CAO Interview

Guided by “Sampo-yoshi,” we will take measures that pursue the “true nature” of a front-line perspective to enhance sustainable corporate value.

Fumihiko Kobayashi

Member of the Board, Executive Vice President, CAO

Q1. What is ITOCHU’s basic policy related to sustainability?

A1. We strive to affirm “what we should do” and “specific paths we should take” as we focus on pursuing our “true nature” from a front-line perspective.

In initiatives related to sustainability, ITOCHU always focuses on the “true nature” from the front-line perspective. Our basic stance is to steadily help enhance corporate value through business. Under this stance and as a merchant that emphasizes trust, we do not absentmindedly chase the trends of the times. But rather, we established material issues, that present “what we should do” to preferentially and independently solve social issues, and simultaneously affirmed “specific paths we should take” (action plans) to achieve these goals.(→ Initiatives to Promote Sustainability)

Sampo-yoshi,” the founding spirit of Chubei Itoh I that has continued to underpin ITOCHU since its beginning, serves as the axle upon which we will determine the direction of the initiatives. The business philosophy since our founding is to emphasize the benefit of not just the Company but also business partners and society from a long-term perspective, not merely pursuing short-term profits. There is no change in our policy of sustainable development going forward.

Q2. What are the characteristics and targets of the human resource strategies?

A2. We aim to be the best company in Japan and strive to cultivate a motivating workplace environment through highly unique measures.

We position human resource measures as important management strategies and thoroughly implement initiatives that pursue the “true nature.”

With the lowest number of non-consolidated employees for a major general trading company at around 4,200, we need to increase labor productivity to come out on top amid the intense competition. To this end, we need to foster an environment where every employee can maintain their health, feel satisfaction, and make full use of their individual capabilities. The Morning-Focused Working System introduced in FYE 2014 is a prime example. We got a head start on the work-style reforms sweeping Japan with this initiative that emphasizes a withdrawal from the typical structure of having employees stay late to work many hours of overtime. Instead, we encourage employees to utilize the extra time created through better health and more efficient operations to engage with customers, develop skills, and further boost health.

As a long-term qualitative goal, we are striving to realize our vision of being the best company in Japan. The impetus was an email an employee sent before passing away from cancer four years ago. In it, he stated, “for me, ITOCHU is the best company.” In his eulogy at the employee’s funeral, Chairman & CEO Okafuji promised, with tears in his eyes, that he would make ITOCHU the best company in Japan. Starting with the Support Measures for Balancing Cancer Care and Work introduced at that time, we are working to foster environments where employees can work with peace of mind through highly unique measures.

In the rankings of most attractive employers in 2021, seven major institutions ranked ITOCHU No. 1 for general trading companies, and four of these institutions ranked ITOCHU No. 1 across all industries. I might be exaggerating, but I think it is evident that students realize that ITOCHU is a sustainable company worthy of entrusting their future lives. Although there is no direct measures of our goal of being the best company in Japan, I feel we are making steady progress on this front. (→ Human Resource Strategy)

Q3. What is the thinking behind the response to COVID-19?

A3. We emphasize the safety of employees protecting the front lines while hoping to serve society by helping the economy recover as quickly as possible.

Initiatives that pursue the “true nature” are consistent with various responses during the pandemic. In the consumer sector, which is ITOCHU’s focus, partner companies support people’s day-to-day lives on the front lines, and the Company must also protect the front lines with all its power. Of course, the safety of employees and their families comes above all else. We therefore take strict measures to prevent the spread of infections to the fullest extent possible, and, while paying close attention to the pandemic situation, we have not rigidly established a work system and instead have dynamically changed the percentage of employees working in the office around 20 times since 2020.

In addition, based on the idea of reassuring employees working on the front lines as quickly as possible, we have moved quickly to implement workplace vaccinations since the government announced its policy. We are providing vaccination for all of the approximately 6,000 workers who want to be vaccinated, including, of course, ITOCHU’s employees as well as those of Group companies at the Tokyo and Osaka headquarters buildings and those of contractors at the Tokyo Headquarters, such as at reception, security, cleaning, and cafeterias.

The goal of workplace vaccinations is not just to speed vaccinations for employees. We also considered if there is anything we can do to help society. As mass vaccination sites of companies and securing doctors for vaccinations increased burden on local medical care, ITOCHU has committed to implementing its workplace vaccinations in line with its size so everything can be done wholly in-house. We are using our own buildings, industrial physicians and nurses, employee volunteers, and proprietary systems. We have uploaded the latest know-how gained from our workplace vaccinations on our website, including manuals and issues that arise, so that many other companies can adopt our measures, consequently helping reduce the burden on local medical care and contributing to the quick recovery of the economy. We opened our vaccination site to employees at medical institutions and corporate managers in charge of vaccination sites. Many have come to observe the sites, and we have also received a lot of positive feedback from local public organizations.

Childcare providers are also valued essential workers who support the front lines. Only when their children’s safety is assured, thanks to the tireless efforts of childcare providers, can employees work with peace of mind and medical professionals fully devote themselves to medical care. With this in mind, we are also vaccinating all of the roughly 1,500 childcare providers who work in Tokyo and Osaka through the contractor which provides the Company’s on-site day care. We hope that the scope of support widens for people making dedicated efforts to protect our lives, beginning with childcare providers.

Q4. What is the purpose of corporate branding activities?

A4. It is to expand engagement with the public, fulfill our larger social responsibility, and continue enhancing corporate value.

In January 2020, ITOCHU established the Corporate Brand Initiative (CBI), which comprises mainly branding and cross-media strategy experts, under the direct management of the CAO. The initiative is promoting corporate branding.

Due in part to achieving the general trading company “triple crown” in FYE 2021, ITOCHU has come to be seen by the public as a representative of general trading companies. We are taking on social responsibility larger than ever before. To meet the expectations of a wide range of stakeholders as well as society as a whole, we need to raise more awareness of ITOCHU’s presence and activities among the public, including those who have not been very interested in the Company. In addition, we must strategically promote communication with consumers and society to steadily achieve our aims of “Enhancing our contribution to and engagement with the SDGs through business activities” and “Realizing business transformation by shifting to a market-oriented perspective.” These aims were established as basic policies in the medium-term management plan. With this background, the Company is promoting corporate branding activities using an approach completely different from before.

Our first effort was changing the internal newsletter concept to a public relations magazine, raising the quality, and expanding the readership beyond just employees to include a wide range of stakeholders. The concept of “SHONIN of the Earth” is a magazine that anyone can enjoy reading, not throw out after finishing, and put it back on their shelf. It has become an effective communication channel with the general public due in part to it being made available at the TSUTAYA BOOKS in Daikanyama, Tokyo, and Umeda, Osaka. In addition, through newspaper advertisements, videos on our website, social media, radio shows, and other various channels, we take strategic actions for each target to foster an image different from the generally held image of general trading companies. In April 2021, we established ITOCHU SDGs STUDIO as a place to not only promote the Company’s SDG activities but to support global SDG initiatives.

I think it is unique that ITOCHU, which has strengths in the consumer sector and thoroughly takes a market-oriented approach, is able to take an approach to communication rooted in the consumer perspective and not just unilaterally sending out information from the Company’s side.

Q5. What is your analysis of recent improvement in the Company’s external ESG evaluations?

A5. I think that presenting specific policies and steadily taking measures pursuing the “true nature” has led to an improvement in our evaluations.

In 2017, when the Government Pension Investment Fund (GPIF) selected three ESG-related indices, ITOCHU was the only general trading company not included in any of the indices. We recognized that the low evaluation from external ESG evaluations was a material management issue. Since then, the Sustainability Management Division, directly overseen by the CAO, took the lead by promoting a cycle of analyzing the underlying reasons for the external opinions, verifying the evaluations after disclosure, and further expanding disclosures. I, myself, frequently held dialogues with external evaluation institutions. Through three years of diligent efforts, we were lauded by various external institutions, as evinced by currently being the only general trading company included in all of four ESG-related indices chosen by the GPIF.

In addition, in 2018 we received the support of the Ministry of the Environment and conducted a scenario analysis based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). After fully evaluating the effectiveness through this scenario analysis, we announced our endorsement for the TCFD recommendations in 2019, and participated in the TCFD Consortium, which was established with the support of the Ministry of Economy, Trade and Industry, the Ministry of the Environment, and the Financial Services Agency. We did not just superficially declare support, but pursued the “true nature.” This mindset led to our policy to completely withdraw from thermal coal interests and the industry’s first disclosure of GHG emissions from all our owned fossil fuel businesses and interests. “Enhancing our contribution to and engagement with the SDGs through business activities” is the basic policy of the medium-term management plan. In the plan, we quantitatively announced “specific paths we should take” to achieve our long-term goals, rather than just stringing together abstract policies and pleasant-sounding words. Announcing specific policies and steadily taking action are characteristic of ITOCHU and have helped improve our external evaluations.(→ State of Action on Climate Change)

Q6. What are you doing to ingrain the corporate mission of “Sampo-yoshi”?

A6. Without taking special initiatives, everyone already comprehends the mission and practices it.

Since revising the corporate mission into “Sampo-yoshi” in April 2020, we have not held briefings or taken any other measures to ingrain it internally. This was because the mission has already taken root as corporate culture in every employee subconsciously, and special awareness-raising measures were unnecessary. “Sampo-yoshi” is already a very familiar spirit for the Company. With “Sampo-yoshi” as a policy, every employee understands the “true nature” of sustainability and practices it at the business site, and each initiative therefore steadily leads to enhanced corporate value. Regarding “Enhancing our contribution to and engagement with the SDGs through business activities,” we are accelerating initiatives at various front-line business sites. I feel very proud that this proof demonstrates that “Sampo-yoshi” is already deeply ingrained.

The corporate mission should be what employees cling to during the toughest times. The Company is very happy that this kind of corporate mission is ingrained in each employee. It is an important asset that the ITOCHU Group must continue to protect, so it can continue serving as our guiding light.