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Our measures to support reconstruction after the disastrous earthquake and tsunami
Uplifting the nation’s spirits

SMFG has the following priorities in its corporate social responsibility program: Reconstruction after the earthquake and tsunami, environmental measures, addressing the shrinking and aging population, and global challenges.

Kunibe: Japan is facing a difficult period with limited prospects for economic growth due to a shrinking, aging population and a mature economy. Against this backdrop, the country was hit by the unprecedented catastrophe of the Great East Japan Earthquake. We must face up to the new challenges arising from this disaster.
I believe the time has come for us to reconsider what we can do in our capacity as a financial institution to address a variety of issues, including the four priorities.
Today I hope we can discuss not only the road to reconstruction after the disaster, but also ways to uplift the nation’s spirits.

Ando: Japan has achieved two miracles - the Meiji Restoration of 1868, and the economic recovery following the end of World War II in 1945. Both events are also regarded globally as being miraculous.
In 1945, foreign diplomats and businessmen visiting Japan were fully confident that the country would recover as they surveyed the ruins and the scorched earth around them, because, in the words of one of them, “People really work hard and help each other, and children take heed of what their parents say and study hard. And because there is a sparkle in their eyes.”
Thereafter, the Japanese worked furiously until the country became an economic juggernaut. However, in the early 1970s, people became complacent about their affluence, and stopped working hard and making efforts. Children assumed that if they went to a top-class university they would walk into a top-class company and have nothing to worry about thereafter. So they started going to cram schools even before kindergarten. I give lectures on the theme “students born in and after 1980 are hopeless cases” (laughs). That was because of the prevailing attitude at the time that Japan’s national development would go on for ever and the economy would remain stable. As a result, parents spoilt their children, and we saw more children who could not do anything. Many such children are in their 30s now.
And in this situation, the asset bubble burst [in the early 1990s], and the collapse of Lehman [hit world markets] in 2008, and now we have the earthquake and tsunami disaster. It seems that everything that happens these days merely makes us more anxious. I think everyone needs to hit the ‘reset’ button in some sense. If we don’t, more difficulties lie ahead.

Miyata: Indeed, prior to 1970, living standards or wage levels were very low, but I think it was a very happy time. People believed that if they really worked hard, their daily lives would improve and their companies would do better and the whole country would benefit.
Returning to Mr. Ando’s words, and his comments about clinging to the status quo, more people now think, “Oh, well, my life is fairly comfortable and that’s enough for me.” This sense of stagnation, or resignation, that people feel in their lives has spread throughout Japan. But when the disaster struck, people again came together and worked together in the recovery effort. I thought, “Not everything that happened has been bad.” But I fear the consequences if we don’t galvanize, coordinate and maximize efforts more effectively.

Kunibe: As for SMBC, I wondered if employees at all the branches and other offices in the affected areas would be able to get to work and carry out their duties at such a difficult time for their own families; or if they would be able to open their offices for business on weekends and other holidays. Despite the lack of water and gas, they really gave their all to provide banking services.
It was really uplifting to see such dedication and sense of responsibility as an employee of a financial institution entrusted with essential social infrastructure. I talk about “the strength of our front-line staff,” but I was able to fully appreciate just how extraordinarily strong SMFG and SMBC are thanks to this display of front-line commitment.
Moving forward on the reconstruction of the Tohoku region, I believe we can also contribute to the rebuilding of infrastructure through project finance and other fundamental businesses of financial institutions in which we excel.
We are now actively engaged in promoting business in the Tohoku region, including business matching with parties outside the region. In addition, we have a range of support activities in partnership with the Miyagi prefectural government and The 77 Bank, Ltd., which is based in Miyagi.

Miyata: In the same way, other SMFG Group companies have been sending out volunteers, and providing donations not only as a company, but also through individual employees. SMBC was at the heart of all these activities, and this was a good opportunity for us to appreciate anew how our business contributes to the public good.
The SMFG Group has 62,000 employees, “stepping up to the plate and working hard to give something back to society.” I think it is important to develop ways of making this a shared aspiration of all the employees of the Group.

Initiatives as a global player and part of the Asian family of nations

For the nation to recover its spirits it must think and act in terms of global relationships, and those with Asia in particular.

Ando: In the 1950s and 1960s, Japanese society allowed a degree of leeway to those who wanted to realize their potential [without good academic qualifications]. I did not go to university, nor receive any professional training. Nonetheless, I wanted to become an architect and set up shop in Osaka. I found an entrepreneur willing to take a chance on someone like me, and here I am today. But this leeway has now grown much narrower. I think we must review where we stand now. I think we must view Japan and Asia as forming a single economic bloc in the world.

Kunibe: For SMBC to continue growing in the longer term, I think we do indeed have to focus on the global market, in particular the Asian market. Geographically and culturally, Asia is close. Our expansion of commercial banking operations to date is part of a growth strategy that also covers Asia. We think of Japan and Asia as being one strategic region.
SMBC intends to actively broaden its scope of operations in Asia, Europe and the Americas. In that regard, we need to consider our global communication capabilities. That is to say, mastering languages such as English and Chinese, and acquiring an international perspective, so we can express and advocate our opinions more clearly. I think these things will be important. I do not think we will be able to achieve our vision of becoming a global corporation unless we can work effectively in foreign languages as we expand operations. For this reason, we are strengthening our foreign language programs and increasing the number of employees capable of working around the world, as a matter of urgency.

Miyata: In Asia today, there are a variety of infrastructure projects. Of course, supporting such projects is SMFG’s fundamental business, but we also hope to contribute to the sustainable development of society and the world including Asia. I think we will be discussing this later, but we are committed to addressing issues such as environmental protection and infrastructure-building by bringing together the combined strength of the whole group including SMBC and Japan Research Institute.

Ando: Our world changed overnight following the earthquake and tsunami. Take the matters of food, energy and resources. In energy-saving, I think Japan is now the world leader. Although Japan has technologies that can contribute to global affluence, I think it has not been able to fully communicate their benefits to the world.
Japanese companies tend to be quite reserved and unobtrusive. I believe they must become more willing to blow their own trumpets. For example, our students and salary men cannot freely express themselves. A place where anybody can speak their mind freely and clearly - that is the kind of country we must become. The reason why Japan is so very poor at dealing with foreign countries is that the Japanese people do not express their own opinions clearly in words, and so the other side doesn’t understand. We must listen carefully to each other and express ourselves clearly. This is true for both individuals and companies.
Japan enjoys a high degree of trust, not only in Asia but also in the world. It has an image of safety and stability. There is trust between people and between enterprises. We must revitalize the country while this trust remains intact. People from various walks of life - industry, business - must come together. While helping each other, they must work for the national interest.

Foster the next generation and deal with a shrinking, aging population. The bonds between people and their families are crucial

A shrinking, aging population: A problem not only for Japan but the whole world

Miyata: As I said, before the earthquake and tsunami, a sense of stagnation was spreading throughout Japanese society. Young people were wedded to the status quo, and I thought we were struggling with weighty and intractable issues. But now more people think, “Let’s pull together.” I think the Japanese people always come together in times of crisis.

Ando: In Tohoku, the sense of family that the rest of Japan has lost still exists. I mean in the fishery industry and in agriculture, which are supported by family bonds. We must plan for the next generation while the bonds between family members, from children to elders, remain in place. The children who will be the next generation must be raised to have hope in their hearts. I have set up The Momo-Kaki Orphans Fund, which helps orphans by supporting their schooling for a period of 10 years. I was hoping to persuade 10,000 people to pay ¥10,000 each year for 10 years, and about 150 people have been signing up every day. However, most of them are people over 60. People of that generation still think first of family and country, and then about themselves. That’s what people used to be like. We have to consider how we can induce people in their thirties today to have this kind of mentality.

Kunibe: I believe “human ties” are important not only in the reconstruction of the areas affected by the disaster, but also in the issue of our shrinking, aging population.

Ando: The thing that Japan today is most acclaimed for is longevity. The average lifespan here is 83 years. Women live to 86. Whenever I go abroad I get asked how Japanese women stay so young and lovely, and full of vitality, and why Japanese men somehow have lost their vigor. What people around the world long for is indeed to live as long and look as fine as Japanese women. Therefore, we need to encourage the participation of more women in society; we need to get more women into the workplace.

Miyata: When I think about what the SMFG group can do, through its core financial operations, to help a society that is living longer with a falling birthrate, I think we can help people plan for the future, help them put a certain amount aside for later. If this kind of service works well in Japan, I think we might be able to help China and Thailand too, where the same problem - a shrinking, aging population - is brewing.

Financial services: A strong helping hand for environmental businesses leads to sustainable development based on Japanese technologies

What are the key issues with regard to environment protection, and living in harmony with nature?

Ando: Environmental issues are also important. This is a global issue. People living around the world should link hands and find new ways of safeguarding the environment. We need to secure stable supplies of energy while protecting the environment. With resources, energy and food supplies dwindling around the world, Japan could fill quite a lot of the gaps through its world-class energy-saving technologies, from air-conditioning to refrigeration. I think people are going to be looking to Japan for such technologies.

Kunibe: I believe that energy is the most important thing governing a country’s competitiveness and industrial strength. Certainly, the timeframe is an issue. We must not engage in short-termism, nor be self-serving, but should devise energy strategies for the future needs of society as a whole.

Ando: I agree. We need industry, government and academia to really talk to each other and take this seriously. If they just butt heads, that won’t get us anywhere.

Kunibe: I see the environmental business as a linchpin of our CSR program, which we can promote through our core businesses. For example, SMBC has created a “Growing Industrial Cluster Project Team” to organize projects in the fields of water, resources, the environment and new energy sources, involving entities from different fields, not just working within one particular sector. We regard this process of engagement as forming a single undertaking and act accordingly. We believe this initiative can contribute to the sustainable development of Asia and the rest of the world.

Miyata: SMFG unit Japan Research Institute serves as an adviser to the Tianjin Eco-City project in China, and SMBC and our securities units can provide funding when needed. Through such organic assistance, we provide support through our core operations as a comprehensive financial services group.

Kunibe: Mr. Ando pointed out that Japanese companies hold a lot of good technology. I think that’s true. With the above-mentioned “Growing Industrial Cluster Project Team,” for example, if technologies are being exported to Asia for an infrastructure project, bank employees will be involved from the project planning stage. I think this is one of the roles of a financial institution.

Ando: I think that the role of financial institutions is significant. They do indeed have the power to get things moving, and it is a very great power.
We need somebody to instill in the people the idea that as long as they have hope, they can go forward; and to lead them. I believe individuals must realize that if they have hope in their hearts, they will see that progress is possible. We must ensure that students are educated with a global perspective and a sense of hope as well.
There is trust in the strength of Japanese technology and the humanity of the Japanese people. The question is who will take the leading role in harnessing these assets, in all their aspects?

Miyata: The group has been implementing systems such as allowing employees to take time off for volunteer activities, or take care of a family member while working.
One more thing, how can you contribute by bringing together the power of a comprehensive financial services group and making it work on behalf of the community? How do you harness that power? In that regard, I would like our group to be one in which employees believe that they have their own distinct role in such endeavors and through that find their work rewarding.

Kunibe: I wish the same for SMBC. I want our bank to be a vibrant place where employees work with a light in their eyes. I would be grateful for any guidance in this respect from Mr. Ando and experts from other fields.

Presiding over the discussion was
Mr. Eiichiro Adachi, Research Chief, The Japan Research Institute, Limited