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CSR in Japan:What is social responsibility in Japan?

Professor Katsuhiko KokubuGraduate School of Business Administration

kokubu@kobe-u.ac.jp

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)

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CSR in Panasonic

◆ Top MessageLong 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 tosociety and be trusted by society.

Fumio OhtsuboPresident, Panasonic Corporation

Panasonic CSR Report 2010

9Mr Kounosuke Matsushita, Founder of Panasonic

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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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)

Research sample

Seven core subjects in ISO 26000

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

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Organizational governance

coresubject

6.2 Organizational governanceNumber ofcompanies

%

6.2.3 Decision- making processes and structures 33 66%

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Human rights

coresubject

6.3 Human rightsNumber ofcompanies

%

6.3.3 Due diligence 14 28%6.3.4 Human rights risk situations 0 0%6.3.5 Avoidance of complicity 0 0%6.3.6 Resolving grievances 30 60%6.3.7 Discrimination and vulnerable groups 33 66%6.3.8 Civil and political rights 4 8%6.3.9 Economic, social and cultural rights 30 60%6.3.10 Fundamental principles and right at work 22 44%

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Labour practices

coresubject

6.4 Labour practicesNumber ofcompanies

%

6.4.3 Employment and employment relationships 6 12%6.4.4 Conditions of work and social protection 20 40%6.4.5 Social dialogue 22 44%6.4.6 Health and safety at work 39 78%6.4.7 Human development and training in the work place 44 88%

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The environment

coresubject

6.5 The environmentNumber ofcompanies

%

6.5.3 Prevention of pollution 42 84%6.5.4 Sustainable resource use 44 88%6.5.5 Climate change mitigation and adaptation 49 98%

6.5.6Protection of the environment, biodiversity andrestoration of natural habitats

41 82%

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Fair operating practices

coresubject

6.6 Fair operating practicesNumber ofcompanies

%

6.6.3 Anti- corruption 14 28%6.6.4 Responsible political involvement 2 4%6.6.5 Fair competition 26 52%6.6.6 Promoting social responsibility in the value chain 31 62%6.6.7 Respect for property rights 14 28%

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Consumer issues

coresubject

6.7 Consumer issues Number ofcompanies

%

6.7.3Fair marketing, factual and unbiased information andfair contractual practices

11 22%

6.7.4 Protecting consumers' health and safety 33 66%6.7.5 Sustainable consumption 10 20%

6.7.6Consumer service, support, and complaint anddispute resolution

34 68%

6.7.7 Consumer data protection and privacy 25 50%6.7.8 Access to essential services 4 8%6.7.9 Education and awareness 12 24%

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Community involvement and development

coresubject

6.8 Community involvement and developmentNumber ofcompanies

%

6.8.3 Community involvement 49 98%6.8.4 Education and culture 48 96%6.8.5 Employment creation and skills development 11 22%6.8.6 Technology development and access 9 18%6.8.7 Wealth and income creation 6 12%6.8.8 Health 12 24%6.8.9 Social investment 44 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

Issues not treated in ISO26000Number ofcompanies

%

The Solution of social issue through core business 50 100%Environmental management system 50 100%Risk management 45 90%Quality contorol of product and service 42 84%Employee's healthcare 39 78%Investor relations 36 72%Enviromental accounting 35 70%

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Differences between issues emphasized by Japanese companies and issues in ISO26000

Issues emphasized by Japanese Companies Issues in ISO26000

The solution of social issue through core business

Environmental management system

Risk managementQuality control of product and

serviceEmployee’s healthcareInvestor relationsEnvironmental accounting（The rate of response: ７０％

～１００％）

Community involvementClimate change mitigation and adaptationEducation and cultureSustainable resource useSocial investmentHuman development and training in the work placePrevention of pollutionProtection of the environment, biodiversity and restoration of natural habitatsHealth and safety at workConsumer service, support, and complaint and dispute resolutionProtecting consumer’s health and safetyDiscrimination and vulnerable groupsDecision-making processes and structurePromoting social responsibility in the value chainEconomic, social, and cultural rightsFair competitionConsumer data protection and privacy（The rate of response: ５０％～９８％）

Human rights risk situationsAvoidance of complicityResponsible political involvementCivil and political rightsAccess to essential servicesEmployment and employment relationshipsWealth and income creationSustainable consumptionEmployment creation and skills developmentFair marketing, factual and unbiased information and fair contractual practicesHealthEducation and awarenessAnti-corruptionDue diligenceRespect for property rightsConditions of work and social protectionSocial dialogueFundamental principles and right at work（The rate of response: ０％～４４％）

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.

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