Over many years, BBWW has been our purpose. In 2016, we participated in the Embankment Project for Inclusive Capitalism and established the LTV Promotional Office in July 2020. In September of the same year, we were engaged in the formulation of the World Economic Forum (WEF) Stakeholder Capitalism. As a professional services firm committed to BBWW, we help achieve long-term, sustainable and inclusive growth. We have advocated for broader recognition of value, including non-financial value categories such as consumer value, social value and human value, and a broader stakeholder perspective, including capital markets and employees and society with a long-term rather than short-term profit orientation.
Traditionally, capitalist societies have adopted a relatively short-term perspective, focusing on the competitive edge, improved earnings and shareholder value. In recent years, corporate value is starting to be re-defined to include the value that companies provide to society and the environment from a longer-term perspective, areas traditionally positioned as CSR activities and companies' value to consumers and corporate members (See Figure 1).
To our clients, which include corporates, governments, institutional investors, and broader society, we offer various consultancy services to design and implement transformation strategies focused on creating long-term value. In doing so, we take on the challenge to make a transformative impact on business and society. We are committed to leading by example by launching the EY Japan LTV vision; our transformation is essential to achieve a transformative impact for our clients.
We will achieve our purpose (BBWW) by serving and collaborating with stakeholders who share our vision to build a better society for the next generation.
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Figure 1: Targeted direction for long-term value
The era of uncertainty
The world has entered an age of high uncertainty and some people talk about peak capitalism. Many of these uncertainties relate to the United Nation’s (UN) Sustainable Development Goals (SDGs). They include climate change and the COVID-19 pandemic, economic security, food-related issues, the widening gap between rich and poor, and a prolonged period of ultra-low interest rates.
Following the heightened global focus on SDGs, the Japanese government announced its Green Growth Strategy, accelerating its transition to carbon neutrality. In addition, Japan has become a forerunner on a number of social issues, including the arrival of a super-aging society with depopulation due to the declining birthrate and aging population, an increase in medical and nursing care costs, a shrinking market, shortages of human resources, a decline in international competitiveness due to the growth of emerging countries, food security (desire to move away from import dependency) and increased natural disasters. These social issues have a significant impact, and their interplay increases risks to society (see Figure 2). With remote working becoming the norm, talent acquisition in rural areas is increasing. Moreover, the hiring of foreign laborers and the use of robotic technology are accelerating to fill the labor shortage. In response, the promotion of digital transformation (DX) and the re-design of the workplace and evaluation systems are necessary. The digital changes in the workplace have made re-skilling a must. As businesses and society respond to these changes, diversity and complexity are increasing and it is becoming increasingly difficult for companies and individuals to find solutions on their own. A focus on diversity and inclusiveness (D&I) and identifying developing ecosystems becomes increasingly important.
On the other hand, as suggested in Stakeholder Capitalism of WEF*, Larry Fink’s letters and the Green Swan report, new concepts and ideas call for a new approach to capitalism. Managers facing these changes and social issues are forced to make difficult management decisions, and investors are anxious about the uncertainties of capital markets and society. We have entered an era in which companies, industries, and society need to transform with a longer-term perspective in mind (see Figure 2).
Figure 2: Emergence of new concepts in an era of uncertainty
LTV activity policy at EY Japan
To achieve long-term value creation in an uncertain and new era, EY Japan has established its LTV activity policy for our clients, society, the economy and ourselves.
Clients:
With a long-term perspective, we will transform companies and industries and contribute to the maximization of corporate value
EY Japan aims to find alternatives to the challenges facing Japan's economy and society. With this in mind, we offer various consultancy services to help companies design and implement transformation strategies focused on creating long-term value. EY services to support companies' long-term growth include the valuation of non-financial information and the provision of assurance on this information.
Socioeconomic:
To build a better society, we will work on transforming the socioeconomic system itself from a long-term perspective
Society has witnessed the birth of new technologies and industries, such as hydrogen power generation and renewable energy, decarbonization, the use of the human microbiome, symbiotics, a shift from the Internet of Things (IoT) to the Internet of Behavior (IoB) and Augmented Human technology. EY Japan continues to directly support the growth and development of these new industries and develop the tools to assess and analyze them to build the trust required by capital markets as value is created.
Firm/HR:
We will lead society by pursuing our own approach to being a sustainable corporate citizen
As business leaders, we recognize the need to provide long-term value to all stakeholders to build a better working world. To achieve this, EY Japan will commit to engaging in its own transformation journey. We will pursue our goal of long-term value creation by executing on specific goals and KPIs in the areas of principles of governance, planet, talent and social value.
LTV activity KPIs and targets at EY Japan
As a trusted provider of specialized professional services, creating long-term value is an integral part of EY's LTV vision goals. EY believes that implementing quality improvement activities that consistently aim for high standards throughout the world will eventually create long-term value for society.
- Our activities will be centered on BBWW, our purpose.
- An EY ethics hotline and mandatory training programs for all employees on corruption and fraud-prevention.
Climate change is one of the key challenges of our time. There is no question climate change is a scientific fact. We face irreversible and significant climate change, and we need to take immediate action to protect our planet for the next generation. The initiatives we are taking include the following:
- We will reduce CO2 emissions in line with a science-based target1 and achieve net zero2 by 2025.
- We will calculate the amount of CO2 emissions during the implementation of client work and provide tools to all client services teams to reduce these emissions.
- We will build a resource recycling system working in partnership with our suppliers. We will establish a green procurement supplier policy, setting targets for the amount of paper used or discarded, and disposable plastics used and the recycling rate for furniture and fixtures.
1 Science-based targets (SBT); emission reduction targets based on scientific evidence:
Greenhouse gas reduction targets. The goal is to reduce EY's CO2 emissions in line with climate science and the Paris Climate Agreement's goals that aim to limit global warming to 1.5°C within pre-industrial levels.
2 Net zero refers to a point when both the SBT target of plus 1.5°C and the removal or offsetting of residual emissions from the atmosphere are achieved.
At EY Japan, every professional is a valuable asset to the firm. To achieve BBWW, we believe that it is necessary to create an attractive workplace where each professional can reach their full potential and achieve the highest possible standards. Our initiatives include the following:
- We will further strengthen our D&I initiativesl to develop systems in which diverse EY people can contribute to value creation. More specifically, we will further enhance gender equality in the workplace, including support for women in leadership, the inclusion of LGBT+ people, and expand the employment of people with diverse abilities and non-Japanese workers. In addition, we will continue our efforts to create a welcoming work environment. We will also design a new talent evaluation system that accurately assesses our people based on individual skill sets and abilities.
- We will strengthen our efforts to improve supplier diversity. We aim to register 20 female entrepreneurs as suppliers.
- We will foster a professional culture that encourages ongoing personal development and will design talent systems to support this.
- For workplace health and safety, a theme that has become more important due to the pandemic, we have introduced various measures to enhance wellbeing with the launch of the Well-being Promotion Office. We will set goals and KPIs in this field.
3 PPAPD: Partner, principal, associate partner, and director. The ratio of women in senior manager / manager positions is 15.3%.
We will focus on supporting next-generation talent, working together with entrepreneurs with a social impact. Leveraging our skills where we can best contribute, we bring the value created by EY knowledge to people around the world and to geographies where it is difficult to reach otherwise. For example, we are implementing the following initiatives:
- One of the metrics of the WEF Stakeholder Capitalism is regional revitalization, which has been released in 2020, six years after the announcement of Japanese government to revitalize regional economies in 2014. We will increase both the number of our people participating in EY Ripples, our corporate responsibility (CR) program, and the scale of its impact. Since its launch in 2018, EY Ripples has encouraged our people to participate in non-work-related volunteer activities revitalizing local communities.
- We will remain committed to educating and supporting next-generation STEM talent, as well as certified public accountants. We will also focus on the career development of our people through programs such as the EY Tech MBA and EY Badges.
- We will continue our contribution to the development of the next generation of Japan’s business leaders through programs, such as Entrepreneur of The Year (EOY), Entrepreneurial Winning Women (EWW), and Women Athletes Business Network (WABN), and enhance these networking activities.
Summary
We at EY Japan have launched our LTV vision and established the LTV activity policy for our clients, the economy, our society and for ourselves. We will support the sustainable growth of our stakeholders and take the lead in the transformation and pursuit of long-term value creation.
