With its vision, “Better Systems, Better World,” RAKSUL leverages the power of the Internet to alter the value chains and industry structures of conventional industries. While operating its major business lines including Raksul, a printing and offline advertising platform, and Hacobell, a logistics platform (HACOBELL Inc. was established on August 8, 2022 as a joint venture with Seino Holdings Inc.), RAKSUL is committed to ESG in order to be a trusted business in the market.
We interviewed Yasukane Matsumoto, Representative Director, President, and CEO about RAKSUL’s approach to ESG management.
What ESG means to Raksul
“The top priorities for RAKSUL are first, to ensure good governance, then under “S” (Social), tackle diversity as well as human rights topics across the value chain,” says Matsumoto.
“G” (Governance) priorities are critical to the continuity and competitive assessment of RAKSUL. Increasing diversity enables RAKSUL’s foreign, LGBTQ+, and female employees to succeed. Matsumoto says, “we want RAKSUL to be a workplace where people of any background feel comfortable, and we provide the opportunity for our talent to thrive.”
Matsumoto also feels that there are not many people in Japan who have a “public mindset” and desire to lead. Compared to Europe and the United States, Japan has less philanthropic engagement, such as contribution to NPOs.
In this regard, RAKSUL supports NPOs by offering a 25% discount on Raksul printing services, as well as organizations that provide natural disaster support by offering a 10% discount on Hacobell logistics services.
With regard to “E” (Environmental), “the imperative for each person to tackle [environmental issues as] a major societal problem has been repeatedly addressed through prominent forums such as the United Nations and Davos, as well as by major investors. It has made it easier for RAKSUL to take on a public mindset, recognize the issues, and take action,” says Matsumoto.
Benefits of disclosing ESG information
In 2021, RAKSUL published its ESG activities on its corporate website.
“While in Western countries, a company’s failure to respond to the BLM (Black Lives Matter) movement or the war in Ukraine is seen as a problem, I believe that in Japan, the opposite is true: a company’s public response to such societal challenges is seen as problematic. However, the ESG framework has allowed RAKSUL to communicate more global, democratic values within the company,” Matsumoto says, noting that the benefits of ESG integration is not only for the sake of information disclosure to investors.
For example, there are more opportunities to discuss why climate change should be addressed. RAKSUL used an NHK Special program on climate change during an internal session. Similarly, they can bring up global topics, such as the BLM movement.
Matsumoto continues, “in Japanese society, many people hesitate to bring up topics such as LGBTQ+. As we move forward with ESG integration and diversity-related activities, employees recognize that RAKSUL is a place where people are free to express their thoughts and feelings. In turn, they realize that this company is a safe environment in which to work, creating a positive cycle.”
Developing ESG materialities
RAKSUL shares its distinctive approach to ESG through its materiality map, but Matsumoto highlights a few in particular.
The first is “rebuilding conventional industries with IT.” Matsumoto believes that the business activities based on RAKSUL’s vision “Better Systems, Better World” will contribute to the realization of a sustainable society. Thus, it is the most important materiality, shown at the top right of the materiality map.
The second is “diversity and inclusion.” As S is an area where a company can particularly bring in originality, RAKSUL puts emphasis on the success of this dimension across the printing, logistics, and TV commercial supply chains, i.e., our partner businesses.
Another unique initiative within RAKSUL is “future leadership development and appropriate rewards to employees.” In Japan, compensation levels for top talent is relatively low, and the GDP per capita is lower than that of South Korea and is 25th among OECD countries.
“The compensation for an executive at a Japanese ‘megabank’ is the same as that for a new graduate at a non-Japanese investment bank or major IT company. Even considering differences in standard of living, the gap is far too great. People who are creating value are not being appropriately compensated, and people with strong abilities are not being fairly evaluated. This is a major problem in Japan,” emphasizes Matsumoto.
To address this issue, RAKSUL has created a scheme to reward top talent and value creators through promotions and/or equity incentives.
“Value in businesses is created by employees, so Japanese society must change to include incentive compensation through company stock. This is where we at RAKSUL place great importance.”
What early-stage companies should focus on
Matsumoto mentions that without ESG, a business leader will focus purely on sales, profit, return on equity, earnings per share, valuation, etc. For a company that’s looking to start taking actions around ESG, Matsumoto feels it’s important “not to approach ESG as an obligation.”
If a company thinks about ESG integration as an obligation or task, the effort and related costs of trying to achieve the assessment criteria of ratings agencies such as Sustainalytics, MSCI, FTSE, and others becomes high, and the focal point becomes an effort to merely improve the scores.
Startups ought to consider what stage of maturity their company is in, and integrate ESG accordingly.
“Under S, starting early on diversity is a must – it’s not something that can be changed easily later down the road. For G, I recommend that companies at the earliest stages don’t overly spend their efforts on this. Governance is about finding balance and business continuity, and a benefit of being a startup is sometimes being ‘off-balance,’” explains Matsumoto. Further, he states that investors at the Series B or C stages will begin to work with companies on governance topics, so at the Seed or Series A stages, it can be too early.
“Regarding E, specific metrics around it can be tackled once a company has established product-market fit and/or growth. Then, the company can focus on metrics other than earnings or valuation.”
RAKSUL published its “RAKSUL Value Creation Report 2022” on July 28, 2022. This report, in addition to RAKSUL’s sustainability page, contains the latest information about the company’s ESG-related disclosures and activities.