While western-style corporate responsibility is a relatively new concept in Japan, it echoes ancient traditional business practices
While western-style corporate responsibility is a relatively new concept in Japan, it echoes ancient traditional business practicesAlthough the concept of corporate responsibility originated in the west, similar thinking can be found in Japan’s traditional business models.
The prosperous “Ohmi” merchants of the Edo period in Japan (1603-1867), followed a principle known as “sanpo yoshi”. Literally meaning “three-way good”, this business ethic demanded that transactions be not only good for the seller and good for the buyer, but also good for society – a 300-year precursor to John Elkington’s triple bottom line.
As travelling merchants who needed to gain trust in the places they carried out business, the Ohmi merchants strongly believed in social responsibility.
Luke Poliszcuk, an Australian corporate responsibility consultant based in Tokyo, says: “The philosophy of the Ohmi merchants was strongly oriented toward corporate social responsibility, although how that translated into practice is a little harder to determine.”
The term corporate social responsibility came into widespread use in Japan around the turn of the millennium, amid the Enron and Worldcom scandals. However, as long ago as 1956 the Japanese Association of Corporate Executives, the Keizai Doyukai, issued statements on corporate responsibility for company bosses.
Setsu Mori, publisher of Alterna magazine, says corporate responsibility philosophies were not limited to the west and that the Keizai Doyukai was outspoken on these issues from as early as the 1970s. Konosuke Matsushita, for example, a founder of Panasonic, widely promoted the viewpoint that corporations are public institutions.
Distinctive employment
“At Japanese firms, distinctive commitments were made to employees and the wider community,” says Peter Pedersen, chief executive of corporate responsibility consulting firm E-Square. The famous “life-time employment” can be seen as a socially responsible notion. This involves not laying off workers at the company’s convenience and taking good care of employees both in good or bad times.
Commitment to employees is part of many Japanese companies’ DNA, as, for example, at Panasonic. When Panasonic opened one of its first foreign plants in Malaysia back in the 1960s, the company carefully followed its philosophy of doing business rooted in, and growing together with, the local community.
At one stage Japanese companies generated 5% of GDP in Malaysia. Mahathir bin Mohamad, Malaysian prime minister in the 1980s and 1990s, was very appreciative of Japanese companies committed to and working with local communities.
But a negative side of a rapidly growing economy had already started to appear in Japan. A notorious example is the Chisso Corporation. It had been polluting Japanese rivers with mercury, which built up in fish and shellfish and caused the neurological Minamata disease in local people.
There were companies criticised for getting involved in irresponsible clear felling of tropical forests in south-east Asia from the 1960s to 1980s to provide housing materials for Japan.
By the 1990s, however, there was a wave of environmental management implementation and reporting. Japanese companies eagerly acquired ISO 14001 certification, and by 2000, the number of certified companies in Japan was the highest in the world.
The concept of zero emissions became popular, and was widely accepted and pursued by companies and local governments. More companies started issuing environmental reports, a process helped in 2001 by a series of environmental laws introduced to promote even greater reuse and recycling by companies.
In 2000, in the aftermath of the Enron and Worldcom scandals in the US, there was a big scandal involving Yukijirushi – or Snow Brand, a famous national brand. Nearly 15,000 people were poisoned by milk sold by Yukijirushi when it was unfit for human consumption. This sent a big wake-up call to Japanese companies.
It was at this time that the term corporate social responsibility came to be widely recognised, along with the notions of compliance and nurturing trust among stakeholders.
Three-step process
According to Pedersen, the subsequent years can be divided into three phases. The first phase (around 2002-05) is “compliance CSR”, when companies created corporate responsibility departments and appointed staff, in an effort to formalise organisation and comply with standards and regulations.
The second phase (around 2005-09) was a period of “comprehensive CSR”, when companies pursued a wide range of corporate responsibility issues in a comprehensive manner. These included following standards such as the GRI Guidelines and UN Global Compact.
Now Japan is in a third phase, one of “competitive CSR”. Progressive companies are finding clear links with their core businesses and launching major marketing initiatives in fields such as the environment, the so-called bottom of the pyramid and cause-related marketing.
However, several problems remain in Japan, particularly when it comes the work-life balance, social structure and diversity.
The average Japanese worker spends 500 hours more at work each year than French or German workers. The birth rate in Japan continues to decline and the population is ageing. There are still few women in management positions, and balancing career and family life is difficult.
Many people wish to work in a sustainable career, though. And there are, for example, growing calls for Japanese companies to manage work practices not just in Japan but also along their entire international supply chains.
In order to do this, and achieve more in all aspects of corporate responsibility and sustainability, Japan’s civil society must work with and exert more influence on the corporate sector.
Ethical Corporation: Japan corporate responsibility factsheet
References:
Socio-economic statistics obtained from recent publications by the IMF, the Government of Japan, the CIA Factbook and the Human Development Index.
Corporate responsibility statistics obtained from a March 2010 Ethical Corporation survey.
Guideline and standards statistics obtained during March 2010 from official website of each initiative.