Third-Party Remarks

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Third-Party Remarks

Katsuhiko Kokubu Professor at the Graduate School of Business Administration,Kobe University

Completed a doctoral program in business administration at Osaka City University Graduate School. After serving as an assistant professor at Osaka City University and Kobe University, he assumed his current position in 2001.
Head of the Graduate School of Business Administration at Kobe University from 2014 to 2016 and from 2021 to the present. Has served concurrently as the head of the Graduate School of Business Administration at Kobe University (from 2019 to 2021) and as Head of Kobe University Value School (since 2020). His recent publications include “From Accountability to Management Ethics” (Yuhikaku Publishing Co., Ltd.), “Emergent-Type Responsibility Management” (Nikkei Publishing Inc.), “Education for Value Creation” (Kobe University Publishing Association), and “Ethics as Responsibility” (Minerva Shobo).

Strong Messages from Top Management

The standout feature of Sumitomo Rubber Group’s Integrated Report 2024 is that it is structured around messages from top management, including officers and Outside Directors. This structure allows the authentic voices of the leadership team to be directly heard. In particular, the TOP COMMITMENT section by President and CEO, Representative Director Satoru Yamamoto is clear and detailed, and is likely to earn the trust of many stakeholders. Additionally, the inclusion of roundtable talks among Outside Directors, alongside internal officers, demonstrates Sumitomo Rubber Group’s commitment to incorporating diverse perspectives into its management. However, roundtable talks can inevitably give the impression of being somewhat scripted. In the future, I feel it would be beneficial to incorporate dialogue with third parties to convey messages even more transparently.

Linking the Value Creation Story with Officer Messages

The Sumitomo Rubber Group clearly articulates its value creation story in line with integrated reporting guidelines. The value creation story itself succinctly demonstrates how the Sumitomo Rubber Group creates both financial and social value. However, I feel that if the officers’ messages regarding the six forms of capital were linked more closely to the value creation story, it would make them even more persuasive. The officers also frequently emphasize “structural reforms,” and I would like to understand in more detail how these reforms impact the value creation story.

Reflecting the Sumitomo Business Philosophy to Identify Material Issues (Materiality)

The Sumitomo Rubber Group identifies material issues (materiality) and sets out a vision of what it aims to achieve along with KPIs by referencing standards such as the Global Reporting Initiative (GRI). While this is important for clarifying the overall picture of activities, I believe there are more ways of identifying the company’s unique characteristics that leverage the Sumitomo Business Philosophy. The Sumitomo Business Philosophy states that “the business activities of Sumitomo must benefit not only Sumitomo, but also be of benefit to the nation and to society as a whole.” By reflecting this aspect of benefiting the nation and society in identifying material issues (materiality)—in other words, approaching things from the perspective of helping to resolve national and social challenges—Sumitomo Rubber can establish its own unique material issues (materiality).

Toward Promoting Effective ESG Management

There is currently a global movement toward the standardization of ESG management, with various regulations and standards being established. However, merely adhering to standards carries the risk of ESG management becoming a mere formality. One example of this is the disclosure of Scope 3 information. The Sumitomo Rubber Group is also working on the disclosure of Scope 3 information, but even if it becomes technically possible to calculate emissions in the supply chain, it will be meaningless for both management and the natural environment without accompanying reduction measures. This is also true for the disclosure of information related to human capital management. It’s not reporting but practical implementation that counts. Disclosing information that cannot acted upon is a mere formality. I therefore hope that the Group will pay close attention to this point and lead the industry.

Response to Third-Party Remarks

I would once again like to thank Professor Kokubu for providing us with his pertinent advice.
In 2020, we established “Our Philosophy” as a set of guidelines for action and a source of support for the diverse members of our Group. In the same year, we also formulated the Long-Term Sustainability Policy: “Driving Our Future Challenge 2050,” and have since been driving its initiatives forward. Our internal understanding of sustainability has also moved on, and I believe we have now established a foundation for engaging in sustainability management. Starting in 2024, we have entered a stage of moving beyond merely complying with various regulations and standards, but rather integrating sustainability perspectives into our management practices to enhance their effectiveness. Specifically, we are reviewing our sustainability promotion framework and enhancing execution by establishing individual subcommittees for key initiatives.
In our Integrated Report 2024, we have focused on clearly conveying the thoughts and intentions of our management team, including its most senior members, to our readers. The management team has expressed their determination to use 2025 as a turning point, ensuring a solid foundation that sets the stage for future growth. We also intend to review and update our material issues (materiality) and consider how best to present them from the perspective of sustainability management. On that basis, we will move forward with integrating these aims into our business strategies and various action plans. We intend to keep all stakeholders informed of our progress through our Integrated Reports and the Sustainability website.
As noted in Professor Kokubu’s feedback, we are keenly aware that we currently lack sufficient third-party perspectives and dialogue. Going forward, we will be actively engaging in dialogue with external parties and leveraging their perspectives to further enhance our sustainability management.

So IshinoGeneral Manager, Sustainability Management Promotion HQ