Sustainability Discussion Looking ahead to the future and working towards our goals Sustainability Discussion Looking ahead to the future and working towards our goals
Mr. Kazuo Tase President & CEO, SDG Partners, Inc. × Tsutomu Tannowa Representative Director, President & CEO Mr. Kazuo Tase President & CEO, SDG Partners, Inc. × Tsutomu Tannowa Representative Director, President & CEO

Left: Tsutomu Tannowa, Representative Director, President & CEO /
Right: Mr. Kazuo Tase, President & CEO, SDG Partners, Inc.

Mr. Kazuo Tase

Graduated from School of Nuclear Engineering, Faculty of Engineering, University of Tokyo; Visiting Professor at New York University School of Law.

2017 Established SDG Partners, Inc.
2014 Assumed the office of Director, Global Management Institute at Deloitte Tohmatsu Consulting, Japan.
2005-2014 Worked at the United Nations; served as Chief of Human Security Unit in UN Office for Coordination of Humanitarian Affairs, and later Acting Director of UN Information Center in Pakistan.
1992-2005 Worked at Japan’s Ministry of Foreign Affairs.

Top management leadership is essential

── The Company has thus far deepened its triple bottom line management approach and is working to engage in management with ESG elements at its core. Mr. Tase, you have a wealth of knowledge about sustainability. What do you think are the key elements required for a company to promote sustainability strategy?

Tase

I think top management must show leadership by fully understanding and identifying with the significance of promoting sustainability strategy. If they don’t, employees are unlikely to follow suit. In the case of Mitsui Chemicals, I get the feeling that the president understands the essence of sustainability and executes business decisions accordingly.

Tannowa

I too agree with your opinion that top management’s comprehension of sustainability is a prerequisite. Also important I think is how top management can communicate its ideas to employees. We established the Corporate Sustainability Division in 2018 and one of its objectives is to ensure that employees understand and make sense of sustainability management. We also wanted to externally demonstrate how serious Mitsui Chemicals is about addressing ESG issues. We want to place pressure on ourselves, in a positive way, as we take steps towards promoting sustainability strategy.

Tase

Is there anything you keep in mind in terms of employees’ understanding of sustainability?

Tannowa

I usually explain the significance of sustainability management to employees by using the expression “a company not merely strong but also good.” A company must have financial strength, as demonstrated in earnings results and the like, but at the same time, if it isn’t a “good company,” so to speak, by possessing non-financial intangible value, then there is really no point in surviving.

Tase

I tend to liken financial and non-financial factors to the muscle strength and internal organs of an athlete. Even with muscle strength and skills an athlete can’t keep winning without healthy internal organs. In business, companies with an uneven balance of financial and non-financial strengths have little prospect for sustainable growth, in my opinion.

Conceiving our future targets from a long-term perspective and working towards them

── The Group has formulated its Long-Term Business Plan. What are your thoughts on the importance of a long-term perspective?

Tase

Recently when talking with the younger generation of company executives, the importance of a long-term perspective is often raised. Many of them think that medium-term business plans might as well be laid to rest. Mitsui Chemicals has already switched from medium-term plan to long-term plan, which I think was a very forward-thinking approach. What were the reasons behind that decision?

Tannowa

While I personally strongly pushed for it, we realized that in these times of such volatile change in the business environment, a pre-established plan would be meaningless. We decided to go with a long-term plan because even if it’s a bit vague, for example, we would still be better off framing our future targets and working towards them. The idea behind this is that if conditions change, implementing a rolling plan to flexibly factor in those changes is a more realistic approach.

Tase

I’m sure it was a big decision to make, but were there any concerns voiced within the Company?

Tannowa

I think there were some concerns among employees who were used to a rigid management system of preparing a budget based on a medium-term plan. However, things do not always proceed as pre-established under a medium-term plan. We decided it would be better to shift to long-term goals in the sense that it would encourage a change in mindset among employees.

Tase

I think it’s very important to steer the Company toward a goal that is slightly further away. This approach also applies to how we should address social challenges. For example, providing food to impoverished and hungry children will satisfy their hunger at that moment, but it doesn’t solve the underlying problem. It goes without saying that tackling poverty itself is crucial. I want companies to have an awareness of whether their approaches will really lead to their long-term goals. It’s important that companies employ a combination of inductive short-and-medium term perspectives with a deductive long-term outlook.

Management must look ahead to the future and change accordingly

── Mr. Tase, you have also said that the process for reflecting current trends into management is essential to promoting sustainability strategy.

Tase

In a way, ESG approaches can be said as a function to foresee outlook for the future. Discussing matters that management needs to know about at the right time is the key. My guess is that you intentionally positioned the Corporate Sustainability Division under the direct control of the president as a way to reflect important topics concerning the future into management.

Tannowa

As you say, I frequently engage in discussion with the Corporate Sustainability Division. Those discussions are then brought to the table at the meetings of the Corporate Sustainability Committee and the Board of Directors. At Board meetings in the past, most agenda items concerned recent business matters or investments, but there have been more signs recently that Board members want to discuss matters from an ESG perspective. Social challenges are characterized by the trends of the times and differ in significance and impact. We must be sure to engage in deductive arguments and ask ourselves what we should do now by considering the influences these issues may have in 20–30 years’ time. Through these discussions, I think the measures we take and our management priorities will change.

Tase

Management anticipates the future and makes changes accordingly. That is what sustainability management is all about. For example, a scenario where people use self-driving cars on a daily basis is no longer a pipe dream in 10 years’ time. If it does happen, the notion of distance will lose all meaning and land prices and urban living will change dramatically. I think it is vital for management to always be attentive to such changes in society and acutely decipher what those trends mean. When looking ahead of the situation of chemical industry in 10 years’ time, how do you analyze the current state of the industry?

Tannowa

I feel that the potential of chemistry is growing. There is always a role that chemistry can play in sparking innovation. Not surprisingly, the biggest issues for the chemical industry and Mitsui Chemicals are climate change and plastic waste. These problems are expected to become even more severe in 10 years’ time, so I think we need to draw up a major framework in which we outline the scenarios and examine what measures we can implement.

Tase

General consumers tend to forget about the life cycle assessment point of view when considering the problem of plastic waste. Simply saying that we have to reduce plastic because it ends up as waste fails to address the essence of the problem, I think.

Tannowa

Appropriate treatment and disposal of plastic products after use would be ideal. However, the situation is that the environment is suffering as a result of inappropriate waste management. It is important that we use scientific data to confirm environmental impacts at each stage of a product’s lifecycle before making comprehensive assessments. Naturally it is our responsibility as a company that manufactures plastic to consider what we can do and how we should take action. At the same time, problems need to be solved in cooperation with various parties across the entire supply chain, for example, the local governments and administrations that are tasked with collecting and processing waste. We must realize that the problem of plastic is not something that can be dealt with shortsightedly in a certain way. I am personally aware of this and I intend to make my thoughts known from both a Company and industry point of view.

Tase

I would certainly like to see a company with thorough knowledge of plastics, like Mitsui Chemicals, taking a leading role and engaging in fundamental debate. I also think general consumers struggle to understand the whole picture of this problem. I hope that you can provide consumers with easy-to-understand information and develop superior products that help find a solution.

Putting in place a scheme under which diverse human resources can thrive

── Mr. Tase, in addition to the environment, what other issues do you attach importance to?

Tase

I have an impression that diversity and inclusion such as SDG’s gender equality and women’s empowerment are where Japanese companies’ efforts are most needed. What’s the situation at Mitsui Chemicals?

Tannowa

In the past it was normal for production sites of chemical companies to have few female workers, but we are placing as many women as possible into the three rotating shifts. While we need to improve our facilities and systems to facilitate this, the very idea of what our worksites should be like continues to change. In management as well, two of our three outside directors are female as of this year. Our challenge is that we have few female employees to begin with, so if we can steadily increase the ratio of female recruits going forward, we should be able to have more women in managerial positions or key postings in the future. We think this will set in motion a virtuous cycle.

Tase

What about diversity from a broader point of view?

Tannowa

We are actively appointing staff hired overseas to key positions. And we established our Global Human Resources Division with the aim of making active use of talented human resources.

Tase

Nurturing employees who are capable of flexible thinking as the next-generation of managers is a really important initiative, I think.

Tannowa

At Mitsui Chemicals we have established a Key Talent Management (KTM) system based on which we create succession plans and assign roles in a series of distinct stages to nurture employees right through to senior management. We have a Human Resource Advisory Committee to discuss on the assignments of our top management. The Committee hears the opinions of outside directors and assumes accountability. In other words, we have a very strong awareness of responsibility to make discussions in an open and transparent manner.

Need to also demonstrate social impact, a leading indicator of profit

── How have the Company’s unique Blue Value™ and Rose Value™ indices and products been received?

Tase

I think society calls for various solutions from Mitsui Chemicals as an industry leader. Your Blue Value™ and Rose Value™ indices and products seem to represent a suitable response to those requests.

Tannowa

Our Blue Value™ and Rose Value™ visualize our contributions to solving social challenges as environmental contribution value and QOL improvement contribution value respectively. We started disclosing this information in 2015 because these initiatives became able to deliver objectivity and benefits for all our stakeholders to evaluate.

Tase

In addition to simply selling products that contribute to society, it also seems that your initiatives are financially viable. Is this true?

Tannowa

It would be meaningless to just promote our products without a goal, which is why we are committed to increasing the sales ratios of Blue Value™ and Rose Value™ products as a KPI in our Long-Term Business Plan. We believe growth in these products can also help achieve sustainable economic growth. This is why we now focus on the value of contributions to the environment or improvements to quality of life when assessing investment projects.

Tase

Investors are becoming increasingly interested in how much a certain product or service impacts society. In other words, whether it changes society for the better or whether it reduces a negative impact. They think social impact is a leading indicator of profit and a company’s contribution to society will be returned in the form of profits over the medium- to long-term. I think it would be wonderful if your products could also demonstrate their impact on society in the future.

Fulfilling major social responsibilities but also seeking profitability

── Finally, please describe your expectations for the Mitsui Chemicals Group.

Tase

My assessment of Mitsui Chemicals so far is that it has upheld some major social responsibilities. Even if society is transformed in the future, I’d like to see the Company continue to fulfill its core social responsibilities and be even more profitable through those efforts. I expect it to maintain the right balance between contributing to society and growing as a company.

Tannowa

Mr. Tase, your job involves tackling social challenges from various approaches in different parts of the world. We kindly ask that you cast a strict but warm eye over our Group’s initiatives on addressing social challenges and sustainability management. Please let us know if we appear to be veering off track.

Interviewer: Ken Migita, Senior Director and General Manager of Corporate Sustainability Division

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