Evaluation from Outside the Company

I have been reading Daifuku’s CSR reports from a third party perspective since 2013. I have been invited to comment regarding their disclosure of nonfinancial information online. For the disclosure of nonfinancial information on the Internet, it is necessary to take extra steps to create a well-designed structure given that the website needs to serve the purpose of communicating the essence of the information in a compact manner, while at the same time providing more detailed information for those who require it. I would now like to make some comments from this point of view.

Although each reader has varying interests, if analyzed from my own field of ESG investment in the finance industry, the essential core of nonfinancial data is composed of information regarding the value that a corporation is planning to create through its business activities. In concrete terms, this concerns the identification of social issues which the corporation is planning to solve through their business activities, in other words materiality analysis, as well as a story to achieve this goal (a value creation scenario). If this information is presented first, the reader can then be led to more detailed data depending on their levels of interest. This would create a structure that is easy for them to understand.

When we look at the information released by Daifuku from this perspective, the revision of the CSR Action Plan, to coincide with the new four-year medium-term business plan, is firstly presented in the message from the CEO that serves as an introduction. In this section, after reviewing FY 2016, 15 newly identified materialities are presented, while an explanation of each of these 15 items is developed afterwards. Care has been taken so as not to merely list a series of examples, as these explanations have a consistent format that presents the “Basic Policy” at the beginning, followed by a promotional framework and specific initiatives. As this content provides many points of entry and presents a wide variety of data and initiatives, it is clear that this report is intended to meet the various information needs of Daifuku’s multiple stakeholders. I believe this content presents an ample quantity of data that will satisfy the expectations of readers who desire detailed information.

On the other hand, if we focus on the perspective of ESG investment, in order to utilize the detailed information, I suggest that it would be more effective to create a webpage such as a portal site for the core sections, to show an overview of explanations for each item before going into the specifics. Based on materiality analysis, it would be useful for readers who seek the essential core of the value creation scenario if Daifuku could present an overview of their strategies and then develop explanations for each item, by describing what kind of value creation they will move forward with and through what kind of business model. Using this as an introduction to the detailed sections would not only clarify the border between the core section and the detailed database section in terms of format, but it would also be more effective in communicating a value creation scenario that is unique to Daifuku, with its ability to contribute to solving social issues through improving the productivity of its clients. Nevertheless, the way to deal with the different interests of stakeholders is a theme that cannot be settled entirely online and must be considered in relation to the role played by reports. I imagine that this will be decided upon during future discussions.

As my own expectation moving forward, I would like to see a more in-depth disclosure of information regarding newly identified materialities. As stated above, the 15 items that have been disclosed are effective in responding to the various interests of the stakeholders. On the other hand, to summarize them with an emphasis on the scenario they can be grouped into the aspects of: (1) Providing Value through Products and Services (including R&D), (2) A Basis for Supporting This (Compliance, Information Security, BCM, Industrial Safety and Health, Supply Chain Management), (3) Human Capital (Diversity, Supportive Working Environment, Human Resource Development), (4) The Environment (Environmental Awareness, Eco-Friendly Products, Basis for Environmental Management), and (5) Communication (Shareholders/Investors, Local Communities/Society). It can be assumed that these items have been identified at the current level of detail after a range of discussions inside the company. However, “the reason why these have been selected as materialities” is significant information, so it would be preferable for it to be disclosed proactively, rather than just stating that it was “evaluated based on our unique criteria”. In this respect, it is also an important point to disclose how Daifuku has incorporated the perspectives of its stakeholders, in addition to the relevance to Daifuku’s strategies (value creation). Once these points are clarified, it will be beneficial when considering the introduction of KPIs with a focus on their future impact.

Through information disclosure via the website, I hope that the unique characteristics of Daifuku’s CSR will attract attention from even more stakeholders.

Keisuke Takegahara,
Executive Officer, Deputy Chief Research Officer, Chief Manager, Sustainability Management Office,
Corporate Planning & Coordination Department, Development Bank of Japan Inc.