March 25, 2020

Creating a Sustainable Society by Putting the OMRON Principles into Practice

OMRON ESG Meeting Report

Author : OMRON / Publisher: OMRON

The Sustainability of Society - An Urgent Issue

The attention being paid to sustainability is increasing rapidly. According to a report issued in 2018 by the environmental preservation NGO World Wide Fund for Nature, 60% of the Earth's representative animal and plant populations have become extinct since the 1970s, and humans have continued to use resources equivalent to 1.7 times the Earth's "biological productivity."

If we do not change the state of our society, global warming will further advance and biodiversity will continue to be lost, with the resulting risks to be borne by today's children and future generations. Responding to urgent requests from society, many stakeholders such as companies and local governments are beginning to not just change their approach to the environment, but in fact change the balance and state of the economy and society overall.

Corporate sustainability initiatives are often depicted in terms of CSR (Corporate Social Responsibility) and CSV (Creating Shared Value), but OMRON has been continually working on sustainability based on the OMRON Principles since before those phrases were even created. The Sustainable Brands Japan editorial office has also taken an interest in the OMRON initiatives.

Toward a Sustainable Society by Putting the OMRON Principles into Practice

In 1959, OMRON founder Kazuma Tateishi formulated OMRON's Mission, to improve lives and contribute to a better society. The Mission encapsulates two beliefs held strongly by the founder, which also resonate with modern-day approaches to sustainability.

He described the public nature of business as "a company shouldn't be just about pursuing profits...it has an obligation to serve society", and expressed his determination that OMRON would constantly anticipate the future and show society the way there, saying "OMRON will be a pioneer in creating inspired solutions for the future."

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The rough draft of the Mission, handwritten sketch by founder Kazuma Tateishi himself on January 11, 1959

More than 60 years since our Mission was formulated, OMRON Principles continue to carry those beliefs forward today. The current Principles are comprised of two parts: Our Mission, formulated by our founder, and Our Values, prized by each and every employee. There are three Values: "Innovation Driven by Social Needs," "Challenging Ourselves," and "Respect for All."

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OMRON has worked to build its structures and processes in order to foster understanding and encourage employees to 'live' the values. Furthermore, in its VG2.0 Medium-Term Management Plan launched in fiscal 2017, OMRON also set sustainability targets aligned with business strategies. Specific earnings targets and business strategies have been linked with key sustainability issues, meaning that - based on the OMRON Principles - management and sustainability have been completely integrated.

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OMRON has been holding ESG Meetings since fiscal 2017 in order to broadly share this management attitude and policies with stakeholders. At the February 2020 Meeting, the company was represented by President and CEO Yoshihito Yamada, Senior General Manager, Global Human Resources and Administration HQ Masahiko Tomita, and Senior General Manager, Sustainability Office Kashuku Hirao.

Environment, Society, and Governance Initiatives which Inspire Resonance

This, the third ESG Meeting, marked the first time that President Yamada had attended, and he opened the meeting by giving a broad overview of management driven by the OMRON Principles, which forms the basis for ESG initiatives, as well as introducing examples of solving social issues through OMRON's businesses.

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President and CEO Yoshihito Yamada

President Yamada began by stating OMRON's Management philosophy, that "we are committed to sustainably enhancing our long-term corporate value by putting the OMRON Principles into practice," which is based on the fundamental idea that "a business should create value for society." OMRON has rolled out its Medium- to Long-Term Management Plan, OMRON Group's Management Policy, and stakeholder engagement initiatives based on the above philosophy. The Medium-Term Management Plan laid out the key issues which OMRON should address for each of our focus business domains. For example, in the healthcare field, it is promoting its "Zero Events" initiative, which aims to eliminate attacks related to neurological or cardiovascular disease such as strokes, cerebral infarctions, or myocardial infarctions. Its generation of new innovations to promote addressing issues has also been recognized, such as the wearable blood pressure monitor it developed being chosen for Time magazine's "The 100 Best Inventions of 2019."

What steps should OMRON take to create many such innovations? President Yamada emphasized how much importance it places here, saying "this is where our ultimate challenge lies." "How do we spread the OMRON Principles throughout the front line and inspire further resonance with them? Simply sharing and empathizing with these principles are not enough. We are working to spread the OMRON Principles throughout the front line, through all our sites, aiming to strike a chord with everyone involved." So, how specifically is OMRON working to put the OMRON Principles into practice in the three aspects of Environment, Society, and Governance?

With regard to Governance, in terms of spreading the Principles and accelerating decision-making, President Yamada described how "making small evolutions while still maintaining effectiveness is a feature of OMRON." OMRON has an Audit & Supervisory Board, but in order to further enhance oversight functions, OMRON has created a distinctive hybrid governance framework that incorporates the advantages of a nomination committee, creating various committees as necessary since the first decade of the 2000s. In addition, OMRON pays careful attention to separating oversight and business execution functions, so that President Yamada - who is in charge of the latter work - is not a member of any committee, increasing the objectivity of the Board of Directors.

See here for details of OMRON's governance framework

On the theme of the "inspiring resonance" which President Yamada spoke of, initiatives to develop human resources that create innovation provide clear examples of OMRON's uniqueness and corporate stance. Masahiko Tomita, Senior General Manager, Global Human Resources and Administration HQ introduced two measures: The OMRON Global Awards (TOGA) and "VOICE."

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(Left) Managing Executive Officer and Senior General Manager,
Global Human Resources and Administration HQ Masahiko Tomita
(Right) Senior General Manager, Sustainability Office Kashuku Hirao

Senior General Manager Tomita explained that "TOGA is not simply a recognition program but is an activity to support all global employees in embracing and putting the OMRON Principles into practice." This is how TOGA works. Working in teams, employees commit to and implement initiatives to put the Principles into practice, and then share those themes on a company-wide basis. The projects which best embody specific Principles are then recognized through the awards. TOGA is a platform for all employees to acquire extensive learnings and insights. Closely connected with TOGA is the "VOICE" engagement survey. President Yamada himself read all of the approximately 8,500 comments freely made by their employees from around the world. Senior General Manager Tomita described that the "VOICE is a marketing tool for making OMRON more attractive." "As well as solving social issues through it, TOGA also promotes personal growth, and using VOICE helps to create an environment in which diverse human resources can perform to their fullest and the company and employees can grow together."

See here for details of OMRON's human resources initiatives

Specific environmental initiatives were also discussed at the Meeting. Kashuku Hirao, Senior General Manager in the Sustainability Office, outlined that "in the environmental field, we interpret the 'better society' part of our Mission to mean a 'sustainable society.'"

She explained how OMRON's Environmental Vision is comprised of two pillars.

- Providing eco-friendly products and services
- Fully leveraging management resources to achieve a global, sustainable society

OMRON is accelerating initiatives from both of these perspectives. For example, after endorsing the Task Force on Climate-related Financial Disclosures (TCFD, an international initiative to support companies disclosing information about climate-linked risks and opportunities and to promote the transition to a low-carbon society) in 2019, it began scenario analysis* in the Social Solutions domain which contributes to maximizing customer energy efficiency. Its consideration in the smart energy area is scheduled to conclude at the end of March 2020. Senior General Manager Kashuku Hirao reiterated OMRON's determination to "continue to focus on solving climate change and other social issues through our business while simultaneously reducing the environmental burden of our businesses"

See here for details of OMRON's climate change initiatives

*Scenario analysis is a method of forecasting changes in the business environment etc. due to the direct effects of global warming, climate change, etc. as well as long-term policy trends related to climate change, and considering what impacts those changes can conceivably have on the company's business and management.

The Future Viewed Through the Spirit of Our Mission and OMRON Principles

Building OMRON as an organization, incorporating human resources, and environmental compliance. The foundation of all of these is its determination to solve social issues through its businesses, and its belief that companies have a role to play in creating a sustainable society. The starting point for all of this is OMRON's Mission created by its founder, "to improve lives and contribute to a better society." Laid down at the same time as its Vision, its Values - prized by each and every employee - are Innovation Driven by Social Needs, Challenging Ourselves, and Respect for All. Carrying these ideals with them, OMRON employees aim for a future for all, including themselves. OMRON embraces the challenges of both creating a sustainable society and sustainably enhancing its long-term corporate value, continuing to make steady progress toward its vision of future society.

See here for details of the ESG Meeting