Material Issues
The Company has identified six material issues that link its corporate philosophy and vision to its growth strategy. The Company has positioned these as priority issues in balancing corporate value enhancement with the realization of a sustainable society. By identifying and addressing these material issues, the Company will accelerate its management strategy and contribute to the realization of a sustainable society.
Sustainability strategy
Six material issues
Our six material issues are as follows:
- (1)Solving social issues through digital transformation (DX) and AI transformation (AX)
- (2)Connecting people and information to create new excitement
- (3)Delivering Next-generation Social Infrastructure to support a society that coexists with AI
- (4)Contributing to the global environment with the power of technology
- (5)Providing sustainable communication networks
- (6)Developing a resilient management foundation
Identifying
material issues
The Company reviews its material issues and value creation annually in light of changes in the business environment, rising expectations from external stakeholders, and societal demands for ensuring the effectiveness of ESG promotion. In reviewing its material issues and value creation, the Company applies a double materiality approach, taking into account not only the impacts of social and environmental issues on the Company, but also the impacts of the Company’s business activities on society, the environment, and each stakeholder group.
Based on short-, medium-, and long-term risks and opportunities identified through company-wide risk assessments, the Company evaluates their importance to the Company from the perspectives of impact and likelihood. At the same time, it assesses social and environmental materiality by considering both the positive and negative impacts on stakeholders, including customers, suppliers, municipalities, NGOs and NPOs, employees, and investors, in light of factors such as scale, irremediability, scope, and likelihood. In conducting these assessments, the Company considers social and environmental impacts across the entire value chain, extending beyond its own business activities to include upstream activities such as procurement and logistics, as well as downstream impacts including the use and disposal of products and services.
Based on the results of these assessments, together with the views of experts and other third parties, the Company identifies its material issues through deliberations by the ESG Promotion Committee and approval by the Board of Directors. For each material issue, the Company has defined multiple value creation items, representing the value to be created through its business activities, and uses initiatives in these areas to create business opportunities.
[Notes]
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Created with reference to the ESRS Materiality Assessment Implementation Guidance framework
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Obtained third-party assurance for materiality identification process (Japan Quality Assurance Organization)
Internal Importance
Based on the significance of short-, medium-, and long-term risks and opportunities, in terms of likelihood of occurrence and impact, identified through the Company's comprehensive risk assessment, after assessing the importance of various issues for the Company and the Group, taking into account dialogue with experts and investors, and holding discussions within the ESG Promotion Committee.
External Importance
Based on an assessment of stakeholder impacts, including those on investors, local governments, NGOs and NPOs, customers, employees, and suppliers, in terms of scale, severity, and likelihood of occurrence, with due consideration given to both the impacts of society and the environment on the Company and the Group and the impacts of the Company and the Group on society and the environment.
Materiality map
Integrate sustainability-related risks into enterprise-wide risk management
We integrate sustainability risks related to identified material issues (e.g., climate change, human resource development and retention, etc.) into company-wide risk management.
Every half year, the Risk Management Committee, whose members include the president, vice presidents, CFO, etc., and which is attended by corporate auditors and the heads of related departments, is held to evaluate and monitor risks and to review risks. Please refer to Risk Management for specific risk descriptions and management systems.
Monetary quantification of social impact
We recognize the importance of evaluating and analyzing the impact of our business activities and social contribution initiatives on society, and we quantify these impacts in monetary terms.
The impact of materiality-related business activities on society
We conduct monetary quantification of the impact on society (social impact) of some of the materiality-related projects.
| Monetized items | Impact on external stakeholders | Amount of money | Related material issues |
|---|---|---|---|
| Smartphone classes |
|
¥4,522 million*1 | “Connecting People and Information to Create New Excitement” (2) Provide an environment in which everyone can access information |
| Mobile phone recycling |
|
¥824 million*2 | “Contributing to the Global Environment with the Power of Technology” (2) Promote a recycling-based society |
[Notes]
- *1
Societal costs associated with learning how to use smartphones and economic benefits from the Increase of Smartphone users
- *2
Social cost associated with industrial waste management and value of useful metals returned to society through mobile phone recycling
Examples of outcomes achieved through AI initiatives
Examples of AI-related initiatives and outcomes undertaken by the Company and its Group companies are as follows.
| Category | Results |
|---|---|
| Environment and energy | AI-based power-saving controls are helping advance net zero initiatives, with annual electricity consumption expected to be reduced by approximately 5 million kWh. |
| Operational efficiency | Generative AI has been used in employee training for contact centers, reducing the time required for instructors to respond to questions by approximately 160 hours and cutting about 60 hours from test creation through feedback. |
| Network infrastructure | AI has been used to enhance the radio access network, improving 5G communication speeds by approximately 30%. |
| Solutions |
|
Trial with SK Telecom and CSES
We signed a Memorandum of Understanding (MOU) with SK Telecom Co., Ltd., a leading mobile communications operator in South Korea, and CSES (Center for Social value Enhancement Studies)
, a non-profit foundation established by South Korea's SK Group for the purpose of social value research. Using DBL (Double Bottom Line)
, SK Group's social value measurement framework, we collaboratively quantified the monetary impact of our group's activities on society.
For approximately 250 indicators related to our group's business and sustainability efforts, we defined the inputs, outputs, and outcomes for each, and developed a monetary conversion logic to assess whether the social impact could be quantified in financial terms. As a result, in the FY2024 performance, we conducted trials to quantify both the positive and negative aspects for 15 items across the economic, environmental, and social categories in monetary terms.
For more details on the monetary quantification of social impact, please refer here.