Independent Opinion

Mizue Unno
Managing Director, So-Tech Consulting Inc.

After graduating from Chiba University Graduate School of Horticulture, Ms. Unno worked for various consulting firms including Roland Berger Strategy Consultants until she founded So-Tech Consulting Inc. in 1996. At present she provides Japanese firms advice and support in practical corporate activities in the areas of sustainability and CSR from a global management perspective. She is also a part-time graduate school lecturer of the University of Tokyo and serves as a member in various government committees. Publications include “Understanding the Basics of Corporate Social Responsibility (CSR)” (Chukei Publishing Co.).

Strategic CSR with Sustainability Elements Embedded into the Business Strategies

Last year, Yokogawa Electric Corporation announced the mid-term business plan "Evolution 2015," which revealed the renewed strategy for the future. Resource-rich countries and emerging economies are considered as the prosperous regions in Yokogawa's growth strategy, in which it is projected that an expansion of Yokogawa's business will help resolve their social issues. Moreover, the plan includes not only the conventional energy conservation but also the field of renewable energy as one of key target industries. Yokogawa's strategic CSR initiatives are now clearly defined, having incorporated the element of sustainability at the forefront of the business plan.

Yokogawa has also shifted its fundamental stance from an internal R&D-oriented business to that of a solution business to address specific customer needs. Such a shift, thus, indicates that it is critical for Yokogawa's business to address the needs of stakeholders. If Yokogawa takes a step further, looking at the business from the perspective of how it can address the needs of society as a whole and bring benefits to community instead of simply responding to customers' needs, Yokogawa will be able to enhance its corporate value.

Fundamental CSR Part of the Strategy

As for the fundamental CSR part of the strategy--namely human resources, community development and the environment--Yokogawa should deploy a management approach that will cultivate environmental and social awareness in daily operations by implementing ISO 26000 framework, rather than approach that is oriented toward compliance and control.

Given the continued growth and global expansion of Yokogawa’s business, the globalization of business management has become a significant challenge. The mid-term business plan is therefore designed to streamline the entire company organization and system on a global scale, thereby encouraging the aggregation and utilization of business know-how. To carry out the CSR activities, each regional organization is required to take initiative meeting the local needs instead of receiving the majority of their planning and instructions from Japan, though those regions must also be managed globally.

・ Human Resources

Human resource management is the core of global strategy. Accordingly, as part of the global workforce strategy, Yokogawa has made improvements in regard to the acquisition and utilization of human resources, as well as a setup of the human resource development system. Please take those improvements into account as Yokogawa conducts the CSR activities.

Also, the labor practice issues in emerging economies have become a critical matter and are now viewed as human-rights issues. Thus the Yokogawa Group must handle those issues with special attention. In countries having inadequate governance, such matters have frequently turned into labor disputes, posing a significant management risk. Yokogawa, in undertaking various projects in such regions, must focus on those issues going forward. The global condition is such that the global headquarters (or Yokogawa Electric, in this case) must be held responsible not only for its domestic issues, but also for the issues of its worldwide supply chain. It is therefore critical that Yokogawa has a firm grasp of local labor conditions so as to ensure that the supply chain CSR guidelines, which have already been set, are observed locally and that sufficient communication with suppliers is maintained. Yokogawa’s global organizational structure plays a very important role in this regard.

・ Community Development

Yokogawa established the Technical Center at the Kazan Institute of Technology (in the Republic of Tatarstan) and has thereby made a significant contribution to the region through the development of local human resources. Among the community activities, considerable emphasis is placed on the contributions and activities (which go beyond donations and charities) that can help the region advance economic independence and develop human resources. Yokogawa must not only report the examples of its activities but also demonstrate that it clearly incorporates local technological development into the basic policy of its CSR as a fundamental, community strategic initiative.

Regional volunteer programs are also imperative. It would be effective to focus on activities related to Yokogawa’s core business. This will make it easier to gain support and understanding from the community, as well as to apply the models that are already in use to other group companies.

・ Environment

Yokogawa deserves high marks for its efforts in studying the activities that involve sustainability indices, in which environmental issues are of principal importance. It has attracted a lot of attention worldwide in conducting the evaluation of what sort of internal/external impact a sustainability-related activity can have. This does not need to be done in any particular format, but it is up to each company to select the key areas and the method of assessment. It is crucial that the company incorporates the Yokogawa style into its activities. It is essential that Yokogawa shares the sustainability indices not only within the company but also with its business partners, so that it can develop a system in which the CSR activities can expand continuously.