Intellectual Engagement

Intellectual Engagement

When issuing the CITIZEN Group CSR Report 2017 Digest Version, the Head Office of CITIZEN Watch welcomed Mr. Tomita, a director at Lloyd’s Register Japan K.K. A discussion was held and matters were confirmed based on FY2016 CSR activities, such as the directionality of Group-wide CSR activities from the current fiscal year, the kind of activities needing reinforcement, and enhancement of information disclosure.

(Date: May 9, 2017)

The significance of reorganizing material issues

Suzuki:
CITIZEN Group carried out CSR activities while taking into consideration the third-party opinions shared by Mr. Tomita last year in the CITIZEN Group CSR Report 2016. In regard to the opinion that information disclosure beyond examples of activities and explanations of outcomes is necessary, we recognize that the lack of a strong sense of story lines throughout the CSR Report, and that all the activities the CITIZEN Group has implemented to date were fragmented anecdotes. With understanding the importance of clear awareness toward issues to carry out the kind of suggested information disclosure, in FY2016 we reorganized key issues and determined six topics material to the CITIZEN Group.
Kitano:
In the process of determining materiality, we have not yet invited various stakeholders to obtain their opinions, so I think this will be our agenda going forward. In FY2016, we reaffirmed what issues were important to CITIZEN Group, while referring to international initiatives such as the Global Compact, EICC, and SDGs. As we move to resolve the issues specified as materiality, we are engaged in building recognition of those issues in order to tackle them Group-wide in the future. In addition, in this year’s report we disclose information on our activities based on materiality while linking the determined six material topics to SDGs goals.
Tanaka:
Over the next two years, we plan to establish a cycle that includes materiality reviews while involving stakeholders and welcoming their comments, as recommended by the SDG Compass.
Tomita:
Last year, your company used the term “CSV,” but apparently this year you have reorganized your activities based on SDGs. There are various ways of viewing and treating general principles and guidelines recognized by international society, but now Japanese companies are also actively trying to engage in SDGs. You need to indicate which SDG goals/numbers your company’s activities are related to. However, what is important is to understand the essence of the SDGs, which is that the provided goals must be achieved by 2030 amid awareness of the risk to global sustainable development and the inability for global CITIZEN to survive, and to use this as a hint for pinpoint challenge how your company can positively contribute.
Suzuki:
Also, the last fiscal year Mr. Tomita told us about the importance of responding to international initiatives. CITIZEN Group intends to strengthen its global expansion through actions such as acquiring overseas companies and increasing employment of foreign nationality staff. From FY2017 we began temporary employee transfer to the Global Compact Network Japan, in which we have participated in the past. We feel the necessity of making a greater commitment to the Global Compact, and linking materiality and SDGs is a part of that.
Tanaka:
The CITIZEN Group regards acting up to the “Citizen Group Code of Conduct” as the foundation of CSR activities. Materiality and SDGs are linked, but basically everything is linked to the Code of Conduct. We make as much effort as possible toward resolving societal issues while clarifying the relationship between SDGs and the Code of Conduct revised in the last October.

Recent trends in international society and the state of corporate CSR activities, initiatives for SDGs

Tomita:
Stating it briefly, the biggest trend of recent years was that CSR activities have been propelled into mainstream. One reason for this is that international awareness of CSR is rising, and international codes of conduct and rules have been drawn up. Examples are SDGs and the United Nation’s Guiding Principles on Business and Human Rights. It can be said that corporations’ decent actions regarding CSR is becoming a primary agenda.
Until now, if anything, laws were created by each country. However, since country-specific control systems are no longer feasible in a sense, the move to position the ideal state of corporate CSR as a common global issue is distinctly emerging. The discussion on TPP, too, is not just a debate about tariffs. The truth is, the discussion includes labor standards and environments related to trade. It is not simply a matter of preferring low tariffs. There is a movement to attempt to solidify matters, including the environment and labor standards, at an international level and use a common language.
From a corporate perspective, unquestionably I think that until now “business” and “CSR” have been visualized as somewhat separate or individual matters, but today “CSR” are being mainstreamed even within companies. An approach is now being taken as what kind of social and environmental issues exist within business.
Therefore, we are now in an age where we cannot appropriately respond unless we dig further into what kind of business each corporation is engaged in, and what kinds of issues exist. In the CITIZEN Group, too, issues differ by business, whether it is watches, machine tools, or devices. In these times we must carefully examine what problems, risks, and opportunities exist in each business and we need to respond to them appropriately. At the same time, there needs to consider how to disclose matters such as responses taken in these circumstances. As stated earlier, standardization is progressing, so a country or a global corporation must not be complacent. There is a call for disclosure that meets certain criteria, including GRI Standards, IIRC, and a move toward legislating the disclosure of non-financial information in the EU, and responding to the promotion of mandatory ESG information disclosure by securities exchanges in various locations.
In Japan, too, non-financial information is also receiving more and more attention from the investment perspective, so on this point the expectations to companies is growing. In your company as well, that the CSR Department acquire a position while actively engaging with the business divisions and the management layeras a mainstream corporate function should be an expected change in the future.
On the other hand, global leading companies not only have established their own fundamental ways of thinking, but also appreciate the investors’ ESG assessment and disclose information in response. Understanding through this kind of CSR Report whether you are properly carrying out disclosure according to globally sought-after standards is extremely important. In that sense, I think your company’s direction of separating the digest version (booklet type) and online version is suitable. I believe that strengthening CSR governance and management mechanism while redefining the concept of information disclosure will be even more important from now on.

Expectations for the CITIZEN Group celebrating 100 years in business

Tomita:
It has been a dozen or so years since the current kind of CSR report began. At first, there were not many companies enthusiastic about information disclosure, but there is a growing understanding of the importance of active information disclosure. There are still limited companies that expose problems as truths, but recently a growing number of constructive companies also disclose negative information.
Suzuki:
Last year, Mr. Tomita’s suggestions included the clarification of goals with KPI, and the enhanced disclosure of numerical information. We must be creative not only with the content of the information, but also with how we communicate the information.
Kitano:
It is crucial to work on enhancing awareness of the importance of CSR activities..
Tomita:
That is true. On that point, it is also necessary to have contact with the outside company. Only thinking about your company’s CSR activities once a year when issuing the report makes it difficult to gain a compelling sense of their importance. To change that, it should be good idea to create opportunities for meaningful communication. You mayinvite outside intellectuals and lecturers to events such as in-house workshops and seminars, to understand what is expected in the world and to have chances to listen to real opinions. However, the truly important thing is for each company to search for and implement the best method for itself. I hope you will find your own method that can gradually spread and take root in the CITIZEN Group’s original corporate culture and business structures, and then continually put that into practice.
Suzuki:
The CITIZEN Group is, so to speak, a 100-year-old tree. Naturally, this 100-year-old tree’s survival in the next 100 years requires both things with no change and things need to be changed. Given this, we intend to consistently move forward with firmly grounded activities.
Tomita:
“CITIZEN L” is a wonderful specific example of an initiative, but in terms of the environment, aside from coping with the DRC conflict free issue, there is no disclosure regarding responsible procurement in the labor environment. Furthermore, “CITIZEN L” is the only product I could find that carries out such initiatives, so I hope you will consider horizontal expansion to other models as well. In your company, I would like to see that you not only appeal to investors and specialized fields, but also integrate ethics and sustainability in brands and link to product differentiation and brand value enhancement. Also, this kind of session with review and recapitulation of the last years’ third-party opinions is exceptional. To have meaningful engagement for both your company and stakeholders will be unfailingly utilized in the next actions, and I truly hope you will continue this effort.
Suzuki:
We moved forward with various activities in FY2016, and we’ may try a few un-CITIZEN-like things as well in FY2017. As advised by Mr. Tomita, although it is not easy to do, we need to consider moving closer to global standards while maintaining what is “the CITIZEN Group,” if this “100-year-old tree” is to survive another 100 years.
Tomita:
To that point, it should be good idea to have a road map illustrating how far you want to reach in the next three years, for example. Perhaps it is appropriate to first consider how far you want to go in the three years and what you want to do from there.
Suzuki:
In FY2017, we will further thoroughly implement the revised Code of Conduct throughout the Group. We considered that a full-fledged global roll out of the Code of Conduct was quite difficult with given factors such as differences in culture and business practices. However, with our president’s note saying that what can we achieve if we cannot do anything about the roll out if we really want to become a solid global company, we even translated the Code of Conduct into nine languages. Of course, the translation itself does not sufficient and we will fully focus on spreading the Code of Conduct Group-wide.
In addition, in April 2017 one of our employees was temporary loaned to the Global Compact Network Japan. This is our first collaborative initiative with an international organization. We are also planning many other activities, including developing responsible procurement within the Group. The next year when we celebrate our 100th anniversary is the last year of our “Global Plan 2018,” and, thus, we strive to decisivelytackle issues while anticipating what lies ahead.

Hidemi Tomita
Director and General Manager
Business Development Division
Lloyd’s Register Japan K.K.
A wealth of experience participating in government committees, international standards, etc.

CITIZEN WATCH CO., LTD.
CSR Department
From Left Tanaka, Suzuki, Kitano