Outside Evaluation of Our CSR

Third Party Opinion on CSR Activities in Fiscal 2017

CEO, International Institute for Human,
Organization, and the Earth (IIHOE*),
editor and publisher of Socio Management
Hideto Kawakita

* Founded in 1994 for "Democratic and Balanced Development for All the Lives on Earth," IIHOE has served as a management consultant for NPOs and social entrepreneurs while supporting CSR engagement of major Japanese companies.

http://blog.canpan.info/iihoe/ (in Japanese)

This third-party opinion has been written based on the content of the CSR-related pages on the DENSO Group's website as well as on interviews with DENSO staff in charge of management of creating environmental value, facilities, procurement, quality and after-sales services, human resources, health promotion, creating ideal working place of safty and health, social contribution, IR, and CSR.

DENSO has set numerical targets for all of its wide-ranging CSR initiatives based on the DENSO Group Declaration of Corporate Behavior, which was established in fiscal 2007. In Japan and overseas, the Company has developed and established a structure to quantitatively manage the achievements and issues related to its CSR initiatives and is promoting a global management cycle in an appropriate manner. In doing so, I believe DENSO is setting standards that should serve as the benchmark for other companies around the world.

Items that deserve high praise

  • DENSO deserves high praise for its world-class level of CSR management. Under the DENSO Group Long-term Policy 2020, DENSO has placed "preserving the planet" and "creating a safe and secure society" as the key objectives for its initiatives in CSR management. For these objectives, a diverse range of social contribution initiatives are being managed and promoted by each division and relevant personnel in a comprehensive and quantitative manner from the perspective of risk management and stakeholder satisfaction.
  • In regard to corporate governance, DENSO deserves high praise for establishing and implementing a structure based on Japan's Corporate Governance Code as well as for promoting information disclosure. In addition, high marks should be given to DENSO for clarifying methods for "appropriate cooperation with stakeholders other than shareholders" within its "Basic Corporate Governance Policy," established in June 2015, and making efforts to put these methods into practice.
  • For environmental management, in addition to reducing the environmental footprint of its products and production, DENSO has established quantitative targets for each department and relevant manager in regard to a detailed list of items in order to pursue world-class environmental efficiency and resource productivity. At the same time, initiatives are being carried out Companywide to realize these targets. I evaluate DENSO highly in this regard. DENSO's "organizational culture that encourages a bottom-up approach and follow-through on decisions" provides a backbone for the Company's environmental management initiatives, an area in which DENSO excels on a global basis. This organizational culture can also be viewed as the source for deepening the Company's initiatives toward sustainable growth and social contribution. In particular, item 115, "Perfect Energy Factory (PEF) Activities," as well as "Just-In-Time (JIT) Energy Activities," where the Production and Facilities Management departments share necessary information on all types of resources, including not only electricity and gas but also compressed air, air, steam, and water, in advance using "electric signboards" and work to minimize and optimize supply, represent best practices that should act as a benchmark for the global manufacturing industry. In addition, I believe DENSO should be commended for clarifying its three targets of "ENERGY 1/2; CLEAN × 2; and GREEN × 2" (Target 3), as well as 10 specific actions (Action 10) for realizing these targets, within DENSO Eco Vision 2025, which was announced in fiscal 2017. I give a high evaluation of the items and processes within the report, which were compiled in detail. I also give a high evaluation to the progress DENSO has made in various initiatives, including the prompt expansion of initiatives in water management that take into account regional characteristics as well as the development of methods to calculate the environmental footprint during car use by automotive part. Going forward, I hope that DENSO will expand, deepen, and achieve Target 3 in such ways as leveraging micro-hydro power generation that makes use of drainage water, while giving consideration to its entire value chain, including its service stations.
  • For sustainable procurement, DENSO deserves high praise for disclosing its Supplier CSR Guidelines, which help DENSO's suppliers establish a foundation for CSR management, on its corporate website as well as for providing guidance on introducing these guidelines, performing self-checks through self-diagnostic sheets, and offering feedback to 1,030 primary Group suppliers in Japan and overseas. Furthermore, for issues such as conflict minerals that are difficult to resolve through initiatives by only DENSO, I commend DENSO for actively spearheading initiatives as an industrial group. DENSO deserves extremely high praise for incorporating CSR themes into the daily management of not only the Group but also the Group's primary business partners. This is an example of another initiative that I believe should serve as a global benchmark. I sincerely hope that DENSO will introduce an award system and provide the opportunity for past cases to be presented in order to share the best practices of its business partners going forward. In addition, I hope that the Company will work to make specific and effective improvements in the necessary areas identified through risk evaluation.

Areas in which DENSO should make further efforts while evaluating the progress of its initiatives

  • In terms of improving customer satisfaction, I commend DENSO for gradually opening independent service sites in Southeast Asian countries and for promoting business operations that respond to local market characteristics and the development of human resources. At the same time, I hope that DENSO moves forward with improvements in fuel efficiency during car use, primarily by leveraging service centers in emerging countries, as well as with reductions to its environmental footprint, such as through fluorocarbon recovery, and improvements in safety.
  • For promoting employee health and creating a safe workplace, I give DENSO a high evaluation for the following items: continuing the Open Consultation Hotline, creating non-smoking times and declaring these times Companywide in September 2016, organizing and utilizing an Occupational Health and Safety Council comprising foreign factory workers, and carrying out training at overseas locations for personnel in charge of safety. Going forward, I hope the Company continues to actively promote initiatives overseas.
  • As for DENSO's social contribution activities for international and local communities, I give DENSO high marks for the diverse and trailblazing initiatives that it is undertaking. These initiatives include the Compassionate Point System, in which nearly half of the Company's directors and employees participate, support for the disabled through the Wheelchairs and Friendship Center of Asia and other means, as well as the promotion of traffic safety awareness. At the same time, I hope that employees of the Group worldwide take action in their respective communities to act as traffic safety instructors. I also sincerely hope that DENSO leverages its services and strengths to their full potential in such ways as creating maps and curriculums for the development of human resources. In addition, I strongly encourage DENSO to move forward with efforts aimed at creating a society with zero traffic accidents.

Expectations for the advancement of DENSO's initiatives as a global company

  • Regarding respect for employees and personal diversity, DENSO has begun to institute a set of common evaluation criteria for personnel, for use Groupwide, and a human resources registration system to serve as a foundation to foster versatile personnel management. The percentage of long-term, local employees at Group companies overseas is upwards of 30%, with the ratio of persons with disabilities exceeding 2%. DENSO is actively working to promote employee health, but the percentage of DENSO CORPORATION employees taking advantage of leave and reduced working hours for childcare, caregiving, and nursing care is still only 1.5%. Disparity in length of employment for men and women also remains. Moving forward, I sincerely hope DENSO continues efforts to provide an environment conducive to both working and supporting families through childcare, caregiving, and nursing care, and moves ahead with quantitative reviews of decision making, such as at meetings, and business conditions in order to raise productivity. At the same time, I sincerely hope that DENSO continues to promote the multilingualization of exchanges with, and messages and notices to, candidates for upper management so that even more employees in each and every region in which it operates can understand DENSO's philosophy, values, and practices in their own native languages.
  • For the sustainable growth of both society and the Company, DENSO needs to consider not only the current state of infrastructure and performance of automobiles but also the state of infrastructure and automobiles based on population compositions and social and economic conditions in the near future. In particular, I would like to see DENSO actively make proposals for guaranteeing accessibility for aging populations, a trend that is occurring in Japan and worldwide, as well as for realizing mobility without the use of fossil fuels.

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Editor's comments

We are very thankful for Mr. Kawakita engaging in dialogue with representatives from each department in order to offer his third-party opinion. We will take his comments as an indication of expectations for the DENSO Group from society at large, and will make reference to them in our activities going forward.

During the dialogue with each department, he offered a variety of opinions on topics from business activities to environmental management and social contribution. For instance, in terms of business itself, he pointed out that there are still contributions DENSO could make to solve issues of urban mobility. In anticipation of future changes in the social environment, we, as a part of the automobile industry, would like to actively work for the benefit of society by making sustainable urban mobility a reality.

Furthermore, in regard to environmental preservation through service stations and social contributions that lead to business opportunities, he suggested that we not only expand these activities but also promote cooperation (integration) between departments. Going forward, we will promote the cultivation of both internal and external cooperation, giving consideration to expand the scale of our activities to include increased engagement with society.

It has been 10 years since DENSO began CSR activities in earnest in 2006. While we cannot yet claim to be 100% satisfied with our efforts, we feel that CSR is taking root, little by little, in both our business activities and the hearts of each and every employee. In order to make further advancements, we would like to cultivate dialogue and cooperation with even more stakeholders while improving CSR management moving forward. Moreover, from this year, we have integrated our CSR report with the annual report in order to better communicate information. As this is the first year, we hope to fine-tune the report as a communication tool through opinions from a variety of stakeholders.

Corporate Planning Department, DENSO CORPORATION