July 16, 2024
Special Roundtable: Building a greener future for Japan
Over the last few decades, sustainability has moved from being a buzzword to occupying prime place in the strategic plans of governments and corporations. Along with the United Nations’ sustainable development goals (SDGs), entrepreneurial pursuits and social movements driven wholly by sustainability have heightened the presence of this concept. It has taken diverse forms, becoming highly personal and meaning different things to different people.
Two people — one an entrepreneur, the other a fund manager — whose work and life are heavily influenced by sustainability sat with host Ross Rowbury for the “Special Evening Roundtable: Building a Greener Future for Japan” held recently in Tokyo. Before a buffet dinner at the event, held in collaboration with Nomura Holdings, a few hard questions were on the table.
Noriko Shindo, founder of Hue — a personalized restaurant search app — and Shohei Maekawa, chief operating officer of SDG Impact Japan (SIJ), which invests in and assists early-stage companies in increasing impact and sustainability-driven growth, did not shy away. For close to an hour, they engaged in an evenly paced but spirited discussion about the very meaning of sustainability, the extent to which social businesses can get funding or balance profit and purpose, measuring a company’s sustainability performance and the role of government regulations in creating a more sustainable world.
More in the thinking
To get the ball rolling and contextualize the discussion, Rowbury asked Shindo and Maekawa to explain what “sustainability” meant to them as individuals. Both offered that it is largely about how you think.
Shindo said: “Sustainability is the world running not at the expense of anybody’s well-being. For me, ‘anybody’ also includes animals and all things living. But I think the most important thing is that you think. It’s not so much how much you do, what you refrain from or how vegan you are. The most important thing is that you think about the effects of what you’re going to do — if it’s your business, if it’s what you’re going to eat, if it’s what you’re going to buy. Also in terms of well-being. I have kids, so it’s not always easy to be plastic-free [for example]. And so the question I always try to stick to is not so much how perfect we are in terms of the impact or less impact, but how happy we are as well.”
Maekawa said: “Technically speaking, sustainability is about thinking about the balance among economy, development and society. It’s easier to understand when we think about the Japanese translation of sustainability, which is jizoku kanōsei (possibility of continuing). So it’s about continuity of the things that we are doing. So to make sure that things will continue, to sustain things, I think we need to think about making sure that we’re not crossing the lines [or disrupting the balance] for each of those — economy, development and society. If I were to generalize sustainability, I would say that would be the thing that we need to keep in mind.”
Sustainable needs profits
Shindo first became attuned to the idea that there were problems in the world, and there were people working to solve them, while donating to charities through her primary school in the United Kingdom. Later on, after completing university in Japan, going overseas for an MBA and becoming vegan in the process, she returned to Japan to find that not many people knew about veganism or why others were choosing to eat that way. That prompted her to start Ekolokal, a community that offered help in finding sustainability options for products or services. Eventually, however, it became difficult to define the product Ekolokal was offering, and therefore, difficult to turn a profit. This, she says, is crucial in operating sustainable ventures in a capitalist framework. The critical question still has to center on how much money can be made.
“As of last July, I’ve founded a different company, which is called Hue. It’s a bit of a wider view of sustainability in that it’s no longer just the environment. We’re looking at the food and beverage industry because we feel that [there is] too much ‘digital reality,’ especially in Japan, where there’s also these large sites that [can] skew reviews and therefore stir people to go to certain places. That’s driving the small businesses and ones that are doing great things — tasty stuff, sourcing locally — out of business. Hue is aiming to correct that by encouraging everybody to be true to their preferences instead of what goes viral.”
ESG investment strategies
Before joining SDG Impact Japan, Maekawa worked for more than 15 years in management consulting, overseas investment and global trading. He studied economics in university and, like Shindo, completed an MBA in France. Long interested in how companies can move their impact beyond profitable products, he was drawn to concepts like corporate social responsibility (CSR) and socially responsible investing (SRI). After completing his MBA, he started his more direct engagement with those concepts by working for a company doing ESG (environmental, social and governance) research, then moved into his current role in 2022. SIJ operates on three pillars: investing in innovative companies with the potential for impact; establishing its own carbon-neutral businesses; and operating funds for listed companies.
“We have three funds already launched, and we are now discussing establishing another fund. One fund we’re doing is an ESG engagement fund. The fund is investing into 30 Japanese companies from an ESG perspective — not great companies, but sort of B-rated companies. So the fund invests into B-rated companies, and we engage with them and try to improve their sustainability-related performance so that they can improve their impact to the world. And also they can link sustainability-related activities to their business strategies. The others are venture capital funds that we’re focusing on: agrifood tech and sustainability. Interestingly, we have one fund which is focusing on New Zealand. (New Zealand is an interesting country. By nature, they care about nature. So themes like sustainability or circular economy are really rooted in the country.) And we’re now also discussing a gender impact fund that focuses on gender equality and the well-being of gender-minority people — investing into new technologies or business models that enhance the well-being of those groups.”
Negative impacts, ‘zombies’
But how exactly can the potential impact of an emerging company be measured, one audience member wanted to know. Maekawa offered that this is a balance between a company reducing its negative impact while also addressing a noticeable gap, which means it has the potential to be profitable. Of note is that because sustainability has become trendier and awareness is increasing, it is becoming somewhat easier for entrepreneurs to access funding. However, he noted that there still remain SDG-focused solutions, such as those related to poverty reduction, that do not offer a clear opportunity for profitability.
With regard to whether government policy is more important than individual action toward a more sustainable society, Shindo said government targets can be a useful trigger for action. The reason for an increase in the number of people taking paternity leave or the number of female executives doesn’t really matter. What matters is that it is happening.
Before the audience broke into pockets to continue the conversation on sustainability from several nuanced angles, they considered Japanese companies that have been in existence for over a 100 years. Some of these are referred to as “zombies,” Maekawa said, because of their lack of growth. However, he said, focusing on reducing their negative impact and thinking about the society and environment rather than just customers or investors, has, and can continue to boost the longevity of profitable companies. Shindo added that loyalty and a strong work ethic among the Japanese will also continue to contribute to business sustainability
