Hakuhodo has launched its SDGs Corporate Program to support the management and future business of companies that adopt the SDGs. We asked four people involved in the Program, Takeaki Udo and Setsuko Hara of Hakuhodo Brand & Innovation Design Division and Keiichi Takahashi and Keisuke Shimada of Hakuhodo’s PR Strategy Division about the background to the introduction of the Program, and its purpose and outlook.
UDO: As I’m sure many know, the Sustainable Development Goals (SDGs) are universal development goals adopted by the United Nations in 2015 to be realized by the international community by 2030. They set out specific policies for such issues as poverty, consumption and production, and diversity, toward the realization of sustainable development, with companies seen as major players. At the root of Hakuhodo’s SDGs Corporate Program is our desire to support the realization of economic and social impacts from corporate activities.
HARA: In recent years, companies have very much been required to show in their corporate communications and branding that they can realize not just value for customers, but higher level value for society as well. We launched an expert platform, OPEN 2030 PROJECT, in September 2015, at roughly the same time as the UN’s adoption of the SDGs. From the variety of opinions that came out of that, we realized we needed to better utilize Hakuhodo’s resources, so initiatives that were being carried out by branding specialist Hakuhodo Brand & Innovation Design Division, Hakuhodo’s PR Strategy Division and EDGE International, a specialist corporate IR company of the Hakuhodo Group, and others, were brought together as the SDGs Corporate Program.
TAKAHASHI: In the PR industry, too, rather than just PR for individual products, clients’ need for corporate public relations for their organization as a whole, or for their president or their domain, in other words the content of their business, has been increasing recently. In response to this need, the Public Relations Strategy Division decided to tackle the mid- to long-term challenges that company heads need to address using PR techniques while taking the standpoint of a company head. It was at this point that I had the opportunity to ask Udo and Hara about the launch of the SDGs Corporate Program. Our division had experience with Team Minus 6 Percent, a project extolling anti-climate change measures, and similar initiatives, and empathizing with the Program’s cause, we wanted to get involved.
HARA: As ESG investing, or investing in companies with enlightened environment, social and governance policies, gains traction, companies are becoming increasingly aware of the need to explain their activities to investors, consumers and other stakeholders through the lens of the SDGs. Recently an integrated flow has materialized whereby companies build their mid-term business plans on a backbone of the SDGs and incorporate the SDGs into their business activities and integrated reports. This has led clients to come to us to discuss how their new corporate communications should look and what branding they should undertake to build their reputations globally.
TAKAHASHI: In IR, too, EDGE International, which is principally involved in preparing integrated reports, has received orders to not just create reports, but to create symbolic actions and to conduct internal education toward these. This led us all to look at integrating the techniques and networks each of us has.
UDO: Although we actually work in a variety of ways, I’ll roughly explain how we undertake projects using one example. First, we hold a study session for senior and mid-level management with invited experts to deepen awareness of the SDGs and their connection to the company. Next, with the company’s employees we look at links between the company’s corporate activities and the SDGs’ 17 goals, in particular the positive and negative environmental and social impacts of their entire value chain, including procurement, processing, manufacturing and sales. It is necessary to dig down to realities that the company may not want to look at, so this mainly involves workshops where it is possible to sit down and have serious discussions. Then, after discussing and deciding what actions to take, the next step is to communicate these both internally and externally.
TAKAHASHI: As long as stakeholder communication is the final goal, it is necessary to convey within the company and to investors and business partners in as simple language as possible that the company is keeping an eye on the supply chain “all the way to here.” Rather than simply showing a lot of detailed data, companies need to demonstrate in words and their demeanor how seriously senior management is taking this, whether by creating a key message or video or the like. Our PR skills and knowledge are extremely effective for showing and conveying this.
Further, as we see from the addition of an SDGs category at Cannes Lions International Festival of Creativity from this year, the power of creativity will become crucial to symbolically conveying the efforts and thinking of companies as a whole. Clearly and fairly conveying business activities undertaken to improve society and the world is an area in which, I think, the combined power of the entire Hakuhodo Group can be used to great advantage.
SHIMADA: Let me explain the background to the Program a little more from the viewpoint of investment. First, Japan’s Government Pension Investment Fund (GPIF)—the world’s largest pension fund—commencing ESG investing for the first time last July had a huge impact, and awareness of ESG investing began to spread broadly after that. Initially, some companies were criticized for “green washing” and riding the upswing in interest in the SDGs by shining the spotlight on just a few good examples of their efforts. But my feeling is that there has been a rapid acceleration in the flow of attracting investment as companies are being rated for demonstrating, as Udo mentioned, that they are truly reviewing their corporate activities from a zero base to identify areas that need to be improved. To put it another way, companies have begun feel pressure, realizing that if they don’t undertake truly sustainable business activities they can’t count on ESG investment and may be unable to raise funds. Among the United Nations and financial institutions, the predominant inclination is to seek a stable world order in a real sense as a way to avoid repeating mistakes like the global financial crisis, which arose from the pursuit of short-term profits. There, too, Japanese companies are falling into line.
UDO: Right. Against this background, our essential mission is to support companies to communicate in an integrated manner what initiatives they are undertaking for society and the environment as they strive to better themselves while also continuing to generate profits.
A meeting on the SDGs called the High-Level Political Forum on Sustainable Development is held every year in New York. If a company is used as a case study there, it provides that company with an opportunity to boost their global reputation. Given that kind of opportunity, I think the SGDs Corporate Program will prove invaluable.
UDO: You’re absolutely right. In truth, Japanese companies were a bit late to begin their efforts toward realizing the SDGs compared to their international counterparts. Then there are also plenty of Japanese companies that are doing great things for the environment and society in their business activities, but not telling the world about it. It’s a missed opportunity. For instance, companies that have set their procurement standards exceptionally high, but don’t promote this. Many Japanese companies still think it’s enough to just do what they have to do, perhaps from a Japanese sense of modesty. This modesty was probably seen as a virtue until now, but from now on, in order to attract ESG investment and to call on other companies and society in general to work toward building a better society, proactively communicating from the position of a leading company will be crucial, and this, I believe, will awaken significant social change.
SHIMADA: The GPIF has also spoken from time to time about Japanese companies’ reluctance to disclose information. Japanese companies, in particular, are actually really advanced in their initiatives for the “E” part of ESG—that is for the environment—but they don’t particularly make any noise about it. Increasing literacy about conveying information is something that Japanese companies could probably work on.
TAKAHASHI: One client we helped a little was recognized at the Japanese Ministry of Foreign Affairs’ Japan SDGs Award for ceating a sustainable mechanism in a particular region outside of Japan for inviting local employment while solving social issues. They may not be widely known, but there are actually many such examples that can be shown off proudly to the world, and we’d like to bring them to the world’s attention.
HARA: It’s true that when looked at from the perspective of a company, the hurdles to shifting to end-to-end communication spanning IR, marketing, management planning and their entire organization are quite high. But the prevailing wind has clearly changed and we think it could potentially lead to a large wave. There is also the possibility that reporting could even be cross-industry, with all-Japan information being communicated to the world.
UDO: That’s definitely true. When looking at how to convey this information, “modest” Japanese companies, which are probably large in number, will consider what they need to do in terms of corporate advertising and PR, not just announcing their mid-term business plans and integrated reports and other things intended for investors. So I think that strategic ethical marketing intended to educate sei-katsu-sha, or everyday people, will also become crucial. It is our hope that we can build relationships where we are trusted partners in that situation.
For instance, interest in ethical shopping is high among the younger generations, so even without the environment as the gateway, there are various insights, such as fashion, “mottainai” thinking and safety and security.
As we enter an age in which economic and social impacts are both seen as important, our role could perhaps be characterized as being doctors dispensing advice on how companies can improve their constitution, rather than doctors prescribing drugs to treat symptoms. So, something like suggesting a review of the diet, then perhaps taking up yoga, or maybe giving such and such traditional Chinese remedy a go. We’d like to have full interactions with the clients we work with to be able to do this.
TAKAHASHI: In Japan, the consumption tax hike, the G20 summit and then the Olympic Games lie ahead. Japanese business is set to change next year and the year after. What we want to stress is that to convey the great initiatives Japanese companies are doing to the world, we need to start preparations now. The time to start mid- to long-term projects using the SDGs is, I believe, right now.
HARA: From now on, it might be necessary to review everything from business activities to marketing activities and product brand values, not just corporate communications. In this regard, the thinking needs to penetrate companies’ bloodstream naturally. We would like to create this together with companies, from the thinking part, as their partner.