The Core of Sustainability Management - Building the Future by Staying Connected with Society
For this section, we welcomed Mr. Norio Masuda, an expert in corporate sustainability promotion and disclosure, which is a key driver of progress in corporate management and its role in society. Together, we discussed from a broad perspective how companies should integrate management and sustainability and the direction society and business should pursue. From his objective standpoint, he also shared candid and invaluable opinions.
- Date: Friday, July 25, 2025
- Attendees:
[Outside expert]
Norio Masuda (Co-Representative Director, ESG Disclosure Study Group (General Incorporated Association); Senior Manager, Group Sustainability Division, Hitachi, Ltd.)
[TIS Inc.]
Yasushi Okamoto (President & Representative Director)
Masakazu Kawamura (Managing Executive Officer, Division Manager of Corporate Planning SBU, Corporate Sustainability Promotion Officer)
[Facilitator]
Tomohiko Yamaguchi (Consultant, Cre-en Inc.)
Participants
Norio Masuda (Co-Representative Director, ESG Disclosure Study Group (General Incorporated Association); Senior Manager, Group Sustainability Division, Hitachi, Ltd.)
Mr. Masuda joined Hitachi Solutions, Ltd. in 1985 and transferred to Hitachi, Ltd., in April 2015. From FY2017 to FY2019, he served as General Manager of that company's Planning Department, Group Sustainability Division, where he helped formulate and promote the Hitachi Group's sustainability strategy. Since April 2020, he has held his current position as Senior Manager of the Group Sustainability Division. In June 2020, he became Co-Representative Director of the ESG Disclosure Study Group (General Incorporated Association) upon its establishment, a role he continues to hold. From April 2022 to March 2024, he also served as a specially appointed professor at Kyoto University Graduate School of Management.
Yasushi Okamoto (President & Representative Director, TIS Inc.)
1985 Joined Toyo Information Systems Co., Ltd. (now TIS Inc.)
2011 Executive Officer, Department Manager of Corporate Planning &Control Dept.
2013 Managing Executive Officer, Division Manager of IT Solutions Services SBU
2016 Senior Managing Executive Officer, Division Manager of Industries & Solutions
June 2018 Director, Senior Managing Executive Officer and Sector Director of Service Strategy Sector
April 2021 President and Representative Director (to present)
Masakazu Kawamura (Managing Executive Officer; Division Manager of Corporate Planning SBU; Division Manager of Human Resources SBU; Corporate Sustainability Promotion Officer; Human Resource Strategy Promotion Officer, TIS Inc.)
2017 General Manager of Corporate Management Dept. (after serving in Financial Industry SBU and elsewhere)
2020 Executive Officer, Deputy Division Manager of Corporate Planning SBU
2021 Division Manager of Corporate Planning SBU
2024 Managing Executive Officer
April 2025 Current position (responsible for corporate sustainability, corporate planning, finance and accounting, IR/SR, corporate governance, intellectual property and legal affairs, and human resources strategy)
[Facilitator]
Tomohiko Yamaguchi (Consultant, Cre-en Inc.)
The pillar of sustainability management
Kawamura: The Group's approach to sustainability management began with establishing the proper framework. We have since advanced to the stage of linking these efforts to enhanced corporate value through ongoing initiatives and communication with stakeholders. While we are pursuing non-financial KPIs from an ESG perspective, it will be important to determine how we can embody our brand message, "Make society's wishes come true through IT," in our businesses. At the same time, we must bring to life the Mission in OUR PHILOSOPHY, "To brightly color the future as a mover," and link it to corporate value. Recently, with the concept of "social impact" gaining wider attention, the Group is exploring ways to quantify its initiatives and link them to tangible outcomes. For example, while we have identified four key social issues*1, we also feel the need to go further and demonstrate the broader value we deliver to society through our core B2B*2 businesses - extending to B2B2C*3 and ultimately to society as a whole. I welcome your views on how we can deepen understanding of the connection between our core business and society and on how we should engage with stakeholders.
Masuda: Having reviewed your company's initiatives, I feel that sustainability is firmly embedded in your management. Sustainability is not a passing buzzword, but the common foundation that underpins all strategies, including management, human resources, and financial matters. When speaking to employees, I explain that sustainability is, in essence, the very nature of corporate activity. However, it requires us to consider our relationship with society from a long-term perspective, not merely in terms of short-term profits.
Your company takes a 10-year view of the future and incorporates it into medium-term management plans. Your Group Vision - "Society oriented, operationally diverse, globally active" - also encapsulates the essential elements to establish over the long term. The four social issues you have identified are areas where your Group can leverage its strengths in IT and finance, and you clearly recognize your role as part of the social infrastructure. The essence of sustainability management lies in sharing the recognition across the organization that "the sustainable development of society and the sustainable growth of the company are inseparable." It also means embedding that recognition into daily decision-making and operations.
*1 Back in fiscal 2019, we looked at more than 160 social challenges and identified four issues where we can make the greatest contribution: Financial inclusion, health concerns, low-carbon/decarbonized society, and urban concentration and rural decline.
*2 B2B: An abbreviation for "Business to Business." It refers to a business model in which a company provides products or services to other companies.
*3 B2B2C: An abbreviation for "Business to Business to Consumer." It refers to a business model in which a company provides products or services to end consumers through another company.
How our businesses are linked to society
Yamaguchi: According to Mr. Kawamura, the Company is working to shift from "focusing on solving specific issues" to "ensuring that business activities themselves help resolve social challenges." Doesn't this give rise to a vague and diluted notion that "everything we are doing now must somehow be addressing social issues"?
Okamoto: There is no need for concern on that point. Under OUR PHILOSOPHY, we define growth as "improved value exchange" with our stakeholders, who include not only customers and employees but also business partners, shareholders and other investors, and ultimately society at large. From that perspective, we have asked ourselves whether our business activities truly serve society, and we reaffirmed that all of our businesses, even if gradually, do indeed bring value to society.
That is why it is essential for individual employees to continually reflect on why their work holds meaning for society. We want all employees - programmers and system operators alike - to think deeply about how their daily work with impacts society through our customers. By doing so, employees can take pride in the work they do. While the four social issues we have identified are symbolic, they apply to other challenges as well.
In response to Mr. Yamaguchi's question, being mindful of the connection between overall corporate activities and society does not dilute our awareness about addressing social issues. Rather, it creates a foundation for employees to become more strongly aware of the meaning of their own work.
As a common axis of our human resource strategy, we place importance on "work purpose," "work environment," and "compensation," with "work purpose" being the most critical. With this in mind, I strongly ask employees to "Look beyond the customer and see the society that lies further ahead." I believe this mindset forms the very foundation for connecting business with society.
Masuda: Much like B2B2C2S*4 concept, when the value chain is broken down and visualized, employees can clearly understand where their own work generates social value. This, in turn, gives greater clarity to the meaning of their daily tasks.
At Hitachi, for example, each business organizes its impact across three layers - primary customers, secondary customers, and society at large. By organizing impacts and measuring them qualitatively and quantitatively, employees can clearly recognize that their work is having a ripple effect on society as a whole. This awareness naturally fosters engagement and pride.
*4 B2B2C2S: An abbreviation for "Business to Business to Consumer to Society." It refers to a business model in which a company provides products or services to consumers through another company, ultimately delivering value beyond the consumer to society as a whole.
An organization that embraces diverse values
Yamaguchi: As employee values become more diverse, how does your Group approach individuals who feel that their own values do not align with the Group’s philosophy or management approach?
Okamoto: Everyone has their own values. When someone's values differ significantly from the Group's philosophy or direction, we encourage them to pursue opportunities in other fields or environments where they can thrive in their own way. That is ultimately beneficial for both sides. At the same time, if there is something we can learn from the individual's values, we remain open to embracing it through dialogue. We have many in-house forums for discussion, and I personally listen with an open mind, always reminding myself that my views are not necessarily correct.
Masuda: Ultimately, a relationship between employees and a company is a contract between an individual and an organization. While we want to avoid negative resignations, we also welcome positive departures, as workforce mobility is essential for organizational vitality. In my past HR experience, I felt that when talented employees "graduate" and move on to their next stage, it shows that the company has successfully nurtured them. Turnover rates should be evaluated not only by numbers, but also by substance.
Visualizing social impact and decision-making
Yamaguchi: Mr. Masuda, could you tell us about the work you have done on quantifying social impact and developing business evaluation metrics?
Masuda: At Hitachi, beginning with its medium-term management plan for 2019-2021, we worked to visualize social impact under the banner of "triple bottom line management" encompassing social, environmental, and economic value. Through internal workshops, we identified around 300 financial and non-financial factors, mapped their causal relationships, and established a framework for sharing data-driven analyses across such functions as corporate planning, HR, IR, and finance. For each business, we quantify both positive and negative impacts. In joint analyses with Kyoto University, we have found a significant correlation between a higher ratio of female managers and increased sales, as well as indications that diversity can also have favorable financial effects, such as reducing the ratio of interest-bearing debt.
Okamoto: Many factors cannot be quantified, but your approach of visualizing the overall structure and applying it to management decision-making is highly instructive. On the other hand, while system implementation can bring significant benefits in some areas, it may also have negative effects in other aspects, such as job losses. It is important to acknowledge not only the positive aspects of corporate activities but also the negative aspects you mentioned earlier. I believe that recognizing negative impacts and seeking solutions is what leads to truly sustainable management.
Masuda: At Hitachi, each business is organized into four quadrants, mapping "financial impact" and "social and environmental impact" in terms of both positives and negatives. If both impacts are positive, we continue the business; if both are negative, we exit it. When one side is negative, the essence of sustainability management lies in deciding how much of that negative impact can be tolerated, how it can be turned positive, and within what timeframe.
Kawamura: To give a sense of connection with society and the future, business planning and investment decisions are increasingly guided by the perspective of how such a business will impact society. Sharing stories that help employees understand the value of their work to end users and society is essential. This applies not only to businesses directly connected to society, such as our SIS*5 strategic domain, but also to infrastructure operations that represent a large part of the Group, such as credit card-oriented core systems. Recently, even at the new business planning stage, we've shifted from focusing solely on "what we want to do" to envisioning the future that the business will create and then working backward from there to develop our plans. I feel this change is also contributing to our corporate culture.
Masuda: At Hitachi as well, "social impact" is used as one factor in investment and financing decisions, ensuring that people on the ground are constantly mindful of the Company's connection with society.
*5 SIS: An abbreviation for "Social Innovation Service." It refers to one of the Group's unique business domains (strategic domains) defined under Group Vision 2032 to achieve sustainable growth. Within this domain, we establish social impact indicators and directly engage in businesses that address social issues.
Practical knowledge for advancing sustainability
Okamoto: From the perspective of linking sustainability and management, we place great importance on dialogue between management and frontline leaders. Rather than confining discussions to corporate headquarters, we need to draw on the views and ideas of people in the field, as well as insights into market conditions. As a Group, our starting point for engaging with society is open, barrier-free internal communication.
Masuda: Strengthening the frontlines and conducting surveys with partner companies are also excellent initiatives. Incorporating the views of frontline staff and customers, as well as partners, into management helps create a multifaceted perspective conducive to enhanced sustainability. The fact that you, Mr. Kawamura, serve concurrently as both head of finance and head of human resources is highly demanding. At the same time, it represents a forward-looking approach in the way the Company integrates financial and non-financial matters.
Kawamura: Human capital plays an important role in our business and is a source of value creation. Therefore, it is important to link human capital directly with our management strategy. We need to approach our management, financial, and human resource strategies as an integrated whole. For example, we must actively design compensation and talent placement based on technological advances and the future we aim to create while defining the types of talent we seek.
Naturally, trade-offs arise between raising compensation and improving performance, and as the executive in charge I often struggle with balancing the two. Investments can only become meaningful when there is a business strategy that defines our desired future. With this in mind, I seek solutions through dialogue that bridges financial and non-financial perspectives.
Masuda: From a capital allocation perspective, financial and non-financial capital are closely interconnected, so it makes sense to pursue overall optimization rather than treating them separately.
Kawamura: An example of our initiatives to cut across financial and non-financial areas is our emphasis on human capital, which we regard as critical. First, we are designing a human capital scenario focused on cultivating the Company's foundation and culture. This involves defining top talent and setting and implementing KPIs for them, thereby increasing per-capita productivity and enhancing corporate value to create a virtuous cycle of improved compensation. What matters is not setting up neat metrics devised in theory but rather making them "living metrics" by continually reviewing and discussing them during implementation.
Yamaguchi: From our conversation, I felt that your Group places "people" at the heart of management and genuinely values those on the frontlines. Thank you for the opportunity to have such a substantive discussion today.
Masuda: Thank you for this valuable opportunity. I was impressed that you place people - the driving force of the company - at the starting point, while also maintaining a balanced perspective that considers both the bright and dark sides of corporate activity. It is clear that you possess a broad perspective encompassing society and the future, as well as a long-term time horizon in your business endeavors. This is truly the essence of sustainability management. While challenges no doubt remain, I look forward to seeing you continue creating value for society. I have great expectations for your efforts.