Japan

The role of CSR

The social goal of all-encompassing harmony also applies to Japanese businesses. Business decisions are generally reached through an extended consultation process that involves employees at all levels and, increasingly, stakeholders from outside the company. The goal is to reach consensus. Unions play a relatively small role and are usually organized at the company level.

A similar principle applies to political decisions. There is intensive dialogue between employers’ associations and the government at all levels. The involvement of NGOs is still in its infancy as compared with other developed economies. This is also because Japanese NGOs – unlike their western counterparts – prefer to avoid confrontation and refrain from exerting pressure on businesses. In recent years, however, NGOs have gained in importance and play a more prominent role in the decision-making process.

A survey by Nippon Keidanren (Japan Business Federation) in 2005 showed that 75% of all major Japanese companies have CSR committees, and 80% issue reports on their CSR activities. International environmental standards such as ISO 14001 play an important role in the CSR efforts of Japanese companies. Japan ranks number one in terms of ISO 14001 certifications, significantly ahead of the Western industrialized countries. Japanese companies prefer to focus on areas in which their contributions can be statistically measured; interest in social aspects of CSR is significantly less pronounced than in other industrialized countries. This can be explained by the fact that the effect of such efforts on company earnings is unclear, and that little pressure is exerted by stakeholders, particularly NGOs, the public and investors.
Source: German Embassy, Tokyo

CSR understanding

Japanese companies take social responsibility for their permanent employees. This is a way of repaying employees for the loyalty expected of them, which is manifested in a willingness to work overtime, forgo vacation time and the like. In addition to a salary, Japanese employers frequently provide a highly subsidized apartment. In many cases companies also pay social insurance costs and provide child care and leisure activities, among other benefits.

CSR is traditionally associated with environmental protection and energy efficiency. However, the high level of company involvement in labor and social matters is increasingly reflected in CSR activities as well. More attention is being paid to areas that have attracted public attention as a result of scandals, such as food safety and corruption.
Philanthropic involvement by Japanese companies is much more limited than in the English-speaking countries. There is also less awareness than in other developed countries of corporate responsibility for the social impacts of the value chain.

Major Japanese companies have considerable influence on the political order, both through the political involvement of individual entrepreneurs, particularly in the longtime governing party LDP, and through Keidanren, a business association, and Keizai Doyukai, an organization of corporate executives.

After a great deal of initial skepticism, companies and their representative organizations – the Keidanren business association and Keizai Doyukai executive organization –  are taking the lead in promoting CSR as a way of expanding export opportunities and strengthening the international competitiveness of Japanese companies. Economic considerations dictate the CSR priorities of these companies.

The media also play an important role, particularly in their reporting on environmental and food safety issues, which is sometimes carried out in close consultation with the government.

Foreign NGOs that play a leading role in the international discussion of CSR have more influence on Japanese companies than do local organizations.

Source: German Embassy, Tokyo

Expectations towards companies

The workplace is central to Japanese society, and often plays a more important role than the family. Men in particular spend the vast majority of their time on the job or with colleagues. Even though almost one-third of Japanese workers no longer hold permanent positions, but instead less stable jobs, the traditional model of employment for life is still the ideal. Thus companies and entrepreneurs continue to have a major role in Japanese society. They are expected to do significantly more than “merely” produce goods and services. Their responsibilities include social security for their employees, fulfilling their obligations to the nation, society and consumers, and maintaining and expanding the Japanese economy.

The prominent role of Japanese companies – especially large companies – is rooted in the late Tokugawa era, when major trading firms played an ever greater role in financing the ruling samurai class. The companies expanded their social position during the Meiji Restoration, when they played a major role in converting Japan into an industrialized and militarily powerful commonwealth (Fukoku kyohei) that was a match for the major Western powers. After World War II, it was again the large, internationally successful companies, working closely with the government, that enabled the country once again to claim what the Japanese regarded as their rightful place in the international community.

Since the government no longer exerts administrative control (gyosei shido) over the companies to the extent it once did, expectations of corporate social responsibility appear to have increased. Discussions of CSR in Japan have traditionally focused on aspects that directly affect Japanese society – and this originally meant environmental protection in particular. Now greater attention is being paid to product safety and preventing corruption. It is relatively new, and still somewhat uncommon, to assess the activities of internationally active Japanese companies  in terms of CSR. The concept of socially responsible investment and the idea of monitoring the production chain from a CSR perspective have played a subordinate role up to now.

Source: German Embassy, Tokyo

Basic conditions

Government regulations – Implementation of international regulations

There are no specific provisions that regulate activities in the sphere of corporate social responsibility. However, the 1988 law to promote specific non-profit activities, which makes it easier for companies to carry out such efforts, is of major significance in this context. Obviously, companies operating in Japan are required to comply with the applicable legal standards.

Important standards that regulate the social obligations of companies and relate to their CSR activities include

• the commercial code,
• the penal code,
• basic environmental law,
• basic food safety law,
• the law guaranteeing equal opportunity and treatment of men and women on the job, and
• regulations regarding the processing of public tenders.

In addition to complying with their reporting obligations under corporate law, many Japanese companies report on their CSR activities voluntarily or in keeping with nonbinding reporting standards such as the Global Reporting Initiative. While the focus only a few years ago was clearly on environmental protection, more emphasis is now being placed on sustainable development and a more comprehensive understanding of CSR.

OECD Japan

Ratified: April 28, 1964

Local contact
Director
OECD Division
Economic Affairs Bureau
Ministry of Foreign Affairs
2-2-1 Kasumigaseki
Chiyoda-ku
Tokyo
Tel: (81-3) 5501 8348
Fax: (81-3) 5501 8347
Web: www.mofa.go.jp/mofaj/gaiko/oecd

Director
International Affairs Division
Ministry of Health, Labor and Welfare
1-2-2 Kasumigaseki
Chiyoda-ku
Tokyo
Tel: (81-3)-3595-2403
Fax: (81-3)- 3501-2532
Web: www.mhlw.go.jp

Director
Trade and Investment Facilitation Division
Ministry of Economy, Trade and Industry
1-3-1 Kasumigaseki
Chiyoda-ku
Tokyo
Tel: (81-3)-3501-6623
Fax: (81-3)-3501-2082
Web: www.meti.go.jp/policy/trade_policy/oecd/index.html

Economic initiatives - CSR instruments in the business community

The Japanese business community, and Nippon Keidanren (the Japan Business Federation) in particular, originally viewed the concept of CSR with skepticism. It was widely held that Japanese companies were already taking into account not only the interests of their shareholders, but also those of their employees, consumers and the larger society. To avoid allowing others to make all of the relevant decisions, particularly regarding ISO standards, Keidanren decided in 2004 to become more actively involved. In 1991 it published a “Charter of Corporate Behavior” that dealt with corporate citizenship and corporate giving, which was revised in 2004. In 2003 Keidanren established a subcommittee for socially responsible corporate management. Other organizations, such as the Council for Better Corporate Citizenship, which is closely associated with Keidanren, also devote themselves to these issues.

Keizai Doyukai (the Japan Association of Corporate Executives) is also involved in this area. In the year 2000, the organization expressed its support for CSR in its “21st Century Declaration”. It went on to conduct a related survey of companies in 2003.

The number of Japanese companies that are involved in CSR activities is rapidly increasing. A local Global Compact network was founded in 2003; by the end of 2005 it included 40 of Japan’s leading companies. So far, however, it has not played a major role in establishing CSR standards.

The Japanese Industrial Standards Committee, an agency of the Japanese Ministry of Economy, Trade and Industry, actively participated in drafting ISO 26000.

GLOBAL COMPACT NETWORK

Local contact
UNIC (United Nations Information Center)
globalcompact (at) untokyo (dot) jp
http://www.unic.or.jp

Contact:
Ms. Hiroko Enomoto
hiroko.enomoto (at) fujixerox.co (dot) jp

WORLD BUSINESS COUNCIL FOR SUSTAINABLE DEVELOPMENT

On-site network since 2003

Local contact
Nippon Keidanren (Japan Business Federation)
Mr. Kiyotaka Morita
Principal Administrator
Industrial Affairs Bureau III
1-9-4 Otemachi
Chiyodu-ku
100-8188 Tokyo, Japan
Tel: +81 3 5204 1677
Fax: +81 3 5255 6257
E-mail: morita (at) keidanren.or (dot) jp
Website: www.keidanren.or.jp

Source: German Embassy, Tokyo

Areas of activity