KOKUYO Sustainability Message from the Managing Officer of CSV Division

Embedding materiality into our organizational culture

In our engagement with stakeholders over the past year, we found that they are very interested in corporate sustainability at KOKUYO. One topic that came up a lot was materiality. Many stakeholders wanted to know how action on the material issues would improve KOKUYO’s value, build competitive edge, and ensure that our businesses offer a differentiated value proposition. We need to dedicate more efforts to the material issues that we newly identified in the latest materiality analysis. One of these is to improve wellbeing among employees and external stakeholders. The other is to expand business fields through the Forest-Like Management Model.

President Kuroda has instructed us to disseminate the material issues throughout the workplace so that they are embedded in our organizational culture. This will be an important priority in FY2023, along with stakeholders’ requests for us to more clearly link the material issues with outcomes such as competitive edge. We must raise KOKUYO’s value if we are to make our organization indispensable to world of tomorrow. Finally, we’ll deliver social value balanced with business value and press ahead with our material issues in a way that contributes to making our Forest-Like Management Model a reality.

Transforming attitudes toward sustainability

KOKUYO has established the Sustainability Committee. The committee is composed of executive officers and chaired by me. We decided that the Sustainability Committee should meet four times to clarify an approach on sustainability. I will continue to serve as chair in 2023. In management meetings until now, we would set very clear sales and profit goals, but sustainability goals were fuzzier by comparison. However, 2023 will be a year for changing this mentality. The first step is for executives to commit themselves to the sustainability goals. The executives will then start thinking about how sustainability relates to the businesses that they manage. This in turn will cascade down, leading to a transformation of attitudes across KOKUYO in 2023.

To be honest, while senior executives may be on board with sustainability, at the operational level, staff often struggle to balance financial and non-financial concerns. Yet integrating non-financial concerns is absolutely critical in corporate sustainability. While we do have some teething problems right now, we’ll press ahead in our sustainability agenda, focusing on how KOKUYO can offer value to the world of tomorrow.

Through the materiality analysis I mentioned at the start, we crafted a differentiated value proposition. With this done, we’re proceeding with the next step, which is to engage with institutional investors. Through this engagement, we’ve received mixed reviews about materiality. Some investors appreciate what we’re doing and dig our corporate culture. Others are less sure. In light of the feedback, we need to engage better and make our message clearer, clarifying how our non-financial initiatives will help build KOKUYO’s value and ultimately contribute to the goal of 500 billion yen in net sales.

Accelerating efforts to safeguard the planet as a place for work and life

After the first two material issues (after improving wellbeing among employees and stakeholders, and expanding business fields through the Forest-Like Management Model), we have three material issues grouped under the theme of safeguarding the planet as a place for work and life: respond to the climate crisis, contribute toward a circular economy, and contribute toward a society that coexists with nature. Of these, responding to the climate crisis is a particularly important task for us. The Sustainability Committee has identified climate-related tasks and prepared an organizational process for decision-making and execution. Following this, we endorsed the Task Force on Climate-related Financial Disclosures (TCFD) and have made progress in addressing climate-related risks and setting metrics and goals.

Japan once had a serious pollution problem, and no one doubts that the private sector had a moral obligation to clean up the pollution. The TCFD agenda remains in its early days, and our workforce is yet to fully appreciate its importance. However, like the pollution problem, the private sector now has a social responsibility to battle climate change. It will therefore become increasingly important for us to disclose the social and environmental impacts of our business activities.

Under our current operations, it will be no easy task to balance the goal of cutting carbon emissions with our financial goals, since the more we produce, the more emissions we produce. We face a host of challenges such as fuel costs and the need to upgrade our facilities. But we’ll start by changing attitudes in our workforce and then we can accelerate efforts.

For the fifth material issue, contribute toward a society that coexists with nature, we need to endorse and comply with the Taskforce on Nature-related Financial Disclosures (TNFD), as we have done with the TCFD. To that end, we must identify how our current business activities are impacting the natural environment, prepare the data, and set a plan to generate positive social impacts.