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1. Points for commendation

The clear designation at the management level of priority issues facing Sumitomo Mitsui Financial Group, Inc. (SMFG) in its capacity as a financial institution - reconstruction after the Great East Japan earthquake and tsunami, the environment, the shrinking and aging population, and the challenges of globalization - as well as the explanation of initiatives undertaken in these four areas as part of group business activities are highly commended.

Acting on a group-wide basis, the Group CSR Committee reviews action plans, monitors progress and discusses measures for the following fiscal year based on prior-year progress reviews, while following a PDCA (Plan, Do, Check, and Act) cycle.

In its CSR reporting, activities of group companies are covered by stakeholder category: Customers, Shareholders and the Market, the Environment and Society, and Employees. One has a clear idea of the framework of individual companies’ business activities through which the Group is addressing the four designated issues facing society.

Notably, the environmental and social risk evaluation built into project financing, and the various environmental businesses (the Environmental Assessment Loan/Private Placement Bond products, and the Environmental Business Forum), can be seen as important environmental initiatives undertaken through the Group’s core businesses as a financial institution. At the same time, they contribute to the solution of issues on a global scale.

I was impressed with not only the expansion of measures for a shrinking and aging population (barrier-free initiatives and improved services for the aged at branches), but also the development of businesses that support the installation of facilities needed to cope with a rapidly rising old-age dependency ratio, and development of systems at the workplace for dealing with this issue.

SMFG’s Food and Agriculture Assessment Loan, launched in April 2011 with the aim of improving the Japanese diet and strengthening the agricultural and fisheries sectors, and the support for measures to commercialize research into iPS cell research, are activities of great significance. It is to be hoped that they can be continued over the long term.

2. Areas for further improvement

For progress to be made in addressing the above four priority issues on a group basis, the people on whose shoulders the task rests - the employees of each group company - must have a shared commitment to the group mission, understanding of CSR as defined at SMFG and sense of business ethics: that is, a shared determination to act. It is not easy to ensure that each employee has a full understanding of these needs. But a joint sense of mission and purpose - a sense of partnership in fact - in providing financial services spanning banking, credit card, leasing and thinktank services, and securities brokerage, will make possible still greater achievements. I believe that it is important to continue measures to foster shared goals and a shared sense of mission, and at the same time periodically review progress in fostering such shared commitments. It would be useful to see reports on measures and progress in this area in the future.

3. Measures for the future

Social (external) risk truly does pose a growing threat to the sustainable development of a company, as social and enterprise risk continue to converge. As a result, relationships between employees and their families and society at large have reached a point where a convergence of risk is unavoidable.

It is essential to face up to and find ways to mitigate increasingly threatening risks to social sustainability such as chain-reaction instability in global finance, the severe impact of climate change on economic activity, the economic drag caused by demographic change (in Japan) and food, resource and energy shortages caused by global population growth. What is really needed is a unified approach to sustainability (the concept of ichien yugo (“fusion of the whole”) developed by Sontoku Ninomiya, an Edo-era agricultural theorist), to prepare us for the future, bringing together enterprises and people, enterprises and other enterprises, and enterprises and society, with fusion of the whole with nature.

In this regard, the roles and responsibilities of a comprehensive financial group offering a large range of financial services are extremely great. Looking ahead, the Group as a globally competitive financial provider that prides itself on the trust of clients, society and other stakeholders, must draw on its full range of financial roles and group strength and continue to address the challenges of contributing to a sustainable society.