EU-Japan Centre for Industrial Cooperation
Seminar ReportJapan-Europe Symposium on Business Reporting for Sustainability
Mechanisms to communicate information, including ESG/CSR, forsustainable growth

26 May 2010
Brussels – Belgium

Executive summary
On 26 May 2010, the EU-Japan Centre for Industrial Cooperation and the World Intellectual
Capital Initiative (WICI), with the support of the Japanese Ministry of Economy, Trade andIndustry and the European Commission (DG Enterprise & Industry), as well as of JETRO
Brussels, the Business Council in Europe (JBCE) and JMC Brussels, organised a full-day
seminar on "Business Reporting for Sustainability", with the participation of Ambassador
Naoto NIKAI (Japanese Mission to the EU) and Viscount Etienne DAVIGNON (President,CSR Europe), and speakers from HORIBA, Ltd., Novo Nordisk A/S, Accounting for
Sustainability and the European Federation of Financial Analysts Societies (EFFAS), theEuropean Parliament, e-Parcel Corp., Sakigake Semiconductor CO.,LTD., WissenskapitalGmbH and Doshisha University.
In the context of the global financial crisis people have realised the importance ofsustainable capabilities of companies, which cannot easily be recognised through financial
reporting, hence the need to establish a new mechanism of business reporting which enables
the evaluation of the exact value of a company, covering not only financial but also nonfinancial information, including ESG/CSR, in which society has a great interest. Based on
experiences of European and Japanese companies, regardless of their size, to communicate
with stakeholders, the seminar debated the need for a framework for business reporting forsustainability, focusing on non-financial information relating to a company’s businessstrategy, its own value creation mechanism and its economic performance, rather than asking
companies for as much information as possible from a purely social point of view.
There was a main stream of thinking that disclosure and Business Reporting for
Sustainability should become general practices to help all stakeholders take informed andresponsible decisions: all companies should be required to report publicly on their ESG
performance, or if they don't, explain why.
There was also a generally-shared view that non-financial reporting and financial reportingneed to converge into an integrated reporting system using quantitative indicators andallowing an embedded decision-making process. In particular, that process would benefit toSMEs who do not have access to stocks and therefore need other sources of financing (bankloans or public subventions).
There was less consensus about the regulatory aspect of the reporting practice, its geographic
standards (national? European? International?) and whom should take the lead1

(governmental initiative or corporate ownership?) Since both Europe and Japan have many
common elements, including the interests of governments on this issue, ESG/CSR
awareness, and a shared sense of balance between social and economic values, it is expectedthat both regions can find more opportunities to cooperate with each other to establish aglobal mechanism that would promote the benefits of integrated reporting, implement allrelated issues and avoid overlapping initiatives.
The audience gathered about 45 participants from EU and Japanese Authorities as well asfrom major EU and Japanese companies.

Contents
1 – Seminar outline .................................................................................................................... 2
2 – Summary of discussions ...................................................................................................... 43 – Photographs ....................................................................................................................... 10
4 – Profile of participants ........................................................................................................ 11
5 – Evaluation .......................................................................................................................... 122

1 – Seminar outline•Title:Japan-Europe Symposium on Business Reporting for Sustainability Mechanisms to communicate information, including ESG/CSR, forsustainable growthzDate/Time:

Wednesday, 26 May 2010, 10:00-17:00

z

Place:Club of the University Foundation
Rue d’Egmontstraat 11, 1000 Brussels•Organised by:

EU-Japan Centre for Industrial Cooperation
World Intellectual Capital Initiative (WICI)•Supported by:

European Commission, DG Enterprise & Industry
Japanese Ministry of Economy, Trade and Industry (METI),JETRO Brussels, JBCE, JMC BrusselszAgenda:10:00-10:20

Welcome Greetings

10:20-12:00

Ayako KAWAMURA, Director , EU-Japan Centre
Etienne DAVIGNON, President, CSR EuropeAmbassador Naoto NIKAI, Japanese Mission to the EU
Session 1: Major listed companies- Moderator: Alison THOMAS, Director, Corporate Reporting PricewaterhouseCoopers LLP
99912:00-12:30

Strength and Strategy
Understanding of a company’s own value creation process
The way for a company to communicate to society its own strength andsustainability and contribution to society
9 Necessary framework for communication
9 Function of KPIs and introduction of XBRLAtsushi HORIBA, Chairman, CEO & President, HORIBA, Ltd.
Susanne STORMER, Vice President, Global TBL Management Global Stakeholder Engagement,
Novo Nordisk A/SPaul DRUCKMAN, Chairman, Accounting for Sustainability
Alexander G. WELZL, Chairman CIC, EFFAS- European Federation of Financial Analysts Societies
Ralf FRANK, Secretary General Commission on ESG, EFFAS- European Federation of Financial
Analysts Societies
Keynote Speech
Richard HOWITT, European Parliament Rapporteur on the European Commission Communication onCorporate Social Responsibility3

13:30-15:00

Session 2: SMEs
- Moderator: Nobuyuki HIRATSUKA, Director for Corporate System, Corporate Affairs Division,
Economic and Industrial Policy Bureau, Japanese Ministry of Economy, Trade and Industry (METI)
99999

15:00-15:30

Experience of business reporting
Merits of communication
Necessary framework with minimum burden
Implications of KPIs
Expected support from governments
Joji KITANO, President, E-Parcel Corporation.
Koshi TAGUCHI, President, Sakigake Semiconductor CO.,LTD.
Mart KIVIKAS, Partner, Wissenskapital GmbH
Chitoshi KOGA, Professor, Doshisha University
Coffee Break

15:30-16:55

Panel Discussion (policy agenda)- Moderator: Takayuki SUMITA, Chairperson, World Intellectual Capital Initiative (WICI)How to establish mechanisms for communication between companies and stakeholders regarding the activities
and capabilities of companies contributing to sustainable growth and to society

16:55-17:00

Prof. Yasuhito HANADO, Professor, Waseda University
Nobuyuki HIRATSUKA, Director for Corporate System, Corporate Affairs Division, Economic andIndustrial Policy Bureau, Japanese Ministry of Economy, Trade and Industry (METI)Yukako KINOSHITA, Chairman, CSR Committee, Japan Business Council in Europe (JBCE)
John SWANNICK, Executive Director, European Academy for Business in Society (EABIS), Co-chair,
European Laboratory on Valuing Non-financial performanceStefano ZAMBON, Chairman, WICI Europe
Pedro ORTUN, Director, European Commission, DG Enterprise & Industry
Closing Remarks
Hidehiro MURAMATSU, Director, Europe Division, Japanese Ministry of Economy, Trade and Industry (METI)

4

2 – Summary of presentations & discussions
Full speakers’ presentations are accessible on our website. Main speakers’ opinions areexpressed in the following abstracts:

Mr E. DAVIGNON, President, CSR Europe
15 years ago CSR reporting was merely a communication tool dealt with by PR staff. Today,
it has become major management issue dealt with at CEO level.
Topics covered by CSR reporting are as vast as complex. However, since no competition isinvolved, companies show much willingness to exchange best practices, as do the EU andJapan.
Ambassador N. NIKAI, Japanese Mission to the EU
With the financial crisis an increasing request for ESG disclosure are now pushing thebusiness reporting project to evolve.
Since there is no common standard for business reporting yet, cooperation between EU andJapan would indeed be most welcome.
Mr A. HORIBA, Chairman, CEO & President, HORIBA, Ltd.
Nowadays, the traditional reporting is indeed not sufficient to understand what is behindfinancial assets. This is typically the case for intangibles in management, in which Horiba
invest substantially (staff education and training, facilities etc).
Horiba is more in the practical action than in the brainstorming about business reporting
because they not yet convinced that non-financial reporting will gather many readers.
Understanding our corporate motto “Joy and Fun” is very important for stakeholders toevaluate future potentiality of our business. It is essential for stakeholders to understand theHoriba’s corporate philosophy and management policy when they evaluate our businessgrowth and stability for mid and long term.
Mr R. FRANK, Secretary General, EFFAS commission on ESG
Business reporting should be quantitative, built on key performance indicators that reflect
expectations of mainstream investors and allow comparative analysis.
The main question today is: “what kind of regulation do we want?”

5

Mr A. WELZL, Chairman, EFFAS commission on Intellectual Capital (CIC)
A main objective of the CIC-commission is to develop market driven and sector specificintellectual capital metrics and standards for internal and external corporate reporting, with afirst focus on the telecom industry. Accounting and reporting practices have to be changed toinclude IC-metrics for valuation of long-term value creation. Therefore EFFAS CIC engages
in training and education for financial professionals and academics. We also promote
implementation of our principles and standards in the capital markets e.g. recently at
Warsaw Stock Exchange. Understanding intangible driven value creation is also at the coreof rethinking economics (macroeconomy) of nations. EFFAS is a WICI founding member.
Ms S. STORMER, Vice President, Global TBL Management Global Stakeholder
Engagement, Novo Nordisk A/STheir “triple bottom line principle” promotes social, financial and environmental
responsibilities.
An integrated reporting (financial and non-financial) is absolutely necessary.
Let’s think about the following question: “what is the value of what we create/sell/etc if
those outputs do not exceed the value of the inputs (in terms of environment, welfare etc)?
So far, there has been more reflection about “what to report” versus “what are the benefits ofsuch reporting”?
Mr P. DRUCKMAN, Executive Board, Accounting for Sustainability (A4S)
At the present time sustainability is not adequately integrated into the business strategy.
There is a focus on short-termism; fund managers incentives are not alligned to soundsustainable investment decision making; and more generally the embedding of sustainability
into business deceision making is not evident from reporting.
There are often objections in terms of available and reliable data. In order to make sure we
can internalise externalities the data must be consistent, monetised, complete, and validated.
It is possible to do hat with a combination of accurate and extimate data and companies
should be looking at this route.
In the reporting space the Accounting for Sustaiability (A4S) project has created a conectedreporting framework which has been used by a number of major global companies in part.
Moving forward A4S has joined forces with a number of key organisations, including GRIand IASB, in an attempt to establish the Interenational Integrated Reporting Committee. The
collaborative team are looking at gaining authority from the G20 in Paris in 2011.

6

Mr. T. SUMITA, Chairperson, World Intellectual Capital Initiative (WICI)CSR reporting in Japan is not regulatory as such but compliance is very high (more than
1000 companies because of social pressure.
The capture of non-financial elements for business reporting is also a major opportunity forincreasing performance in many companies, leading to the win-win situation especially for
SMEs which is easily defeated in a serious competition under the money oriented capitalism.
Mr R. HOWITT, European Parliament, Rapporteur on the European Commission
Communication on Corporate Social Responsibility
As CSR rapporteur he suggested a Japan-EU dialogue on CSR towards a common globalframework.
Indeed both regions are facing several common challenges, and should now move forward inshifting from a concept of philanthropy to one of accountability and governance, at a time
when ESG disclosure is more and more required.
There is a clear commitment of the EC to propose to bring forward a Communication
focusing on ESG disclosure, as well as a clear political commitment (cf G8 meeting inTokyo) toward international instruments and standards for CSR. The International Integrated
Reporting Committee concept of A4S and others is something he believes is very importantand is supportive of the work.
Mr J. KITANO, President, e-Parcel Corp.
SME venture companies are underestimated when evaluated only in terms of financialassets.
SMEs like e-parcel expect non-financial assets and a type of business reporting including
them to become powerful tools not only in sales (for customers) but also in financial terms(for investors).
Mr K. TAGUCHI, President, Sakigake-Semiconductor Co., Ltd.
For Sakigake (Kansai Front Runner Award Winner 2010) business reporting can help
educate new employees about the company’s history, philosophy and values, and give all
stakeholders a clear vision of the company’s future and its technical and personnel merits.
The Kyoto prefecture is actively promoting business reporting for SMEs, and have initiatedan approval system for SMEs business reports.
Mr M. KIVIKAS, Partner, Wissenskapital GmbHThe whole point resides in promoting a company’s ‘stakeholder value’ instead of the usually
put forward ‘stakeholder value’: investments in intangibles and impacts on business successfactors as well as on customers and markets give a company its real value.
7

The ECI (Earnings Capability Index) constitutes a concrete forecast on a business’s successand profitability.
Mr C. KOGA, Doshisha University
His presentation covered successively the following points:•Competitive superiority of Japanese high-growth SMEs: functional, cultural,
positional and legal sources of superiority••

Non-financial information used by financial institutions in the loan process
2008 OECD project regarding intellectual assets management and Japanese highgrowth SMEs.

•Key Performance Indicators’s purposes and contents are different for listedcompanies and unlisted companies.

•Main challenges for non-financial reporting include minimizing the cost of its
preparation, improving reliability and quality of the information, training
management, banks and other stakeholders, and international cooperation.

Mr N. HIRATSUKA, Japanese Ministry of Economy, Trade and Industry (METI)
SMEs are better willing to comply with business reporting because they don’t enjoy accessto stock markets and depend essentially on bank loans ans subsidies.
The japanese government has started supporting an education scheme on integrated
accounting for bankers.
Clearly a EU-Japan cooperation on this subject would be most welcome. It would mostprobably be looking at a private initiative ande a sectoral approach.
Mr P. ORTUN, Director, European Commission, DG Enterprise & Industry
How can we promote disclosure? Companies generally consider that the increase inadministrative burden and requirements are not compensated by any additional recognition
or reward system. However many companies appear not to be happy either with the current
situation. Only a couple of Member States have established a clear policy about this issue.
Another difficulty is to find a proper balance between• national, EU and international initiatives• benefits for investors, customers and employers• regulatory and non-regulatory approaches
Finally sectors have diverging characteristics.
There is obvious convergence in the proposals presented so far on a certain number ofissues: need for transparency, need for non-financial indicators, need for risk information,need for eductaion of all stakeholders in particular.
8

Ms Y. KINOSHITA, Chairman, CSR Committee, Japan Business Council in Europe
JBCE’s expectations from the EC policy mainly include:•the system should be flexible and non prescriptive which enables companies ofdifferent size, sector and organisational structure to report on sustainable businessstrategy and relevant information;•a global approach is needed in order to reduce inconsistancies in the various
requirements from regions, governments etc. The EU and Japan could work closely
together on this issue.
JBCE welcomes the progress made by DG Enterprise on ESG information disclosure.
Mr J. SWANNICK, Executive Director, EABIS and Co-chair, European Laboratory
on Valuing Non-financial performance
The debate was once about mandatory or statutory reporting. Now it is more aboutdisclosure (cf. transparency and accountability) and materiality (cf performance and impact).
From the perspective of key stakeholders – customers, employees and shareholders – we areseeing convergence in the drivers for disclosure and materiality.
Mr S. ZAMBON, Chairman, WICI Europe
The absence of non-financial information can lead to dangerous situations and behaviors
such as ‘short-termism’ and market volatility.
Main conclusions include that there are indeniable benefits in integrated reporting, that
implementation issues should not be overlooked and that stakeholders and regions should
avoid the overlapping of initiatives.
Mr Y. HANADO, Graduate School of Commerce, Waseda University
At first explained our perception on business landscape in this 21st century and our efforts tointroduce and implement Intellectual Assets Based Management in each business segment ofearly stage venture business, matured manufacturing industry and new business field such as
ICT industry. And secondly he pointed out that the internet society through interactive data
communication based on XML and/or XBRL technology, it will promote dramatic shift frompresent business disclosure society to future knowledge sharing society.

93 – Photographs

Photographs: from left to right and from top to bottom: Mr E. DAVIGNON and Ms A. KAWAMURA,Panelists of Session 1, Panelists of Session 2, Panelists of Panel Discussion, Mr S ZAMBON, Mr P
ORTUN, Mr H MURAMATSU

10

4 – Profille of parrticipantts (totall: 39)

Type of com
mpanies/orgganisations
ndustrial Meedia
Infedderations 3%%
JA public
8%
orgganisations, JA
diplomacy10%

Oth
her2%%

EU
U publicorgaanisations,
EU diplomacy
d13%

EU and Japaan
business secttors
64%

115 – Evaluation (number of replies: 11)
Overall Opinion of the seminar by participants
Excellent

9%

Good91%

Average evaluation of the seminar by participants on the scale of 1 to 5
(1 = Poor/ Low; 5 = Excellent/ High)Learning value

3,8Adherence to title

3,9Adherence to needs/interests

3,8

Session1

3,4

Mr.Horiba

3,8

Ms.Stormer

3,9Mr. Druckman

3,8

EFFAS (Mr.Welzl &Mr. Frank)

3,6

Session2

3,9Mr.Kitano

3,1

Mr.Taguchi

3,1

Mr.Kivikas

4,0

Mr.Koga

4,0Panel Discussion

4,3

Seminar organization

4,1

Event organisation

4,00,00,5

1,012

1,52,02,53,03,54,04,5