Nov. 19, 2019
"I know, I know. I was just about to do it." This is what I always hear from my son who is in junior high school, whenever I say, "Do your homework," or "Finish it quickly." I know what he will reply, but as a parent, can’t resist saying it. He starts reluctantly and just can’t put his heart into it.
If someone is told to do something by someone else, it feels like an imposition. The same applies to corporate activities. If people feel that the rules and regulations have been imposed, then they will follow them only superficially. Here, I would like to change this thinking to a future-oriented mindset.
The fusion of digital technology and the philosophy of tackling social issues head-on is a driver of growth
Companies are now required to respond to a variety of social issues. If the response is inadequate, shareholders and consumers will quickly lose confidence in a company with little prospect of sustainable growth. It is essential to consider ESG (Environmental, Social, and Governance) and SDGs (the achievement of the United Nations’ Sustainable Development Goals by 2030) in our corporate activities. Although the burden on companies is getting heavier, rather than complaining we should consider afresh how solving social issues can be a driver for sustainable growth.
In the past, Omi merchants advocated “Sanpo-Yoshi (three-way satisfaction)” which means “good for the seller, good for the buyer, and good for the society”. Eiichi Shibusawa, an industrialist in the Meiji period (1868-1912), advocated the theory of moral and economic unification, according to which economic activities lead to public interests. Also, many Japanese companies in the postwar period were the first to take measures against pollution. Even though not referred to as ESG or CSR (Corporate Social Responsibility), I am proud to say that our founding spirit and philosophy incorporates our relationship with society, and we have been continuously engaged in such activities. In the 1970s, amid the tightening of emission regulations in the U.S., Honda Motor Co., Ltd. achieved a dramatic reduction in pollution level through its fuel-efficient CVCC engines. This led to its subsequent rapid growth in the North American market. This is the typical image of Japanese companies.
An important element of growth drivers now is digitalization. The rapid advancement of digital technology has made it easier than ever to provide a solution for social problems. In Germany’s Industry 4.0, not only the digitalization of the manufacturing industry but also the upgradation of the whole supply chain and cooperation with social infrastructure has begun. In Japan, Toyota Motor Corporation and Softbank have formed an alliance to provide Mobility as a Service (MaaS). These initiatives are aimed at solving social issues by effectively utilizing resources and improving the convenience of transportation. The business model transformation of the digital era is reorganizing a variety of services and functions across industries from the perspective of being more closely aligned with the end-user.
Given this situation, if we can get a closer look at the actual difficulties of the people and focus on solving the social issues, we should be able to get a little closer to an affluent society. This is based on the concept of Creating Shared Value (CSV), in which a company uses its strengths to solve social issues and integrate the social value with the growth of the company. Japan is a developed country but with its own unique problems, it is high time for Japanese companies to incorporate social contributions into their growth strategies and make them the driver of innovation.
NRI will continue to create social value through digital technology
Nomura Research Institute (NRI) was founded in 1965 as Japan's first comprehensive private think tank. NRI stated "Promoting the industrial economy and serving the general community" in its founding prospectus and also advocated economic rationality by adopting a joint-stock company organization. More than 50 years later, the company has launched its Medium-Term Management Plan 2022. Besides the financial targets and key ESG-related issues, it has also set non-financial targets, such as the kind of social issues that need to be addressed to create value. NRI's "three social values" are described below.
The first is "co-creating a thriving future society by driving new value." NRI aims to create a prosperous and comfortable society in which new values are generated continuously and all people can enjoy them. To this end, NRI will promote business model reforms, social recommendations, and information dissemination as a DX (Digital Transformation) partner for its clients.
The second is "co-creating an ideal society by effectively utilizing its resources." NRI will contribute to the creation of a more comfortable society by effectively utilizing important social resources through business reforms and shared-use business platforms that reduce CO₂.
The third is the "co-creating a safe and secure society by advancing its infrastructure." The aim is to protect social infrastructure by using IT aspects such as cloud and security and to create a safe and secure society that is resilient to cyber-attacks and disasters. We will also promote policy recommendations for disaster prevention and mitigation and provide support for reconstruction.
Through these three goals, NRI will continue to create social value together with its clients.
My son, whom I introduced at the beginning of this article, is now checking out new homestays in Canada and has started talking about his career plans. He seems to have figured out a bit more of his future than just homework and seems to be focused on his career. Let’s look forward to the future.