Independent review of CSR Report 2013
Mitsuo Ogawa
President, Craig Consulting
After graduating from Waseda University, he joined a major automotive-related manufacturer. Then, in 1991 he obtained an MBA from the University of Pittsburgh in the US and in the same year he joined the Sanwa Research Institute Corporation. In 2000, he moved to PwC Consulting and then in 2004, he established Craig Consulting as an independent company, becoming its president. His publications include ISO26000 de Keiei ha Kou Kawaru (; Nikkei Publishing Inc.)
Drawing up the CSR vision
Companies generally have fairly straightforward motives for embarking on CSR programs, yet doing so means that any failure to continually scrutinize business practices would likely put a company’s operations at odds with its CSR mandates. Meanwhile, one major factor behind management decisions to implement CSR programs is to better ensure sustainability of a company's business operations over the long run. More precisely, such programs encourage management to look ahead to around the year 2030 in anticipating likely social and environmental changes, thereby prompting them to interpret potential ramifications of such changes to the company's value chain and accordingly come up with strategies for addressing these possibilities.
In that regard, Advantest's CSR report duly spells out rationale underpinning the company's CSR initiatives, with the CEO's message stating that management intends to "pursue a position as a company that is both trusted and needed by society into the next century." Here, though it would seem unlikely that management could pinpoint social conditions at hand a century hence, a twenty to thirty year forecast does seem conceivable. Furthermore, I would like to see the report more fully consider factors that hold significant sway over Advantest's competitive advantages in its value chain, in terms of whether such factors could be subject to regulations and soft-law guidelines, and in terms of how the company's measurement technologies might deliver solutions geared toward impending social issues amid demographic shifts and other such future contingencies. In other words, the report should have provided more clarity regarding the company's CSR objectives and where it is headed in that regard.
On the other hand, given that the report aptly summarizes how Advantest has been approaching its CSR challenges, an effective tactic going forward would be to approach the company’s CSR as one key facet of business operations by providing details on the CSR trajectory ahead along with related quantitative benchmarks.
More effectively addressing CSR on a global scale
After acquiring Verigy Ltd. in 2011 and completing full integration of its operations in 2012, Advantest has become a truly global company now controlling the greatest share of the worldwide semiconductor test system market while generating over 90% of its sales overseas. As such, the CSR report should have provided more detail about the degree of progress the company has made in handling its now more globally-based operations. For instance, although a degree of coverage was given to human rights issues which attract a great deal of attention on the world stage, this was mainly limited to the company's efforts in Japan in the realms of its human rights training and consideration given to human rights issues in the supply chain. I would like to have seen more expansive coverage of human rights issues encompassing management's timeline toward globalizing operations and how the company is proceeding in that regard.
Moreover, I see a need for management to build a more robust framework for pursuing CSR initiatives so that the scope of the program better accords with the scale of the company's responsibility to society. This in turn would be in line with CEO's message asserting that the company's "position in having captured the top share of the global market brings with it even greater societal obligations." For instance, I would hope to see disclosure in the CSR report pertaining to issues raised by outside experts in the course of management's engagement with major stakeholders, regarding means put in place to modify the company's approach to CSR and how management intends to address related concerns. Increasing complexities inherent in grappling with CSR issues on a global scale translate directly into exposure to a greater degree of business risk. Given that, I hope to see management take steps to intelligently draw on stakeholder views, while avoiding pitfalls of an overly self-reliant approach.
Materiality
Advantest engages in CSR initiatives forged on the basis of the seven core subjects of social responsibility defined in the ISO 26000 guidelines. Here, I give the company high marks for adopting such global standards from the outset, and accordingly taking steps to ratchet CSR practices up to a higher level.
However, I hope to see the company avoid taking an all-encompassing blanket approach to CSR, and instead opt for an active approach whereby management mindfully prioritizes CSR issues while properly considering the timing and specifics of such initiatives. Accordingly, in determining material issues, meaning those that have been accorded high priority, Advantest needs to closely monitor worldwide social concerns while constantly keeping tabs on expectations of its stakeholders.
At this point, a pressing issue for the company will be that of approaching CSR through a process of preparing a CSR vision specifying levels of issue materiality, setting up timelines and strategies toward addressing such issues, and ultimately preparing a CSR report that conveys progress achieved toward meeting CSR objectives. I am convinced that such an approach will act as a pillar in enabling Advantest to rise to challenges on its path to developing further as a Truly Global Company.
