NRI’s Sustainability- and Purpose-Focused Consulting
Amid increasing uncertainty in the business environment, “sustainability-oriented management” is coming under a spotlight as an important step for achieving sustainable corporate growth. Focusing on sustainability means strengthening the management foundation for growth when viewed in terms of ESG measures, while from the perspective of creating social value through business, it also leads to medium- and long-term growth strategies. Sustainability-related efforts tend to incur costs, but when a company maintains a strategy designed to have a financial effect, such efforts can surely lead to corporate growth.
In NRI’s sustainability- and purpose※-focused consulting, we see three managerial results that may be acquired through sustainability-oriented management: competition strategy, risk hedging, and loyalty engagement. Tapping NRI’s wealth of knowledge, we support client companies in their efforts to achieve sustainable growth.
※Purpose: The reason for existence; its significance in society.
Achieving Sustainable Growth through Sustainability-Oriented Management
NRI’s Sustainability- and Purpose-Focused Consulting
Supporting Efforts to Achieve “True Integration” of Business and Sustainability
Sustainability-oriented management will continue to cover an ever-broadening scope, having a significant impact on various areas of management and business. Promoting such management will require efforts beyond those of a single organization; it will require efforts involving everyone from senior management down to each and every employee, efforts by not only functional departments but also business departments, and efforts both in Japan and at the global level.
Aiming for “true integration” of business and sustainability, we at NRI will assess high-priority challenges from various scopes and draw an effective and efficient roadmap for sustainable growth through sustainability-oriented management.
Combine Knowledge in “Sustainability” and “Business and Industry” to Offer Highly Effective Advice
Having sustainability-oriented management produce management results requires development and implementation of a management and business integration strategy. Effective examination requires specialized knowledge on sustainability that takes into account the characteristics of a given business and industry. At NRI, consultants providing sustainability services and consultants specialized in certain businesses join forces to offer highly effective advice to clients.
Purpose-focused consulting redefines the reason for existence of an enterprise/organization and helps establish a shared value
With the advance of globalization, the growing trend of sustainability-oriented management, and heightening uncertainty in the business environment, a “unifying force”—which brings an organization together for effective implementation of a strategy—is becoming more important than ever.
By providing an environment where an enterprise and/or organization and each and every employee revisits, redefines, and shares their “reason for existence” in society, the enterprise gains strong power in achieving its strategy. We at NRI assist clients with purpose-focused consulting, through which the “purpose” of an enterprise/organization is redefined and a shared value is widely established.
Position a purpose that stakeholders agree with at the core of management to accelerate strategy implementation
Against the backdrop of public expectations concerning the social presence of enterprises, the existence of sustainability-sensitive millennials, and the growing importance of an organizational unifying force, the awareness of companies as “social entities” is increasing significantly.
By placing central importance on your company’s purpose, i.e. a shared value that internal and external stakeholders agree with, and by promoting management and business and enhancing communication, you can gain greater trust from stakeholders and increase their understanding. From the perspective of employees, who are tasked with carrying out company strategies, you can also strengthen the unifying force of the organization and inspire a greater sense of value and pride in the work they do, and this in turn will lead to the swifter implementation of your strategies.
※Purpose: The reason for existence; its significance in society.
Strategy consulting looks to long-term growth and incorporates a social value into the vision/management plan
The momentum is growing for many Japanese companies to change tack to “sustainability-oriented management” for sustainable growth. They are also actively incorporating sustainability elements into the core of their visions, management plans, or business strategies and combining the concepts. The tide of sustainability-oriented management will bring about a range of changes and effects in the area of operations of corporate management in the near future. However, how best to address them will depend on the company and its business or business format.
At NRI, we assist the sustainable growth of clients through strategy consulting for incorporating sustainability elements into management and business, in areas ranging from the core corporate sustainability strategy of incorporating social value into visions/management plans to the domain of corporate operations.
Incorporate the concept of sustainability at the foundation of management, and build a “sustainable management framework”
Corporate social responsibility was a concept popular among Japanese companies that preceded sustainability-oriented management. But given its level of involvement in future management and business operation fields, sustainability-oriented management is drastically different from the conventional CSR concept in its strategy development techniques and implementation methodology. The mission and positioning of a promoting organization should be re-examined as well.
As described above, sustainability-oriented management questions the way management and business will function in the future. By incorporating the concept of sustainability into the “management framework”, you can acquire a more “sustainable management framework” for future growth. The first step in achieving reliable management results is to specify material challenges that are effective for sustainable growth and incorporate them into the vision/management plan, which serves as the core of corporate management.
Strategy consulting for determining materiality and developing value-creation stories to engage in more effective and sustainable activities
In recent years, Japanese companies have shown greater interest in integrated reporting, and many of them have begun examining how to determine materiality (material societal issues that have a significant impact on decision-making) and to develop a value-creation story that includes countermeasures to the foregoing.
However, companies without full involvement of functional or business departments have faced problems such as an inability to determine or communicate their “uniqueness/originality”, or are in a situation where, even though they have identified materiality or a value-creation story, they have not gained the cooperation of functional or business departments and thus their materiality is less likely to be effective”.
We at NRI utilize our knowledge of strategy development in a wide range of businesses and industries, and we assist clients by providing consulting services for determining materiality and developing value-creation stories from a strategic perspective of our clients’ business developments and social trends.
Providing close support in all steps from proposing processes for establishing materiality and developing value-creation stories to implementation
To determine a materiality that is integrated with functions and business, NRI has built its own examination framework and a process for establishing materiality that looks separately at a company’s functions and business. The involvement of function and business departments is essential for establishing highly efficient and true materiality and developing a value-creation story designed to be disclosed in an integrated report.
Positioning materiality and value-creation stories as key elements for future growth, we at NRI work to establish materiality and develop value-creation stories by proposing the involvement of pertinent departments, cross-organizational tie-ups, and other processes intended for dissemination to society, and providing close support to clients in implementation.
Integrated reporting consulting for achieving reporting to stakeholders based on “true integrated thinking”
In Japan, the publication of integrated reports is on the rise every year, with many companies switching to integrated reporting and seeking to enhance the quality of their reports. It is said that the true aim of integrated reporting is to demonstrate as a story what kind of value is created in the long term through “corporate integrated thinking”—that is, through the integration of financial and nonfinancial capitals with corporate management※. In other words, companies need to communicate with investors in a clear and effective manner that they have the capability to continue creating value over the long term.
Some companies in Japan have the problem of not having fully systematized the link between financial and nonfinancial capitals and not having formed integrated thinking, let alone integrated reporting. We at NRI provide strong support to clients with the goal of achieving integrated reporting based on “true integrated thinking”.
※Per IIRC (International Integrated Reporting Council)
Identify value provided to society, extract connection of nonfinancial activity with value creation
To express integrated thinking, it is necessary to clarify the association between financial information and nonfinancial information. For desired integrated reporting, it is important to build a story that appropriately communicates value creation to investors.
At the implementation stage, the value provided to society is identified and specified, and the connection of nonfinancial activity with value creation is examined and incorporated into a report. Through partnership with an integrated reports production company, support may be offered for services like reviewing designs for producing a report.
ESG consulting for effective information disclosure to assessment organizations and stakeholders
The momentum for ESG investing is growing in recent years. Compared with Europe, where ESG investing is already embraced, Japan is still lagging behind; however, in 2017 the Government Pension Investment Fund (GPIF) chose ESG indexes and began passive investment linked to these indexes, and ever since then ESG investing has assuredly been grabbing stronger attention. The urgent challenge for companies is to disclose and communicate their current conditions to investors and other stakeholders more effectively.
Meanwhile, companies are expected to disclose a broad range of ESG information, and it is nearly impossible to disclose all information in a perfect manner. At NRI, we support clients with consulting for effective ESG information disclosure.
Analysis and evaluation process based on ESG evaluation index database, for which NRI is licensed
To effectively handle a wide range of ESG information, it is necessary to understand the current standards and identify high-priority issues. At NRI, we use the ESG evaluation index database for which we are licensed, as a basis to systematically list 1) responses specific to industry and country; 2) the position of your company compared with others; 3) priority issues going forward, and to analyze and assess them in order to examine with a client the desirable approach and action plan for that client.
At the stage of implementation, we propose measures to improve evaluation scores, develop an action plan that includes advice for enhancing the efficiency of ESG information disclosure, and otherwise provide close support for implementing the foregoing.
Strategic consulting for addressing supply chain risks and creating opportunities
One of the urgent issues today is to address various unexpected supply-chain risks concerning sustainability. Japanese companies can no longer neglect issues that may arise anywhere on a global supply chain. Insufficient handling of social responsibility matters, including human rights and the environment, means courting a risk that might develop into an event shaking the foundation of a company’s management.
Meanwhile, it is nearly impossible for a company to address all the supply chain-related risks in a perfect manner. Thus it is necessary to look at both supply chain risks and opportunities, and identify high-priority issues that should be addressed for development of a sustainable supply chain. We at NRI support clients with strategy consulting for addressing supply chain risks and creating opportunities.
Look at both risks and opportunities, and identify high-priority issues to be addressed for developing a sustainable supply chain
To effectively address supply chain-related risks, it is necessary to understand the current standards and identify high-priority issues. At NRI, we analyze high-priority themes, business partners, materials and markets based on our framework and examine the approach and action plan desirable for a specific client. At the implementation stage, we provide close support for implementation of the action plan, including how to approach suppliers.