New Phase of CSR in Japan: Corporate Volunteer, Corporate Governance, and Guidelines Thursday April 13. 2012 Korea University Business School Seoul, Korea

New Phase of CSR in Japan: Corporate Volunteer, Corporate Governance, and GuidelinesThursday April 13. 2012

Korea University Business School

Seoul, Korea

Hiroshi Amemiya

Lecturer, Meiji University Graduate School of Governance Studies

CEO, Corporate Citizenship Japan

2011-2012: Challenging Environments March 11 Great East Japan Earthquake and Energy

Corporate Governance Failures

Socially Irresponsible Investment

Supply Chain and Climate Change

Corporate Citizenship Japan Limited 2

Corporate Volunteers Corporate volunteers play key roles in the disaster relief and reconstruction

assistance activities for the March 11 Great East Japan Earthquake More than 690,000 (gross) volunteers had participated in disaster relief

activities in the three affected prefectures (Fukushima, Miyagi, and Iwate) for the first five months after the Earthquake

Both volunteerism and volunteer engagement among corporate employees have increased after the Earthquake

170+ companies* offer a volunteer holiday program (*) among approx. 1600 member companies and organizations of Japan Business Federation

Source: Japan Business Federation (a.k.a Keidanren) as of August 2011

In FY2010 (Apr2010-Mar2011), annual corporate donations topped US$8,500Mil, the highest ever since records began in FY1962.


Hands On TokyoHands On Tokyo was founded in December 2006 comprising both Japanese and foreign nationals who are committed to making volunteer activities more accessible and committed to accelerating the growth of volunteerism in the Tokyo area. One quality that is unique to Hands On Tokyo is our passion to becoming the catalyst that will help spread volunteerism in Japan. Overcoming language barriers, we developed a bilingual volunteer clearinghouse so that we can work together for a common purpose. While each volunteer brings different philosophies or perceptions on volunteerism, one common belief we all have is that everybody has something to contribute to society.

Source: Hands On TokyoCorporate Citizenship Japan Limited 4

Hands On Tokyo “Mission Statement” Hands On Tokyo addresses the critical needs of the community by

partnering with other organizations focusing on educational and social issues in Tokyo as well as disaster relief in Northeastern Japan.

Through this partnership, we provide numerous volunteer opportunities for any individual or corporation looking to make a difference in the community.


HOT collaborates with corporate and individual volunteers to meet the needs of our community

Schools,Social Service

Organizations,Hospitals,

& NPOs

Corporate& IndividualVolunteers

HOT vision is to empower volunteers so that they can be confident that their contribution can change lives of others.


Great East Japan Earthquake Tohoku affected region (three prefectures of the total six prefectures in

Tohoku region were severely damaged from the Earthquake)

Hands On Tokyo faced many challenges after the Earthquake in March 2011: Chaotic situations

Roads were blocked (Only those with transportation permit could enter the region)

Hands On Tokyo made numerous visits during April and May to the region to search for a partner who could recognize, understand and pursue Hands On Tokyo mission through projects and it tried to understand how Hands On Tokyo can meet the needs of both volunteers and recipients (women, men, children, young adults and seniors).


Disaster Relief Support Sent items to 54 distinct locations

20,000 Towels (individual)

30,000 Toothbrushes/Toothpaste (individual / group)

20,000 Blankets (corporate: large retail store)

50,000 bottled water (corporate)

513 Pairs of Socks (individual)


Yamamoto-cho, cleaning debris

Cleaning cans for a canning factory in Ishinomaki

Pictures from Disaster Project

Hot Café at Oshika


Local needs are changing Right after 3/11: Pressing need for immediate aid (water and food)

A month later: The need for daily supplies such as sanitary items, calling for volunteers who can engage in Heavy duty work such a debris cleaning

Moving further away from 3/11: More focus on interaction with the locals


Source: Hands On Tokyo

Summary: Tohoku related projects 2011 Made 26 trips with 744 volunteers (individual / group / corporate), benefiting

3,872 people Sent relief items to over 54 locations with 288 volunteers More than 1,000 volunteers gave back to the Tohoku affected communities

Onsite Activities

• Debris cleaning at a canning factory, in residential areas, and cemetery• Sorting and distributing relief supplies and food to temporary housing residents• Serving food, treats, and drinks at evacuation centers and temporary housing shelters • Supporting special events in Tohoku• Sorting and Loading Projects at the Hands on Tokyo office with volunteers to prepare

donated items to send to Tohoku affected communities


Source: Hands On Tokyo

Corporate Governance Failures Listed companies

Top management involvement

False representation

Cover-ups were long-lasting and too complicated


Independent Director Former/Current Occucation(Listed Companies)Former/Current Occupation %

Lawyer 20.9

Public accountant or tax accountant 18.9

Director or employee of a company unrelated to the company that he/she serves as its independent director

17.0

Director or employee of a large shareholder of the company 10.4

Director or employee of a leading creditor (bank) of the company 8.8

Director or employee of the company’s parent company 6.3

Director or employee of the company’s client or partner company 6.3

University professor 3.1

Public officer 1.8

Others 6.5Source: Nikkei Business, March 19 2012 Issue, P31Corporate Citizenship Japan Limited 13

Changes in Corporate Board Composition(Listed Companies)

1Q 2003 1Q 2005 3Q 2011

# Directors per company 9.3 8.7 8.0

% Companies hiring independent directors 21.8% 32.3% 51.0%

# Independent directors per company 1.8 1.9 1.8

% Independent directors who belonged to the company’s parent organization

21.2% 18.1% 12.7%

% Independent directors who belonged to the company’s affiliate company

24.1% 20.7% N/A

% Companies employing a corporate officer structure 25.3% 38.0% 65.1%

# Corporate officers per company 9.9 9.6 12.3

% Directors who also serve as corporate officers 44.8% 44.1% 37.7%

# Auditors per company 3.6 3.6 3.8

# Independent auditors per company 2.1 2.3 2.5Source: Nikkei Business, March 19 2012 Issue, P41Corporate Citizenship Japan Limited 14

Going forward Most of major corporate scandals uncovered in 2011 are led by top

management or former senior executives

Authority of independent directors and/or independent auditors is likely to increase

Selection process of hiring independent directors and/or independent auditors should be more transparent

Shareholders not creditors are likely to engage in designing management and decision-making process


Socially Irresponsible Investment Recent scandals in the investment space call for stronger SRI guidelines

Investment managers demand companies to do well by doing good while they sometimes forget their demand

Pension fund looked for good numbers rather than good risk adjusted returns

Investment managers tried to produce good numbers by breaching laws


Supply Chain and Climate Change World Bank research shows two of Top 4 costliest disasters occurred in 2011


Conclusion 2011-2012 are one of the most difficult years in Japanese business history

CSR needs to be reconsidered and reintegrated by Japanese companies

One positive sign is “Increase in corporate volunteer activities”

Teamwork and leadership are necessary to turn around many negative factors occurred during the period

Upcoming CSR/sustainability reports could be a benchmark for Japanese companies to regain their corporate value

Transparency and accountability are increasingly becoming critical elements for all stakeholders to address to each other

18Corporate Citizenship Japan Limited

Documents

New Phase of CSR in Japan: Corporate Volunteer, Corporate Governance, and Guidelines Thursday April 13. 2012 Korea University Business School Seoul, Korea