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Third Party Opinion

Eiichiro Adachi
Head of ESG Research Center
The Japan Research Institute, Limited

As in fiscal 2015, I have once again been invited in fiscal 2016 to review the Sustainability Report of Fuji Xerox and its affiliates. In my comments last year, I pointed out that there remains a slight sense of disconnect when the social issues the company wishes to address and the values it provides are presented under the headings of the existing business segments and stakeholders.

This comment has been addressed in the fiscal 2016 report in the following manner. Although disclosures by separate stakeholder categories are provided on the website, Chapter 3 of this Sustainability Report now comprises four categories of social issues. This approach I believe has resulted in a more consistent and compelling presentation.

Referring to the Sustainable Development Goals (SDGs) contained in the 2030 Agenda for Sustainable Development adopted by the United Nations in September 2015, the fiscal 2016 report does an excellent job of explaining the relationship between SDGs and the values Fuji Xerox provides. Furthermore, in the Top Commitment it is stated that Fuji Xerox's most important mission is "to make a valuable contribution to promoting decent–that is, fulfilling and humane–work and realizing sustained economic growth." I find this foresight highly commendable.

Fuji Xerox and its affiliates have adopted a series of very specific and unique commitments in their Mission Statement. These are "Build an environment for the creation and effective utilization of knowledge," "Contribute to the advancement of the global community by continuously fostering mutual trust and enriching diverse cultures," and "Achieve growth and fulfillment in both our professional and personal lives." At the same time, society around us is being overtaken by numerous problems. These include the digital divide, the chain reaction of mutual distrust, social alienation, and growing despair. In my estimation, these pervasive difficulties make it all the more important that Fuji Xerox and its affiliates rise up and prove their true worth to society.

An interesting illustration of how the company is responding to these expectations appears in a highlighted article entitled "For the Community, With the Community" appearing in Chapter 2. A GPS-linked Audio Guide Service for tourists foreshadows a future world in which people everywhere in the world are able to communicate unhampered by the language barrier. Services like this may well develop to become new examples of "Society-In," a concept that focuses not only on the value for the market but also the value for society. This is in line with the contribution that Xerox copy machines made to "the democratization of information," which was also built on the "Society-In" concept. I was particularly impressed to learn that this initiative was pursued not only as a social activity contributing to local communities but also as a business initiative. Pledging that "no one will be left behind," the UN 2030 Agenda focuses on individuals and calls for action by countries at all levels of development–poor countries, rich countries, and middleincome countries. It draws special attention to the role of private businesses and civil society and emphasizes the importance of cooperation and partnership among all actors. The highlighted initiatives are not merely aimed at supporting regional revitalization. Rather, they can be interpreted to constitute the act of building bridges between the company's Mission Statement and the 2030 Agenda.

This brings me to a few specific recommendations. The first concerns the analysis of opportunities and risks on page13. I believe it would be more productive to break down the analysis into two separate parts: "Risk that environmental and social deterioration may constrain business activities," and "Risk that business activities may add to environmental and social deterioration." My second recommendation pertains to the section on Diversity and Inclusion that appears under Social Issues. Chapter 3 should not stop with engagement with employees. In fact, I would have been very interested to read about concrete solutions made possible by the company's products and services. The same comment applies to Robust Management Foundation. I would be curious to learn more about how solutions provided to customers can enhance governance in companies and other types of organizations. The report presents information on how initiatives are being moved forward based on KPIs. Although I have no reason to doubt the comprehensiveness of the KPIs, disclosure of the units of measurement for the principal environmental indicators would have been helpful in terms of gaining a better understanding.

Finally, page 6 of the report carries a column titled "The Foresight of Yotaro Kobayashi." In 2003, I had the opportunity to assist in preparing the 15th Corporate White Paper on "Market Evolution" and CSR Management issued by the Japan Association of Corporate Executives led by Mr. Kobayashi, who was chairman at the time. I am reminded that during the many meetings I had with him, Mr. Kobayashi repeatedly emphasized this seminal point. "It is vital for businesses to meet their responsibilities to society in the course of their core business activities." I am reassured to find that this spirit lives on at Fuji Xerox and its affiliates, and I eagerly look forward to the next stage of "Society-In" that will arise from the company's business activities.

Sustainability Report 2016 Questionnaire