Japan, a driving force for global transformation
Creating long-term value (LTV) for the next generation
Today, the world is teeming with challenges that include globalization, digitalization, climate crisis, demographic change and the COVID-19 pandemic. This has triggered a huge shift in values towards stakeholder capitalism, where sustainable growth and value creation are long-term goals for corporations, citizens, political leaders, and investors alike. Since 2013, EY has looked to the long term and set a goal of making the world a better place with its purpose of Building a better working world.
EY’s distinctive purpose has led all of our people around the world to question what they should achieve in the long term and act accordingly on a daily basis. The same purpose underpins the NextWave strategy, which EY rolled out globally in 2018, and has been evolving ever since. Corporations and nations are now accelerating their response to climate change and other issues highlighted as major Environmental, Social and Governance (ESG) themes. Japan already has an aging society and a rapidly-declining population, with corresponding issues in medicine and nursing care, and is uniquely positioned to show the world what may lie ahead. The COVID-19 pandemic and economic turbulence have also disrupted supply chains and boosted digital transformation (DX). Against this background, there is a call for transformation of not only the work styles of individuals, but also the structure of industry.
With the increasing risk of existing business models becoming obsolete, Japan is a precursor in addressing these issues. Some Japanese companies are thriving by including not only shareholders but also society as a whole in a definition of their stakeholders and constantly creating LTV by solving social issues through their business.
As Japan is one step ahead in confronting these difficulties, it is also beginning to gradually overcome these mounting challenges. As a consequence, Japan has the potential to become a forerunner in solving issues. However, there is always the risk of a misstep, with both the initiatives and the solutions being specific to Japan, and falling behind wider global trends. EY will use its long-term perspective and global insight to support Japan and its companies to drive change around the world, to set global standards for future generations, and to help build a new, prosperous and progressive society. This is my renewed vision of EY’s purpose.
Working with clients to solve society’s problems
Driven by our people’s dreams
Our clients are always at the center of everything we do at EY. Our professionals operate in Japan and over 150 countries globally across our four service lines: Strategy and Transactions; Assurance; Tax; and Consulting (see page 26). Their respective insight is put to work in collaborating with each other to address issues facing clients and provide comprehensive support. We assist companies as they venture into overseas markets, with EY Japan and local EY teams acting as one, and overcoming differences in language or culture. We provide global perspectives essential for corporate management. For example, we support organizations to establish purpose-oriented businesses, set up Talent policies and career paths. All EY people around the world share a purpose: Building a better working world. This allows us to provide optimal solutions compatible with the culture and commercial practices of the destination country. It is the norm at EY to collaborate globally to solve issues facing our clients and society. This professional culture is the key to EY’s strength.
To support the shift from shareholder capitalism to stakeholder capitalism that includes a wide range of stakeholders, we have developed our LTV Promotional Office. It frames the comprehensive client services that we provide for Assurance, Tax, Consulting, and Strategy and Transactions. To accelerate this initiative, we established the EY Japan SDGs Carbon Neutral Office in January 2021. The office selects experts well versed in carbon neutrality and sets up a team that goes beyond the boundaries of the four service lines of Strategy and Transactions, Assurance, Tax, and Consulting. It aims to be a one-stop solution provider covering a broad area from strategy to the disclosure of non-financial information.
Our actions for society center on supporting the creation of new industries that serve as the foundation for sustainable economic and social systems, as well as creating a platform to support them. As part of our efforts to create new industries, we host the EY Entrepreneur Of The Year™ Award, an annual international award program. It recognizes the achievements of innovative entrepreneurs in new business domains with the spirit of Building a better working world. In 2001, we launched the EY Entrepreneur Of The Year™ Japan program to promote the activities of entrepreneurs who are pioneering Japan’s future, and to help develop their successors. We also host the EY Entrepreneurial Winning Women™ program to celebrate the accomplishments of women entrepreneurs. We support public-private sector cooperation as a member of the Japan Hydrogen Association, an organization that promotes decarbonization through global collaboration around hydrogen and the formation of a hydrogen supply chain for the creation of a hydrogen -based society. We have also joined the ESG Disclosure Study Group, a forum for businesses and institutional investors who are studying the ideal form for ESG disclosure. We also work with other companies by taking part in the Japan Well-being Initiative which aims to create metrics for well-being and explores a new management approach centered on well-being. These are examples of our efforts to create a platform to support sustainable social systems. I also participate in and contribute opinions to the Cabinet Office’s Male Leaders Coalition for the Empowerment of Women. We will stand beside stakeholders who empathize with EY’s purpose to co-create transformation, and to pass a better society to the next generation. We believe that this is the mission of EY in Japan.
People working at EY
Fostering awareness in all of our EY people is paramount in putting our purpose into practice. In Japan, it has been the practice that companies give directions to employees, who just follow instructions and do the jobs that they are given. At EY, we believe what drives innovation and solves problems is the power of each individual to realize their own dreams and goals (My purpose) at a personal level that can be shared with family and friends. On taking office as CEO, I launched an initiative to help our people identify their individual purpose and connect it with EY’s purpose.
For individuals to achieve their dreams and goals, they first need to understand that others may have different views. Secondly, they need to develop a culture of encouraging those with more (relative) power e.g., in terms of job rank, gender, absence of disability, to listen to and adopt opinions that differ from their own. Thirdly, they must have the psychological safety that allows them to share with other team members, even when their own background or opinion are different. EY seeks to become an organization shaped by diversity, i.e. the understanding that there are diverse people and perspectives; a culture of inclusiveness, where differences meet and reach mutual respect while recognizing some disagreement; and equity, where those in power rise above their advantage and provide support to others.
With a worldwide network of over 330,000 people, EY is in a unique position to offer a variety of opportunities and a system of mutual support that cuts across borders and organizations. I hope that EY can serve as a stage for our people to realize their dreams. By spurring EY members into action to achieve their individual purpose, we will encourage them to drive transformation, not only at EY but in broader society as well.
Technology and data
We use the same technology for our own operations and technology services as we do to support client DX in the more than 150 countries where we operate. This is testament to the strength and consistency of EY’s global collaboration, a foundation which allows EY people around the world to work together seamlessly across borders, and the engine that provides support for our clients. I believe this is another of EY’s strengths.
EY plans to invest US$10 billion in technology in FY22-FY24, and to leverage it for enhancing the prosperity of companies and society and the associated LTV. As the Japanese vector for this initiative, we established EY Digital Hub Fukuoka in October 2021. From its base in Fukuoka, it collaborates with local companies, recruits tech talent and and offers solutions to benefit companies and society across all of Japan.
As technology evolves, data increases in importance. Handling data requires analysis, authenticity and confidentiality, which poses a challenge to companies in terms of reliability and safe use, particularly in a borderless society. Based on trust, and values which only EY can offer, we aim to leverage our knowledge and global insights for the prosperity of business and society.
Becoming a sustainable corporate citizen
Setting an example
We at EY Japan will be taking action as a sustainable corporate citizen so that we can serve as a role model for society.
In July 2021, EY Japan formulated its own LTV vision, which reflects EY’s purpose. We have set key performance indicators (KPIs) for the four themes of governance principles, protecting the global environment (planet), best talent, and creating social value as we evolve into an LTV-oriented organization.
In addition to providing clients with assistance in calculating and reducing their CO² emissions, we are also stepping up our efforts within EY. We will cut our absolute annual CO² emissions and offset or remove any carbon emissions that exceed the target to become carbon negative, and then achieve net zero by 2025.
We also operate EY Ripples, a corporate responsibility program in which over 330,000 EY people worldwide share the objectives of contributing to society. Our goal is to positively impact 1 billion lives worldwide by 2030 through EY Ripples. By leveraging EY’s assets, namely our global collaboration and our professional expertise, skills, and experience, we will support the next generation, work with impact entrepreneurs, and accelerate environmental sustainability, to positively impact lives across the world. In Japan, EY professionals mentor students and young people who aspire to become impact entrepreneurs and offer business skills training and other support that only EY can provide. This is another way in which we can contribute to society.
Our Purpose as a compass
Despite the seeming slowdown in Japanese society, we believe that with our clients and partners we can and will unleash the true potential of Japanese society and rebuild the country as a driver of world development.
We use our purpose of Building a better working world as the compass to navigate that process.
Our aspiration is that Japan will once again lead the world in five to ten years from now. We want to Build a better working world, not only for the current generation but for those who
follow, and not only for Japan, but for the whole world. We would like EY to be central to tackling the world’s pressing issues, offering a new perspective and pushing forward to a hope-filled future.
Our latest thinking
As a forerunner, with a long-term perspective, EY set its own goal of making the world a better place as early as 2013 under its global Purpose: Building a better working world. We aim to be a driving force for transformation that increases long-term value (LTV) of society as a whole, rising above distinctions between government, business and academia.