Looking back at a year as CSO

The fiscal year 2020, my first year as CSO, started under the highly unusual circumstances of the COVID-19 pandemic, chiefly the government’s declaration of a state of emergency on April 7. In Japan, people were urged to refrain from going out and to work remotely. And internationally, the flow of people and goods shrank rapidly. We responded by taking various actions to cope with the situation. We implemented urgent BCP measures to ensure that our business continued amid the pandemic. We endeavored to reform work styles and explored ways of doing non-face-to-face business with an eye to “life with the coronavirus.” And we sought to make a social contribution by supporting research on masks, test agents, and the like.
Looking at business strategy, we designated the Digital Solutions Business and Life Science Business as new core businesses under a new mid-term management policy that commenced in FY2021. Meanwhile, we engaged in discussions toward making our company’s first major business transformation since its founding―a transformation that includes making unrestricted reforms to the Elastomers Business.^*1
As for sustainability, we conducted a scenario analysis in early FY2020 for each of our businesses in line with the TCFD Recommendations. The analysis was aimed at bringing about real measures to combat climate change, which was a priority issue for us even before I was appointed CSO. The results were reported to, and discussed by, the Sustainability Promotion Committee and the Board of Directors, and we officially announced that JSR supports the TCFD Recommendations in October.
Looking back, FY2020 brought great changes in our domestic and international business environments. And I believe it marked a turning point for our company.

*1 The Elastomers Business is scheduled to be transferred to ENEOS on April 1, 2022 (as of September 10, 2021), subject to approval at JSR’s General Meeting of Shareholders as well as by the concerned authorities.

Incorporating materiality into the actions of all business departments

Each time we update our mid-term business plan at JSR, we also review our materiality. We do this based on the idea that materiality is not a matter of sticking to what we think is "ideal"; rather, it is something that must be changed dynamically to meet the needs of society at the time.
However, “materiality that is based on the demands of society” is not particularly original when expressed in words. This is because, quite naturally, all companies want to engage in activities that meet society’s demands. But even if we ultimately use the same words as everyone else to describe our materiality, I believe it is important that we be able to fully explain the process by which we reached this description―in other words, why JSR chose particular points as its materiality and how it prioritized them. If this process is convincing, the originality of JSR’s materiality will become apparent even if the words are the same.
The process of reviewing our materiality within the JSR Sustainability Challenge, which was conducted in conjunction with steps to update the mid-term business plan, also taught us quite a bit about respect for human rights and the supply chain. Through the review process, we decided to give particular focus to two areas―namely, “reducing greenhouse gas (GHG) emissions” and “improving employee engagement.” I feel that these aims have become “keywords” in our employees' consciousness as a result. However, our materiality has not yet been fully incorporated into all business department activities, and this remains a challenge that we must address. Materiality does not end with selection. I believe my role as CSO is to find a way to apply it to management and link it to the actions of each business department.
Our new mid-term management policy, which extends to FY2024, states that we will “continue to proactively take on the challenge of achieving ‘effectively net zero’ GHG emissions in 2050” and “build a resilient corporate structure capable of responding to any situation by applying scenario analyses based on the TCFD^*2 Recommendations” as part of our efforts to address ESG issues. I anticipate that clearly presenting to employees the fact that the “sustainability” perspective has a major impact on business activities in this way will bring a change in their mindset.

*2 TCFD: The Task Force on Climate-related Financial Disclosures, established by the Financial Stability Board. In June 2017, the TCFD presented recommendations calling for the disclosure of climate change impacts in financial reports issued by financial institutions, corporations, governments, and others. More than 2,000 organizations around the world have endorsed the recommendations (as of May 2021; figure published by the TCFD).

Strengthening employee engagement to advance "Group management”

Designating Digital Solutions and Life Sciences as our new core businesses will have a profound impact on our sustainability activities overall. Particularly in the case of the Life Science Business, the majority of our business operations, including decision-making, are handled in North America. This means that the importance of collaboration between Japan and North America has increased dramatically. Previously, “sustainability” tended to be focused on the activities of JSR itself. But from now on, employee engagement implemented from a global perspective, and as part of Group management, will be essential. Specifically, overseas affiliates that have been brought into JSR Group through mergers and acquisitions have their own unique corporate cultures. While respecting this diversity, we are building a system for sharing information and deepening communication (using the North American headquarters as a hub) so that we can standardize engagement indicators for shared application in human resources management and work toward sustainability as one JSR Group. In 2021, we conducted our first global employee engagement survey and are analyzing the results as the first step of this endeavor.
One of the results of this effort to strengthen collaboration with North America is an initiative called “Diversity, Equity & Inclusion,” which adds “equity" to the previously existing concept of "diversity and inclusion.” When it comes to leveraging people’s diversity to achieve growth for JSR Group as a whole, it is not enough to simply acknowledge diversity. Unless opportunities are provided fairly, any enterprise toward this end becomes pointless. My attention was drawn to this when the sustainability officer of a Group company in North America raised the word "equity." I felt the importance of diversity deep down. Therefore, beginning in FY2021, we are standardizing all notations regarding the diversity of people, both inside and outside the company, as “Diversity, Equity & Inclusion (DE&I).” We have also assigned a full-time DE&I manager.
As we advance employee engagement globally as part of Group management, one thing that I want to bear in mind is the fact we are neither monitors nor supervisors. Our role will change as we move forward with global management. I think the challenge will be to find an approach that does not make us seem like monitors or supervisors within the Group―in other words, to communicate a common direction for the Group in the midst of diverse values.

Becoming a sustainable and resilient company

The basis for this “common direction for the Group” is none other than our “Corporate Mission.” At a management policy briefing in FY2021, CEO Johnson made a presentation on “Creating Value through the Five Foundations.” He focused on sustainability as a means of building a resilient management foundation. If we are to fulfill our Corporate Mission―Materials Innovation: We create value through materials to enrich society, people and the environment―we must be “resilient,” and we must be “sustainable.” Especially now, with the entire world grappling with COVID-19, the concepts of resilience and sustainability are receiving renewed scrutiny. I understand that this is precisely why we have reiterated them in our new Management Policies.
If we think about how to apply sustainability to management, we realize that it will be necessary not only to reexamine our materiality but also to assess and quantify the impacts of our activities and to make those impacts visible. I mentioned earlier that “we are neither monitors nor supervisors. Rather than simply using what assessments reveal in warnings or instructions, the point is to use our own awareness as the basis for connecting “sustainability” to our department’s work and actions. That is what I must do. What is important is to communicate the approaches that will help people in the field understand what sustainability is. Having “resilience” means having the ability to foresee changes in society, and possessing the nimbleness that permits quick action when risks arise. Even if we cannot avoid damage when a predicted risk materializes, it is important to have a system that can quickly switch to recovery mode afterward. Regular communication is essential for such a system. A company whose established practice is to routinely energize communication throughout its organization, and which thereby possesses the ability to demonstrate necessary communication capabilities in any emergency―that, to me, is a “sustainable” company.