In May 2023, the Isetan Mitsukoshi Group unveiled its reorganized Isetan Mitsukoshi Group Corporate Philosophy. The reason for this move was twofold. Firstly, we recognized that we needed to come up with something that would serve as a guiding principle to help us regain our confidence after the harsh conditions brought on by the COVID-19 pandemic. Secondly, we also realized that we lacked an integrated corporate philosophy encompassing the entire Group, even though each goodwill brand retained its own individual corporate philosophy following the merger. Over the course of a whole year, around 14,000 employees, including those at Group Companies, thought and talked about what they found fulfilling, what they valued, and what they wanted the Group to be. Based on these discussions, the management team also engaged in repeated deliberations and redesigning of the corporate philosophy.
In order to realize our vision of becoming a retail group centered on extraordinary department stores working toward improving the lives of our customers, which we set forth in our medium-term management plan in 2021, we clarified our raison d’être (mission) and the thoughts and actions we place importance on (values), creating an approach to moving forward as a united group.
Our Mission, “Touching people’s hearts with human-driven experiences,” expresses the idea that each and every one of us will work together to touch the hearts of our stakeholders. At a time when the world is facing many difficult challenges, such as rising geopolitical tensions and climate change, we will help create a sustainable society by leveraging the capabilities of our diverse human resources, one of the strengths of our Group, to solve problems.
In FY2022, the first year of our medium-term management plan aimed at revitalizing our department stores, we recorded operating income of 29.6 billion yen on a consolidated basis, surpassing our FY2018 performance prior to the outbreak of the COVID-19 pandemic. The app membership system has contributed significantly to this. The total number of identifiable customers, including MICARD members, app members, and digital members, increased significantly to approximately 5.9 million at the end of FY2022. We are now aiming to evolve into a business centering on individual customers that responds firmly to the demands of the high sensitivity, fine quality consumption of those customers with whom we have connected in this way. We are striving to further deepen our relationship with our customers by understanding the needs of each customer through personal marketing and by providing services for content outside of our department stores.
In the deployment phase that follows the revitalization of our department store business, we will combine the skills and expertise of our Group companies in areas such as finance, systems, logistics, construction and interiors, staffing and other areas to increase the value we provide to society, and link this to future Urban Community Development with department stores at the core.
In 2023, Mitsukoshi celebrates its 350th anniversary. Isetan also has a long history of 137 years. Both have continued to follow our customer-first principle since their establishment, to this day anticipating customer needs and making proposals while responding to changes in the times and the social environment. This is the very starting point of the Isetan Mitsukoshi Group’s sustainability.
In 2018, we established the Isetan Mitsukoshi Group Policy on Sustainability, which expresses our commitment to playing a role in creating a prosperous future and a sustainable society by helping to solve social issues through our corporate activities. Based on this policy, we have set out three priority initiatives (materialities): ① Connecting People and Local Communities; ② Connecting a Sustainable Society and the Times; and ③ Improving the Satisfaction of Employees, as well as Group governance and communication to support these.
In terms of ① Connecting People and Local Communities, we are working on measures to help revitalize regions in collaboration with local companies, organizations, and municipalities. One example of our efforts to date is the Isetan Mitsukoshi Hometown Tax scheme, launched in 2019 with the aim of conveying the charms of Japan’s regions to the rest of the country. Another important role we believe we play is to pass on Japanese culture and traditions through cultural exhibitions and other means, as well as to nurture the next generation of artists and creators, endeavoring to support their activities by providing them with venues and other opportunities to showcase their works.
In terms of ② Connecting a Sustainable Society and the Times, we are mainly working to promote energy conservation, energy creation, and introduction of renewable energy with a view to helping create a decarbonized society, as well as the 4Rs (Refuse, Reduce, Reuse, Recycle) toward a recycling-oriented society. With regard to climate change in particular, at the 26th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP 26) held in November 2021, a goal was set to limit global average temperature increases to 1.5°C above pre-industrial levels. In light of this, in 2021 the Isetan Mitsukoshi Group expressed its support for the Task Force on Climate-related Financial Disclosures (TCFD). We disclose our medium- and long-term goals along with our annual results. As a result of these efforts, in FY2022 we were selected as an A List company in a survey on climate change conducted by CDP, an international environmental NGO.
It is also very important for us to work together with our business partners to promote responsible procurement and to advance efforts toward the realization of a sustainable supply chain. In March 2023, the Isetan Mitsukoshi Group endorsed and signed the principles of the United Nations Global Compact (UNGC), and in April revised its Human Rights Policy and Procurement Policy. In June, we established our Code of Conduct for Suppliers, clearly stating our commitment to the Ten Principles advocated by the UNGC in the four areas of human rights, labor, environment, and anti-corruption, both internally and externally.
In terms of ③ Improving the Satisfaction of Employees, we have established a lifelong career development program through a career support system that encourages self-directed growth, as well as assigning employees to positions in a strategic manner from a medium- to long-term perspective based on an assessment of each employee’s latent qualities. This allows us to maximize human capital through the combined efforts of the company, supervisors, and employees.
As a foundation for this, we are focusing on creating a culture of dialogue. Through regular dialogue meetings between management and employees, 1-on-1 meetings between supervisors and subordinates, and other forms of dialogue facilitated by each department, we feel that we have successfully deepened the understanding and penetration of our corporate philosophy and management strategy.
Another important task is to create a workplace environment in which employees can work with peace of mind. In June 2023, we issued a joint labor-management declaration together with the Group’s labor union, setting proper working hour management and zero harassment as priority initiatives.
In order to improve the effectiveness of diversity, equity and inclusion (DEI), starting FY2023 the Group has adopted ESG indicators for the evaluation of executive compensation.
In order to ensure the effectiveness of these efforts, we have held the Sustainability Promotion Meeting, chaired by me, twice a year since FY2021, during which we confirm the progress of our efforts and discuss our mid- to long-term direction in light of the latest ESG trends and environmental changes. We also review and monitor risks to our business involving sustainability issues, at the Compliance and Risk Management Promotion Meeting, which is also chaired by me.
In FY2022, Isetan Mitsukoshi Holdings established its Sustainability Promotion Section and began promoting Group-wide sustainability activities through the operation of six working groups. However, it is also true that these activities have not yet been fully reflected in the operations and actions of each department. In order to accelerate our efforts, we have started discussions to review our priority initiatives (materialities) in light of changes in the external environment, as well as the Group’s mission, strengths, and businesses, and the vision we aim to achieve.
We believe that sustainability management involves a cycle in which we make thorough use of our strengths to solve social issues, bring joy to our stakeholders, earn profits in return, and reinvest those profits to solve the next social issue. It is by incorporating this concept into our business strategy and having each and every one of our employees put it into practice that we can achieve sustainable management and business activities that enhance both social and economic value, which is also the fundamental spirit of our Group.
The Isetan Mitsukoshi Group is committed to continuing to engage in dialogue with its stakeholders, to connect affluent lifestyles to the future, and to contribute to the creation of a better society for all. We will continue to evolve so that we can become a corporate group that draws the attention and appreciation of people around the world, and continues to be loved and trusted by everyone for many years to come.
We are committed to sustainability management based on the Isetan Mitsukoshi Group Policy on Sustainability and three priority initiatives (materialities) (p. 15), with the aim of improving the lives of our customers through our business activities in accordance with the Isetan Mitsukoshi Group Corporate Philosophy, which was reorganized in 2023.
Priority Initiative ①: Connecting People and Local Communities involves activities that are unique to our group, which is centered on department stores. Japan is currently grappling with major social issues that include a declining birthrate and an aging population, as well as increasing economic disparities between regions. To address these issues, we are striving to contribute to the revitalization of local communities by introducing to customers throughout Japan the attractions of not only the areas where our stores are located, but also the regions with which our buyers have developed relationships through the procurement of products. The online initiatives Isetan Mitsukoshi Hometown Tax and MOO:D MARK by ISETAN (p. 20) are growth businesses that play a strong role in this regard. We also believe that our activities to connect various people and regions are important, such as the promotion of Japanese culture at MITSUKOSHI BGC, which opened in the Philippines in July 2023 as a mixed-use retail + real estate development project, as well as the hospitality we provide to overseas customers who visit our stores in Japan.
Next, I would like to mention our efforts to respect human rights and conserve the environment, which form the foundation of our business activities. In FY2023, we are focusing particularly on the promotion of supply chain management, which is part of Priority Initiative ②: Connecting a Sustainable Society and the Times (p. 38). In June 2023, we newly established the Isetan Mitsukoshi Group Code of Conduct for Business Partners to address human rights and environmental risks in the supply chain, issues that are becoming increasingly important in society. In the first half of the fiscal year, approximately 9,000 Group employees received training on human rights and environmental risks to deepen their understanding of the responsibilities that come with conducting business. At the same time, we informed approximately 6,000 of our business partners, mainly in the department store business, about the Isetan Mitsukoshi Group Code of Conduct for Business Partners. By the end of the fiscal year, we will ask approximately 10,000 business partners, including those of our Group companies, to complete a questionnaire regarding their human rights and environmental initiatives. Through dialogue, we will work together with our business partners to realize a sustainable supply chain.
As for our Group’s efforts to conserve the environment, we are making progress toward achieving our 2030 greenhouse gas emissions reduction targets through such means as promoting energy conservation through the introduction of an AI smart air-conditioning system at our Isetan Shinjuku Main Store, as well as creating our own energy through the installation of a solar power generation system at the Isetan Mitsukoshi Logistics Center (Tokorozawa City, Saitama Prefecture) (p. 32).
In our annual customer questionnaire survey on sustainability activities (p. 14), too, the number of responses mentioning initiatives for sustainability that customers expect from the Isetan Mitsukoshi Group has been increasing in recent years, including reducing food loss, cutting greenhouse gas emissions, and reusing/recycling products. As such, we recognize the need for further efforts to address environmental issues.
Another is Priority Initiative ③: Improving the Satisfaction of Employees. This is an initiative to promote diversity, equity, and inclusion (DEI) so that each and every employee can maximize their abilities, while achieving both job satisfaction and a pleasant working environment. In order to improve job satisfaction, we will take steps to promote lifelong CDP (p.46), and we will make working environments more pleasant by taking measures to ensure that employees can enjoy a good life-work balance (p.52). As the foundation for communication to support these efforts, we will continue to foster a culture of dialogue throughout the Group.
In recognition of activities such as these, we were recognized as a 2023 Certified Health & Productivity Management Outstanding Organization, and received 3 stars in the “Eruboshi” certification scheme as an excellent company based on the Act on Promotion of Female Participation and Advancement in the Workplace. In addition, in June, we issued a joint declaration in collaboration with the labor union. This joint declaration by labor and management commits to creating a workplace environment where people can work with peace of mind to focus on proper working hour management and zero harassment (p. 61). At present, we are restructuring our medium- to long-term human resource strategy, with the maximization of human resources as a pillar, aiming to link the growth of employees to the creation of a unique corporate group that will last well into the future.
Over the years since its establishment, the Isetan Mitsukoshi Group has continued to propose new, affluent lifestyles and culture to its customers, always keeping in mind that we are half a step ahead of the times. Even in this era of rapid change, we remain confident that we will be able to meet the expectations of society by carefully identifying the roles we should fulfill through dialogue with our stakeholders.
Following three years of the COVID-19 pandemic, we are now entering a phase in which the true value of our sustainability management will be put to the test. We will make every effort to ensure that every single employee understands and empathizes with our sustainability policies, and to ensure that we integrate them with our business activities and implement the PDCA cycle to make them more effective.