Redefining Group CSR Materiality

In April 2016 the Group redefined its CSR Material Issues to reflect recent international and business developments. The new material issues are now guiding PDCA-driven efforts to further increase performance in accordance with a new set of CSR key performance indicators (CSR-KPIs).

Background

On April 1‚ 2010‚ Sompo Japan Insurance Inc. and NIPPONKOA Insurance Co.‚ Ltd. merged to form Sompo Holdings‚ Inc. (initially named NKSJ Holdings‚ Inc.). The new joint holding company‚ drawing on the CSR initiatives of the two companies‚ formulated the Group CSR Vision‚ which served as the basis for identifying the Group’s CSR Material Issues in fiscal 2011 and fiscal 2012‚ and for advancing initiatives to meet the Group’s new CSR-KPIs in fiscal 2013 and fiscal 2014.

Social and Organizational Context

The year 2015 was an important year for setting a new international agenda on sustainability: In September a summit of UN leaders adopted the SDGs*1 with a target date of 2030‚ and in the following December‚ the COP21*2 adopted the Paris Agreement. The following year‚ fiscal 2016‚ also marked the start of the Group’s new Medium-Term Management Plan‚ in which we set out to transform our business structure to provide services under the theme of “security‚ health‚ and wellbeing.” Based on these international developments and organizational changes‚ we redefined our material issues with the objective of furthering both social sustainability and Group growth.

Four Steps in Redefining Material Issues

STEP 1: Materiality Assessment based on International Guidelines

Various international guidelines and frameworks have been developed as the international community has sought to address pressing social issues that have global impacts. The Group recognizes the importance of understanding and implementing these guidelines as it expands its global business.
In fiscal 2011 and fiscal 2012, we began the process of identifying and prioritizing our material issues‚ first by organizing them based on ISO 26000‚ then by mapping them on two axes — impact to stakeholder on one axis‚ and importance to the Group on the other — based on international sustainability guidelines‚ including the SDGs‚ the Global Reporting Initiative’s G4 guidelines‚ and the UN Guiding Principles on Business and Human Rights (Ruggie Framework).

Fig. 1 Materiality Matrix

STEP 2: Multi-Stakeholder Dialogue

We recognize stakeholder engagement as important initiatives for understanding social issues‚ building relationships of trust and collaboration‚ and yielding greater results. When redefining our material issues, we exchanged perspectives with 16 different groups of stakeholders, including experts and international institutions specializing in CSR and ESG investment as well as other key stakeholders that impact our business activities, including governments, civil society organizations, consumers, agencies, outside directors, and employees.

Stakeholders engaged during the material issues redefinition process
Stakeholder
Category
Affiliation (at the time of dialogue) Name Key Comments Our Actions
CSR Expert International Institution CEO, International Institute for Human, Organization and the Earth
Publisher, Socio Management Review
Mr. Hideto Kawakita Risk Management and Stakeholders’ Satisfaction are both important at the time of review and assessment of key issues. Value chain management is also in need to review along with the shift of business model portfolio. For each material issue we summarize the risks and opportunities, and looking to the future, we will redefine the material issues along with the shifts in the business model portfolio to include issues related to the value chain.
Professor, Department of Environmental Management, Tokyo City University
President, Institute for Studies in Happiness, Economy and Society (ISHES)
Co-Founder and Chief Executive, Japan for Sustainability (JFS)
Ms. Junko Edahiro When thinking about strategies for each target, it is important to have external measures for products and services, as well as internal measures for things such as developing corporate structures to achieve them. Our Key Strengths include consideration of both internal and external measures.
Managing Director, Redefining Value/ Manager, Redefining Value, Reporting, WBCSD Mr. Rodney Irwin/ Ms. Anaïs Blasco It is important to convey the process (story) that led to the selection of the material issues. It is also necessary to explain their relationship with the SDGs. Our reporting explains the process (story) and relationship with the SDGs.
Public Affairs Specialist (at that time), United Nations Development Programme (UNDP), Representation Office in Tokyo, Mr. Toshiya Nishigori Their directions correspond well with the three fundamental concepts listed by the UNDP (resilience, sustainability, inclusiveness). We will also undertake measures that align with the UNDP's three fundamental concepts.
Vice-President, China WTO Tribune Mr. Gefei Yin As for the redefined material issues, issues and approaches are clearly separated, and their contents are convincing. How about emphasizing that the material issues are connected to value creation for the economy, society and environment? We summarize and explain the linkages with management strategy.
ESG Investment Expert Chair, Japan Sustainable Investment Forum (JSIF) Mr. Masaru Arai To communicate information to investors, it is important to convey the message that the material issues have been redefined by making the most of the industry and company characteristics (strengths), and the story of what the company is aiming to achieve in the future. With featured topic articles we report on industry and company characteristics (strengths), and summarize and explain the linkages with management strategies.
Head of Japan, Global Networks and Outreach
UN PRI Japan Director, CDP
Ms. Michiyo Morisawa It is important to convey the message that tackling the redefined material issues will lead to growth of the company. We summarize and explain the linkages with management strategy.
Government Director-General for Disaster Management
Cabinet Office, Government of Japan
Mr. Hisayoshi Kato Because there are limits to what governments working alone can do to deal with disaster preparedness, I expect corporations to play a role in communicating awareness about risk to citizens and society. Under Material Issue 1: Providing Solutions for Disaster Preparedness, we are working to communicate and raise awareness about risk.
Director and Deputy Director, Global Environmental Bureau, International Strategy Division, Japan's Ministry of the Environment Ms. Keiko Segawa/ Mr. Keitaro Tsuji We think you have been actively tackling environmental issues until now, but in the future, we expect you to further strengthen certain initiatives as your core business, such as climate change adaptation measures, and initiatives for human resource development. For Material Issue 3: Promoting the Manageability of Global Environmental Issues, we are putting an effort into developing and offering products and services that focus on adaptation measures, as well as environmental education.
Deputy Director and Assistant Director, Economic and Industrial Policy Bureau, Economic and Social Policy Office, Japan's Ministry of Economy, Trade and Industry Ms. Moe Sakai/
Ms. Mari Seki
We find it good that you are addressing diversity as part of management strategy. As a corporation, it is important that you communicate the context with the stakeholders including investors for management’s efforts to address diversity. For Material Issue 5: Supporting Diversity and Inclusion in Private and Public Life, we are taking actions and reporting on them.
NPO/NGO
Civil Society
Executive Director, Japan NPO Center Ms. Eriko Nitta I would like to see you engage in partnership with civil society continuously to deal with new issues. I also look forward to seeing financial services for people with low income, to lead toward solutions for poverty and inequality. One of Our Key Strengths is "Promoting the development of advanced human skills by fostering partnerships with stakeholders representative of broad sectors of civil society." We also develop and offer products and services for developing countries, such as our weather index insurance in Southeast Asia. We still recognize the need to develop and offer more financial services for people with low income.
Consumer President, Japan Association of Consumer Affairs Specialists Ms. Mariko Yoshikawa Looking from the perspective of the consumer, I expect that they will be able to receive even higher quality services that ensure their "security, health, and wellbeing" through your integrated initiatives with the redefined material issues. We will continue sincere efforts to address the material issues and to offer services of the highest quality possible.
Agency AIR Autoclub Chairman Mr. Tsukasa Tanno It is important to further strengthen partnership with agencies and employees, such as with environmental initiatives and community outreach. We will step up our efforts with an awareness of partnership with agencies and employees.
Outside Director Professor of the Department of Global Business, College of Business, Rikkyo University Mr. Scott Trevor
Davis
It is important to convey the strategies and stories of transformation as you adapt to changes in society and the Group, while taking the details the initiatives you have done into account from the perspective of continuity. We report on our initiatives to date as well as the strategies associated with changes in the Group.
Trade Union President, Sompo Japan Nipponkoa Worker’s Union Mr. Atsushi Miyai As the Group undergoes business transformation, dialogue with employees becomes more important.
We will continuously propose our views for the sound development of the Group. Our goal is to create a workplace where everyone would be proud to work.
We are actively engaged in dialogue with unions and employees, and report on our efforts.
General Secretary, The KANTO Regional Federation of Electric Power Related Industry Workers Unions of Japan Mr. Hitoshi Takezume To deal with local issues, it is important to prioritize things and conduct sustained activities with a long-term perspective. I also look forward to seeing ESG (environmental, social, governance) considerations in the area of investment and finance. With Material Issue 4: Empowering Community and Society, we are taking a long-term view. We are also incorporating ESG considerations into investment and finance through the UN PRI principles, Japan's Stewardship Code, and so on.

STEP 3: Internal Engagement

To discuss and promote CSR across the Group based on this stakeholder input, we held meetings with the Group’s Council for CSR Promotion, Management Committee, and Board of Directors.

Council for CSR Promotion

STEP 4: Identification and Action

Based on Steps 1 through 3, we redefined our material issues. We then set new CSR-KPIs based on the new material issues and measures. Directed by a Group-wide CSR management system and an interactive PDCA-cycle process to improve performance, we are implementing various Group initiatives to address social issues and build a more sustainable society.
Initiatives based on these CSR-KPIs are regularly reported to our Management Committee.
In addition, we will redefine our material issues again whenever necessary based on the latest international developments and changes in our business environment.

Fig. 2. Prioritizing the materiality