Japan behind US, Europe in adopting CSR CSR is becoming a popular theme in Japanese businesses, but modern aspects of CSR as practised in the US and Europe seem unlikely to take root, according to a survey and report released today by the Economist Intelligence Unit. The way of the merchant–Corporate social responsibility in Japan details the findings from a survey of 199 senior executives from around the world, including 51 in Japan, as well as 40 in–depth interviews with corporate practitioners of CSR, senior managers, academics and investors. Of the Japan–based respondents to our survey, 66% believe that Japan is behind the US and Europe. Of those who believe this, 64% cited the unproven business benefits of CSR as the main reason. Another 40% chose lack of pressure from stakeholders. Asked what Japanese firms need to do to catch up with the US and Europe, 72% of Japan–based respondents chose "improve governance structures, accountability and transparency". The survey and interview results indicate that while some aspects of CSR such as care for the environment, community relations and occupational safety are likely to remain part of Japanese business because they are already embedded in business practices, other aspects of CSR, among them improved governance, greater workforce diversity and better communication with stakeholders, seem less likely to take root. Japanese firms find it relatively easy to install environmental management systems or engage in philanthropic activities because, although they cost money, they do not affect the company's internal dynamics. The same cannot be said of corporate governance that reduces the CEO's power and increases attention to the demands of shareholders, or of an opening of the managerial ranks to women. Of the Japan–based survey respondents, 55% said they thought the expectations about CSR were highest in Europe, while only 14% chose Asia. Moreover, only 10% of the Japan–based respondents felt that Japan had a high commitment to CSR. Key findings from the report include: | The adoption of CSR is an attempt to regain public trust: Where Japanese companies are on a par with their international counterparts in some areas of CSR, such as environmental protection and community relations, it is more because of a desire to regain lost public trust following a series of corporate scandals in Japan, government prodding or international pressure than because being socially responsible is part of the cultural heritage of Japanese business. Of the survey respondents with CSR programmes, 77% said that their company's decision to adopt CSR was influenced by the fact that it could address the potential risks faced by the company (of the respondents from outside Japan, the most common answer [41%] was that CSR would provide a competitive advantage). | | The emphasis on reassuring customers is strong among Japanese companies: Customer satisfaction (82%) and marketing and brand image (72%) are the two main issues they are hoping to address through CSR programmes. Customers were chosen most frequently (75%) by Japan–based companies as the stakeholder group with which they have formal, structured and regular communications. Among overseas respondents, customers ranked third (64%) behind employees, and shareholders. | | Some aspects of CSR clash with traditional business culture: Where Japanese companies seem to lag their international counterparts, such as in the areas of corporate governance, stakeholder communications and workforce diversity, it is because Japanese executives are reluctant to let outsiders–whether they be investors, non–government organisations (NGOs) or women–affect their position or the inner workings of their company. Though "high standards of accountability and transparency" ranked second (75%) behind "the establishment of our company's mission, vision, values and internal standards" (84%) in the aspects of CSR that are most important to respondents, in practice there are many areas of corporate governance that are in need of improvement. At Sony, for example, women account for 32% of managers at its US operations and 14% of managers in Europe. But in Japan the figure is only 2.4%. | | There is no solid financial case for CSR: It is difficult to make a solid financial case for CSR because, although the costs are accounted for upfront, the perceived benefits accrue in the long term and are often intangible. Indeed, of the Japan–based respondents to our survey, only 13% said that CSR resulted in reduced operating costs, while 53% thought it increased productivity and quality control. However, 93% said that CSR led to higher employee morale, and 75% said it resulted in better public relations and brand image. With shareholders demanding profitability more than ever, the pressure on Japanese companies to put profits first may limit deeper implementation of CSR in the short term. |
The way of the merchant–Corporate social responsibility in Japan is sponsored by Daiwa Securities Group, Ricoh, British American Tobacco Japan and BVQI Japan. The way of the merchant–Corporate social responsibility in Japan is available free of charge from www.eiu.com/CSR_Japan
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Editor's notes: About the survey respondents and interviewees
The report is based on 40 interviews conducted in Japan and elsewhere, as well as a quantitative survey of 199 senior executives–51 in Japan and 148 outside the country–in late 2004. The findings and views expressed are those of the Economist Intelligence Unit alone. About the Economist Intelligence Unit
The Economist Intelligence Unit is the world leader in global business intelligence. It is the business–to–business arm of The Economist Group, which publishes The Economist newspaper. The Economist Intelligence Unit provides geopolitical, economic and business analysis on more than 200 countries, as well as strategic intelligence on key industries and management practices. With over 300 full–time professionals in 40 offices around the world, supported by a global network of more than 700 contributing analysts, the Economist Intelligence Unit is widely known for its unparalleled coverage of major and emerging markets. More information about the Economist Intelligence Unit can be found on the Web at www.eiu.com. |
