Sustainability | How the Public Sees Us

Third-Party Opinion

藤井 敏彦 氏

Toshihiko Fujii
Visiting Professor
Tama Graduate School of Business

I am extremely grateful to have been asked again this year to state my opinion as a third party about TDK’s sustainability website. Under President Shigenao Ishiguro’s leadership, TDK has made rapid strides in its sustainability drive. As a researcher, I am most delighted to have been given the opportunity to look closely its achievement and to make some concrete suggestions, setting the bars higher that should be jumped over in near future.

Qualitative Transformation

First, I would like to note that the TDK Group’s initiatives underwent a major qualitative transformation in the fiscal year under review. For one thing, in addition to its previous materiality, which was limited to sustainability issues, TDK set a materiality covering a wider, nonfinancial matters. Arguments both for and against this approach may be possible. Critics might express concern that the setting as materiality from a wider perspective, including, for example, “asset efficiency improvement,” which might seem a distant issue from sustainability, could lead to weakened focus.

However, I am in full agreement with this setting of nonfinancial targets concerning the entire management together with sustainability materiality in a narrower sense. The reason is that for a company to contribute to the sustainability of society and the environment, it requires whole-of-the-company’s approach, which, in turn, calls for the review and probably reform of the company management and organization. A difficulty lies in the fact that many organizations, in particular large organizations, are actually compartmentalized into several “subsocieties” each of which has its distinctive cultures and ways of thinking. TDK might not be an exception.
For example, such items as “pursuing both delegation of authority and internal controls” and “HR management” are extremely important initiatives that bring the whole company together, overcoming the differences in values and approaches among sections (and among employees belonging to those sections)/, The attempt, although could be said not directly linked to sustainability issues, it is actually a prerequisite to become able to tackle sustainability issues. Hopefully TDK will continue to recognize the importance of this matter.

Connections with the New Medium-Term Plan

Furthermore, it is praiseworthy that this materiality has been formulated in unison with the new Medium-Term Plan. As a result, an effective implementation setup has been put in place by linking the Sustainable Development Goals with main products and technologies.

Human Resource Development

When speaking about the TDK Group’s efforts to address sustainability, it is difficult not to mention the well-designed initiatives to foster global leaders, in other words, human resources capable of leading change. They are still unique initiatives for a Japanese company, and many Japanese companies can learn from the TDK Group in this respect. In many cases, efforts to tackle sustainability issues require a move away from existing business modes. So human resources capable of leading and managing such departures from status-quo are essential for working on solutions of social and environmental issues. Indeed, not a few Japanese companies have stumbled on this point.
Once again, I would like to praise the fact that human resource management has been included in nonfinancial materiality.

Carbon Neutrality: The Direction for Greater Progress in the Future

Regarding efforts to achieve carbon neutrality, the declaration of carbon neutrality by 2050 is an important first step, but the roadmap for achieving that goal has not necessarily been properly clarified. Furthermore, the introduction of emissions trading has become a worldwide trend, and the possibilities of border tax adjustment are surfacing too. In these circumstances, the issue of reducing carbon dioxide emissions could impact a company’s very survivability. This can be said to be the case for all companies. TDK possesses various technologies, including especially electronic device technology. I sincerely hope that by further polishing them, TDK will contribute to the achievement of carbon neutrality in a range of industries.

Cooperation with Wide Range of Stakeholders

In the latest report, the explanation of stakeholder engagement has been significantly expanded. In many cases, there is a limit to what companies can do alone for the mitigation and solution of sustainability issues. The reason is that Japanese society and international society themselves require change. The importance of technology cannot be overemphasized. At the same time, though, we need to take care not to descend into technological “solutionism,” whereby social change is brought about by new technology alone. Quite often than not, for new technology to be put into practice in society, new rules such as new legislation and regulations and the fostering of social norms are necessary. Accordingly, it is to be hoped that TDK will continue to promote cooperation with various stakeholders.

Supply Chain

Violations of human rights are occurring around the world and are shaking global supply chains. In Germany and other European nations, laws have been enacted obliging companies to exercise supply-chain due diligence on human rights. Necessity for a company to manage supply chains in terms of human rights are no doubt going to increase sharply. Seems to me it is likely that the Japanese government will adopt some form of measures as well. I look forward to the further deepening of the TDK Group’s initiatives in this respect.

Geopolitical Considerations

It is probably no overly wrong to regard the hegemonic rivalry between the United States and China, the two superpowers of the world, as a struggle over technological hegemony. The business of many Japanese companies is already being impacted. Moreover, the rapid new development of this geopolitical landscape is closely connected to issues of sustainability too. Centering on activities relating to research and development, mergers and acquisitions, and so on, the TDK Group also needs to deepen understanding and assessment of the situation and integrate geopolitical prospects into its business.

Conclusion

I would like to conclude my third-party opinion by savoring, together with readers, the words of President Ishiguro.” a happy society is one in which no one is left behind.” What more is there to say?

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