CSR in Japan - EESC European Economic and Social Committee

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1. CSR in Japan: What is social responsibility in Japan? Professor Katsuhiko Kokubu. Graduate School of Business Administration [email protected] ...

CSR in Japan: What is social responsibility in Japan?

Professor Katsuhiko Kokubu Graduate School of Business Administration [email protected]

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CSR in Japan • Japan is one of the leading country in CSR. • Many companies establish CSR division/units and publish sustainability report. • How does theJapanese cultural context affect the CSR practices?

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The number of companies publishing sustainability reports in Japan

Source: Ministry of the Environment, Japan

Japan Business Federations Charter of Corporate Behavior 1. Develop and provide socially beneficial and safe goods and services for consumers. 2. Engage in fair, transparent and free competition. 3. In addition to communicating with shareholders, disclose corporate information actively and fairly. 4. Respect diversity, character and personality of employees and ensure a safe and comfortable working environment. 5. Proactively initiate measures in acknowledgment of environmental issues. (Charter established Sept. 14, 1991; 5th version released Sept. 14, 2010)

Japan Business Federation’s Charter of Corporate Behavior 6. Actively engage in community involvement activities. 7. Resolutely confront antisocial forces and organizations. 8. In line with the globalization of business activities, contribute toward the development of the local economy and society. 9. Top management recognizes that it is its role to realize the spirit of this Charter. 10. In case the Charter is violated, top management should clarify that it will take charge to resolve the situation, and promptly make full public disclosure.

Japanese style of management • Various characteristics of Japanese style of management influence CSR - carefully codified work standards - emphasis on creating harmonious - relations among workers lifetime • The power of government relatively stronger, but the pressures from external stakeholders weaker. •

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Traditional philosophy on CSR in Japan • ‘Sanpo-yoshi’ : Three-way satisfaction: benefits to the seller, to the buyer and to the local community Ohmi shonin (Famous merchant in Edo and Meiji era) 7

CSR in Panasonic ◆ Top Message Long before the word CSR was in side use, Panasonic’s activities were already guided by our management philosophy which states that a company is a public entity of society. Our founder, Konosuke Matsushita, often said that, “Companies and society are not separable, but rather are a single entity.” I hope that all employees at Panasonic will look into their own “corporate consciences,” and act in ways that contribute to sustainable growth in society. By always behaving with this kind of sincerity, the Panasonic Group aims to continue to contribute to society and be trusted by society.

Fumio Ohtsubo President, Panasonic Corporation Panasonic CSR Report 2010

Mr Kounosuke Matsushita, Founder of Panasonic

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Comparison of ISO 26000 and Japanese CSR activities • Sample: 50 largest Japanese companies’ CSR reports. • Investigating whether or not the issues in ISO 26000 was disclosed in the report. The results was based on Fujichika (2010)

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Research sample TOYOTA MOTOR, Mitsubishi, ITOCHU, MITSUI & CO., Hitachi, HONDA MOTOR, Marubeni, SUMITOMO, NISSAN MOTOR, Panasonic, TOSHIBA, JAPAN TOBACCO, Seven & I Holdings, AEON, Tokyo Electric Power, FUJITSU, NTT DOCOMO, Sojitz, NEC, NIPPON STEEL, KDDI, Mitsubishi Electric, CANON, DENSO, Mitsubishi Heavy Industries, JFE Holdings, Sharp, COSMO OIL, Kansai Electric Power, BRIDGESTONE, East Japan Railway, Mitsubishi Chemical Holdings, Kirin Holdings, Chubu Electric Power, FUJIFUILM Holdings, Mazda Motor, AISIN SEIKI, SHOWA SHELL SEKIYU, RICOH, YAMADA DENKI, Sumitomo Electric Industries, Nippon Yusen, Kobe Steel, Tohoku Electric Power, KAJIMA, SUMITOMO CHEMICAL, DAIWA HOUSE, SHIMIZU, Dai Nippon Printing, NIPPON EXPRESS (50 Companies)

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Seven core subjects in ISO 26000 • • • • • • •

Organizational governance Human rights Labour practices The environment Fair operating practices Consumer issues Community involvement and development

Organizational governance

core 6.2 Organizational governance subje ct 6.2.3 Decision-making processes and structures

Number of % companie s 33 66%

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Human rights core subject 6.3.3 6.3.4 6.3.5 6.3.6 6.3.7 6.3.8 6.3.9 6.3.10

6.3 Human rights Due diligence Human rights risk situations Avoidance of complicity Resolving grievances Discrimination and vulnerable groups Civil and political rights Economic, social and cultural rights Fundamental principles and right at work

Number of companies 14 0 0 30 33 4 30 22

% 28% 0% 0% 60% 66% 8% 60% 44%

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Labour practices core subject

6.4 Labour practices

6.4.3 6.4.4 6.4.5 6.4.6 6.4.7

Employment and employment relationships Conditions of work and social protection Social dialogue Health and safety at work Human development and training in the work place

Number of companies

%

6 20 22 39 44

12% 40% 44% 78% 88%

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The environment core subject 6.5.3 6.5.4 6.5.5 6.5.6

6.5 The environment Prevention of pollution Sustainable resource use Climate change mitigation and adaptation Protection of the environment, biodiversity and restoration of natural habitats

Number of companies 42 44 49

84% 88% 98%

41

82%

%

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Fair operating practices core subject 6.6.3 6.6.4 6.6.5 6.6.6 6.6.7

6.6 Fair operating practices Anti- corruption Responsible political involvement Fair competition Promoting social responsibility in the value chain Respect for property rights

Number of companies 14 2 26 31 14

% 28% 4% 52% 62% 28%

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Consumer issues core subject 6.7.3 6.7.4 6.7.5 6.7.6 6.7.7 6.7.8 6.7.9

6.7 Consumer issues Fair marketing, factual and unbiased information and fair contractual practices Protecting consumers' health and safety Sustainable consumption Consumer service, support, and complaint and dispute resolution Consumer data protection and privacy Access to essential services Education and awareness

Number of companies

%

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22%

33 10

66% 20%

34

68%

25 4 12

50% 8% 24%

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Community involvement and development core subject 6.8.3 6.8.4 6.8.5 6.8.6 6.8.7 6.8.8 6.8.9

6.8 Community involvement and development Community involvement Education and culture Employment creation and skills development Technology development and access Wealth and income creation Health Social investment

Number of companies 49 48 11 9 6 12 44

% 98% 96% 22% 18% 12% 24% 88%

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The rate of response in each core subject

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High response rate issues

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Low response rate issues

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Issues not in ISO26000 but a lot of companies address Number of companies The Solution of social issue through core business 50 Environmental management system 50 Risk management 45 Quality contorol of product and service 42 Employee's healthcare 39 Investor relations 36 Enviromental accounting 35 Issues not treated in ISO 26000

% 100% 100% 90% 84% 78% 72% 70%

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Differences between issues emphasized by Japanese companies and issues in ISO26000 Issues emphasized by Japanese Companies The solution of social issue through core business Environmental management system Risk management Quality control of product and service Employee’s healthcare Investor relations Environmental accounting (The rate of response: 70% ~100%)

Community involvement Climate change mitigation and adaptation Education and culture Sustainable resource use Social investment Human development and training in the work place Prevention of pollution Protection of the environment, biodiversity and restoration of natural habitats Health and safety at work Consumer service, support, and complaint and dispute resolution Protecting consumer’s health and safety Discrimination and vulnerable groups Decision-making processes and structure Promoting social responsibility in the value chain Economic, social, and cultural rights Fair competition Consumer data protection and privacy (The rate of response: 50%~98% )

Issues in ISO26000 Human rights risk situations Avoidance of complicity Responsible political involvement Civil and political rights Access to essential services Employment and employment relationships Wealth and income creation Sustainable consumption Employment creation and skills development Fair marketing, factual and unbiased information and fair contractual practices Health Education and awareness Anti-corruption Due diligence Respect for property rights Conditions of work and social protection Social dialogue Fundamental principles and right at work (The rate of response: 0%~44% )

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Conclusion • Japanese companies disclosed much information on the environment and internal issues. • Some issues in Human rights, Labour practices, Fair operating practices, Consumer issues are not disclosed very much. This means Japanese companies do not receive much stakeholders’ pressures on these external issues. ‘Internal oriented CSR’ • ISO 26000 may enlarge Japanese companies’ and stakeholders’ recognition on CSR issues. 25

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