KOKUYO Sustainability Message from the Managing Officer of CSV Division

Kokuyo’s unique culture: A passion for tackling societal issues

A hallmark of Kokuyo is our passion for proactively tackling societal problems. This mindset is one of our strengths and has become an embedded part of our culture.

As social conditions change, so too do people’s values and so too do customers’ needs and the societal problems that need addressing. Kokuyo is good at adapting to such macro changes, because no matter how society changes, we always retain our passion for tackling problems. Whenever an existing product or service has failed to meet the customer’s requirements, we’ve put our heads together and combined different ideas to solve the problem, and this has sometimes involved co-creation with the customer. We’ve also always been creating new value, contributing to the resolution of societal problems. This well-rooted attitude represents a strength that enables us to deliver value for society regardless of changes in the way people work and live, and it represents a part of Kokuyo’s unique culture.

Kokuyo-style materiality: Balancing social value and economic value

The third medium-term plan, Field Expansion 2024 (FE 2024), sets KPIs for five material issues which we are committed to addressing.

In 2020, we ran our first materiality analysis. We referred to societal problems, as represented by the SDGs for example, and identified a number of material issues. However, with employees feeling a little vague on exactly why they should be engaging in these issues, we failed to build up the united effort we’d hoped for. In 2022, we took steps to rectify this situation. First, we clarified our corporate purpose with a new purpose statement—to present a tomorrow you can’t wait for. We then defined the ideal future scenario we want to achieve—a self-directed, collaborative society—to establish consensus about our direction as an organization. Finally, we updated our set of material issues, making them reflect Kokuyo’s present brand values more closely.

Kokuyo employees once had the notion that sustainability is just about contributing to society in some way. But after we updated our set of material issues, employees started to see that sustainability is really a matter of how we can solve societal problems through our business operations. The swift response is probably down to Kokuyo’s long-held culture of problem solving. Kokuyo as a whole has the passion to engage in sustainability, and while it may still take some time for individual employees to grasp the full significance of this and take actions themselves, change is happening slowly but surely.

A good example of Kokuyo-style sustainability is our commitment to tackling the functional depletion of forests in Japan caused by a lack of forest-thinning work. Back in the early 2000s, Kokuyo started selling products made from timber harvested in forest-thinning operations. In 2006, we launched a forest conservation project called Yui-no-Mori Project in Shimanto, Kochi Prefecture. Until then, timber harvested in forest-thinning operations was mainly used in government offices, but we started offering furniture made from such timber under the brand Yuimori. The idea was to use Japanese timber in a way that would create a more harmonious relationship between people and nature. In this way, we developed a Kokuyo-style sustainable project that creates a positive loop between environmental benefits (sustainable forest management) and economic benefits (contributing to the local economy). All sustainability activities are integrated into our business operations, and the project is driven by the proactive efforts of our employees. Each of our Kokuyo-style sustainability projects will surely help build up our organization’s long-term value.

Understanding and explaining how sustainability action produces economic value

FE 2024 sets out the material issues (materiality) along with 2030 challenge goals and 2024 commitment goals. Each one is very ambitious.

Two of the five material issues are particularly ambitious: improve wellbeing among employees and external shareholders and expand business fields through the Forest-Like Management Model. They powerfully declare our organizational passion for making life better by contributing to a self-directed, collaborative society.

In managing sustainability initiatives, we focus, as you would expect, on working toward the KPIs in a way that will balance social value with economic value, but we also focus on inculcating awareness among employees about the benefits of the initiatives and the importance of proactive, dynamic action. We also recognize that we must do more to give our shareholders, investors, and other stakeholders a precise and logically coherent account of how our materiality efforts will create economic and social value. These tasks will be on our minds as we approach our fourth medium-term plan.

Creating as many “That’s it!” moments as possible

As I see it, customer needs are societal problems in their own right. Customers experience little annoyances or they find that a product lacks a certain feature that would make it easier to use. When we deliver a product that makes customers say “That’s it! That’s just what I needed,” we are solving a bona fide societal problem. As small as the problem may be, we’ll put our heart and soul into solving it—that’s part of our organizational culture. In some cases, this may be hard to square with short-term financial objectives like revenue and profit. But what matters most is to put ourselves into our customers’ shoes to find a solution to their problems. That is where our true purpose lies. The more we solve customers’ problems, the more we, in turn, enhance our ability to sustainably create economic value. Sustained creation of social value along with economic value requires employee creativity. It also requires us to articulate the organization’s values in clear language to ensure they continue to be upheld. Whereas our culture, purpose, and material issues were once tacitly understood, they are now expressed in clear statements, which has helped in clarifying Kokuyo’s direction and informing employees about what we value as an organization. Kokuyo’s distinctive approach to problem solving—to find what it takes for the customer to say “That’s it!”—requires us to unleash one of our strengths: creativity. The Kokuyo-style approach is to get as many “That’s it!” moments as possible and, through these inspirations, create economic value. The more employees identify these problems prevalent in society, engage in them, and show the world how we as a company can solve them, the more they will take pride in the work they do. Kokuyo is full of people who keenly observe the small problems in the world, are willing to listen to people’s concerns, and offer solutions. One of my primary responsibilities is to enhance the visibility of these valuable assets and foster opportunities for connection and communication. I am committed to intensifying my efforts in this regard.