What are the features of the Sompo Group’s SDGs in Business Management?
Mr. Hamada I see the term SDGs in Business Management as a framework for management that does not simply mean “manage with SDGs in mind” but rather something that includes clarifying issues that need to be addressed to fulfill the Purpose, carrying out the PDCA (Plan-Do-Check-Act) cycle for long-term initiatives, and communicating the results. While there are many management frameworks for pursuing short and medium-term results, particularly in insurance, there have not been many frameworks for promoting long-term, non-financial initiatives.
After unpaid insurance claims developed into a major social issue, the insurance industry reaffirmed the importance of service quality. Since then, the Sompo Group has established a management framework that regularly checks quality, and both management and the field continue to place a high priority on quality. Similarly, when considering initiatives that create social value or contribute to the SDGs, but do not immediately lead to economic value, it is necessary to create a common awareness across the entire Sompo Group in order to keep these initiatives on track and sustain them, and this is exactly what the Purpose is for. And the various mechanisms and management PDCA process aimed at enhancing quality is what SDGs in Business Management is.
With regard to “incorporating the SDGs into our management system,” which is critical in promoting SDGs in Business Management, we have set the SOMPO’s Materiality which covers the key issues for fulfilling the Sompo’s Purpose. In this process, we created a matrix of the SDGs, identified the relationship between the 169 targets of the SDGs and the products and services offered by the Sompo Group as well as its future strategies, and set KPIs tied to the SDGs for initiatives aimed at achieving the SOMPO’s Materiality. These Materiality KPIs are closely linked to the value creation story for fulfilling the Purpose and the new Mid-Term Management Plan, and as a result, about 80% of the KPIs have a strong connection to our businesses and are suitable indicators to see the progress of the respective businesses
In this way, we will continue to create social and economic value, and hopefully, in one year, we will be able to take our SDGs in Business Management further to the point of setting the 18th SDG for Sompo Holdings.
Ms. Sakai By organizing the Materiality KPIs and SDGs matrix, we realized that the issues that Sompo Japan Insurance Inc. is tackling in the new Mid-Term Management Plan and the approaches to SDGs in Business Management are not far apart, but aligned. And now, there are four things that we are going to put into practice as Sompo Japan Insurance Inc.
The first is to improve society with the SDGs by developing products and services within the P&C insurance business. New technological innovations could include insurance and services to mitigate risks. In addition, Sompo Japan Insurance Inc. has a network of about 23,000 employees and 48,000 agents, which we will leverage to address issues specific to each region.
Next, we are working to go beyond providing conventional insurance to solve social challenges. Specifically, we will focus on enhancing preventive services such as disaster prevention and mitigation through the use of DX, and on supporting Mobility as a Service (MaaS).
The third point is to address the issue of climate change. In order to achieve the Japanese government’s goal of carbon neutrality by 2050, we continue replacing our power usage with renewable energy. In addition, in the field of “adaptation,” which society has high expectations for, we will work to provide new solutions, such as insurance and risk consulting, by leveraging the knowledge we have accumulated over the years.
The fourth point is engagement (constructive dialogue). As an institutional investor, we will actively engage in dialogue on ESG issues to promote the initiatives of our investees and loan customers, and also contribute to the transformation of Japanese society.
Mr. Sasaya It is extremely important to incorporate the SDGs into management, rather than simply being aware of them. For companies to achieve their SDGs, it is important to implement the competitive strategy of creating shared value (CSV), which aims to simultaneously achieve economic value and social value. However, the social issues we address should not be subjective. This is where the SDGs can be utilized, and social issues can be objectified through the SDGs. This is the key to differentiating a company and building a competitive advantage. For example, this can influence the consumer’s product preferences and help secure partners that can contribute to your competitive advantage.
In addition, employees will grow to think about SDGs, which will lead to SDG-related conversations inside and outside the company, leading to new initiatives and innovations. In this way, it is important to incorporate the SDGs into management, as it will make a big difference in terms of organizational strength.
Furthermore, the relationship between ESG and SDGs is currently confusing. To address this, I have used my experience working with companies to develop a method called the ESG/SDGs Matrix, which helps to organize the 17 goals of the SDGs in relation to ESG in an easy-to-understand manner. The benefits of using this method are firstly that it helps in the selection of materiality by organizing it in a comprehensive manner, and secondly that it prevents criticism that the company has opted for SDGs that are a convenient fit. This will greatly boost the appeal to investors and make the focus more visible to multi-stakeholders. It will also help improve employee understanding. The matrix of your company, which I’ve had the pleasure of advising this time, served as a very good start as we organized the SDGs at the target level, shared it within the Sompo Group, and set materiality for the Group as a whole.
It is also important to note that over 80% of the KPIs for implementing the SDGs are aligned with the Sompo Group’s core business. This is because creativity and innovation through the company’s core business is expected when it comes to pursuing SDGs, and by incorporating SDGs into the company’s core business, it can become a source of competitiveness and a business model that leads to high quality services.
There are still very few companies that have incorporated the SDGs into their management and are thoroughly using them, so it will be fascinating to watch.