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<Fiscal 2010> Four Material Issues and Expectations for KDDI

Past Stakeholder Dialogues

<Fiscal 2010> Four Material Issues and Expectations for KDDI

In FY2008, KDDI has promoted CSR efforts, focused on the selected "four material issues for CSR." This time, we held dialogues between three external CSR practitioners experts and the management, in which we gained opinions from an objective perspective on our past activities and future challenges as well as expectations for KDDI in the future.

Phot: Opinions on the Four Material Issues for CSR

Phot: <Fiscal 2010> Four Material Issues and Expectations for KDDI

Opinions on the Four Material Issues for CSR

To start out with, we received candid opinions, evaluations, and comments from three experts regarding KDDI's four material issues for CSR, the selection of issues, and our previous activities up to this date.

How to Appreciate CSR Issues

Image: Overview

Kuroda: We hear that the cooperative model with "bracNet [1] " is enjoying success in KDDI's global business operations, and mobile phones are in widespread use even across povertystruck regions. Businesses in developing countries (BOP business [2]) are attracting attention, and amongst them, the utilization of ICT is the one of which the most is expected. I hope that KDDI will further expand the success model of "bracNet" to many other countries.

Ishida: In a hard-eyed view, the "four material issues" are not so clearly differentiated from the issues presented by the other corporations. CSR is about communicating how the top management exerts its strong leadership to meet the needs of society and how the challenges are going to be taken on.
These four themes are selected from the business perspective, but it is more important to identify which social issues KDDI is going to put the most effort into. In other words, the key point is the integration of CSR and management; how to incorporate CSR into business strategies.

Midorikawa: When deciding on "which social issues that need to be focused on," I suggest starting with a clean sheet of paper, that is to say, identifying the social issues first, instead of approaching from the relation with KDDI's lines of business.
KDDI's "four material issues" can only be extracted upon the recognition of their denominator, "which is the social issues that need to be resolved." I feel that many Japanese companies lack or have an insufficient awareness of the "social issues." Amongst them, KDDI is remarkable in the point that it includes administrative organizations and NPOs/NGOs as stakeholders in the concept of TCS. Administrative organizations and NPOs/NGOs will become increasingly substantial entities in a diverse meaning for enterprises.

Photo: Mr. Yoshiki Midorikawa

Why Dialogues are Needed

Photo: Takashi Tanaka

Tanaka: When I was studying in the U.S., neighborhood communities held parties and other gatherings, taking great care of me. At this time, I thought about the meaning of "companies contributing to the society." The relationship with the society is essential for a company to grow. However, in reality, companies are driven to undertake CSR activities only as a peripheral part of their overall business. Whether this is healthy is a question I have long been asking myself.

Ishida: All kinds of corporate managers face this question. That is the very reason why dialogues are needed. It is one channel by which to build the relationship between a company and its stakeholders. By discussing issues with citizens and NPOs/ NGOs, you can gain "insights" into the problems that need to be addressed, which can lead to sustainable business. For instance, companies' "human rights" awareness is rising in recent years, but it wasn't the case formerly. On another note, "compliance" was never mentioned with a sense of reality ten years ago, but nowadays it is firmly actualized. It is vitally important to keep up the highest level of sensitivity when getting involved with diverse stakeholders if we ought to appreciate social issues.

Kuroda: It is crucial for a company to be conscious of the fact that it is a member of the community, and that it carries out the efforts necessary for that community even if those efforts do not directly concern its line of business. Nevertheless, efforts that are not part of business tend to be on the back burner in the light of budgets. Considering continuity and sustainability, shareholders are easier to persuade with CSR efforts related to the company's line of business, and moreover, in telecommunications, the business itself has a social contribution factor. By taking advantage of that feature, KDDI can lead its business to resolving the various issues in society.

Midorikawa: The 'line of business' is always the past and present-what a company should do in the future depends on the changes in society. A company doesn't necessarily need to pursue only the current business.

Shimatani: In that sense, KDD [3] has conducted a three-month training sessions for engineers in Africa and other areas for more than 30 years. I have heard that one of those trainees later became the country's minister of communications. It is an example of contribution to the community that does not have a direct relationship with our business.

Photo: Yoshiharu Shimatani

Ishida: Even if a matter is not an imperative that must be done in order to prevent the company from falling apart, by the time the issue surfaces five or ten years later, it may be too late to correct the direction to the needs of the age. For this reason, a company must look toward being a step ahead of the current situation. Seen in this light, meeting CSR requires "cunning." In order to lead the world and challenge it, good communication is the key; for example, a tie-up with an international NGO can bestow new visions on the company.

Midorikawa: Japan has an entrenched and prevalent culture of preferring "to become number two instead of number one." The first one risks the most. Therefore, people target the second as a safer choice. There may be some differences based on industry, but companies are now challenged to seek activities that aim for the top of the world, breaking free of this tradition.

Changes in Social Roles Assumed by a Company

Photo: Mr. Hiroshi Ishida

Ishida: Poverty-struck countries have very high expectations of a deep-pocketed enterprise. How should we approach "equality" and "fairness," which the world today is most concerned about in alleviating social inequality? Taking the KDDI Mobile Phone Learning Class as an example, these classes are held to provide "equal opportunity [4]." It is important for KDDI to have that attitude of taking the initiative and to clearly convey that message to the society.

Midorikawa: The world has radically changed if we compare the 1990's and the 2000's. Previously, NPOs and companies were opposed to each other, but now the basic line is to "cooperate." On the level of social business, a common ground that allows entry for both the companies and NGOs was formed-all the more reason for KDDI to intensify its communicative power and constantly demonstrate a strong presence. I also hope that KDDI will build up the corporate capabilities that will enable that accomplishment.

Tanaka: Since we were, up to now, thinking in the scope of "what telecommunications could do," I think our views have been provincial. We would like to identify the things we can do among the needs of the society and the positioning of such efforts in our business activities.

Ishida: I suggest narrowing down the issues from a social perspective and then become specialized in dealing with the selected issues.

Tanaka: Speaking of "bracNet" mentioned at the beginning of this discussion, we promoted this with the understanding of our social assignment, specifically the advantages we have as a company and the social benefits we can deliver. This business is growing but the situation is quite challenging for social contribution. Without the continuity of the company, we cannot attain our objectives. The balance between business and social contribution is difficult. I believe "bracNet" is a good project that realizes the synergy of business and social contribution, but we have yet to understand how much it accounts for what the world is demanding and what significance this project has.

Kuroda: I see "bracNet" as an innovative project. The circumstances of management that you mentioned are something inevitable in running a sustainable business.
Including the current state of affairs and business performance, it would be appreciated if you were to disclose and communicate those processes.

Photo: Ms. Kaori Kuroda

Expectations for the Future of KDDI

After a break, we commenced the second half of the dialogue. To further the conversation in the first half, we asked each of the three experts to write keywords on a sheet of paper about "what they expect of KDDI."

What "Sustainable Growth" Means to a Company

Photo: Mr. Hiroshi Ishida

Ishida: I wrote "Sustain." Sustainable growth is very important for a company, but I feel that the root of the term "sustainable" is often not well understood. "Sustainable" has three meanings: maintain, suffer, and uphold. Let's consider "what sustainable means" when applied to a company by approaching the term on the basis of these three words. By building up each process in discussions, be it inside or outside of the company, KDDI can construct its original "sustainable" growth.

Shimatani: Speaking of "corporate sustainable growth," KDDI has been working on business continuity planning (BCP). We had a disaster drill in January this year, but when I look back, honestly there wasn't enough tension.
Then we had the earthquake in March. What was vastly different about the recovery from the damage left by this earthquake from previous recovery efforts was that there were many "human" interactions in the devastated areas.
As a symbolic story, when the KDDI work vehicles entered the disaster areas in order to restore the base stations, they put up a sign saying "shared ride" and carried people evacuating to the shelters. This was completely spontaneous; no one ordered them to do it.

Tanaka: It's not a corporate operation, but it's something that should be done in terms of contributing to the community "as a human being." The experience of this earthquake seems to have changed the awareness of our associates. By proactively taking action and deciding, they accomplished tasks that would normally take one month in one day. There is a lot to learn from this.

Ishida: Maybe it was the "KDDI Philosophy" that was at the core of the KDDI employees' actions. It is vital to have as many employees as possible to resonate and sympathize with the management philosophy.

Shimatani: In fact, our associates' sense of purpose and will to "restore our services as soon as possible" were very strong.

Midorikawa: The "KDDI Philosophy" is a brilliant philosophy.
While employees promote their happiness, their actions can also help the international community. I hope KDDI will maintain this attitude.

How to Make Use of ISO 26000 [5]

Kuroda: I wrote two key words. One is "community." Among the "seven core subjects" of social responsibility that ISO 26000 address is the "Community involvement and development." Many enterprises say that "this must be referring to CSR activities in developing countries," but it's not-it's about how companies and other organizations get involved with their own communities. When getting involved in the community, companies need to face the community's issues with other community members as part of the community.
My second keyword is "human rights." John Ruggie's "framework for business and human rights [6] " is becoming a guideline for companies when they design their human rights policies. What is important is the idea that the scope of corporate influence is broad and a company is responsible for its influence to the extent that it can control it. In other words, when a company considers human rights CSR, it needs to extend its view to the supply chain, and beyond their organizational boundaries. This is a future issue faced by Japanese companies, which tend to address human rights in a limited scope.

Photo: Ms. Kaori Kuroda

Photo: Mr. Yoshiki Midorikawa

Midorikawa: First I wrote "education" and "equality." Education in Japan must change fundamentally. The way of education should be reconsidered broadly, including university education and employee training. In Europe and the U.S., thorough investigations and detailed discussions are conducted when making a decision. This is what Japan lacks the most. Laws, including the Constitution, need to be decided based on the consensus of the people.
Such decision-making abilities of the citizens can only be fostered through appropriate education.
With this established, we can finally pursue "equality." Then there is "agreement." Using an example unique to Japanese companies: When a corporate worker submits his or her wish for internal transfer, most often the employee ends up being reassigned to a different post than what he or she had wished for-which is not the case with organizations in Europe and the U.S. In Europe or the U.S., people are not moved around without their consent, or in other words, without forming an agreement with the individual. Japan also needs to adopt this way of thinking. Japan is such an organization- oriented society. We need to change this society for the better.

Ishida: It is difficult to strictly adhere to and execute what is presented in ISO 26000, because first you need to understand the context of the situation under which the whole framework was established, and then refine it into KDDI's "core subjects".
After the refinement, exert corporate leadership via the top management communicating the core subjects as commitments and then put them to actual practice.

Midorikawa: Japanese companies are markedly nonchalant about "human rights" and "community" in particular. In the case of Japanese companies, human rights issues are handled by the HR department. However, since human rights issues include those particular to the community, it should not be left in the sole hands of the HR department, but rather tackled as a company-wide undertaking. Another important task for a company is to distinguish and organize issues that can be immediately taken on and those that need medium-to-long term actions. Take the principle "equal pay for equal work," which is also mentioned in ISO 26000, for example. Even the government has not presented a vision for this principle.
Actions for the improvement of gender equality have already been launched, but the inequality due to seniority effected by annual raises and the inequality in employment conditions between regular employees and non-regular employees have yet to be resolved.

What KDDI's CSR should Aim for

Ishida: It is important to send out messages on these issues instead of remaining silent because nothing can be done. The messages can be something like: "We can't work on this although we have recognized the issue up to so and so point" or "We can't do this because we have this system..." Without sending out these messages, externally it's impossible to tell whether the company is simply ignoring the issue or has actually taken the issue into consideration. After the message has been expressed, leadership is exerted to influence the industry when the stakeholders' requests develop into actions to be taken.

Kuroda: ISO 26000 is difficult to work with because it's not a certification standard. Numerous recommendations are listed and described, so it is important for KDDI to show the process of how KDDI is going to select the ones to implement. The question here is not whether or not the recommended item is already implemented; CSR is about showing the working process. In that process, you establish the policies, hold discussions in the company, and bring them out for further discussions with stakeholders to decide what is crucial for the company. If this is incorporated in the CSR reports, it will make it much easier for external entities to understand KDDI's CSR activities.

Shimatani: It didn't quite click with me where CSR and "cunning" connect, but I'm starting to understand the link between the two through this dialogue. Basically, a company can reinforce its competitiveness through CSR. I intend to chew over this in our context and deepen my understanding.

Tanaka: A company is a "corporate person;" it has "personhood." Like a person pays tax to the community they live in, the company KDDI must also contribute to the community. Upon digesting the pieces of advice we were given today in the context of KDDI, we would like to improve the sustainable continuity of our business. Through means of returning part of our profits to the society for taxes, we intend to contribute to the community. It was a great pleasure to have this talk. Thank you very much.

Photo: Overview

  • [1]
    bracNet: Telecommunications company that provides broadband service in Bangladesh. KDDI invests in bracNet and promotes the penetration of high-quality Internet broadband through establishing communications infrastructure in the area.
  • [2]
    BOP business: BOP stands for "base of the pyramid," indicating the lowest income class. BOP business targets this class in order to contribute to the improvement of their standard of living while pursuing corporate profits.
  • [3]
    KDD: KDD Corporation. KDDI Corporation is formed as a result of KDD merging with two other companies, DDI Corporation and IDO Corporation, in October 2000.
  • [4]
    Equal opportunity: Western concept that has a focus on "fairness," in this case, meaning that opportunities should be granted equally.
  • [5]
    ISO 26000: International standard on social responsibility that was released in November 2010.
  • [6]
    Framework for business and human rights: "Protect, Respect, and Remedy policy framework" developed by Professor John Ruggie, Special Representative of the UN Secretary-General on business and human rights.

Reflections on the Dialogue

This was the first opportunity for KDDI's top management to host a meeting to exchange opinions with experts. We gained an objective look at our CSR efforts, which are TCS activities aimed at the improvement of all our stakeholders' satisfaction, and received recognition in certain parts. On the other hand, we could not but realize how much we are still missing, have learned, and need to think about in terms of how to approach "social issues" and information disclosure. KDDI will see eye-to-eye on the valuable opinions that were bestowed upon us through the dialogues and strive towards improvement. We will continue to seek opinions through dialogues with stakeholders and constantly ask ourselves what social responsibilities we assume as KDDI Corporation. Toward our goal to become a company that sustainably grows with the society, we will commit to addressing social issues.

Photo: Kazuhito Iizuka General Manager, CSR & Environment Management Department General Administration Department, General Administration & Human Resources Division

Kazuhito Iizuka
General Manager,
CSR & Environment Management Department
General Administration Department, General Administration & Human Resources Division