KKC International Platform
June 18, 2021

. The NEW Growth Strategy
Masakazu Tokura

The COVID-19 pandemic has forced the global economy into recession and shed light on thedisparities that had been growing wider under capitalism. Under these circumstances, as amajor player in a capitalist society, the business community has a duty to co-create andprovide value from interactions with diverse entities through business activities and toactively engage in finding solutions to challenges such as environmental issues and economic
disparity. Declaring “sustainable capitalism” as a new form of capitalism, Keidanren proposesa growth strategy that places emphasis on three challenges.
The first challenge, to make capitalism sustainable, is to correct the disparity between
nations, between generations, between occupations, and between regions, throughexpansion of the economic pie and its proper distribution. The second challenge is thefocused expansion of investment in the future to enable sustainable growth into the future.
This includes the education of children and young people, support for families with young
children, support for young researchers, and investment in next-generation technologies. The
third challenge is to envisage a future vision of the economy and society in 2030, the target
year of the SDGs, and, by backcasting from there, to clarify the particularly important actions
to be taken. By starting with those actions that we can put into effect now, we can anticipate
economic measures that will return us to a path of strong economic growth.
The title of this proposal signifies our strong intention to put a period to conventional
strategies and to indicate a new one. We are recommending the major direction we should
pursue going forward. The road ahead will certainly not be smooth, but we are resigned to
the fact that the extension of our current path of gradual reform offers no future forcapitalism, and we intend to take bold steps to embark on this new strategy.

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VIDEO: . The NEW Growth Strategy(4 mins 12 secs, in English: https://www.youtube.com/watch?v=p3eS_CC-9zo )Establishment of Sustainable Capitalism Through Society 5.0
The keys to establishing sustainable capitalism are to include and co-create the diverse values
sought by multiple stakeholders, including consumers, workers, local communities, the globalcommunity, and the natural environment. The only way to accomplish sustainable growth isfor corporations to embrace the demands of their multiple stakeholders, not just theirshareholders, and create value with them through dialogues.
The key to this is digital transformation, or DX. Digital transformation makes social issues
visible, balances optimization for the whole and the part, and creates diverse value. In thisDX, it is humans who will discover the issues and decide on their balance with value, and it ishuman wisdom that will be at the center of sustainable capitalism. This is the very realizationof Society 5.0, a creative society that combines the imagination and creativity of diverse
people with DX to solve problems and create value.

Future Vision for 2030
The future vision we hope to realize in Japan and in the world by 2030 is centered on the cocreation of value with the following five stakeholders: consumers, workers, localcommunities, the global community, and the natural environment. Bringing together thewisdom of diverse stakeholders, we can establish sustainable capitalism through Society 5.0.

2Actions Toward 2030: Growth Strategy
Actions in five different areas are recommended to be taken under the initiative of thegovernment and the business community, in order to achieve the future vision for Japan in2030. These actions which can be started immediately towards the goal of 2030, signify agrowth strategy that will lead to the recovery and growth of the Japanese economy postCOVID-19.
1. New Growth Through DX
Industry, academia and government should unite to conduct concentrated investment incommon foundations to achieve new growth and value creation with the use of digitaltechnologies and data. Through this, we can realize new healthcare that will maximize
individual well-being, new learning that will unleash future talent, new supply chains thatwill create reliance and value, and new public administration that will respond swiftly todiverse needs.
2. Transformation of Work Styles
Workers in the era of Society 5.0 will command digital technologies with rich imagination andcreativity and will create value through flexible work styles that are not confined by time or3space. Evaluation will not be based on working hours, but on the value that has been created.
Human resources mobility should enable diverse, multi-stream careers. Active participationin the workforce by diverse people should be promoted and investment should beconcentrated to develop a society in which it is easy to have and raise children.
3. Regional Revitalization
Japanese businesses have long valued their relationships with local communities andengaged steadily in social contributions to the regions, however, in many regions,
corporations have been unable to create new jobs and this is creating a vicious cycle in whichpeople are leaving the regions, accelerating the decreasing populations. To bring people backto regional areas, attractive industries that take advantage of regional strengths andcontribute to the sustainable growth and development of the regions should be created.
The following measures are recommended: (1) Promotion of human resources mobility
through a shift to flexible work styles, (2) Strengthening the competitiveness of regional
industries and universities, etc., (3) Building of value co-creation ecosystems in regional areas,and (4) Building of resilient and sustainable social infrastructures such as water supply andsewerage networks, energy, public transport, and communications networks.
4. Rebuilding the International Economic Order
Even as production and consumption activities become more globalized and the economic
structures are transformed by DX, free and open trade and investment will remain a criticalfoundation for the world’s sustainable growth. The Japanese business community will
support the maintenance, expansion, and deepening of a free trade and investment system,
ensuring proactive and strategic economic security, and the formation of coalitions forsolving global issues.
5. Realization of Green Growth
The global economy declined sharply due to the COVID-19 pandemic, however, it has
become clear that this slowdown will not lead to any drastic reductions of greenhouse gases.
It will be impossible to realize both the improvement of living standards for the world’s
people and a decarbonized society with existing technologies and socio-economic structures,and the only solution is major reforms of the economy and society through innovation.
The business community will promote the acceleration of innovation aimed at adecarbonized society, priority assistance for competitive renewable energies, use of nuclearpower that balances decarbonization and economic feasibility, improvement of theelectrification rate, and the formation of “the Union of Green Growth Nations”.

4Conclusion
The key to achieve sustainable capitalism, which is the basic principle of this growth strategy,
will be the visualization of issues and creation of solutions through DX, or, in other words, therealization of Society 5.0. To put this in action, reforms of regulatory systems and public
administration are essential. Through wise spending that concentrates investment in keyareas, the government should recover and grow the economy and draw up a path that willlead to the realization of fiscal consolidation. Corporations will co-create value with multiple
stakeholders through their business activities and build stories and actively disclose
information. At the same time, investors also need to clarify their investment stances. The
business community, through dialogue, collaboration and co-creation with diverse entities,
will steadily implement the actions in this growth strategy, starting with those actions thatcan be taken immediately.
Learn more: https://www.keidanren.or.jp/en/policy/2020/108_proposal.html

Masakazu Tokura is Chairman of KEIDANREN, Chairman of Keizai Koho Center, andChairman of the Board of Sumitomo Chemical Co., Ltd.
KEIDANREN (Japan Business Federation) is a comprehensive economic organization witha membership comprising 1,461 representative companies of Japan, 109 nationwide industrial
associations, and 47 regional economic organizations (as of April 1, 2021).

Keizai Koho Center (Japan Institute for Social and Economic Affairs, KKC) has served
as a bridge for the Japanese business community to interact with its key stakeholders insideand outside Japan. With a wide range of its domestic and international programs, KKC hasdeveloped a worldwide network encompassing businesses leaders, lawmakers, government
officials, journalists, university scholars, and school teachers.
The KKC International Platform is a forum to discuss new developments,changes, and challenges of Japan and the international society.

Keizai Koho Center
https://en.kkc.or.jp
Keidanren Kaikan, 1-3-2 Otemachi, Chiyoda-ku, Tokyo 100-0004 JAPANe-mail: platform@kkc.or.jp

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