Sustainability Management and Future | Sustainability

"Theory language and abbreviation" written by Eiichi Shibusawa, who is said to be the father of the modern Japanese economy, incorporates values that apply to the sustainability management of modern companies.Here, we invited Mr. Ken Shibusawa, Chairman and Chief Executive Officer of Commons Investment Trust Co., Ltd. Director, who is the fifth grandchild of Eiichi, to talk with our president, Nakamura, on the theme of "Ricoh Leasing's medium-to long-term value creation and sustainability management."
(implemented in September 2023).

"Rongon and Sanba" is the management of a modern company itself.

Nakamura

It was April 2020 that I became the president of our company.It was difficult to predict what would happen to the world and the company with COVID-19 pandemic, but I was seriously thinking about how to create the future for the younger generation, particularly children.I believe that a company is not just a source of revenue.A company should earn value based on the magnitude of its added value as to what kind of value it provides to its customers with a sense of ethics.If we do not generate profits in the right way, we cannot achieve sustainable growth.In Eiichi Shibusawa's book, "The Analects of Confucius and the Abacus," there is a saying, "Collect all you can and scatter all you can.It is important not only to make money, but also to balance morals.

Shibusawa

Eiichi Shibusawa was my grandfather's grandfather, and the "theory of moral and economic union" advocated in "The Analects of Confucius and the Abacus" is based on the theme of balancing society (morality) and profit (economy).These two are like the two wheels of a car, and if one of the wheels is large and the other is small, it will not be able to go straight, but will only go around the same place in circles.From this point of view, I believe the keyword "and" in "Arguments and Calculations."The key to corporate management is the "or," which means that efficiency and productivity can be increased by either 0 or 1, black and white, or by winning or losing. However, the comparison of existing products does not create new value.On the other hand, the power of "and" is to create new value and innovation by combining the seemingly incompatible morality and economic through trial and error.Continuing to provide value that is adapted to the new business environment that accompanies the changing times is the kind of sustainability management required of a company.

Nakamura

The Analects of Confucius and the Abacus was published in 1916, when Eiichi Shibusawa was 76 year's old.The Meiji era was over and the world was moving forward, and the world is changing at the same speed.Under such circumstances, this book has many contents that can be used in modern management, such as realizing conflicts with the powers of "and" at the same time, and taking on new challenges, and so on.I am constantly thinking about what to do in corporate management.As a company, it is our mission to earn profits, but we must always have what we want to accomplish.The idea of the Analects of Confucius and the Abacus fits perfectly.

Shibusawa

At the time of its publication, Japan had been affluent to some extent through turbulent times, and against this background, the "nothing-to-do" principle was widespread, and Eiichi was upset that there were no new challenges.In the chapter "Preparedness for Taisho Restoration," it is written that a new challenge will not be taken if a person falls into the doctrine, and that will lead to modern times.Also, as it was written, "If this situation continues, something alarming may happen in the future," the Manchurian Incident took place in 1931, the year of Eiichi's death.The question "for what" is very important.Why is a percussion, what we are doing is a What, what we do is a mission, where we go is a Where, and what we do is a How we can organize it with value.We can expect companies whose presidents and employees share a common sense of values.There are only humans, and AI can't, ask the philosophical question of why they exist.It is important for each and every employee at the company to continue to create value with an autonomy.

"Sympathy" in the management philosophy leads to new creation

Shibusawa

Please tell us about the positioning of your company's management philosophy, which can be called "purpose," and how well it has penetrated the workforce.

Nakamura

Our management philosophy is to "bridge the prosperous future with our unique finance and services."Since this management philosophy is the basis of our business activities, we have formulated policies for each division, considering what is a bridge to a prosperous future.While all employees share the same management philosophy, new challenges are created by the diverse Human Resources working in their own highly flexible ways.

Shibusawa

By having a management philosophy, people with diverse values can gather together, and the company can be compared to itself.Today, this is important because we are experiencing large-scale structure and demographic changes that we have never experienced in history.The pyramid-shaped organizations of the Showa era, lifetime employment systems, seniority-based systems, and other customs will no longer apply in the future.But as a company, we want to hire the best people, and we want them to stay and not quit.The question is "sympathy."Why does the company exist and why do we do our work?This compass is the management philosophy, and even if you are in a different company, you will be drawn together like gravity to work on new things together.In this sense, diversity is also necessary for various chemical reactions to take place.

Nakamura

As you have said, we want diverse people to share our management philosophy and initiatives and work together to create new ideas.If the number of new graduate recruits increases, we can say that we have grown as a company by increasing the number of employees who want to join our management philosophy by empathizing with the management philosophy.

What roles should be played as Circulation-Creating Company?

Shibusawa

I think it's a curious term for the medium-to long-term vision-to-Circulation-Creating Company.I have never heard of any other financial institution.

Nakamura

Generally speaking, the term "circulation" is used in the context of ecology. However, "To Circulation-Creating Company" implies that human beings, substances, principles and ideas are also cyclical.In the financial industry, we play a blood-like role in the world, creating a new circle and encouraging many people and companies.

Shibusawa

It's fabulous!As you say, finance is blood, so it is one of the important roles of financial institutions to circulate it in the world.Eiichi also says, "A drop of shizuku eventually becomes a great river."If blood does not circulate, the body becomes unhealthy.This is the same for society.If Japan's financial industry as a whole aims to create a cycle, the world will change dramatically from a healthy perspective.With regard to this change, your company is hoping that each employee will evolve by using the word "mutation."Changes and reforms are anthropogenic and mechanical, but are they organic and biological, so is the image that they can evolve?

Nakamura

That's right.Organisms live repeatedly by mutating.However, mutations are error-prone, so if you fear, you will not be able to take on new challenges.As a company, errors are not something to blame, but something that is necessary for the company's growth.We are developing our business with the aim of realizing our management philosophy, and this will create a sustainable situation.There will be a variety of mutations and evolution in the process.Our employees recognize that sustainability is the essence of their businesses, which is why we have integrated the new mid-term sustainability plan, which was separate from the previous mid-term business plan.Conversely, we do not conduct businesses that do not lead to sustainability.This is also the power of "and" to do at the same time.

Shibusawa

Your company's sustainability management is "and."We believe that the services we provide to our customers are also created through dialogue with our customers from the viewpoint of sustainability.

Nakamura

That's right.Leases & Finance Business creates value that supports the company's growth opportunity by lowering the hurdle for customers' capital expenditures.Awareness of what growth customers can achieve through capital investment creates a sense of rewarding and pride.What is important is to seize customer growth opportunities through dialogue and reach the next step and the next step after that.We began with Leases & Finance Business and are now in the process of developing services-such as collection-of-money-and investment businesses, such as solar power generation business.We have a "Abundant Future Reserves" system that donates 1% of the profits generated through such sustainability management, deducting the yearly allowance from Net Income, in order to return the profits to society in order to realize the future we aim for.To dispose of profits, the system is operated with the understanding of the stockholder at the stockholder's general meeting.In this way, we strive to promote our initiatives for the realization of a prosperous future, while gaining the understanding of each stakeholder.

The key to sustainability management is Human Resources

Shibusawa

In the new medium-term plan, Non-Financial Targets is newly set in relation to the four Materiality(Key issues), but this leads to the notion of impacts.Around 2008, the Rockefeller Foundation constructed a venture that aims to resolve social issues, so that the money would fit properly.Impact investing has attracted attention since about 10 years ago, and new signs of impact management have emerged as a result of overcoming COVID-19 pandemic.In 2022, the concept of impact was incorporated into the basic policy of the New Capitalism Realization Meeting, which I am involved in, for the first time.This idea is also found in "Arguments and Calculations."Investment is assessed by risk (uncertainty) and return (profitability), but it is also an impact investment that measures the environment and social issues.Materiality is to set a goal around Non-Financial Targets.Other companies are moving to set up Non-Financial Targets like your company, but as there are no indicators to evaluate corporate value yet, I hope that Non-Financial Targets will be able to express corporate value as well.ISSB (International Sustainability Standards Council) is committed to disclosing information on non-financial values (environmental, supply chain human rights, human capital, etc.).The Japanese Government has used the term "human capital improvement" in the new capitalism, and the human capital management of companies has become full-fledged.It has attracted a lot of attention worldwide, and I think Japan is the only country in the G7 that has presented the concept of impact as a basic policy of the government.

Nakamura

In the financial business, we are focusing on Human Resources as our capital, and educational efforts are particularly important.We are increasing the educational expenses per employee, and are enhancing a variety of e-learning programs, including MBA, which contributes to training and listening.The enhancement of education encourages awareness of the individual, so new challenges will emerge as the child grows.Originally, we believe that we can quantify these results.I would like to examine the impact of investment in education on Results improvement in the future in a quantitative manner.

Shibusawa

I would like to have such a tool.In capitalist societies, non-financial value is "invisible value," the most important of which is human value.However, from the viewpoint of diversity and healthy management, we must focus on personnel management, Human Resources investment, and capacity building with "invisible value."In this sense, sustainability management and human capital management can be said to be integrated.

Nakamura

It's all one.Without Human Resources, companies cannot be sustainable.It is important for us as a financial business to create new value through investment, etc., but it is important to understand what kind of social issues our customers are trying to solve and how we can support them through our involvement.In the future, Human Resources will replace AIs and systems. Therefore, it is urgent to mutate and evolve in order to solve more sophisticated issues and create value. Therefore, we need to invest in Human Resources.It is also important that the mutation is stimulated by people coming from outside, but people coming from outside become middle-aged people.It is important that people from outside and inside interact with each other to transform them into mutation-making movements.I look forward to the variation and evolution of each individual.

Shibusawa

I believe that creating new value can be achieved by gathering things that people have imagination, and gathering things that have been realized and have not been able to do so, and then connecting them.I am looking forward to your Human Resources and your company's future development, which will be mutating and evolving.

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