Message from the Senior Executive Officer of CSV Strategy
May 31, 2024
Demonstrating Our Presence as a Global Leader in CSV
through Practical Initiatives and Progressive Disclosure of Non-financial Information
Hiroshi Fujikawa
Senior Executive Officer
Kirin Holdings Company, Limited
Transforming environmental management to grow the Health and Well-Being business
── Could you please share with us the progress of the Kirin Group’s CSV management in 2023?
From the perspective of the environment, I believe that the Kirin Group was able to transform its environmental management, which takes an integrated approach to climate change, biological resources, water resources, containers, and packaging. In general, we made steady progress in GHG (greenhouse gas) emissions reduction, the efficient use of water resources, the improvement of the usage rate of recycled plastics, and more. Additionally, in regard to biological resource initiatives, New Belgium Brewing participated in TNFD’s (Taskforce on Nature-related Financial Disclosures) pilot program and contributed to rule making. The Group also started the development of The Regenerative Tea Scorecard, which supports the practice of regenerative agriculture, in collaboration with the Rainforest Alliance for some tea plantations in Sri Lanka and joined in the creation of other world-leading environmental conservation systems.
Furthermore, the Château Mercian Mariko Vineyard operated by Mercian Corporation was the sole agricultural farm business to participate in the certification demonstration program of the Ministry of the Environment and to be recognized as a Nationally Certified Sustainably Managed Natural Site in 2023. In the same year, it was also selected as the venue for a side event of PRI*1 in Person 2023 in Japan.
Just as can be seen above, in the Environment area, we are achieving roadmaps one by one and continue to make our presence felt as one of the world’s environmentally advanced companies.
In the Health & Well-Being area, led by the immune care field, which includes Lactococcus lactis strain Plasma (LC-Plasma), the Health Science business continues to grow. In addition to starting to supply the LC-Plasma ingredient [postbiotic] a few years ago, we have promoted awareness of immune care through the Genki na Meneki (immune care) Project, a public-private partnership project. As a result, the rate of awareness of immune care reached an all-time high, helping us to achieve our 2023 sales goal for LC-Plasma of 20 billion yen.
In 2023, we also added Australia’s Blackmores, which handles health products, as a new Group company, and by demonstrating synergy with them, we will expand the Kirin Group’s Health Science business, mainly in Asia & Oceania, including China, going forward.
As for the Pharmaceuticals business, Crysvita*2 has continued to grow, and steady progress has been made on KHK4083, an atopic pharmaceutical with high expectations as a next-generation, strategic product. On top of that, since acquiring Orchard Therapeutics, a British company, smooth progress has been made as a Global Specialty Pharmaceutical Company, such as by securing a gene therapy technology platform. Growth in the areas of Health Science and Pharmaceuticals will create value for the Kirin Group's CSV management and enhance our business portfolio. As we continue to evolve the Kirin Group’s strengths of fermentation and biotechnology, we will apply them in the Health Science domain, which we aim to grow as our third pillar, and contribute even more to the healthy and positive lives of people around the world.
In the Community Engagement area, we continued to implement human rights due diligence at grape suppliers in Argentina last year, confirming there were no significant issues. On the other hand, human rights initiatives are still insufficient from a global perspective, and we became aware of human rights compliance as a new issue in marketing measures. In 2023, we withdrew from Myanmar, and finished Kirin Group Human Rights Policy revisions aimed at further strengthening human rights due diligence. Thus, we will aim to be a global leader by revising the Kirin Group Human Rights Policy and beginning initiatives based on the revised policy in order to respond to environmental changes like the above.
Raising corporate value through practical initiatives and information disclosures
── What is your outlook on the realization of becoming a global leader in CSV, like is stated in the Long-Term Management Vision, Kirin Group Vision 2027 (KV2027)?
I want the Kirin Group to become a global leader in CSV by reducing environmental risks and protecting value while generating a cashflow through business activities in the Food & Beverages, Pharmaceuticals, and Health Science domains, using it to resolve new social issues, and creating corporate value.
Nevertheless, through engagement with our stakeholders, it has been pointed out that the Group’s environmental initiatives and the growth of the Health Science business are still lacking. Therefore, moving forward we believe that this is the time to focus on more practical initiatives in the three business domains, so we are beginning various new ones.
For example, as the first step to help consumers call to mind an image of Health and Well-Being for the Kirin Group, we released a corporate commercial advertising immune care that uses LC-Plasma last year. Consequently, the Kirin Group’s image of Health and Well-Being grew, contributing to an increase in sales of LC-Plasma. Furthermore, in May 2024, we launched the first installment of our KIRIN HYOKETSU mottainai series, which is made using fruits that are often disposed of due to not meeting standards, and the series is being well received by consumers and distributors.
While we continue to value the brand image the Kirin Group acquired from trust, quality, integrity, loyalty, and security, we will provide products and services that are directly linked to our CSV initiatives and materialize our CSV management into something that is easy to understand in order to make stakeholders aware that we are a corporation that is contributing to society in a more accessible way. We will actively disclose information on these activities in Integrated Reports, Environmental Reports, and more.
In 2023, the ISSB (International Sustainability Standards Board) published the IFRS Sustainability Disclosure Standards, global standards for sustainability disclosure. We must quickly disclose information, including that on Scope 3 of Group consolidated subsidiaries, in Japanese and English simultaneously. Thus, we are promoting system configuration, operational design reform, and more to prepare for speedy disclosure.
By making efforts in progressive disclosure ahead of other companies, we believe that we will become the de facto standard, giving ourselves a competitive edge. At the same time, we also see our contribution to making global rules as an essential role for us to play in aim of becoming a global leader in CSV.
The Kirin Group wants to put value in not simply disclosing information but in receiving commendations and advice from stakeholders on our Group’s activities based on our information disclosure and in deepening our dialogue with them. Through this dialogue, we will learn about long-term management risks and management issues that should be resolved and improve our corporate management, leading to the sustainable growth of our corporate value.
Strengthening of human capital is the key to realizing CSV management
── What are you focusing on in order to achieve becoming a leader in CSV?
I believe there are multiple ways to tackle corporate and social issues. One method is through human rights, compliance, and governance—our universal responsibilities as a corporation. These must be adhered to if we are to protect our corporate value. The second is through taking on activities that have significant social value, even if they have little economic value. The issue with this second type of activity is that the quantity of efforts put into it is easily swayed by our corporation’s performance due to it lacking economic value. The third way is through CSV management, a business strategy of the Kirin Group, which generates both social and economic value. As a corporation, we want to value the balance of fulfilling our universal responsibilities, generating social impact, and creating economic value.
With the three above perspectives in mind, we will evolve our business portfolio into one that ranges from the Food & Beverages domain to the Pharmaceuticals and Health Science domains. Additionally, recognizing that strengthening human resources is of the utmost importance to achieve CSV management globally in each of the businesses, we are particularly focused on promoting expertise and fostering diversity. In terms of professional skills required to achieve our strategy, the number of mid-career hires made by the Kirin Group in Japan made up approximately half of total hires in 2023. Starting with the hiring of new graduates in 2024, we have started recruiting by job function and implemented function-based talent management for Japanese employees. In terms of diversity, we also have introduced programs that contribute to the diverse workstyles and the development of our employees, such as the overseas work experience programs implemented from 2019, the side-job program that we started in 2020, and a side-job program that involves exchanges with external companies. We are also focusing on fostering an organizational culture that embraces diversity by, for example, starting to hire foreign nationals as new graduates in Japan in 2024. Going forward, we will continue to develop human resources that can implement CSV management with highly specialized and diverse perspectives and to evolve the organizational culture.
