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Third Party Evaluation
Tsuneo Matsumoto
Professor, Law School
Hitotsubashi University
1. Publication of ISO 26000 and CSR Reporting
On November 1, 2010, the International Organization for Standardization (ISO) officially published ISO 26000, "Guidance on Social Responsibility." The standard provides guidance on social responsibility for all organizations, including non-profit organizations and public-sector corporations. For commercial enterprises, it provides guidance on corporate social responsibility (CSR).
Starting in 2001, 450 experts from 42 international partner organizations and 99 countries worldwide joined 250 observers in a 10-year effort to develop a global standard representing the current international consensus on CSR.
In its definition of CSR, ISO 26000 requires companies to contribute to the sustainable development of society, take into account the interests and wishes of stakeholders, comply with laws and international rules, and conduct their business and supply chain operations in line with a commitment by top management.
Companies also have an obligation to provide relevant information to and otherwise inform stakeholders, that is, groups and entities that are affected by corporate decisions and business activities, including consumers, business partners, workers, shareholders and local residents. The standard places the highest emphasis on listening to stakeholders' views and building relationships that facilitate mutual dialogue (in a process called stakeholder engagement).
ISO 26000 defines seven core subjects that should be addressed through CSR programs: organizational governance, human rights, labour practices, the environment, fair operating practices, consumer issues, and community involvement and development. Under these seven core subjects are arrayed 36 issues, which are in turn expanded upon by several hundred recommended example activities provided as a reference resource that indicates how these issues can be addressed.
Unlike the ISO 9000 family, which addresses quality control, and the ISO 14000 family, which addresses environmental management, ISO 26000 does not provide a mechanism by which specialized organizations can review companies' initiatives to verify compliance with the standard.
Rather, the standard recommends several ways for corporations pursuing CSR initiatives to solicit an evaluation of their efforts by society, for example, by providing verifiable information in the form of a CSR report to facilitate a broad evaluation from the larger community or by pursuing mutual dialogue with stakeholder groups to elicit an evaluation of operations. There are also a number of countries, for example, the Netherlands, working to adopt national standards in the form of guidelines requiring companies to declare their commitment to implementing ISO 26000.
2. Shiseido's CSR Report
Amid this international trend, it is appropriate for Shiseido as a company involved with global business activities to have moved quickly toward publishing a CSR report based on the ISO 26000 framework. Shiseido's CSR report also includes extensive content in English. Inasmuch as the company offers a CSR report in English, there is the risk that structuring the report in a manner that is unrelated to ISO 26000 in the future will prevent a proper evaluation of its actual activities.
On the main CSR and environmental activities page on Shiseido's website, content is divided into "CSR Commitment by Top Management," "Three Commitments of Shiseido CSR" based on the company's Corporate Mission, ISO 26000's seven core subjects and "Engagement with Stakeholders" sections.
If you click on "What is Shiseido CSR?" on the main page and then scroll down on the linked page, you'll see a pyramid-shaped diagram entitled "CSR Activities Domain." From the bottom, the pyramid is divided into a series of levels including "Continued corporate existence," "Strict compliance with laws and regulations," "Social contribution activities" and "Creating new markets, proposing new social values."
The lower two levels consist of "Fundamental CSR" (activities that minimize risk and increase corporate value), while the upper two levels consist of "Unique Shiseido CSR" (activities that contribute to the core business and drive corporate initiatives).
The lowermost level, "Continued corporate existence," includes providing high-quality products and services, valuing employees, collaboration with business partners, profits and dividends, payment of taxes and the creation of employment opportunities. This level signifies the consideration of the interests and wishes of stakeholders, which, as I mentioned above, forms the basis of CSR.
Continued corporate existence is similar to legal compliance in that it comprises fundamental CSR. However, whereas it is not possible to endow legal compliance with a unique Shiseido approach, it is possible to bring such uniqueness to bear in terms of how the interests and wishes of stakeholders are taken into account, and in fact, such uniqueness is evident in various facets of Shiseido's efforts in this area. Consequently, continued corporate existence in fact includes numerous unique Shiseido CSR activities, either involving aspects of the Company's core businesses or closely related to them.
If an evaluation of a company's CSR initiatives is to be based on an assessment of whether the company is sufficiently engaged in the pursuit of fundamental CSR initiatives, as well as CSR initiatives that are unique to that company, then I feel that initiatives related to "Continued corporate existence" should be emphasized more as unique Shiseido CSR, instead of limiting that category to "Creating new markets, proposing new social values" and "Social contribution activities."
Of the seven core subjects, there is extensive coverage of the Shiseido Earth Care Project, one of the company's environmental initiatives, and the project features prominently on the website. However, I feel that this content differs too much from other issues in terms of both reporting and style.
Animal welfare was unexpectedly emphasized during the final stage of the ISO 26000 formulation process, and as a result, the standard includes a call for the elimination of animal testing. Shiseido's move to develop alternative testing methods in anticipation of the elimination of animal testing as one of its consumer issues and its elimination of in-house animal testing in March 2011 are worthy of praise, in that these steps signify early compliance with ISO 26000. This issue can be considered to be part of unique Shiseido CSR.
Furthermore, the Company can be praised for its effective program of stakeholder engagement in preparation for the elimination of animal testing. The "Engagement with Stakeholders" section introduces the views of participants in the Roundtable Discussion on Eliminating Animal Testing of Cosmetics Ingredients.
However, the elimination of animal testing is limited to in-house testing at this point. Going forward, I look forward to Shiseido's pursuit of initiatives to eliminate the practice by outside contractors and ultimately throughout the industry.
In order for society to evaluate a company's activities in an appropriate manner, the company must both express its policies and provide a verifiable report of activities undertaken in accordance with those policies. In this sense, Shiseido's action in one of the seven core CSR subjects-fair business practices-has been limited to the statement of its policies. In his third-party evaluation of last year's report, Toshihiko Fujii pointed out the lack of specific information about how the Shiseido Group Supplier Code of Conduct was being implemented, but there has been little change to address this deficit.
From the same standpoint, I imagine that there are many women who experience cosmetics-related problems at some point due to their physical condition or other factors. I think Shiseido should consider reporting data in this area as part of the "Consumer Issues" section, for example, by disclosing information about such problems and providing examples of how products, instructions or consulting practices were improved as a result. ISO 26000 addresses such action as "consumer service, support and complaint and dispute resolution" under consumer issues.
There is also some issue-based bias in the items introduced in the "Activity Results Data" column. In the future, I look forward to Shiseido accumulating timeline-type results data for each issue.
Comments on the Third Party Evaluation for Shiseido CSR website
Michiko Achilles,
Corporate Officer and responsible for Public Relations,
Consumer Information, Environmental Affairs, Corporate Culture Reforms and CSR
Thank you very much for your insightful comments and suggestions concerning the CSR and environmental activities contents on Shiseido's website, as well as the Company's CSR activities.
This fiscal year, we revised our CSR report to comply with the ISO 26000 standard and posted the publication on Shiseido's website. These actions were praised as a timely and appropriate response for a company with global operations. I was also pleased that we received praise for leading other companies in our development of alternative testing methods, our elimination of in-house animal testing in March 2011 and our efforts to engage in dialogue with stakeholders.
Concerning activities categorized as "Fundamental CSR" and "Unique Shiseido CSR," it was suggested that we do more to emphasize initiatives connected with continued corporate existence, since those efforts are not restricted to fundamental CSR but also encompass many unique Shiseido CSR activities. Effective March 31, 2011, we dissolved the CSR Committee and Compliance Committee, and as of April 1, 2011, we formed a new more expansive CSR Committee that reports directly to the Board of Directors. The new committee's agenda reflects the need to identify issues from a more strategic perspective than in the past and then take appropriate action. These include areas such as formulating risk countermeasures with regard to continued corporate existence, revising business continuity plans in the aftermath of the Great East Japan Earthquake, undertaking recovery assistance activities in a way that embodies Shiseido's unique capabilities and character, and articulating information disclosure guidelines.
In addition to this praise and advice, it was pointed out that information about the Shiseido Group Supplier Code of Conduct as concerns fair operating practices or fair business practices has been limited to a statement of policies lacking in specific detail about how the Code is being implemented; that we need to consider disclosing information about consumer issues and reporting examples of improvements; and that there is some issue-related bias in the items introduced on the "Activity Results Data" page.
We look forward to bringing these insightful comments and suggestions to bear on our future initiatives and operations. At the same time, we will strive to be aware of various social issues around the world and to deepen our engagement with stakeholders. Shiseido's mission is to cultivate relationships with people, appreciate genuine meaningful values and create beauty and wellness. Going forward, we will continue to manage our operations so as to create human health and beauty, and we ask for your continued advice and guidance from a variety of perspectives.
