JAPANESE

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

Sustainability strategy Sustainability strategy
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Six material issues

Our six material issues are as follows:

  1. (1)
    Solving social issues through digital transformation (DX) and AI transformation (AX)
  2. (2)
    Connecting people and information to create new excitement
  3. (3)
    Delivering Next-generation Social Infrastructure to support a society that coexists with AI
  4. (4)
    Contributing to the global environment with the power of technology
  5. (5)
    Providing sustainable communication networks
  6. (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 sustainability 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]

  • *

    Created with reference to the ESRS Materiality Assessment Implementation Guidance framework

  • *

    Obtained third-party assurance for materiality identification process (Japan Quality Assurance Organization)

Materiality assessment process Verification Report (141KB)

Internal Importance

The Company assesses the importance of various issues for the Company and the Group based on the significance of short-, medium-, and long-term risks and opportunities identified through company-wide risk assessments, taking into account both likelihood and impact. These assessments are discussed by the Risk Committee, and internal importance is determined through a comprehensive evaluation that also reflects interviews with investors and sustainability experts.

External Importance

The Company assesses the importance of each ESG-related theme based on questionnaire surveys of stakeholders, including municipalities, NGOs and NPOs, customers, employees, and suppliers. The Company also conducts interviews with investors and sustainability experts, and determines external importance through a comprehensive evaluation that incorporates external perspectives on the material issues the Company should address.

Materiality map

Materiality map Materiality map
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Principle of double materiality

The principle of double materiality is a concept that calls for importance to be assessed from two perspectives: the financial impacts of society and the environment on the Company, and the impacts of the Company’s corporate and business activities on society and the environment. This concept is advocated in international guidelines and other frameworks.
The Company identifies its material issues based on the principle of double materiality, taking into account not only the impacts of society and the environment on the Company, but also the impacts of the Company’s corporate and business activities on society and the environment. In addition, these impacts are assessed in terms of both their positive and negative effects on each stakeholder.

Material issues Impact on society and the environment Major Stakeholders
Solving social issues through digital transformation (DX) and AI transformation (AX) Positive
  • Expansion and greater efficiency of the industrial base and creation of new industries through DX and AX
  • Revitalization of local communities through the use of technology
  • Customers
  • Local communities
Negative
  • Changes in the employment structure resulting from DX, AX, and industrial transformation
  • Concerns over widening service and regional disparities due to delays in technology adoption and differences in access to user environments
Connecting people and information to create new excitement Positive
  • Realization of new information experiences and attractive value through the provision of advanced telecommunications and ICT enabled by the spread of smart devices
  • Advancement of new lifestyles and social foundations through the provision of diverse services, including online shopping, a cashless society, and the advancement of ICT in healthcare and education
  • Customers
  • Local communities
Negative
  • Concerns over widening information, generational, and regional disparities due to gaps in opportunities to use and understand digital services
Delivering Next-generation Social Infrastructure to support a society that coexists with AI Positive
  • Contributions to greater operational efficiency, the creation of new services, and the resolution of social issues through the social implementation of AI
  • Contributions to stronger economic security through the development of domestic AI infrastructure
  • Creation of a safe and secure environment for AI use through the promotion of AI governance
  • Customers
  • Employees
  • Local communities
Negative
  • Concerns over information leaks, erroneous judgments, and social disruption resulting from the inappropriate use of AI
  • Concerns that growing distrust of AI may hinder its social implementation
Contributing to the global environment with the power of technology Positive
  • Reduction of environmental impact through the use of technology and carbon-neutral electricity
  • Contributions to the realization of a circular economy through the promotion of the 3Rs
  • Contributions to the decarbonization of society through the spread of carbon-neutral electricity and GX solutions
  • Customers
  • Employees
  • Shareholders and investors
  • Local communities
  • The environment
Negative
  • Greenhouse gas emissions resulting from electricity use associated with business activities
  • Environmental and social impacts associated with resource use, including rare metals, forests, wastewater, and waste
  • Environmental impacts such as deforestation associated with data center construction and base station installation
Providing sustainable communication networks Positive
  • Access to sustainable social infrastructure
  • Construction of robust telecommunications infrastructure that contributes to disaster prevention and mitigation
  • Customers
  • Employees
  • Local communities
Negative
  • Communication outages and delays in recovery when infrastructure is disrupted by natural disasters
  • Impacts on data security caused by cyberattacks and other incidents
Developing a resilient management foundation Positive
  • Contributions to market stability through the enhancement and effectiveness of corporate governance
  • Sustainable social development through collaboration with stakeholders
  • Development of a working environment that respects employee diversity and human rights and supports job satisfaction and health
  • Employees
  • Shareholders and investors
  • Local communities
  • NGOs/NPOs
Negative
  • Loss of trust among business partners and shareholders due to inadequate governance
  • Concerns over impacts on customer convenience resulting from supply chain disruptions
  • Environmental and social impacts across the supply chain, including human rights, occupational health and safety, and conflict minerals

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
  • Reducing the social cost associated with learning how to use smartphones will promote the participation in the digitalized society, i.e. access to information, by elderly individuals.
  • Increasing the new experiences through the use of smartphones by elderly individuals will bring economic benefits to the entire society.
 ¥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
  • The overall cost of industrial waste disposal and management in the entire society will be reduced.
  • The useful metals contained in used mobile phones are returned to society, promoting the transition to a circular economy.
 ¥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
  • The Company developed Vendy, an AI-powered vending machine operation optimization service, reducing time spent on vending machine operations by approximately 10% and increasing sales by about 5%.
  • The Company provides SoftVoice, a customer harassment countermeasure solution for call centers. By using AI to transform emotionally charged voices, the solution reduced the anger evaluation metric*1 by more than 30% on average.
[Note]
  1. *1
    This metric is based on survey results from approximately 300 men and women, both with and without telephone customer service experience, who evaluated the level of anger expressed by the caller on a seven-point scale.

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)（別ウィンドウで開きます）, 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.

Sustainability strategy
Identifying material issues