ago, there was a confusing proliferation of standards related to sustainability, including climate change, but discussions are currently moving toward consolidation at an extremely fast pace.

The IFRS Foundation, which operates international accounting standards, launched the International Sustainability Standards Board (ISSB) last November to formulate sustainability standards in addition to accounting standards. The ISSB released an exposure draft at the end of March this year, and public consultations are being held until July, so it is expected to be formulated as an official standard within this year.

Also, in Japan, an organization called the Sustainability Standards Board of Japan (SSBJ) will be established this July, and work has begun to create a Japanese window for sustainability standards corresponding to the ISSB. Furthermore, discussions are progressing regarding the framework for statutory disclosure. Currently, based on the Corporate Governance Code, we ask companies to describe their efforts toward climate change and sustainability in the exchange's "Corporate Governance Report," but moving forward, it is envisioned that a specific section will be provided in the Securities Report for these descriptions.

Since the Securities Report is a statutory disclosure document, the expressions will be quite formal. However, discussions have begun within the government about whether it might be possible to refer from there to things like sustainability reports where companies can write more freely.

If everything is included, the integrated report becomes massive. It's probably impossible to combine financial reporting, non-financial reporting, CSR reports, and environmental reports all into one. If there were just an entrance like a portal site, it would be convenient for the readers. I hope you can organize that.

Now, Ms. Watanabe, please speak from your position as a consultant.

As a consultant, I support listed companies in promoting SDG management and help society become more prosperous.

It is a fact that many companies do not know how to integrate SDGs into their management strategy, or how to explain non-financial information, including SDGs, to investors.

Therefore, my company provides advice as a consultant on SDG management unique to each company that they can proceed with confidently, based on management theory, statistical data analysis, and on-site interviews. Also, as an IR strategy for investors, we consult on information dissemination that leads to building a shareholder base that supports the company's long-term development.

Do you feel that understanding varies greatly depending on the company?

Yes, the understanding of SDG management varies by company. Therefore, support tailored to the level of understanding is necessary. First, it is important to confirm the goal. The purpose of a company is to maintain and develop over the long term. It is necessary to grow sales, be profitable, and also be a socially good company.

SDG management, which is the path to the goal, can be organized into three stages.

The first stage is the "Start." Clarify the company motto, management philosophy, and vision that the company values. Top management commits to SDG management, determines the overall management policy, and permeates the policy throughout the organization.

The second stage is the "SDG Strategy." Based on the management policy, define what to work on from the perspective of SDGs and social character within the 10-year long-term strategy and 5-year medium-term plan as a management strategy. Investors look very closely at long-term strategies and medium-term plans within the Securities Report. Mr. Konuma mentioned that these things will be included in the statutory disclosures of the Securities Report, and how to integrate social character and the SDG perspective into management strategy is very important.

In the SDG strategy, we also build a basic policy and promotion system for tackling the SDGs. Of course, this includes specific initiatives to strengthen relationships with stakeholders: employees, the local community, the environment, and shareholders. Improving health, which is increasing in importance, is the role of a company for its employees and the local community. On top of that, we strengthen the disclosure of non-financial information.

The third stage is "Strengthening Competitiveness." It is important to actually link this to the strengthening of competitiveness so that the SDG strategy does not become a mere "pie in the sky."

Looking at the situation of various companies, most have completed the first stage. However, few have reached the second or third stages. I believe the process of integrating the SDG perspective into management strategy and the methods for manifesting it as competitiveness are what everyone is struggling with.

Profitability and growth—that is, making money and growing—are extremely important for a company. However, I believe that modern companies, especially large ones, have such a huge social impact that it is not enough for only themselves to profit and grow. Therefore, it is better to place social character alongside those two.

Every company, of course, has a strategy to profit and grow. But while everyone understands that social character is also important, I suspect there are many cases where it is questionable whether that is properly connected to the company's management as a management strategy.

Takashimaya and Kikkoman have that connection, so companies that are succeeding are fine, but I feel there are many companies that are not.

I understand that very well. Everyone is indeed struggling with it.

I heard there were 8 trillion yen in share buybacks in the last fiscal year. Of course, I think doing share buybacks strategically is a good thing, but I think the perspective of whether a company is making more proactive and bold investments, rather than just returning money to investors, is also important.

Inevitably, when it comes to sustainability measures, there seems to be a concern that costs for the next few years will increase and profitability will decline. I think people are struggling because they lack the confidence to fully explain to existing shareholders and other stakeholders that investing now might lead to stable growth 5 or 10 years down the line. If they could take that step forward, things would become much better.

I feel a change in the stock market. Previously, analysts' interests centered on news flow one month ahead and quarterly results three months ahead. Recently, there has been an increase in talk about what the company will be like in 1 to 3 years. I hope the time horizon for corporate evaluation by investors becomes even longer.

Companies should strengthen the creation of shareholders who support them over the long term. Linked with financial strategy, they should appeal to how they will demonstrate strength and improve society over a 5 to 10-year term. This is because it leads to the acquisition of future business opportunities and risk mitigation. CEOs should explain with passion that they cannot survive the changes of the times without R&D, strengthening relationships with the local community, and improving employee health.

I heard that the pharmaceutical company Eisai distributes hundreds of millions of tablets of medicine to cure endemic diseases in Africa for free. That doesn't make any money at all on a 1 to 2-year term. However, they use various data to confidently explain a simulation of how their ROE (Return on Equity) will turn positive 10 years later.

Through such explanations, foreign investors say, "I understand. I'll believe you and invest."

Among profitability, growth, and social character, profitability is a short-term goal, growth is a medium- to long-term story, and social character is long-term—or what I call ultra-long-term. There isn't an easy, immediate return, but I believe there is a mindset that it comes back if you look at it from a long-term perspective.

Growth and profitability are, in a sense, quantitative and can be numerical. On the other hand, social character is qualitative. I agree that management that cannot be sustained is meaningless.

I have a question for Mr. Okamoto. I believe that as long as we are a company, we must first generate proper profits, but is there an academic way to measure the correlation that companies with social character grow more and have more earning power?

There is no fixed consensus in academic societies, but I personally do it. First, I believe that if the top management does not understand what social character is, it will not be realized. In that sense, one method is to interview the president to see how much effort the company is putting in.

Also, since the number of interviews is small and cannot be measured quantitatively, I conduct surveys and analyze the responses through large-number observation. I conducted a survey about 30 years ago, and when I calculate how they answered then and how much those companies profited and grew afterward, companies that were already doing activities with social character in the 90s clearly have higher profit margins and growth rates. The sample is small, but looking at about 200 companies, the results become visible.

I see. Thank you very much.

In Mr. Okamoto's research, there are phases where social character becomes more important, and it was noted that social character is more important when performance is recovering.

For example, the department store industry is currently in the red due to the COVID-19 pandemic and wants to achieve a recovery. In such times, I believe social character is extremely effective.

Exactly. It is impossible to stay profitable forever based on social character alone. However, without social character, conversely, in times of crisis, you will lose support from consumers, investors, and the local community. Since that leads to the company being unable to survive, it is precisely in such times that it becomes necessary.

Looking back, corporate social responsibility first drew attention in the 1960s and 70s during the period of high economic growth when pollution issues emerged.

Next, during the bubble era, terms like 'mecenat' and 'philanthropy' became popular, which were referred to as social contribution. I believe this is also a form of social responsibility. Then, entering the 2000s, the term CSR appeared.

CSR translates to 'Corporate Social Responsibility' in Japanese, but I feel that its content has been changing in recent years. In the era of the SDGs, has CSR actually changed, or is something trying to change it? What are your thoughts on that?

Actually, our company didn't really jump on the CSR or mecenat bandwagon. When the term CSR first appeared, we said that what we were doing wasn't 'CSR,' but simply what we had been doing for a long time.

This might be a slightly different perspective, but I do feel that with the emergence of the SDGs, the agenda of social issues that companies should tackle has become clearer.

When I talk to executives in the US and Europe, they say the SDGs are an opportunity. Their perspective is that since social problems exist, providing solutions to those problems will be profitable. They say the SDGs are not a system of 'don't do this,' but rather a mechanism that 'encourages doing' something good. In that sense, I feel that Western executives have a more natural way of accepting them.

We do business with consumers under the Kikkoman brand, and in the US, the younger generations known as Millennials and Generation Z are very conscious and watch closely to see if a company is sincerely tackling social issues.

In the US and Europe, companies that properly engage in such initiatives are chosen, while those that do not are ignored. I believe this has become a metric for them when choosing, for example, where to invest, where to work, or which services and products to buy.

I feel it's still a bit different in Japan, but in business in the West, there is a sense of crisis that if you don't tackle these issues sincerely, you will be left behind and your brand will become obsolete.

"The brand becomes obsolete" is an easy-to-understand expression. In other words, there is a negative cost to not doing it, right?

That's right.

I think that serves as one logical explanation. Corporate culture varies by location even overseas; in Europe, Italy has many owner-operated companies similar to Japan. However, I feel a trend is emerging everywhere where society expects a logical explanation for things like maintaining a brand through investment or preventing obsolescence.

Even regarding environmental issues, until recently, many executives thought of them as costs, but now, regardless of whether they mean it from the bottom of their hearts, more people are saying, "This is an investment." Since our business in the US and Europe is large, we also have a strong awareness that this is an investment.

Also, looking ahead, I think there will be an increase in requirements for SDG-related disclosures as part of non-financial information disclosure, and I believe it will become important for companies to proactively disclose such information.

Regarding Generation Z that Mr. Mogi mentioned, there is actually interesting data in Japan as well. "Gen Z" has been surrounded by the internet since birth and has grown up in an environment overflowing with fake news, in a sense. Consequently, as one metric for what is correct, they fortunately choose department stores, believing that they handle trustworthy products.

Gen Z seems to be a generation that doesn't feel a high barrier to department stores even when buying brands. Such a trend is appearing in Japan too, and when we do marketing through SNS and information dissemination, we see a trend where the proportion of "Z" individuals is unexpectedly high.

It's interesting that the younger generation doesn't feel a barrier.

In the past, there was a feeling that you had to wear proper clothes to go to a department store, but people in Gen Z come to the store casually and, if there's something good and reliable, they buy it there—they have a very pragmatic approach to consumption.

Since Gen Z is becoming a quarter of the world's population, I believe that if we properly do things that resonate with those people in the next stage, it will result in fitting into the SDG categories as well.

Is that the same not only in Japan but also overseas?

It's the same. We only have four stores in ASEAN and China, but awareness is high there as well.

Also, our company is working on the recycling of clothing, but this incurs costs. Even if we collect them, they cannot be recycled at the department store, so we pay our business partners to take them away.

In particular, because we handle what is called chemical recycling—which continues to circulate as a complete circular economy—as one of our recycled materials, raw material costs are still high. In addition to that, if collection costs are incurred, we must explain to the company the significance of doing it anyway.

Since it is the employees who actually sell and collect them, the current challenge is how to thoroughly instill the significance of going that far in our employees. Since it's still not profitable, we have no choice but to recognize it as a cost, but we must keep saying that it is an investment. I think we are currently in such a transition period.

So even if it's all a cost, if you view it as an investment in the future, it leads to social value in the long run.

The younger generation has high awareness of the SDGs. In addition, I am also in charge of financial literacy promotion at the Tokyo Stock Exchange, and during the COVID-19 pandemic, awareness of stock investment and asset formation among young people has also risen significantly. Accounts at some online securities firms are growing tremendously.

Amidst various rising risks, I think it's significant that awareness of thinking about asset formation and life plans as one's own business has increased. Furthermore, from this April, the age of adulthood was lowered to 18, and financial and economic education has been included in the student guidance guidelines within school education.

Another thing is that, not just asset formation, but "empathy investment"—supporting a favorite company by becoming a shareholder even with a small amount—is increasing among Gen Z. I feel this is another major change. We have high expectations for the future of young people and believe we must provide solid information dissemination that meets those expectations.

As DC (Defined Contribution pension plans) have become common for junior high, high school, and university students, or within companies, it is also mandated that HR departments provide solid training to employees in their 10th or 20th year of employment as a regular employee welfare mechanism upon implementation. As an exchange, we are trying to help by dispatching people to such programs.

Through the pandemic, I also feel that the consumption behavior of the younger generation is shifting toward asset-building consumption.

In the past, things like clothing, which lose value as soon as they are used, were preferred for consumption, but now there is a trend toward consuming—or rather, investing in—things that do not lose value, such as watches, real estate, and artworks. It seems the orientation of young people is toward things that will remain in the future.

Expensive watches are selling very well among the middle class. We call it asset-formation type investment, and I think there is a very strong trend of that sort.

So the consumption behavior of young people is also changing.

Next, I would like to ask how you think about stakeholders in an era where risks occur frequently.

In the US, the Business Roundtable (a US business lobby group) released a statement on stakeholder capitalism in 2019, suggesting a move away from shareholder primacy. However, according to the Harvard Business Review later on, companies that signed the Business Roundtable statement actually laid off more employees compared to those that did not.

I think things became difficult due to COVID-19 and they lost their leeway, but that shows no social character at all. How should we engage with shareholders in that regard?

The US was said to be characterized by shareholder primacy, but there are companies where that isn't necessarily the case. Johnson & Johnson's Credo (a statement concisely expressing the values and code of conduct that serve as the basis for corporate activities) explicitly advocates for multi-stakeholders. It lists the order of stakeholders and says the message is to include shareholders at the end. I was surprised that such a concept exists in the US, but in reality, I think various types of investors are emerging.

In Japan, the concept of multi-stakeholders has been naturally recognized for a long time, but conversely, I think medium- to long-term sustainability investment is what's difficult.

Looking at the breakdown of our shareholders, first, because of shareholder benefits, there are many individual shareholders, and they tend to be long-term holders. Even for KPIs (Key Performance Indicators), we explain that increasing corporate value from a medium- to long-term perspective is more important than temporary ROE improvement, and we say we will act toward that goal.

We must also properly explain medium- to long-term strategies to institutional investors and have them understand that urban development takes time. There are many who do not understand, but I believe that is something we just have to keep doing.

Since it is a free market, I believe corporate management also has the right to communicate what kind of investors they want to invest in them.

For example, when we try to expand into Africa, it takes a very long time for them to start using Asian seasonings in the meals they usually eat. It might take about 30 years to break through.

Unless they are shareholders who look at things from such a long-term perspective, they will ask, "Why are you going to Africa and spending money?" Therefore, I think appropriate explanations to shareholders who support us are very important. Growing the business from a long-term perspective and properly raising profits. To that end, I believe it has become very important to build relationships of trust not only with shareholders but also with other stakeholders, including employees.

If there is a relationship of trust with shareholders, they should forgive us even if we say it will take 30 years to recover the investment. In terms of short-, medium-, and long-term, I believe a relationship of trust can be built by establishing a vision of what kind of company we will be in 10 years, and while proceeding with a medium-term plan of about 3 to 5 years, achieving and accumulating a track record of commitments that include social value as well as business performance.

If that can be built well, I think we will become a company that can steadily raise profits over the long term. It's easy to say, but very difficult to do.

Multi-stakeholder means that various stakeholders have different needs, so you cannot respond to everyone in the same way. However, if you think in the medium to long term, I believe everyone will be convinced at some point, so I think it's important for policies to be consistent.

Kikkoman's market capitalization has increased over the past few years. What do you think about being highly evaluated by overseas investors as well?

Whether a stock price is high or low is something that is difficult to comment on as management; it is something that should be evaluated by the market. If I can say one thing, it's that we have grown our performance, centered on international business, and have basically achieved what we promised, so I think the biggest factor is that we are trusted in that regard.

To gain that trust, I think it's also significant that we have traveled to major overseas cities for IR and other activities to thoroughly explain and gain agreement on not just short-term but also medium- and long-term strategies.

I see. Next, I'd like to ask Mr. Konuma: the GPIF (Government Pension Investment Fund), which manages pensions, is strengthening its sustainability investments. Will such movements change the behavior of institutional investors and also change what they demand from companies?

Among overseas institutional investors, there are companies that have a system for frequently meeting and discussing with listed companies, and those that do not. Some institutional investors say harsh things to us as well, which is stimulating.

On the other hand, I think domestic institutional investors will become important from now on. Domestic institutional investors who are entrusted with GPIF's money, including asset management companies, have had relationships with listed companies elsewhere, and until now, there were areas where it was difficult to speak up. However, now that asset management companies must also separate from corporate groups and act purely as investors, opinions from domestic institutional investors have started to reach domestic companies. For Japanese companies, being told something by domestic institutional investors who know the situation in Japan resonates more than being told by overseas investors. I think domestic investors have come to be considered quite a bit more.

Unlike employees or business partners, you aren't constantly connected with shareholders, are you?

That's right; you are connected only through the monetary aspect of capital. However, while explaining to stakeholders limited to investment—the shareholders—is a burden for corporate management amidst the various types of risks emerging today, I feel it is a very good thing for increasing sensitivity.

Recently, I have been doing support activities for companies trying to go public, and I have opportunities to talk with various presidents of companies considering listing. When asked what the benefits of listing are, I talk about gaining social trust, being able to recruit, and business growing because customers trust you, but recently I also add that you can "increase sensitivity."

Whether it's a private company or a listed company, they are exposed to various risks, so the possibility of being able to predict them increases.

So you end up having contact points with society yourself. The stock exchange newly divided the market into three—the 'Prime Market,' 'Standard Market,' and 'Growth Market'—from this April. Does being a Prime company mean having high sensitivity?

Yes. We expect the attributes of shareholders to be more dispersed across various areas. It has become necessary to include overseas perspectives as well.

I think it's important how 'sustainability' in the SDGs is understood in connection with management strategy. And I think it's important how that can be appealed to shareholders and consumers.

That's right. I believe a relationship of trust will be further built by disclosing information on a daily basis on websites and elsewhere, rather than disclosing it only after being asked.

We are also often told by investors and analysts, "If you're doing such good things, you should promote them more." However, on the other hand, I also wonder if the SDGs have permeated the awareness of employees to the point where they realize the magnitude of the responsibilities and roles the company should fulfill.

During the two years of COVID-19, we faced significant business restrictions. However, there were many things we were made to realize because of that. We were able to feel how department stores are viewed by society, and also the sense of security customers feel from department stores being open.

Even recently, we have been doing crowdfunding for Ukraine, and because people are concerned about where the donated money goes, they say they will donate if it's crowdfunding done by Takashimaya, and money is being collected at a tremendous pace.

It might be presumptuous to call it a social responsibility, but the pandemic made me realize once again that we are an entity trusted by society to that extent.

That is a way unique to Takashimaya. Indeed, such donations are where the trust of the party performing them is questioned. Kikkoman, I believe, is providing food assistance.

That's right. Along with support through the WFP (United Nations World Food Programme), we are donating our products.

It's good to focus on food as a food manufacturer. Something "unique to that company" is necessary, and each company should fulfill its social responsibility in areas related to its own strategy and strengths. In that sense, I believe social value is linked to corporate strategy.

There are many stakeholders, and there are variations in intensity, but in order to fulfill responsibility toward the stakeholder known as shareholders, the way responsibility is taken toward other stakeholders becomes a prerequisite. Without that, we cannot give back. I was made to recognize that we are now in such an era.

It means that what remains at the very end after subtracting everything else goes back to the shareholders, right?

That's right.

Ultimately, a company exists for society. In my view, social responsibility in the 60s was passive, at a level where companies dealt with complaints about pollution and such. The subsequent mecenat and philanthropy were referred to as the "beauty of hidden virtue," where companies did not promote who was donating what.

In that sense, it can be said that with CSR, we finally entered an era where companies proudly promote their stance as a corporate entity.

In Japan, there was a part where it was embarrassing for those doing social contributions to proudly state their names, but since accountability cannot be fulfilled that way, the trend of having to say it is becoming stronger and stronger.

It is called the era of the SDGs, and today I was able to confirm that among Japanese companies, those that are doing it have been doing it properly. Thank you very much for today.