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Third-Party Opinion

The Sekisui Chemical Group CSR ReportLinking CSR activities to the Group’s ongoing evolution (SHINKA)

Mitsuo Ogawa

Mitsuo Ogawa President Craig Consulting Co., Ltd.

Mr. Ogawa graduated from Waseda University and gained experience at a major manufacturer of automotive-related products before earning a Master of Business Administration at the University of Pittsburgh. He then worked at Sanwa Research Institute and PwC Consulting before striking out on his own in 2004. Engaged in the field of consulting through to the present day, Mr. Ogawa’s fields of expertise include organizational theory and the revitalization of human resources. Among a host of publications, he has authored such articles as “How ISO 26000 Will Change Management” and “How to Raise CSR Corporate Value” both issued by Nihon Keizai Shimbun, Inc. Mr. Ogawa is a visiting professor of the Commerce and Business Graduate School of Management at Nagoya University.

Why must companies engage in CSR activities? Quite simply, because the corporate sector forms an integral part of society. As a member of society, it is vital that companies maintain a valuable presence. Recognizing that CSR is an essential component of a company’s business activities, it is by association therefore important that efforts aimed at contributing to society and the environment help to generate corporate value. With this in mind, maintaining a balance between social and corporate value is the wellspring for sustainable growth. In his top message, Teiji Koge, president and representative director of Sekisui Chemical Co., Ltd., outlined his thoughts toward this balanced approach. From his perspective, creating value for society through business activities lies at the heart of the Group’s “3S Principle” Corporate Philosophy. In positioning the environment as an important business pillar, he also explained the critical need to balance ecological concerns with economic development. Achieving both of these objectives is then the ultimate goal of the Sekisui Chemical Group’s CSR activities.

On page 7 of the report, Sekisui Chemical outlines its process for identifying key CSR issues (materiality) as well as details of its CSR medium-term plan. In doing so, the Company has introduced a unique, but easy-to-understand framework that comprises “Three Prominences” and “Three Attitudes of Sincerity.” This effort to announce key performance indicators while disclosing numerical targets is indicative of the Company’s earnest and sincere stance toward fulfilling its corporate social responsibility and is most impressive. The external evaluations listed toward the end of the report are also a measure of the positive manner in which Sekisui Chemical undertakes its CSR activities. Looking ahead, I would hope that the Company continues its vigorous approach toward the disclosure of information.

Meanwhile, how Sekisui Chemical flows through the objectives set out under its CSR medium-term plan to its medium-term management plan, SHINKA!-Advance 2016, is likely to become an important issue in the future. As previously mentioned, the Company must work to fulfill its corporate social responsibility in order to carry out its Medium-Term Management Plan, and in turn help to generate corporate value, for as long as CSR is an integral component of its corporate activities. Given the Company’s horizontal structure and its organization into numerous operating companies, the potential exists for difficulties to arise in the roll out of measures that cut across each company. In order to resolve this issue, it may be helpful to look at other industries and for example the model set by general trading companies. In specific terms, I would like Sekisui Chemical to examine the benefits of adopting a two-story approach toward the setting of objectives. One story would entail overarching objectives that apply to all companies and the Group as a whole. A second story would comprise objectives that are unique to each company.

A second issue with respect to Sekisui Chemical’s approach toward CSR is stakeholder engagement. The Company could and should adopt a more aggressive stance toward stakeholder engagement. Sekisui Chemical does actively engage in CAT Meetings as a conduit to garner the opinions and comments of customers while working through the Heim Mutual Prosperity Group and other venues of communication with suppliers. With the ratio of overseas sales to total sales now surpassing 25%, however, it is vital that the Company examines how best to communicate with a growing number of new overseas stakeholders and to undertake appropriate risk management. I am confident that the Company would gain invaluable insight into the shape of its CSR activities as it enters a new stage by seeking the candid opinions and comments of external stakeholders.

A third issue is internal penetration and the degree to which employees are aware of and understand CSR. No matter how hard the CSR Promotion Department tries, the Group’s success in fulfilling its corporate social responsibility will depend on the ability of each division to take the initiative. Given the focus placed on environmental management, the potential exists for divisions to mistakenly equate CSR with the environment. Broad-ranging measures are vital in increasing internal penetration. It may, for example, prove fruitful to allow more and more employees to freely participate in and observe the aforementioned stakeholder engagement. The same can be said for the active disclosure of information. Unfortunately, the report has not provided a full disclosure of the Group’s activities in detail. As an integral part of its CSR activities, the Company is encouraged to disclose details of its Story of Attractive Qualities, identified on page 25, to external parties. I am sure that this story is one in which employees can take great pride.

In closing, I would like directors to become more involved in creating CSR learning opportunities. Attitudes toward and understanding of CSR are changing at a rapid pace. Taking into consideration the Company’s ongoing globalization, Sekisui Chemical can be expected to confront new management issues as it learns more about global CSR.

In Response to the Third-Party Opinion

平居 義幸

Yoshiyuki Hirai
Director Executive Officer
Responsible for
CSR Promotion Department
Head of Business Strategy Department
Sekisui Chemical Co., Ltd.

I would like to thank Mr. Ogawa for his valuable input. At Sekisui Chemical Group, we strongly believe that in fulfilling our corporate social responsibility we are better placed to enhance our corporate value. This is in turn the very essence of our efforts to help ensure a sustainable society. With this in mind, we will very much take to heart the advice of Mr. Ogawa. While taking into consideration the endeavors of companies that engage in a broad range of activities including general trading companies, we will lend an ear to the comments of external as well as global stakeholders. By reflecting these features and input in our efforts going forward, we will work to enhance the level of the Group’s CSR activities. Fiscal 2017 marks a critical juncture in the Company’s history. As well as our 70th anniversary, this particular fiscal year represents the start of our next medium-term management plan. Making the most of this milestone, we will ramp up efforts to carry forward those attributes and initiatives that have held us in good stead and further increase in-house awareness toward the Group’s CSR activities.

With every level of management working in unison, we will channel our energies toward completing all appropriate initiatives. With our sights set firmly to the future, we will endeavor to achieve SDGs, COP21, and other key targets. Both management and all employees will think long and hard, and work in unison to build a robust structure that is capable of enhancing corporate value.