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

Today, it is fair 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 the present generation without compromising the ability of future generations to meet their own needs. I believe that working toward the SDGs for this 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. Specifically, I think it is impossible for a single company to tackle all 17 goals.

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 want 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 each company's current initiatives. Mr. Murata, shall we start with you?

Due to our business format as a retailer, there are themes among the 17 goals and 169 targets of the SDGs that we are strongly involved with. However, we do not prioritize them. That said, our management philosophy is "Always, starting with people," so 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, since the employment of foreign workers has been increasing recently, we have issued various declarations regarding the acceptance of and collaboration with such individuals.

Additionally, given 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 based on consumption, work toward creating a circular society.

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 (the building) itself as a single town where customers can circulate. Currently, the nature of next-generation shopping centers (SCs) 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, fulfilling 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 excellent.

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 conducting such hub developments in areas like Nagareyama-otakanomori.

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

Indeed. 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 both sides of the station to create an attractive town.

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

Our company is also an old one, so long before the talk of SDGs emerged, we have held the spirit of social responsibility to value the community since our founding. I feel that most companies called long-established Japanese firms have been able to continue their businesses because they possess such a spirit.

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

When the eight families merged, an instruction for 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 a whole as their own. Additionally, it mentioned fulfilling social responsibility as a company through responsible business operations, providing valuable products and services, and cooperating with society.

In fact, in the past, we built elementary schools, and we 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, the current 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 communities. We aim to contribute to society primarily through environmental conservation activities, cultural preservation activities, and promoting mutual exchange between different cultures.

In light of the SDGs, we have organized internally how we can contribute in three major areas.

First, as a food manufacturer, how we can contribute in the fields of food and health. Second, as I mentioned, we have always paid attention to the environment, so how we can support the global environment. Third, since we provide products that are very close to daily life for individual consumers, how we can contribute to people and society. These are the three areas.

We are organizing what activities we can do within these areas and are 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 "Sampo-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 correspond 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 a family constitution.

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

They contain everything from specific instructions like "Eat the same food as your employees" to grand principles like "Virtue is the root, wealth is the branch. Do not forget the root and the branch." I believe all old companies have practiced such solid management and lived in a way that is properly recognized within society.

When the SDGs emerged, they were used by various Japanese companies like a scorecard, 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 takes pride in having firmly practiced coexistence and mutual prosperity with society until now, there may have been a part of them that viewed the SDGs with the awareness that "We're already doing quite a bit of this."

The Japanese spirit of valuing "Gi" (duty/honor)—the idea that business only succeeds when you contribute to the region and gain the support of customers—is at the heart of commerce, isn't it? I think there is a mindset that profits will not follow without that.

Your stories are very similar. Mr. Konuma, from the perspective of the stock exchange, your viewpoint might be a bit different. What are your thoughts?

As everyone has said, I believe the SDGs are largely things that Japanese companies 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 long been committed to regional and social contributions.

Overseas, especially in the U.S., there was an excessive trend toward shareholder primacy, where the only stakeholder was the shareholder, but now a swing back is occurring. Conversely, some Japanese companies tended not to be strongly aware of shareholders as stakeholders. While that might not have been a problem in the past, as the Japanese stock market has opened up to overseas investors and we reach a situation where foreign investors 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 prioritize governance and want the companies they invest in to grow from a long-term perspective.

In this context, we are proposing mechanisms to incorporate good opinions while engaging in dialogue with shareholders, including those from 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, but if the 17 goals are to become indicators, companies must be able to logically explain their initiatives to foreign shareholders. Even if things are understood implicitly in Japan through "A-un no kokyu" (unspoken synchronization), it is difficult to convince foreign investors unless you explain the logic and show numerical results.

Particularly from a market standpoint, environmental issues—especially climate change—are in a state where there is no time to lose globally. We are asking companies in the "Prime Market" following the TSE market restructuring to enhance the quality and quantity of disclosures based on the TCFD (Task Force on Climate-related Financial Disclosures) or an equivalent framework.

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

I want to focus on two things: 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 uses different terminology, I feel it's impossible to compare them.

Two or three 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, established 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 established 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 contact point 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 going forward, it is envisioned that a specific section will be provided in the Securities Report for such 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 the companies 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 is just an entrance like a portal site, it would be convenient for the readers. I hope you can organize that.

Now, Mr. 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 the SDGs into their management strategy, or how to explain non-financial information, including the SDGs, to investors.

Therefore, my company provides advice as consultants on SDG management unique to each company—something they can proceed with confidently—based on management theory, statistical data analysis, and on-site interviews. Additionally, 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 significantly 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 for sales to grow, for the company to be profitable, and for it to 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." This involves clarifying the corporate motto, management philosophy, and vision that the company values, having top management commit to SDG management, determining the overall management policy, and permeating that policy throughout the organization.

The second stage is the "SDG Strategy." Based on the management policy, the company defines what it will tackle from the perspective of SDGs and social character within its long-term 10-year strategy and medium-term 5-year plan. Investors look very closely at long-term strategies and medium-term plans within Securities Reports. Mr. Konuma mentioned that these things will be included in statutory disclosures, 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, local communities, the environment, and shareholders. Health, which is increasing in importance, is a role for companies to improve among employees and local communities. 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 strengthening 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 materializing it into competitiveness are what everyone is struggling with.

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

Every company, of course, has a strategy to make money 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 may be many companies that are not.

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

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

Inevitably, there seems to be a concern that responding to sustainability will increase immediate costs over the next few years and lower profitability. I think people are struggling because, while investing now might lead to stable growth over a 5- or 10-year term, they lack the confidence to fully explain this to existing shareholders and other stakeholders. 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 flows one month ahead and quarterly results three months ahead. Recently, there has been an increase in talk about what the company will look like in one to three years. I hope the time horizon for company evaluation by investors becomes even longer.

Companies should strengthen the creation of a shareholder base that supports them over the long term. They should link this with financial strategy and 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. Presidents should explain with passion that they cannot survive the changes of the times without R&D, strengthening relationships with local communities, and improving employee health.

I hear 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- or 2-year term. However, they use various data to confidently explain simulations 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 think there is a belief that it comes back in the long run.

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. As long as we are a corporation, I believe we must first generate proper profits. Is there an academic way to measure the correlation between a company having social character and it growing more or having higher earning power?

There is no fixed consensus in academic societies, but I personally do this. 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.

Furthermore, since interviews are few in number 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, it is clear that companies already engaged in social activities in the 90s 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 vital 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, you will conversely lose support from consumers, investors, and local communities during a crisis. 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 gained attention in the 1960s and 70s during the period of high economic growth when pollution issues emerged.

Next, during the bubble economy era, terms like mecenat and philanthropy became popular, and this was referred to as so-called social contribution. I believe this is also one form of social responsibility. Then, entering the 2000s, the term CSR emerged.

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, there is a part of our company that 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 something we had been doing for a long time.

This might be a slightly different perspective, but I do think 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 there are social problems, providing solutions to solve those challenges will be profitable. They say the SDGs are not about what you shouldn't do, but rather a mechanism that encourages doing something good—"pushing for 'Do'." In that sense, I feel that Western executives have a more natural way of accepting it.

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

In the US and Europe, companies that handle such initiatives properly are the ones chosen, and those that don't are ignored. I think it is becoming one of the benchmarks 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 this sincerely, you will be left behind and the brand will become obsolete.

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

That's right.

I think that serves as one logical explanation. Corporate culture varies by location even overseas, and in the West, Italy has many owner-managed companies just like Japan. However, I feel a trend is emerging everywhere where society desires a logical explanation for things like maintaining a brand through investment or preventing obsolescence.

Even regarding environmental issues, until a little while ago, executives thought of them as costs, but now, regardless of whether they are speaking from the heart, 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 benchmark for what is correct, they choose department stores—and we are grateful for this—based on the belief that they handle reliable 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 find that the proportion of "Z" individuals is surprisingly high.

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

In the past, there was a feeling that if you were going to a department store, you had to wear something proper, but people in Gen Z come to the store casually and engage in pragmatic consumption behavior, buying something if it's good and authentic.

Since Gen Z now makes up 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.

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 items, 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 the items, the current challenge is how to thoroughly instill the significance of going that far in them. 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 sociality 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 awareness among young people regarding stock investment and asset formation has increased significantly during the COVID-19 pandemic. Accounts at some online securities firms have grown tremendously.

I think a major factor is that, amid various rising risks, 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, beyond just asset formation, "empathy investment"—becoming a shareholder even with a small amount to support a company one likes—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) pensions have become common for junior high, high school, and university students, or within companies, it is also mandated that HR departments provide thorough training to employees as a regular welfare mechanism in their 10th or 20th year of employment. 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 leaning toward asset-forming consumption.

In the past, things like clothing, whose value drops as soon as they are used, were preferred for consumption, but now there is a trend toward consuming—or rather, investing in—things whose value does not depreciate, 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 that trend is very prominent.

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 as well, 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, companies that signed the Business Roundtable statement actually laid off more employees compared to companies that did not sign.

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

The US was said to have shareholder primacy, but there are companies where that is not 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 the message is to please put shareholders last. I was surprised that such a way of thinking 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, there are many individual shareholders because of shareholder benefits, 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 for that purpose.

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 think it's something we just have to keep doing.

Since it's a free market, I think 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, the conversation becomes, "Why are you going to Africa and spending money?" Therefore, I think appropriate explanations to shareholders who support us are very important. We grow the business from a long-term perspective and also generate proper profits. To achieve that, I think 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 think 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, realizing things committed to including sociality as well as performance and accumulating a track record.

If that can be built well, I think we can become a company that can reliably generate 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 we cannot respond to everyone in the same way. However, if we think in the medium to long term, I think everyone will be convinced at some point, so I believe 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 the stock price is high or low is something that is difficult to comment on as management; it's 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 realized 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 not only short-term but also medium- and long-term strategies and gain agreement.

I see. Next, I'd like to ask Mr. Konuma; the GPIF (Government Pension Investment Fund), which manages pensions, is strengthening sustainability investment. 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, had relationships with listed companies elsewhere, and until now, it was difficult for them to speak up. However, now that asset management companies have to 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 started to be taken quite seriously.

Unlike employees and business partners, you are not constantly connected with shareholders, are you?

That's right; the connection is only through the monetary aspect of capital. However, while various types of risks are emerging now, explaining things to stakeholders limited to investment, like shareholders, is a burden for company management, but at the same time, I feel it's 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 say that social trust can be gained, recruitment becomes possible, and business grows because customers trust you, but recently I also add that "sensitivity can be increased."

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

So you end up having contact points with society yourself. The stock exchange newly divided the market into three—"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 the "sustainable" aspect of 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. Rather than disclosing after being asked, I think a better relationship of trust will be built by disclosing on a daily basis through websites and other means.

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 whether 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 the sense of security customers feel about department stores being open.

Even recently, we have been doing crowdfunding for Ukraine, and because people are concerned about where their 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 COVID-19 made me realize once again that we are an entity trusted by society to that extent.

That is a way unique to Takashimaya. I think the trust of the party conducting such donations is exactly what is questioned. Kikkoman, I believe, is providing food assistance, right?

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

As expected, focusing on food as a food manufacturer is good. Being "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 think sociality 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 in such an era now.

It means that what remains at the very end after subtracting everything else goes back to the shareholders, doesn't it?

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 next phase, mecenat and philanthropy, was 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 those doing social contributions felt embarrassed to proudly state their names, but I think the trend where they must say it because they cannot fulfill accountability otherwise is becoming stronger and stronger.

It is called the era of the SDGs, but 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.