Materiality and KPIs
Medium-term Management Plan and Materiality
Since it was founded in 1957, the SG Holdings Group has constantly considered what it can do for customers, and has had the corporate philosophy of “Trust, Create, Challenge” with the “hikyaku no kokoro” (the spirit of Edo-era express messengers) to do its best in its heart. In addition, using the Material CSR Issues, etc. established in FY2017 as a guideline, in order to meet the expectations of stakeholders, we have worked to resolve a variety of social issues through business activities with the aim of creating new value.
Meanwhile, five years have passed since the establishment of the Material CSR Issues and the management environment inside and outside the company has changed significantly such as the need to address climate change becoming more emphasized in international society and being shared with companies, in addition to the SG Holdings Group presenting the long-term vision of “Grow the new Story: New logistics, nurturing a new society together.” aimed at 2030.
In this context, to realize further enhancement of the Group’s medium- to long-term corporate value, we will review the Material CSR Issues, redefine the ten key strategies established in the Mid-term Management Plan “SGH Story 2024” as “Materiality” made up of important management issues including ESG, and promote the integration of sustainability and management planning.
Identification process
Identify Materiality through the following process
- Organize medium- to long-term business opportunities and risks in the Group through analysis of the internal and external environment
- Identify Group management issues in light of 1, and extract important items with a high priority
Set ten key strategies in the Medium-term Management Plan through discussion in Group Management Strategy Meetings and the Budget Committee - Discuss the re-establishment of Materiality in the Materiality Subcommittee that is a subordinate organization of the Sustainability Committee
Redefine the ten key strategies in the Medium-term Management Plan set in 2 as Materiality
Reference: Medium- to Long-Term Business Opportunities and Risks（790KB）
Positioning of Materiality in the value creation story
Overview of Materiality
Materiality and KPIs
| Large category | Subcategory | Major initiatives | KPIs | Progress in FY2022 |
|---|---|---|---|---|
| Enhancement of comprehensive logistics solutions | (1) Promotion of services aimed at solving social and environmental issues such as decarbonization | Reduction of GHG emissions of the Company and customers (senders) | Reduction of Scope 1+2 emissions (vs. FY2013) * FY2024 target: 15% reduction |
- Scope 1+2 emissions reduced by 13.4% vs. FY2013 - Reduced by 4.1% year on year due to reduction of light vehicles (gasoline vehicles), switching to hybrid vehicles and expansion of renewable energy implementation rate |
| Percentage of renewable energy in power usage * FY2030 target: 40% |
- 27.8% renewable energy percentage (+13.2 points year on year) | |||
| Percentage of environmentally friendly vehicles (Total of EV, HV, CNG and clean diesel) * FY2030 target: 98% |
- 64.1% environmentally friendly vehicles (+4.9 points year on year) | |||
| Consideration of new services and businesses aimed at the resolution of social and environmental issues | Promotion of initiatives aimed at the creation and expansion of new services and businesses | - Commencement of environmentally friendly Hikyaku JR Container Transportation Service - Expansion of home appliance recycling service aimed at a recycling-oriented society |
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| (2) Expansion of TMS/3PL networks and enhancement of ancillary solutions | - Expansion of TMS projects - Increased TMS usage rate by existing customers |
TMS operating revenues * FY2023 target: 128 billion yen |
- TMS operating revenues: 119.7 billion yen (116.9% year on year) - Exceeded previous year due to active proposal-based sales |
|
| (3) Strengthening of international and overseas services | - Expansion of share of existing customers - New lanes, expansion of industries |
Expolanka operating revenues * FY2023 target: 137 billion yen |
- Expolanka operating revenues: 207.3 billion yen (54.9% year on year) - The volume of marine and air cargo handled decreased significantly from previous year due to excess inventory levels continuing in the United States, etc. Initiatives are midway in the above market environment |
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| (4) Improvement of profitability through enhancement of service and improvement of efficiency in express package delivery service | - Development of new services, strengthening of services peripheral to express package delivery services - Expansion of sales in new areas |
Number of packages handled * FY2023 target: 1.4 billion |
- Number of packages handled: 1.41 billion (99.1% year on year) - Despite a recovery in economic activity, cargo movement slowed from Q3 |
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| Initiatives to receive appropriate freight tariffs | Average unit price * FY2023 target: 648 yen |
- Average unit price: 643 yen (-3 yen year on year) - Implemented ongoing initiatives to receive appropriate freight tariffs However, decreased slightly due to decrease in large packages from previous year |
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| Improvement of efficiency of express package delivery services | Operating margin of Delivery Business * FY2023 target: 7.8% (Operating margin is expected to decrease from the previous year due to upfront costs aimed at strengthening internal and external resources. Improvements planned toward end of fiscal year due to initiatives taken.) |
- Operating margin of Delivery Business: 9.5% (+0.6 points year on year) - Implemented appropriate cost controls through improvement of efficiency such as streamlining of personnel and digitalization |
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| Expansion of management resources leading to competitive advantages | (5) Strengthening of domestic and overseas transportation network including alliances | [Japan] Strengthening of relationships with partner companies and expansion of support system |
- Expansion of SAGAWA Partner Program - Holding meetings to promote appropriate transactions |
- Dissemination and rollout through publication of SAGAWA Partner Program website, distribution of service guides, display of posters, etc. |
| [Overseas] Expansion of alliance partners associated with sales strategy |
Expansion of alliance partners | - Expansion of network with local alliance partners contributing to the acquisition of Chinese cross-border e-commerce business | ||
| (6) Investment in human capital and improvement of employee engagement | - Development of management personnel and personnel able to propose solutions - Realization of diverse work styles, flexible promotion of personnel |
- Implementation of training, etc. aimed at the development of management personnel and solution personnel - Promotion of work style reform measures |
- Implementation of management development program, Women’s Career Support Training, next-generation leader training, etc. - Introduction of promotion system aimed at early development of young employees - Promotion of internal committees, seminars, etc. aimed at fostering a culture of understanding and voluntarily working on D&I |
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| - Periodic monitoring of employee engagement indicators - Planning and promotion of initiatives through monitoring results |
- Affirmative response rate for questions regarding “employee engagement” - Affirmative response rate for questions regarding “creating an environment that makes good use of employees” |
- “Employee engagement”: 57% (±0 points year on year) - “Creating an environment that makes good use of employees”: 54% (+1 point year on year) |
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| (7) Creation of competitive advantages through investment in DX | - Promotion of measures through three aspects (strengthening of services, improvement of efficiency of operations, evolution of digital infrastructure) - Development of personnel handling DX planning |
- Promotion of services and measures through DX strategy - Promotion of DX planning personnel development activities |
- Implemented fully digital express delivery invoices - Chosen as a DX Stock for second consecutive year due to recognition of DX promotion strategy in the medium-term management strategy |
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| (8) Creation of new value through open innovation | Hosting accelerator program and strengthening of systems aimed at the creation of new businesses | Promotion of activities aimed at the creation of new businesses and services | - Expanded open innovation activities to ten domestic Group companies - Selected four partner companies for proceeding with consideration of commercialization in accelerator program |
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| Enhancement of Governance | (9) Creation of governance structure that meets global standards (10) Ongoing advancement of compliance |
- Strengthening of international legal functions, strengthening of governance of overseas subsidiaries - Establishment of systems and promotion of education aimed at strengthening of preventative legal work and compliance |
Strengthening of governance meeting global standards, promotion of initiatives aimed at advancement of compliance | - Strengthened internal control systems of overseas Group companies - Promoted security education, harassment education, etc. |
Management structure
We will utilize “Group Management Strategy Meetings” to confirm the progress of Materiality KPIs with the responsible departments in SG Holdings and Group companies, and analyze the causes and consider action to take if there is any deviation in the level of achievement. If any changes to the Group’s policies or measures occur or are expected due to factors such as changes in the internal or external environment, we will consider these including resetting targets and KPIs. Furthermore, the Budget Committee will consider measures and budgets for the next fiscal year based on progress of Materiality KPIs, and continue to promote initiatives for Materiality.
In addition, the risk aspects of “strengthening of domestic and overseas transportation network including alliances,” “investment in human capital and improvement of employee engagement” and “creation of governance structure that meets global standards” included in Materiality have been identified as the Group’s strategic risks along with “adapting to and mitigating climate change.” We will consider and discuss measures for controlling the above strategic risks through the Group Risk Management Meetings that are the Group’s risk management organs, and reflect these in management planning.