DECISION-MAKING PROCESS FOR MATERIAL ISSUES
Sustainable Management Decision-making Process for Material Issues
In FY2022, we updated our material issues. We had identified a set of material issues back in FY2020 based on a standard materiality analysis. However, we subsequently decided to conduct a more thorough materiality analysis so that our material issues would align with the kind of society we envisage: a self-directed, collaborative society. For the FY2022 materiality analysis, we performed a gap analysis. Specifically, we reassessed the current societal impacts of our two strategic business domains defined in our long-term vision (CCC 2030) and third medium-term plan (Field Expansion 2024). We then back-casted from the 2030 society we envisage to determine the gap between current impacts and desired impacts. With this information, we identified issues that we need to proactively address. We divided these issues into economic and social categories.
Decision-making Process for Material Issues
ESG: Environmental, Social, Governance
Step 1: Identify ESG issues
First, we identified 34 potential environmental, social, and governance issues by referring to the SDGs and to data from MSCI Inc. and the Sustainability Accounting Standards Board (SASB).
| ||Perspective||Was a survey conducted?||Was desk research (secondary research) conducted?|
|Investors (MSCI, SASB)||ー||○|
|National and local governments (growth strategy)||ー||○|
|Our businesses||SDG contribution from products, services, and CSR items||ー||ー|
|Senior management||No, but a discussion was held|| |
SDGs：Sustainable Development Goals
MSCI：Morgan Stanley Capital International
SASB：Sustainability Accounting Standards Board
CSR：Corporate Social Responsibility
Step 2: Analyze each issue’s impact on stakeholders
Having identified potential issues, we then rated each issue in terms of how much it matters to stakeholders and how much it impacts our business. Issues that had a high score on both metrics were defined as material.
Step 3: Submit to management for review
The issues rated as material were then reviewed by the management to determine whether the materiality designation was valid.
Step 4: Define material issues and goals
Finally, in regard to the material issues, we set goals/targets for 2030.
|Material issue||2030 goal|
|Material issue 1
Pitch ideas for new ways of working
|Pitch ideas for ways of working in the new normal, support work-life balance||Employees act on their initiative and solve problems through teamwork|
|Material issue 2
Promoting diversity and inclusion
|Build a diverse, innovative workplace that is inclusive of gender, disability, and nationality||Workforce is diverse, individual differences are respected, and employees feel empowered|
|Material issue 3
Respond to the climate crisis
|Reduce CO2 emissions through energy efficiency and renewable energy. Use forests to offset emissions||Offset CO2 emissions: Contribute to absorption of at least 6,000 tons of CO2 a year|
|Reduce CO2 emissions: Emissions down by 26% from 2013 level in 2030|
|Material issue 4
Contribute toward a circular economy
|Promote human rights and resource conservation/waste reduction in the entire supply chains||100% of waste (office, construction, inventory) recycled|
|Procurement guidelines applied throughout corporate group|
|Material issue 5
Contribute toward a society that coexists with nature
|Protect biodiversity and reduce use of hazardous chemicals to minimize environmental impacts||Promotion of the use of legal timber|
|Forests: Forests thinned at 150 hectares a year|
|Reedbeds: Reeds trimmed at 1.5 hectares a year|
Updating the material issues
In FY2022, we reviewed progress toward the 2030 goals in light of the material issues we had defined in FY2020 . We then decided to update our material issues to gain a better understanding of the issues we must address in order to achieve our goal of a self-directed, collaborative society.*
- Identify issues
The process of updating the material issues began with a review of the existing issues we had defined in FY2020. In that review, we thought about the strategic issues we will need to address if we are to lead the way toward a self-directed, collaborative society,* a society in which no idea goes to waste. Through the review, we sought to identify a new set of material issues.
A self-directed, collaborative society is a society that respects personal values and cherishes social bonds. In this society, horizontal connections between people, tools, and environments provide new opportunities to collaborate for a better world.
- Divide issues into economic and social categories
In light of the findings of the review conducted in 1 and the strategic themes outlined in the medium-term plan, we identified specific issues to make up for the inadequate elements in the previous materiality analysis. We divided these issues into economic and social categories and consolidated them into issues of a more general nature. We then plotted these issues onto the graph shown below.
- Consider realigning material issues
Previously, our material issues were aligned with the SDGs. However, in this stage, we realigned them with the society we envisage. We then built an organizational framework for these realigned issues. We have set KPIs for our new set of material issues. For now, the KPIs are based on our vision for 2030.
KPI: Key performance indicator
- Final review of material issues by Sustainability Committee
The Sustainability Committee, chaired by the head of the CSV Division, will conduct a review and made the final decision on the material issues. Under the framework provided in Japan’s Guidance for Collaborative Value Creation, we will engage with investors and incorporate their feedback. We will iteratively update the material issues to reflect changes in the social and economic landscape.