I feel the high ambition as a company
Project Any
SIIF Knowledge Development Officer
Satoshi Oda
We asked Mr. Satoshi Oda, Knowledge Development Officer, Impact Economy Lab, Social Change Promotion Foundation, a co-creation partner, about the current state of impact investment in Japan and what is required in the future.
Satoshi Oda
Joined SIIF in 2019 after working at a steel manufacturer, a strategic consulting firm, an IT company, etc. The most important task at the moment is to systematize the practical knowledge generated from impact investment and impact management sites and to create new knowledge. He aspires to make Japan an advanced country in solving social issues through social innovation. Master of Business Administration (MBA).
Economic value and impact on shared capital
—— The SIIF website mentions that “the era of emphasizing economic value is coming to an end.”
Social capital such as natural capital and trust capital. For example, the correction of disparities and environmental conservation cannot necessarily be measured in terms of economic value, but when considering social value, it can be said that there is value, and the need for this is increasing in the world of investment. Existing investments were viewed on the two axes of "risk" and "return," but the addition of "impact on society and the environment" to the existing investment is called "impact investment," which has been expanding in recent years.
Strictly speaking, impact investing is defined as “investments intended to simultaneously generate positive and measurable social and environmental impacts alongside financial returns”. There is a similar concept to ESG investment, but while ESG investment is based on the company's philosophy and stance as selection criteria, impact investment is based on the premise of having the intention to bring about a concrete impact on society and evaluating the results. It refers to investment in a business that aims to
Chart 1 Conceptual arrangement of impact investment and ESG investment
The Rise of Impact Investment and Characteristics of Japan, the United States, and Europe
—— How can we continue to invest in creating innovation?
The main reason behind this is that SDGs and ESG have become buzzwords, and there is a growing trend to invest in solving social issues. On the other hand, Europe, especially Northern Europe, is making progress in addressing environmental and human rights issues, and compared to them, I think Japan is about five years behind.
—— Thirty-five percent of the impact investment balance in Japan is listed companies. I feel that the awareness of management is still low. What are your thoughts on this?
Certainly, I get the impression that even listed companies have begun to develop impact businesses. This means that the base for solving social issues is expanding.
On the other hand, I still feel a difference in the attitudes of financial institutions and business corporations. Since financial institutions are sensitive to policy trends, their attitudes are changing, but what about business corporations? The social pressure on companies that emit a lot of CO2 is increasing, so the number of companies taking measures has increased, but I feel a little uneasy about things other than carbon neutrality and environmental issues.
—— Efforts to address these issues are progressing in Europe and the United States, but where does the difference between Japan and Europe come from?
In Europe and the United States, the thinking and behavior of individual consumers have matured. For example, in Europe, it is said that many people are willing to buy eco-friendly products even if they are slightly more expensive. It is precisely because there are more individuals with such awareness and behavior than in Japan that sustainable businesses are possible.
In addition, there are three different ways of thinking about who will be responsible for solving social issues: the Anglo-Saxons represented by the United States and the United Kingdom, Northern Europe, and continental Europe. Based on the Anglo-Saxon way of thinking, private companies and the private sector are considered to be the main players in solving social issues because of the national character of minimizing the role of the government. Against this background, impact investing is thought to have emerged from the Anglo-Saxon climate. In other words, it is the solution of social issues through capital markets, or the privatization of solutions to social issues.
Continental Europe and Northern Europe, on the other hand, believe that government intervention is necessary to solve social issues. Due to these differences, impact investment balances are very high in the US and UK, followed by Continental Europe and Nordics. Japan is one lap behind, so the balance of investment is still small. In Japan, it will be necessary to clarify the boundaries between the part that the government is responsible for and the part that the private sector is responsible for.
—— Please tell us about advanced management and ESG examples in Europe.
There is an impact-oriented financial group in the Netherlands called Triodos Bank. Founded in 1980 with the purpose of enabling finance to create positive social, environmental and cultural change. As of the end of 2021, the Group has total assets under management of €24.2 billion (approximately 3.5 trillion yen at €=¥145).[1].
In 2014, Triodos Investment Management, a subsidiary of this bank, formed a fund called the “Triodos Food Transition Europe Fund” to realize a more environmentally friendly and socially resilient food production and distribution system.
・Organic food company
・Companies that promote sustainable diets, such as shifting from animal-based to plant-based alternative proteins
・Fair trade-related companies that improve the transparency of the supply chain
・Companies that promote the reduction of food loss and packaging waste
are investing in
Sense of challenge of slowing investment in human capital
—— Carbon neutrality and environment-related SDGs initiatives/sustainability seem to have spread from objectivity expressed in numbers, but on the other hand, it is said that the center of sustainability will be “investment in human capital” in the future. . How is your company doing about this?
For example, an easy-to-understand example is the ratio of women in managerial positions and the issue of diversity. The reason why Japan is not making progress in these areas compared to other countries is, to put it in extreme terms, that there is no need to worry about not making progress. Although it is not the same as Europe and the United States mentioned above, there is little impact on business performance as there is no consumer boycott due to the lack of progress. That's why I don't think things will go as planned.
—— On the other hand, many of Generation Z think that Japanese companies' efforts to achieve the SDGs are not essential. I think there are benefits for companies to focus on as an element of creating an organization that will be chosen by the next generation and young people by keeping their antennas high in response to these trends, which are expected to increase more and more in the future. What do you think? Uka
We also think so. In recent years, university students have seen the reality of companies through their participation in internships, and at the job-hunting stage, they can spot companies that carry out some kind of bogus SDGs and ESG. As student preferences progress through the labor market in this way, companies will fully realize the merits of making a serious approach.
In addition, the ability to influence consumer decision-making will also benefit businesses. On the other hand, it must be said that Japanese people are still less likely to purchase high-priced products just because they are sustainable. Whether it's SDGs, ESG, or impact investment, the keyword is "altruism." Of course, a minimum financial return is necessary, but we cannot create a good society without "altruism" as both an investor and a consumer. I believe that if consumers consider the SDGs and sustainability on an individual level, companies will also put their hearts into it.
Chart 2 Generation Z data on Japanese companies' efforts toward SDGs
* Data collected from a total of 128 people in their 20s who are students of our company
—— Are there any other advantages?
According to the “Impact Investment Consumer Awareness Survey 2022” released by SIIF in October, people in their 20s and 30s who have experience investing in stocks and other investments are more likely than other generations to be with financial institutions that handle impact investment products. I can see that you are positive about trading. When choosing a financial institution to associate with, people in their 20s and 30s use the sustainability perspective of the company as a criterion.
Figure 3 Preference for financial institutions that handle impact investment products
If you learn that a bank, brokerage firm, or other financial institution offers impact investment products, youI want to start trading (or expand)I think. Please choose the one that is closest to your opinion.
About any
-- thank you. Finally, how do you feel about the any initiative? As an investment in next-generation human capital, any provides an educational program that supports the vision and axis of pre-working adults and their verbalization. Individual co-creation partners and corporate co-creation partners co-create a society where they can share their growth when they grow up. By creating and enjoying a society with the spirit of "leading from behind" as a whole society, we believe that "altruistic mind" will be born when they go out into society.
It is wonderful. I would like you to proceed. As a company, I can feel their high ambitions. I feel that any can be very useful in promoting matching in society, eliminating mismatches, reducing early turnover, and improving morale. From the student's point of view, it also plays a role in preventing self-disappointment such as disappointment and gaps that weren't supposed to be like this. I think it's good for both companies and students.
Message to the next generation
Wages have not risen in the Japanese economy for nearly 20 years, and looking at the social situation, the environment is getting worse and worse, and the rights of workers are being violated. It's just that the company side also hires the claim of excellent human resources. In other words, it is important to acquire ability, so I would like you to acquire the ability to encourage companies. That is what I would like to ask people in their 20s. I think there are various ways. Of course, not everyone can be the first person, but I would like them to have a strong spirit to be the first person and approach everything with a strong mind. Rather than just joining a well-known company, I want you to have the spirit to become a presence that will have an impact on society. It is important to resonate with the company's vision, but on the other hand, please have your own vision and try to spread the grand scale. Even if it's just a rough cut, I want you to open up something bigger and bigger in your head.
On the other hand, it is important to be conscious of always relativizing what is in front of you, rather than making it absolute or self-purposed. For example, SIIF's main business domain is impact investment, but if there are effective means other than impact investment for solving social issues, we will also focus on that. It is important to have a mindset that constantly raises your perspective from your current position and considers whether what you are trying to do in the first place cannot be achieved by other means.
Another thing is to think about what is not covered when reading or listening to people. A hypothesis is needed to know what is not mentioned. When I read a book or listen to a lecture, I think, "He didn't actually mention this point." If you read books, listen to lectures, and ask questions to the lecturers with that mindset, I think you will be able to draw out a lot of knowledge. That's why I want you to cultivate the ability to know "What is the other person not touching?"
