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Third Party Opinion

Last year, in 2015, MUFG revised its material issues, selecting three areas: customers, community and responsible finance. MUFG has continued with priority initiatives in these three areas this year as well. This year, I would like to focus my discussion on the response to these activities. One characteristic of last year's revisions was that "enhancing customer satisfaction" formed the basis for CSR activities, with MUFG making its declarations directly to customers.

Prof. Yoshihiro Fujii
Graduate School of Global Environmental Studies, Sophia University
Research Institute for Environmental Finance: RIEF

Yoshihiro Fujii

CSR gained common currency as a management priority in Japan in 2003. Since then, MUFG and other major Japanese companies have been proactive in their CSR efforts through the enactment of structures, practical activities, evaluation methods, and actions, in a repeated PDCA cycle. For many companies, this cycle has become an entrenched part of their operations. In this sense, the P (plan) part of the cycle could be considered essentially complete.

Looking at this year's report from MUFG, as well, from the message from the CEO through to the D (do) activities related to the material issues and circumstances expressed in the C (check) process of disclosure through reporting, rather than novelty the text conveys a sense of accustomed stability. I believe the PDCA cycle is proceeding steadily, including forward-looking A (action).

CSR activities generally do not occur simply by repeating PDCA within a company. In order for the authors to convey the increases in corporate value resulting from CSR activities, I believe it is essential to sufficiently communicate CSR activities to the most important stakeholders—namely, customers. Communication thus plays an important role. MUFG has built up a monitoring system to accumulate customer feedback through diverse channels, including branches, call centers, postcards, websites, and surveys. The PDCA cycle can only be said to be functioning appropriately if CSR activities go beyond efforts that make a company self-satisfied to initiatives that go toward building trust among customers and other stakeholders, and if these activities are linked to a communication cycle that can be confirmed on a daily basis.

If the power of communication is resilient, a company experiences an increase in the number of customers whose trust is unwavering (in other words, "loyal customers.") Furthermore, this customer feedback becomes more likely to be linked to business improvements and new business development. This report discloses that responses to customer questionnaires point to 60% to 70% of customers being either "satisfied" or "somewhat satisfied" with the financial institutions across MUFG as a whole. I think this can be seen as a good response to that fundamental aspect of CSR activities: "enhancing customer satisfaction."

It almost goes without saying that the most important aspect of customer trust in a company is the products and services that company provides. And what might be the next point? Several answers spring to mind. The authors posit the idea that it may be whether or not the organization has a "human face." Put differently, it refers to the level of trust customers place in the people who provide products and services, and whether those people in the company have the same everyday perspectives as the customers themselves, how they respond, and how they work.

MUFG demonstrates its track record on measures targeting employees through systems spanning the financial institutions under its umbrella, including systems for childcare leave, shortened working hours to care for children, and nursing care leave. Many companies have systems such as these in place, but few disclose their records with these systems over time. Looking at the disclosed results, it appears that around half of companies are making "steady increases." Just this year, Bank of Tokyo-Mitsubishi UFJ put in place a work-from-home system and has introduced its policy of making a major effort to create a pleasant working environment through measures to stagger working hours and reduce overtime.

If an organization facilitates a work-life balance for all employees with a structure that balances home life and business, talented human resources will tend to remain at that organization and help it grow. PDCA is one key to maintaining this virtuous circle, and can be evaluated by determining how many employees take pride in their work. What is scary is when a scandal perpetuated by a few people destroys in an instant the trust that an organization has built up over long years. Individuals naturally need to be aware of this trust, but maybe some sort of structure is also needed to provide organizational security.

As measures to reduce environmental impact through its core business, since 2005 Bank of Tokyo-Mitsubishi UFJ has engaged in the business of measures to reduce CO2 emissions through finance. By providing financing to renewable energy and energy conservation businesses, the bank has boosted its CO2 reduction impact to a record level of 250,000 tons. This figure brings the cumulative CO2 reduction impact to nearly 1 million tons. Frameworks in which banks incorporate the impact on CO2 reduction volumes into their lending decisions represent a pioneering effort by financial institutions to integrate the ESG field and their traditional business evaluation methods.

Expectations toward the market for greenhouse gas-related businesses are high, in developing countries as well as in Japan. Considering the Paris Agreement to hold the rise in global atmospheric temperatures to 2℃ or less, financial institutions will be called on to take an even greater role in soliciting funds for areas that address greenhouse gases. Responsible finance, which is positioned as a material issue for CSR, is at the same time an integrated domain—which combined the ESG evaluations of CSR and core business—and a growth domain. I would like to see MUFG take the initiative in this area, leveraging the expertise and experience it has cultivated to date to lead the Japanese financial sector.

(As of July 2016)