Sanpo-yoshi Communication

President's Column] SX (Sustainability Transformation)

Last year, the Ministry of Economy, Trade and Industry (METI) launched the “Study Group on Dialogue to Contribute to Long-Term Management and Long-Term Investment for Sustainability and Corporate Value Creation” (SX Study Group) in collaboration with certain large corporations and financial institutions, and it publishes the minutes of each meeting on its website. You might have thought, “We haven’t even fully grasped DX (Digital Transformation) yet, and now here comes the next one—SX (Sustainability Transformation)?”

However, it may become an even more important concept than DX. SX has been defined as comprising three elements: “enhancing corporate sustainability,” “identifying both medium- and long-term risks and opportunities and incorporating them into management,” and “using these as the core of management, updating them as needed, and adapting to changes in the environment.” Put more simply, it can be described as aiming for long-term growth while balancing “profitability” with “ESG (Environmental, Social, and Governance).”

In comparison, DX—if I may say so without fear of being misunderstood—is “the process of enhancing a company’s competitiveness through IT and digital technologies,” isn’t it? It gives the impression of focusing more on short-term value enhancement. As many of you have already noticed, sustainability has become a requirement across all industries. We’ve actually heard of cases where companies were excluded from supply chains for failing to take this into account, and we’ve experienced this firsthand within our own company as well. We’ve entered an era where, unless we take environmental, social, and corporate governance factors into account, we won’t be chosen by our more socially conscious customers.

In principle, I believe that any business leader—regardless of whether it is explicitly stated—instinctively “identifies both the medium- and long-term risks and opportunities facing the company and incorporates them into management decisions.” In the context of this SX, it can be said that the goal is to transform management by maintaining a strong awareness of both risks and opportunities from a sustainability perspective.

We, too, have recently reaffirmed our commitment to raising our awareness of ESG even further. As I was reading this article on SX, I was reminded of the following words by Eiichi Shibusawa:

"An economy without morality is a crime, and morality without an economy is just empty talk."

I believe that “SX” is by no means a new concept; rather, it is simply a fundamental business principle that has long been emphasized—the idea of striving to balance “profitability” and “ESG.”