Interest in ESG (environment, social, and corporate governance) themes has increased recently. Principles for Responsible Investment (PRI), supported by the United Nations, aims to foster integration of ESG factors into the long-term investment perspective institutional investors are increasingly urged to adopt. We think what underlies the growing interest in ESG is a global trend of seeking more non-financial disclosure and progress in capital market and corporate governance reforms enacted by governments championing more constructive dialogue between companies and institutional investors.
The way companies respond to ESG issues such as corporate governance, increasingly diverse human resources, and environmental risks has a direct bearing on their management foundation resilience and thus the long-term growth that companies naturally seek. With short-termism coming under sharp criticism, it seems to us the growing focus on ESG by both investors and companies is inevitable.
Since fiscal year 2015, we have identified priority themes (materiality) from the dual viewpoints of corporate value and the degree of impact on society. The priority themes we have identified do not merely become the Group’s ESG themes. Through serious engagement in them, we believe we can create pathways for the Group’s long-term growth.
From this standpoint, we have also analyzed the latest ESG trends such as PRI activities and the feedback and evaluations we received from ESG research firms in fiscal year 2016. On this basis, we have cast CSR departments in the role of “in-house ESG investor” that initiates “internal engagement” exercises where they engage in constructive dialogue with departments responsible for matters relevant to high materiality themes. Climate change issues are one theme of internal engagements where risks are identified from an operational perspective based on trends following the Paris Agreement signed in December 2015 and policies are devised for a near-term response. This theme was also discussed at meetings of the Board of Directors in an effort to foster a shared understanding of related issues at the management level.
In fiscal year 2016, “fiduciary duty” and “diversity & inclusion” were the themes relating to materiality where we strengthened our response, including revisions to systems.
Fiduciary duty means putting client interests ahead of everything else in running our operations. Many in the recent past have called on financial institutions to be even more rigorous in how they fulfill their fiduciary duties. The Group regards a sincere commitment to providing principled customer service a part of the Code of Conduct that executives and employees must follow. In fiscal year 2016, we further advanced a number of initiatives aimed at bolstering rigorous adoption across all Group operations, devising Group policies on fiduciary duties and establishing the Fiduciary Duties Planning and Promotion Department. We believe fiduciary duty is an idea that goes to the heart of the trust business, and starting with the provision of products and services that serve the best interests of our clients, we seek to advance initiatives in unison across the Group that improve customer satisfaction.
In contrast, diversity & inclusion is a way of thinking that encourages people to recognize individuality and diversity in the workplace that has attracted more adherents in the past few years. One of our management strategies is to harness employee capabilities unlocked by this approach to create added value. This notion is enshrined in the Group’s Management Principles (Mission) and Code of Conduct (Value). As an organization, we have made strides in building a working environment where each employee can enthusiastically do their jobs and in fostering a corporate culture premised on diverse working styles and support for employees balancing work with childcare or care for elderly relatives. While expanding globally, we have also advanced initiatives to enable women to aim higher in their careers and promoted human rights awareness. In an effort to further strengthen such initiatives in fiscal year 2016, we established the Diversity & Inclusion Promotion Office and took other steps to strengthen related systems.
Nearly fifteen years have passed since CSR gained a wide following among Japanese companies in 2003. There is now a consensus among Japanese companies that linking CSR to their core businesses is the way forward but developing the expertise and knowhow in how to integrate CSR into the core practices of a business is not easy. From here on, however, there are no long-term growth prospects for companies unless they can find ways to expand in socially sustainable ways. Keeping this firmly in mind, we see a strategic role for CSR as we look to improve functions that illuminate our entire operations and attract public interest through the filter of ESG themes. As we continue to press ahead with CSR initiatives that open a way to long-term growth prospects, we look forward to your warm and continued support and cooperation in these endeavors.
- President Tetsuo Ohkubo
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