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Stakeholder Dialogues

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Stakeholder Dialogues in FY2018

Mr. Masao Seki Adjunct Professor, School of Business Administration, Meiji University

Interview 01

Mr. Masao Seki Adjunct Professor, School of Business Administration, Meiji University

This year’s Sustainability Report from the Chiyoda Group shows some clear advances in comparison with the report last year. Management’s intentions have also been clarified by having the business strategy include SDGs that place greater expectations on the corporate role, and Chiyoda has built a new system for their specific promotion within the company.
I consider the Chiyoda Group to have very great potential, using the strengths they have cultivated in the engineering field, to successfully achieve the realization of a sustainable society and at the same time create corporate value.
This fiscal year’s report has laid out a direction for SDG management that is clearly stated, and I hope that they will continue moving steadily forward in that direction in the future.

Points Deserving Recognition

  • 1.

    The fact that the company established a Chief Sustainability Officer (CSO) position in order to clarify the structure of management responsibility regarding sustainability. I think it is of major significance that the company recognizes sustainability as a management issue and has elevated the matter to a crucial issue to be addressed in-house across organizational lines.

  • 2.

    The fact that the company established a Decarbonization Advancement Office is also noteworthy. Chiyoda has explicitly declared that it will employ its own strengths as an engineering company to contribute to realizing not just a low-carbon society but beyond that a carbon-free society, and this is very convincing evidence of the company’s recognition of materiality. As I see it, making the management commitment to a carbon-free society explicit also embodies an important social message that will influence other corporations.

  • 3.

    The case of the demonstration plant factory in Dubai that will contribute to a stable food supply is a possible solution that should be given attention as a way of meeting societal needs that will be growing more intense on a global scale in the future. I think that the company should position its work in this field as a project that contributes to the SDGs, and I hope they will develop this as an initiative in the manner that the Chiyoda Group is uniquely capable of.

Points that Require Reinforcement in Future

  • 1.

    In order to make the value creation story more persuasive, it will be necessary to show in more circumstantial detail how the conceptual diagram on pages 7 & 8 of the Sustainability Report is related to the disclosure information presented later. The story needs to be built up in that way so that people will be convinced of the correlation between the diagram and the information presented on the following pages. In order to show that management is incorporating this into actual practice, it would be good for the company to state its long-term objectives, set up the key performance indexes (KPI), and disclose the state of their progress to the KPI as they go.

  • 2.

    The intention to incorporate respect for human rights into management can be felt, but compared to what is called for in international standards of conduct, I think there is still a large gap in the scope and depth of the company’s measures. I recommend that the company take steps first to analyze that gap, and that they refer to the Nippon Keidanren (Japan Business Federation) Charter of Corporate Behavior, which has newly incorporated respect for human rights, together with that organization’s Implementation Guidance.

  • 3.

    I think that in strengthening the initiatives above, Chiyoda should definitely implement dialogue and engagement with their stakeholders, who will be key actors in these initiatives. It is also hoped that the company will heighten its transparency and disclose in specific detail that process and any opinions that are voiced in the course of such dialog and engagement.

Mr. Kenichi Takayasu Professor, Department of Economics Dokkyo University

Interview 02

Mr. Kenichi Takayasu Professor, Department of Economics, Dokkyo University

The Chiyoda Group, which declares ‘harmony between energy and the environment’ as its Corporate Philosophy, has publicly announced, a stance of sincere engagement by achieving the SDGs in the ‘Chiyoda Group Sustainability Reports’ for 2017 and 2018. Having mapped (related) its core business with the 17 SDG goals, it went on to establish the position of CSO in the Corporate Planning Division in April 2018. A series of these convey the extent to which the management team commits to achieving the goals.

The More Value the Chiyoda Group Creates, the Easier the World Will Become to Live in

The Chiyoda Group has a threefold structure of Corporate Philosophy, Business Vision, and CSR Values as its foundation, upon which it is accelerating the movement of its value creation toward the resolution of societal issues. Furthermore, the company has fixed its focus for a decade from now on three new growth areas. These are the construction of an energy value chain business, the expansion of global environment initiatives and the engineering business, and the development of new business models compatible with a digital society. The company has stated distinctly that it is going to significantly increase the proportion of its earnings portfolio involved in the environment in the medium-term management plan (2017-2020).
What I myself find most appealing in the message communicated by the Chiyoda Group is that it will concentrate its intelligence as an integrated engineering company and make good use of the technology it has acquired. I think this must be the origin of the innovation that has been there since the company’s founding achieved a balance between the contradictory themes of ‘harmony between energy and the environment.’ That being the case, the company personnel who engage faithfully in solving issues are themselves the wellspring for the Chiyoda Group’s value creation. I feel this very strongly.
I will state two hopes I have regarding the Chiyoda Group. One is that the company will periodically announce its projected image of the future, and stimulate public opinion on the matter. For example, say that the realization of a carbon-free society will remain an important topic even beyond the year 2030, which is the deadline for achieving the SDGs. Someone has to present a projected image of the future that has engineering corroboration and that is ultra-long-term in nature. The Chiyoda Group is engaging with Kawasaki City on a Hydrogen Energy Utilization Promotion Project in an industrial zone, and meanwhile it also launched a Decarbonization Advancement Office in 2018. I wish the company would widely broadcast the impact of this not just on industry, but also on the local community and on people’s lives.
Doing so would frame the company’s own value creation in a broader perspective, and no doubt it would also be able to draw in people who want to act with the Chiyoda Group to resolve issues.
One other hope I have is that an arrangement will be created that achieves a balance between financial returns and social returns.
In the context of worldwide expansion of ESG investment and the widespread adoption of the SDGs, investors have become aware of both financial returns and social returns.
However, it is difficult to accept that obtaining social returns from resolving issues faced by the world means sacrificing financial returns. This is a new set of contradictory themes, and to resolve them, it will be essential to have youthful human resources with the ability to come up with fresh new ideas, further innovation to resolve issues, and steady implementation of productivity improvements.
The SDGs have taken root as common goals for the world.
The hope for realization of a carbon-free society and other expectations placed on private enterprise have grown higher than ever before. The creation of value by the Chiyoda Group will be communicated in Japan and overseas through Group networks, supply chains, value chains, and so on, and spread to the company’s business partners and localities around the world. The more value the Chiyoda Group creates, the easier the world will become to live in.

In Response to the Messages from Stakeholders

IR・広報・CSR部長 中村 薫
Kaoru Nakamura General Manager, IR, PR, and CSR Department

We are truly grateful that you expressed your views, which are of great value to us, in this report again in FY2018 as you did in FY2017. The Chiyoda Group has responded to global requirements by establishing a new “Basic Policy on Human Rights” and “Tax Policy.” We are making a detailed study of the views expressed regarding issues identified and measures that should be taken toward achieving a sustainable society. Great anticipation was expressed regarding our establishment of a CSO and a Decarbonization Promotion Office to advance our measures toward a carbon-free society. We will therefore make it our aim to do what we are uniquely equipped to do as an engineering company that creates value for society through technology and wisdom. That is, to create a projected image of the future that is corroborated by engineering, and to integrate that image with a management strategy for its realization. We hope we will continue to receive the unstinting expressions of your views from your professional perspectives.