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Third-Party Opinion

Mami Oku

Mami Oku

Professor
Department of Urban Policy and Science
Faculty of Urban Environment
Tokyo Metropolitan University

In reviewing its material CSR issues, the SG Holdings Group organized the initiatives established in its Mid-term Management Plan in relation to Sustainable Development Goals (SDGs), thereby assessing their alignment with the requirements of society. The Group has now set seven new material CSR issues-"Achieving a safe and secure transportation society," "Promoting environmentally friendly business activities," "Building an organization of diversity and inclusion," "Creating new value through comprehensive logistics solutions," "Contributing to communities," "Promoting sustainable procurement," and "Building a responsible management foundation." The Group's CSR Report 2018 (the "Report") presents the policies, systems, specific elements, and expected results for each of these seven material issues in readily understandable form supplemented with data, diagrams, and photographs.

The Report highlights the strong commitment of the comprehensive logistics group with global operations and more than 90,000 employees, to contribute to the solution of social issues through its business activities, and it also describes the proactive and ongoing progress of the Group's initiatives in pursuit of that goal. It is particularly noteworthy that in carrying out these CSR initiatives, the Group has put into practice every means conceivable at present, not only through the efforts of its own employees but also through alliances and collaboration with its various stakeholders.

Furthermore, the Group has made every effort to obtain third-party objective evaluations on the results of its efforts as well as its CSR promotion framework by utilizing awards, certification, and accreditation programs.

Looking ahead, I think that if improvements are made in keeping with the following three points, an even more complete and compelling report could be prepared. The first point that I would raise regards the overall structure of the Report. While it is fine that the seven material issues are systematically and comprehensively organized, I have a concern that any circumstances or initiatives that newly appeared during the period covered by the CSR Report may be buried in the overall content. However, if, for example, special topics were highlighted by way of feature articles describing the new initiatives undertaken in 2017 such as the in-house nursery school and the in-house university established within the Group, that would add significantly to the vividness of the report and its appeal as a communication tool.

The second point that I would raise relates to the role of the Report as an opportunity for making improvements in the context of the PDCA cycle. Targets and key performance indicators (KPIs) are set for four of the material issues- "Achieving a safe and secure transportation society," "Promoting environmentally friendly business activities," "Building an organization of diversity and inclusion," and "Building a responsible management foundation" -and progress is tracked with reference to them.

For example, in "Promoting environmentally friendly business activities," the Group has the target of "realizing sustainable business in harmony with the earth's environment by reducing CO2 emissions throughout the Group, improving energy efficiency, and increasing the rate of use of renewable energy," and established KPIs in line with this target: "CO2 emissions (total), -1% year-on-year," "Use of energy per ton-kilometer transported, -1% year-on-year," "Waste output, Year-on-year reduction of amount wasted," and "Water usage, Year-on-year reduction of amount used." The results achieved in fiscal 2017 for each KPI are shown in the Report; however, what is not indicated is the total amount of the reduction aimed for over the medium to long term. Particularly in cases where fiscal 2017 results were inferior to those reported the prior year, there is no reference to the mid- to long-term program or analysis and evaluation of the results of efforts aimed at continuing improvement such as the reasons for the deterioration and what improvements are being considered for the upcoming year. The same can also be said in regard to the other material issues.

Information covering the establishment of mid- to long-term targets, each year's targets and results, their analysis together with future remedial plans, and courses of action are today considered essential parts of any CSR report. The inclusion of such information would make the report a more effective tool for ensuring continuous improvement.

The final point is the question of whether the report adequately presents the faces of employees and shareholders in all their diversity. The Group has been dedicated to building an organization that is comfortable for all employees to work in and promoting diversity and inclusion, while providing comprehensives services which benefit the local communities and contributing to society in a wide variety of ways. These earnest initiatives deserve high marks. If the voices of employees and various stakeholders could also be heard in the Report stating in their own words how they see and evaluate these initiatives, the Report would be even more compelling and alive. For example, it is mentioned that the Group conducted an attitude survey covering 50,000 of its employees, but I would also like to know what specific questions were asked and what the results actually showed. We also learn that the SG Holdings Group concluded disaster support agreements and comprehensive partnership agreements for regional revitalization with local governments, providing support for and collaboration with them, but it would probably be possible to include in addition some direct input from the local governments involved. In the future, together with the points that I have just discussed, I would also look forward to seeing details of the initiatives undertaken at overseas bases presented through the voices and faces of the people most involved.

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