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CSR Report 2013

What the JSR Group Needs to Do
to Continue to Step up Its CSR Initiatives

roppongi club

Realizing true innovation together with
internal and external stakeholders

Ms. Sonoda

Ms. Sonoda

The JSR Group has adopted “Materials Innovation” as its Corporate Mission. To realize innovation, it is important to possess the novel conception that turns a negative impact into a positive one or a positive impact into an even more positive one. The driving force for this kind of conception is employees, and therefore, their capacity building is crucial. How do you address this issue at the JSR Group?
Shimizu In my view, Materials Innovation has two aspects: realizing innovation of the materials themselves and bringing innovation to the world through our innovative materials. It is important that all employees, including researchers and marketers, have a vision of how the world should be. Their vision should not be one of complacency, nor should it be one that only satisfies our direct customers. Employees must look outward into their surroundings and need to be sensitive in identifying upcoming trends in society. When new markets are created in emerging countries in addition to developed countries, it will be increasingly important to develop products that can meet the exact needs of such expanding markets.
Dr. Yasui It seems to me that, especially in Japan, innovation just means creating something good that exceeds consumer expectations. But innovation should not only be like that, and in my opinion, we need a kind of “soft backcasting.” We need to understand the current status of society and project how we think it will change in order to get a picture of how it will be in the future. From this picture we can then break down our future needs. During this process, it is important that analyses be based on a global perspective rather than only from a domestic perspective in order to grasp the overall trend of thought from people around the world, as well as roughly how many people think that way and what they need. In short, looking at things from a broad, panoramic perspective is indispensable.
Hirano This may sound a little harsh, but I feel Japan is risky due to its richness. Although the world is being confronted with various issues such as over-population and environmental problems, Japan is so comfortable that people in the country don’t even notice these problems. In the accounting and financial division that I’m in charge of, the staff are given an opportunity to work abroad in rotation. This is just a small practice conducted in our division, but we try to send employees abroad as much as possible anyway.
Kubo I think that kind of practice is important because it allows young employees to recognize the peculiarity of Japan, where everything is so convenient that you can live with the utmost ease.
Ms. Sonoda When the JSR Group’s corporate attitude as talked about here becomes more visible, investors’ evaluation of the Group will change.
Dr. Adachi Socially responsible investment (SRI) is still considered to be an unusual form of investment in Japan, but it is already a common practice in Europe, where investors integrate environmental, social, and corporate governance (ESG) risk factors into the investment decision-making process as a matter of course. Even with excellent financial performance, companies with ESG risks are considered as not suitable for long-term investment. In other words, ESG is used as an initial screening criterion for investment before a final decision is made based on financial performance. JSR’s foreign stock ownership ratio stands at 35% and we expect this ratio to increase at an accelerated rate. Disclosing all information on JSR’s plans and guiding principles should most assuredly help JSR boost its performance in terms of SRI. This endeavor should not only appeal to investors who are already well aware of SRI, but also make those who were unaware realize the social trend toward SRI.
Shimizu I feel that it may be wrong to only emphasize ESG. What we need to do first is to carry out our primary business properly, and while doing so, we make sure that the concept of ESG constitutes a natural part of our business—this is what I think is more desirable. The ideal situation is that ESG factors are reflected in the design of our systems and organization as well as in employee education as a matter of course. JSR has promoted the E2 Initiative, aimed at creating value in environmental performance, both on aggressive and defensive fronts. This is an example of the ESG perspective being incorporated into business operations. We conduct LCAs during the product development phase to determine whether or not a new product will bring about a reduction in energy consumption, and in which phase it will occur, i.e., will it be within JSR or during the phase of product use by individual users. Our fundamental approach is that we will not do anything that harms LCA results. I believe that value criteria for environmental performance are widespread throughout the company.
Kawasaki We also incorporate the LCA approach into our capital spending. We make it clear that we make investment decisions only after examining both positive and negative consequences of an investment project and we choose the option that will secure returns for us.
Hirano We thoroughly examine and estimate the size of returns earned from an investment, with CO2 emissions factored in as costs.
Dr. Adachi Companies report CO2 emissions as required by the Carbon Disclosure Project. In recent years, disclosure of water usage has been required as well, and land will likely be the next subject of disclosure. Companies have recently been expected to quantify the impact of their corporate activities, comprised of the common assets of people and corporations, on the planet, which are referred to as “natural capital,” and to take a corrective approach as a part of corporate management, if necessary.
Kubo JSR has just begun to conduct calculations for this purpose.
Ms. Sonoda It is worthwhile to make public JSR’s attempt to address natural capital issues, even though the effort is still only halfway complete. It may come as a surprise to some stakeholders to know that a chemical company has started thinking about natural capital.
Shimizu Products supplied by chemical companies are used in a variety of ways, and therefore companies have traditionally paid full attention to their relationship with society. As mentioned earlier, chemical companies employ many resources for raw materials and fuel in order to supply products to society. Therefore, they cannot justify their existence as entities that consume many resources for their operation unless the contribution of their products to society has been fully substantiated.

Pursuing a clear vision of how our business should be and
turning it into an engine to drive our daily operations

Ms. Sonoda I’d like each of you to wrap up today’s discussion.
Dr. Adachi As mentioned earlier, it is often the case that in Japan, innovation refers to only a tiny improvement. But real innovation must be something that is more dramatic and can change the very foundation of things. In my opinion, the material industry plays a key role in the creation of such innovation. Material technology is essential for the development of functions and products that elicit amazement from consumers. In other words, real innovation can be born from changes in materials. In this sense, my expectations are high for the JSR Group. I also like the Group’s practice of giving many employees an opportunity to work abroad because I think this promotes creativity. Employees’ familiarity with the everyday lives of people in various countries will surely be a source of innovation that will change their lives around the world.
Dr. Yasui

Dr. Yasui

In my view, the future of Japan will be bleak if nothing changes. The main reason for this is due to the local-mindedness of Japanese people. It seems to me that Japanese people feel comfortable in staying close together in a small area. This can also be said of companies. Not many Japanese companies can confidently assert that they are doing the right thing and are proud of themselves. To make this assertion, companies need to look at things from a global and long-term perspective. High-spirited company operators who are determined to lead into the future with this perspective are what Japan currently needs most. In terms of JSR, President Koshiba has a clear philosophy and displays strong leadership. I’m looking to his individuality to bring an even brighter future to the company and to Japan. We live and do business on this Earth, and this cannot be achieved without consuming the Earth’s resources. But even with this reality, I hope JSR will become a company that can assure us that they are doing business in the best way imaginable.
Shimizu There are traditional issues such as climate change and biodiversity, and there are new movements such as the “shale gas revolution,” which we need to pay attention to. I have acknowledged once again the need to reflect on these various issues and take a longer-term perspective when thinking about business. I also feel strongly about the importance of sharpening the sensitivity of each employee when seeking to incorporate various ideas into the organization as well as the importance of maintaining the organization’s sensitivity as a whole, which doesn’t change even when employees are replaced.
Kawasaki People are so busy with daily operations that they tend to focus only on immediate profit and the current year’s goals. Today’s discussion was very suggestive regarding how we should look at things from a long-term perspective amid ever-changing circumstances. In addition to reflecting what we discussed in our business, I feel we also should share it with employees because it may lead to enhancing their awareness and motivation. I also realize the need to take a different perspective apart from the conventional one to come up with new realizations.
Hirano I’m rather optimistic. It is true that we are facing many issues such as climate change, energy shortage, and procurement of raw materials. But humanity has overcome many difficult issues in its history. In the case of the JSR Group, we have accumulated a great deal of expertise and knowhow for solving various problems. We have a good leader as well. The issue for the future is to accelerate our activities. Once again, I feel that it is important to be proactive in taking action.
Kubo This kind of dialogue was the first attempt regarding the JSR Group’s CSR initiatives. In order to promote CSR, it is important for us to engage in dialogue with society and reflect the results in the actions we implement. Today’s dialogue went beyond mere generalities and led to a discussion from a broad perspective. It was very productive, offering many suggestions. I also was able to understand that society’s expectations for us are high. While it may be difficult to take on these issues all at once, we aim to solve them one by one to become an even better company. Thank you so much.

Message from Ms. Sonoda, the facilitator of the meeting

The JSR Group’s CSR activities are one step ahead of those of other Japanese companies. If these activities are communicated to society more vigorously, the Group’s standing will be boosted, which will lead to further dissemination of these CSR practices to the Group as a result of the boomerang effect. I’m expecting the Group to become the best CSR model among global companies.

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CSR Report 2013