Leveraging ESG to Drive Transformation, Enhance Client Value, and Engage Top Talent

ESG-sustainability-Konica-Minolta-Milan-Lakhani-Interview

Leveraging ESG to Drive Transformation, Enhance Client Value, and Engage Top Talent

In today’s world, sustainability is a pressing and complex challenge that companies must address. With new regulations, such as the EU directive on corporate sustainability reporting, companies must find innovative ways to reduce their environmental footprint and increase social impact while remaining competitive. In this interview with Milan S. Lakhani, Director of Digital Transformation (DX) and Partner, Environmental Social Governance at Konica Minolta, we discuss the challenges and opportunities of the new directive, as well as the concept of sustainability by design, developed in-house to support ESG related product value creation.

What is your perspective on the importance of corporate sustainability and ESG in the current economic and social context, and how does Konica Minolta apply these principles in its operations?

I think it’s important to first take a step back to really define what sustainability is and what we mean by ESG. Sustainability is a reference point to meeting the needs of the present without compromising the ability of future generations to meet their own needs, as described in the Report of the World Commission on Environment and Development. This definition mainly focuses on the balancing of the economic context, the environment and social factors to enable long-term prosperity as well as the well-being of both the people and the planet. On the other hand, ESG stands for environmental, social and governance, and these are the three central factors measuring the sustainability and the ethical impact of a company’s operations. It’s also a framework that is used by investors to assess the credibility of an organisation.

From a Konica Minolta perspective, we define the Environmental pillar as the conservation of the natural world. Examples of this are in the areas of climate change mitigation, resource conservation and the circular economy. The second pillar, Social, focuses on the Company’s relationships with its employees, suppliers, customers, clients, and community, and covers topics such as diversity, equity, inclusion, human rights, working standards and working conditions. In Konica Minolta, this translates to fostering an engaged, skilled and healthy workforce – and by saying healthy we also refer to mental health – and paying great attention to human rights, inclusion and equal opportunities. Finally, the last pillar relates to the area of Governance, which we define as the “foundation of an effective corporate ecosystem”. Examples here are looking at sustainable and responsible conduct, ethical behaviour, governance and risk management, ensuring our products and services have the highest amount of quality.

The topic of ESG is gaining significant attention from investors, customers, and talent, turning sustainability into a “win-win” for both the environment and the company itself. How do you think companies can use sustainability as a competitive lever to attract customers and talent? Do you have any successful examples in this sense related to Konica Minolta? 

It is true, ESG is gaining a growing business relevance. However, it is worth pointing out that the ambitions of these pillars are not necessarily new – in fact, for example, at Konica Minolta, we have been committed to sustainability for decades, starting with the foundation of a global Environmental Management Department in 1971. In Europe, we are aligned to six of the United Nations Sustainable Development Goals, and thirteen in our headquarters, Konica Minolta Inc., in Japan. Additionally, to support our company’s medium and long-term direction, five new material issues have been identified, and for each of these issues, a vision was also established towards the company’s approach to value creation.

In the last couple of years, we have seen a shift from shareholder capitalism to stakeholder capitalism, whereby, customers, partners, employees, and of-course, shareholders want to know more about the involvement and the strategies put in place by Konica Minolta with respect to ESG.

The new Corporate Sustainability Reporting Directive (CSRD) is bringing significant changes in how companies communicate their sustainability practices. What are, in your opinion, the key challenges it may pose for companies?

As the scope of reporting broadens through the CSRD, companies will be required to deliver comprehensive and detailed disclosures – essentially, a substantial data (and insight) driven project. Therefore, one of the first challenges for companies concerns the granularity of information, i.e., to collect, analyse, and report necessary data accurately, transparently, and efficiently. To do this, companies may require implementing robust data management systems and obtaining external assurance, which can be resource-intensive.

The other challenging factor is double materiality, whereby, companies need to report both on the impact of sustainability matters on their business and the impact of their business on sustainability matters. An additional aspect to highlight is stakeholder engagement: companies must engage with a wide range of stakeholders, including investors, suppliers, customers, and employees, to understand their sustainability-related concerns and expectations.

As an example, for the Social side, last year, through our annual global employee engagement survey, we asked a specific question on ESG, resulting in gaining insights from our employees on what was working well, and where improvements were needed. Overall, the results underlined the importance of ESG within the company.

Sustainability by design has become a fundamental part of the corporate strategy for many organisations and for Konica Minolta. Could you explain what is meant by it and what are the key pillars that companies should consider during the process of designing their products or services?

To provide a definition, when we talk about sustainability by design, we refer to the process of “using a systematic design framework to create products and solutions that are environmentally friendly, socially responsible and economically viable”. In this sense, the framework – which currently applies to new product development within our digital transformation (DX) division, consisting of six pillars, aims at designing products and digital solutions that are resource, energy, and cost-efficient, thereby minimising their environmental impact. In parallel, its application can result in increasing the brand perception and reputation, while ensuring to avoid green, or social washing. The pillars, in general, promote life cycle thinking, circularity, and user-centred design.

For example, it is important to consider inclusivity and diversity of users when designing and developing a product, or a solution. Often, when we think of developing new products, the areas of inclusivity are not at the top of the list of what we need to adhere to. So, when we are incubating new ideas and having user testing, we usually target one specific type of persona because we think that might be the target that we want to aim towards. On the other hand, when a solution is user and disability friendly, it has a stronger social and business benefit.

Another aspect of the framework relates to promoting circularity and a regenerative approach. Around 80% of the product’s environmental lifespan is decided at the design stage, and therefore circularity and a regenerative design are the areas of the framework that we want to advance further. This concretely translates into using fewer and more sustainable materials, or at least, knowing the material composition of products, so that we can understand their impacts and potential risks.

CURIOUS ABOUT ESG, SUSTAINABILITY AND INNOVATION IN KONICA MINOLTA?

Konica Minolta is dedicated to integrating sustainability into our core business. Within our Solution Development Centre, we have integrated a ‘Sustainability by Design’ approach. We invite you to learn more about how these principles are woven into our offerings. For further details, please reach out to us. Let’s shape a sustainable, inclusive, and well-governed future, together.

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