Opinion of a Third Party

This is the sixth year that I am responsible for giving the third-party opinion of the DOWA Group’s CSR Report. With the theme of the special feature in this year’s report being “The Advancement of DOWA”, it was deeply interesting to see the roots of the DOWA Group, and to be told about the transition of the business from the time of its founding. The top page gives an overall picture of resource recycling, and you can confirm the role of the DOWA Group as a key player to create a recycling-oriented society.

Later in the report, “CSR Policy and Planning” is published in a large tabular format across two pages so that it is easy to understand, and you can see all the initiatives of the DOWA Group. Within the table, there are the details for the FY 2017 goals, which are specific compared to the year before, and you can see that they are planning for improvement. However, as milestones towards the 2020 target, there are items where you do not know how single-year goals will lead to the achievement of the 2020 target, so there is room for improvement with regards to setting the level and details of the single-year goals. In the Environment section, as always the listing of the material balance is excellent. You can get the overall picture of the change in the input and output of resources and energy from the previous year.

Toward Further Improvement

As I have pointed out in the last few years with regards to human rights, I believe that the time might have come that, along with the company stating its thinking, it should implement specific initiatives for consideration of human rights within the business process. In addition, while it did report on-site inspections and interviews in Thailand two years ago, and in India last year, in this year’s report there was no such mention of human rights. For institutional investors who put emphasis on ESG (Environment, Society and Governance), I believe that with regards to initiatives for “human rights and the community” and “occupational safety” that includes the supply chain for companies that handle resources, there is a lot of interest from the viewpoint of understanding risk, and it is necessary to disclose the details of initiatives. For example, in Myanmar where business is being expanded, it has been pointed out as a country of concern with regards to human rights by ESG evaluation agencies and international NGOS, so at the same time that business is advancing, the company’s human rights stance comes into question.

Recognition is increasing that the promotion of diversity leads to corporate value over the medium to long term. By 2020, the government has set the goal for about 30% of managers to be women, and each company is systemically working on this. Looking at the actual numbers, the ratio of women has declined slightly, but by saying that they are putting effort into hiring women for regular positions, I expect to see results in the future. While the characteristics of the industry might make things difficult, they have not reached the 2% target that the government has set for hiring people with disabilities, and they should explain what kind of actions they are taking.

It is also regrettable that the explanation on “the relationship between business and social issues” that was included in the report until last year, has now been deleted. I think it was an important page that properly told readers what kind of a recognition of issues that management had as they developed business. The information about the CSR initiatives of the subsidiaries overseas has also disappeared, and it can’t be denied that it has become difficult to see the initiatives of each office globally.

Expectations for Future Initiatives

Japan’s Government Pension Investment Fund (GPIF) explains the importance of ESG from the viewpoint of long-term investment. In October 2017, it revised its investment principles to include the viewpoint of ESG for all asset management, including stock investment. For companies, the relationship with investors expecting a long-term improvement in corporate value is important. It is essential for companies to put more effort into ESG information disclosure and to communicate it themselves.

In the part “Communication with Shareholders and Investors”, the theme is only related to IR activities from the past, but in addition to these activities, they also need to touch upon future efforts to promote engagement with institutional investors. And as the base for this engagement, active disclosure of ESG information is required.

Precisely because the DOWA Group can provide services through the value chain with regards to the increasingly serious problem of resources, I am confident that by properly communicating that ESG is integrated into the business, it will lead to a future improvement of corporate value over the medium to long term.