Special talk
to Commemorate 150th Anniversary
Growing Forests,
Utilizing Forest resources
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On February 12, 2023, Oji Holdings marked the 150th anniversary of its foundation. What was the powerful intent behind the venerable Eiichi Shibusawa’s proposal for the establishment of Shoshi Kaisha, a paper manufacturing company that was the origin of the Oji Group? What are the Oji Group’s purpose and human capital management for leaping into its next 150 years to meet the needs of society? Joined by facilitator Naomi Trauden , a model and television personality, a special talk took place between Ken Shibusawa, Chief Executive Officer of Shibusawa and Company, Inc. , and Hiroyuki Isono, President and Group CEO of Oji Holdings Corporation, to commemorate the 150th anniversary.
150 years of carrying on the strong intention to “see it through”
Trauden:To start with, could you tell us about the connection between Eiichi Shibusawa, who is described as the father of capitalism in Japan, and Oji Holdings?
Isono:The Oji Group’s roots lie in Shoshi Kaisha, a paper manufacturing company that was established at the recommendation of Eiichi Shibusawa in February 1873. He felt that, for the advancement of Japanese culture, the country first needed a thriving printing industry that would send many books, newspapers, and other publications out into the world, and for that to happen, paper was an essential commodity. Japan did have its traditional washi paper, but Shibusawa believed that domestic production of Western paper was also needed. So that is how our company came to be established. The production of Western paper was initially not without its struggles. The company built and started operating a paper mill, but production did not go as well as was expected, and the company’s losses apparently snowballed. However, ours was the first company to bring in machinery and invite engineers from overseas to set up manufacturing in Japan, and Shibusawa believed that, if it were to fail at this point, it would deal a tremendous blow to the future development of the domestic industry. Determined to see it through no matter what, he apparently helped lead the company to success. Having reached our 150th anniversary, we want to carry on that strong intention to “see it through.”
Trauden:Mr. Shibusawa, my next question is to you, as the great-great-grandchild of Eiichi Shibusawa. I understand that your ancestor also established some 500 companies of various kinds, many of which have evolved into large corporations in the present day. Why do you think he put so much passion into that pursuit?
Shibusawa：Eiichi Shibusawa was very patriotic, so I guess that it came from a sense of frustration that, after centuries of isolation, Japan had been left behind by the advancement of culture and industry in the West. He wanted to make up for that delay and help Japan to prosper and grow in strength. I imagine that his strong motivation to make that happen from the private sector is what drove him to accomplish so much in his lifetime.
Isono:In his later years, Shibusawa wrote, in his reminiscences about the paper industry, that the title of the genesis of Japan’s mechanical manufacturing industry should go to none other than Oji Paper Company. Our Group has carried on those 150 years of history, but when we look to the future, it will probably be difficult to survive with paper alone. Developing businesses by creating new products and materials based on the same wood resources, while also responding to environmental issues, will be the best route to connecting the past 150 years to the next 150 years.
Creating social value with corporate conduct based on our Purpose
Trauden:Oji Holdings formally established its Purpose in 2022. What significance do you think this Purpose has for the company?
Shibusawa:My view of purpose is that, rather than being something that is imposed on us by others, it is something that centers on “our own issues” as individuals. Creating a framework that individuals with varying values and perspectives can enter and exit freely, without the need to force themselves to fit in with the Purpose declared by the company, is more likely to lead to new evolution for the company. It is also crucial to confirm that one’s own individual purpose and the company’s declared Purpose overlap. Failure to make that confirmation would lead the individual to question whether the company really is the place for them and, conversely, for the company to question whether that individual really is the right person for the company.
Isono:Our Management Philosophy contains the words, “Creation of Innovative Value,” “Contribution to the Future and the World,” and “Harmony with Nature and Society.” You could say that the Purpose gives added clarity to those words. The core of our company is the business of making paper based on forest resources. We are growing our company-owned forests in an appropriate way in light of global warming and environmental issues. It is not that cutting down trees is wrong, but that cutting down trees rejuvenates the forest, and that we make good use of the wood from those trees as raw materials. As well as for paper, the wood can be used to make products such as wood-based biomass plastics. Achieving the use of forest resources in such ways will enable us to realize what is stated in the second half of the Purpose, namely “to bring this world a brighter future filled with hope.” Just as Eiichi Shibusawa moved the times 150 years ago, we want to move the times forward with forest resources. That is the intention that we have instilled in our Purpose. I also believe in the importance of working together with other companies around us to accomplish those things that would be difficult for us to achieve with our own powers alone.
Trauden:Could you elaborate a little more on the potential for the use of forest resources, such as the biomass plastics that you just mentioned?
Isono:Until now, we have extracted the fibers from inside the tree to make paper, but we are now researching and developing other uses. For example, in the area of moving away from plastic, we have already commercialized some products that use less plastic, such as reduced-plastic packaging. For paper cups as well, whereas previously, paper laminated with petroleum-derived plastic was used for the inside of the cups, we are making cups with plant-derived polylactic acid laminated paper, which was developed based on the paper laminating methods we have cultivated over the years. We are also pursuing research into the use of the wood component, hemicellulose, in pharmaceuticals, and we are developing new materials such as cellulose nanofibers and biomass plastics. However, at the moment, these new materials are still more expensive than regular plastic products. We need to convey more strongly to consumers the value of these kinds of materials, including their eco-friendliness.
Shibusawa:In terms of corporate conduct based on the Purpose, consumers are highly important stakeholders. Until now, Japan’s consumers in particular have leaned strongly toward price considerations, but among the younger generations who will become the main consumers in the years ahead, there is a growing preference for products that properly consider the environment. This trend is true not only in Japan but in global markets, and I think we will see more and more consumers who value the future and the environment. From an investor’s viewpoint as well, particularly strong interest in environmental and social responses is being shown by investors who want to engage with those companies over the long term, so companies will need to take that kind of awareness on board and create value in a sustainable manner.
Trauden:It seems to me that, beyond financial status, there is a growing focus on the question of what kind of purpose those companies are basing their social value creation on. The trend toward disclosure of non-financial information is accelerating worldwide, isn’t it?
Shibusawa:From the standpoint of wanting to invest in corporate value over the long term, financial value reflects the efforts that have been made until now, so, in some respects, it is just the tip of the iceberg. In most cases, future value creation lies under the surface and cannot be seen, so we call it invisible value. As to why it is invisible, it is because it is difficult to quantify. It truly is non-financial value. I would like to see the Oji Group, which is engaging in environmental themes based on its Purpose, become a model for other companies as a leader in non-financial disclosures.
Isono:Thank you. Speaking of non-financial disclosures, in December 2022, we were named by CDP* in its Forests A List, which is its highest ranking for corporate sustainability. On the other hand, in areas such as women’s active participation, our scores are not rising as much as we would like. As a manufacturer, our male-dominated employment situation has continued for many years, so we want to take more action to increase the percentage of women in our workforce.
Human capital management needed for green innovation
Trauden:I would love to hear both of your opinions about human capital management, the importance of which has been recognized in recent years.
Shibusawa:We started this conversation by talking about 150 years ago, and if we consider the resources Japan possessed in abundance back then, they were water, forests, and people. In other words, it was by enhancing its human capital that the nation of Japan pulled itself up from its status as a developing country to become an advanced nation in a matter of decades. Then, even after the devastation of the country resulting from the Pacific War, it was that human capital that once again rebuilt the nation, enabling it to advance to the position of the world’s second-largest economic superpower. As to how Japan will advance in the years ahead, the answer to that question lies, naturally, in the enhancement of its human capital. In terms of corporate human capital management, there is the view that concentrating efforts on investment in human resources and the promotion of growth and active participation are what will bring about the expansion of corporate value, but that is much easier said than done.
Isono:To realize the kind of green innovation that the Oji Group aspires to, we need to attract and nurture talent who possess new insights and skills, while creating work environments in which our employees can participate actively with vitality, leveraging their own diversity and individuality. It is also essential that the purpose of individual employees and the company’s Purpose overlap and that we share an awareness of green innovation across the entire company. I see this as the challenge in human capital management for the Oji Group. As one initiative based on that thinking, in October 2022, to coincide with the establishment of the Corporate Business Development Division, we invited applications from within the Group for positions in the new division. We will actively promote skilled, ambitious employees to the division in the hope of reinvigorating the whole Group.
Trauden:Finally, if Eiichi Shibusawa were alive today, what do you think he would say?
Shibusawa:I think he would convey a message of ‘You can do still better.’ He would probably ask everyone in the Oji Group, ‘Using your foundations as a manufacturing company, what will you achieve for the sake of the global environment looking ahead?’ That is what I imagine he would say.
Isono:I feel the same. As I mentioned at the beginning, 150 years ago, Eiichi Shibusawa started this business in the belief that this company, Oji, was essential to achieving the advancement of Japanese culture. In my remarks on my appointment as President in April last year, I said that I feel as though, after 150 years of that cultural advancement, if Eiichi Shibusawa were here today, he would talk about his belief that this company, Oji, is essential to achieving the sustainability of the global environment. The times are changing, and I believe that he would be asking us about our resolve amid that change, about how we intend to address global warming and environmental issues and advance our business by using sustainable wood resources.
Trauden:Thank you so much for talking to us today.
(*) Founded in the United Kingdom in 2000, CDP is a non-governmental organization that runs a global information disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts. Its environmental disclosure and evaluation processes are widely recognized as the gold standard of environmental reporting.
URL: https://www.cdp.net/en
Profiles
Ken Shibusawa was born in 1961 in Kanagawa Prefecture and is a graduate of the Department of Chemical Engineering at the University of Texas. In 2001, he founded Shibusawa and Company, Inc., where he serves as CEO. He also founded Commons, Inc. in 2007, changing its name to Common Asset Management, Inc. and becoming its Chairman in 2008.
Hiroyuki Isono was born in 1960 in Tokyo and graduated from Keio University’s Faculty of Economics in 1984. He obtained his MBA from Canada’s McGill University in 1991. Joining Oji Paper (now Oji Holdings) in 1984, he has served as a Group Corporate Officer and chairman of a Group company in Oceania, among other posts, before assuming his current position in April 2022.
Naomi Trauden debuted as an exclusive model for fashion magazine, CanCam, and holds the record as the magazine’s longest-serving exclusive model. In addition to walking the catwalk at the Tokyo Girls Collection and GirlsAward fashion events, she also started appearing on news and information programs while still a university student. Named by Forbes as one of Japan 30 Under 30 in 2021, she is an active commentator on environmental issues and the SDGs.