This post has been translated from Japanese. Read the original interview here.
In aiming to resolve negative factors in society such as inequality, inconvenience and insecurity, Japan’s Recruit Group has devised a new framework, “Sustainability Orbit,” detailed in its annual report issued this October. With management's full commitment, Recruit Group follows the framework’s action guidelines to execute sustainability activities. Masahiko Kawamura, Director and Chief Researcher at Alterna Research Institute, interviewed Executive Officer Ms. Ayano Senaha about its aims and prospects.
Kawamura: In this annual report, you have devised a new framework, “Sustainability Orbit.” Why now?
Senaha: One reason is that Recruit Group has become a global entity. In Japan, we might be seen as a domestic company, but our overseas sales have now reached almost 50 percent of the Group’s revenue.
What's the latest in impact investing?
Explore the latest tools, guides, platforms and organizations making it easier than ever for investors to put their money where their values are — at New Metrics '19, Nov. 18-20.
In addition, the global environment has changed considerably. When our CSR Promotion Office — the predecessor of the Sustainability Promotion Office — was established in 2012, we had already recognized the importance of listening to the opinions of stakeholders, and incorporating them in our initiatives. The logical next steps were to listen to a wider range of stakeholders globally — including NGOs and investors — and properly arranging the internal governance structure for discussion and decision-making.
Kawamura: The flow of the world has changed dramatically, such as the adoption by the UN of Sustainable Development Goals (SDGs), and the Paris Agreement in 2015.
Senaha: Yes, that is true, however I personally think that even in a constantly changing world there are important things that remain consistent. We have a culture of asking: “what do you really want to do?," which is deeply rooted in our group. We have challenged and solved negative factors in society through our business since it was founded. Most of our existing businesses have originated from employees’ ideas.
Even though we have nearly 60 years of history, the culture remains the same. For instance, in 2017, 988 new project proposals were put forward within our Japanese operations alone. As we have this kind of culture in our group, the question for us was not what we can do to accommodate SDGs. For us, it was very natural to ask ourselves what we want to do when considering sustainability policies.
The spirit of its Founder and the “Ribbon Model"
Kawamura: Has your company always had this corporate culture? It does not sound very Japanese.
Senaha: Yes, it’s been like this since the company’s founding in 1960. And yes, I guess it is unique in the Japanese social context. When Hiromasa Ezoe, our founder, was studying at the University of Tokyo, he noticed how inconvenient it was that job offer information was scattered, hidden in places like student information boards, or just personal introductions through laboratories in universities. He felt this was also inequitable, so he gathered and collated all available job information in one place and started publishing it in the student newspaper.
This episode signifies two important characteristics of Recruit Group: using business to solve societal problems, as I explained earlier; and creating value from matching clients with users, which we call the “Ribbon Model.” We visualise a ribbon with the client at one end and the users at the other. We make the two sides of the ribbon meet in the middle, and maximizing this “matching effect” has been our role since our founding.
Kawamura: It must have been quite an innovative idea at that time. I can see why you needed to create your own concept of sustainability. How did you begin?
Senaha: Our first step was to start dialog with stakeholders. As you can easily imagine, the big question for us over the past two years has been to define Recruit Group’s own concept of sustainability. The Sustainability Orbit, 5 Material Matters and SDG Domino — all new concepts which are shown in our annual report, which I will explain later — are the outcomes of our efforts to meet stakeholders’ expectations.
Kawamura: Who did you talk to in the Stakeholder Dialogues?
Senaha: We listened to 68 different NGOs, experts, investors and lawyers. We found their various opinions and demands from their own perspectives very interesting. I felt expectations from them, but also encouragement.
Management team commits to new structure
Senaha: We call our evolving cycle of sustainability initiatives the "Sustainability Orbit." Through dialogue with our stakeholders, we recognize the demands and expectations society has of us, then discuss them at depth with outside experts and management teams at the Sustainability Committee.
Then, at Recruit Holdings’ Board of Directors meeting, we secure management's commitment. According to our action guidelines, we promote tangible sustainability activities. It may be easier to understand if you imagine a three-dimensional helix, not a flat spiral. It is not a process that has an end, and will always evolve and improve.
Emphasizing stakeholder engagement
Kawamura: That is exactly what stakeholder engagement should be about. How are you going to make this work?
Senaha: We do this by grasping society’s demands through Stakeholder Dialogue, participating in international conferences, reviewing action plans, consulting with the Sustainability Committee, and finalizing our plans with the Board of Directors.
Kawamura: Can you tell me about your time scale, and if there are any challenges in realizing it?
Senaha: I think it is a cyclical flow, so the time scale is almost constant. For example, we noticed at one point that we maybe a little biased because we mainly listened to stakeholders outside our company, such as NGOs and investors, so from this year we started having town hall-style meetings with our employees, who are also important stakeholders. We improve the process by correcting its trajectory as necessary.
Five Material Matters and the SDG Domino
Kawamura: Now, please tell me the specific tasks your company is working on, and their Key Performance Indicators.
Senaha: We focus on five themes as our priorities: “Inspire new ways of working,” "Close the opportunity gap,” “Celebrate diversity and inclusion,” “Respect human rights” and “Conserve the environment." These matters were selected after materiality analysis; evaluating the level of demands gathered through the Stakeholder Dialogues, and the degree by which we can contribute the most in our original way. In addition, there is the "SDG Domino" effect, in which all the matters relate to each other.
Senaha: I think it is significant that we selected “Reduced Inequalities,” the 10th SDG, for our first domino piece. As providing “Opportunities for Life" is a key mission for Recruit Group, we are determined to add value to society by maximizing the matching effect, with the Ribbon Model at its core.
However, there are other things that directly contribute to different SDGs in our business. For example, we have an educational business, so the 4th Goal, “Quality Education,” gets tackled head on. In addition, we run a job listing service called "Travaille,” aimed mainly at women, which matches the 5th Goal of “Gender Equality." That said, the 10th Goal — “Reduced Inequalities” — is set as the first piece of the domino for the whole group, and we try to make each goal interact to generate social impact.
We launched “Travaille" in 1980, more than five years before the official enforcement of the Equal Employment Opportunity Law in Japan. From our founding to 2018, our idea that we want to make a positive influence on society through our core business has not changed. As a result of this accumulation, we would like to realize our basic principle of creating a brighter world where all individuals can live life to the fullest.
Kawamura: What is your vision for your future?
Senaha: Recruit Group’s vision is to "Follow Your Heart.” As the basis of this vision, we believe each person reaches their greatest potential when their aspirations, dreams, desires and passions are all unleashed. This belief is incorporated into each element of group management, and produces a virtuous cycle that creates a social impact through engaging with all of our stakeholders.
Being in charge of sustainability, I place great importance on one thing, and that is “authenticity.” Our vision, as well as our Sustainability Orbit, are not there just to be framed and hung on a wall. I want them to be real tangibles in our daily activities.
At Recruit Group, these principles are grounded in reality that each employee actually carries out their duties sincerely. These accumulated efforts not only grow our business but also make our contribution to the society very authentic. As a result, I hope that we make positive impact for SDGs and a sustainable society in a real, unique way.