Nissan Motor Co., Ltd. (7201) Earnings Call Transcript & Summary

Hello, everyone. Thank you for joining us at Nissan Sustainability Seminar 2023 circular economy. My name is Ohara with Global Communications of Nissan Motor Corporation. I have the pleasure of serving as your emcee today. The seminar is divided into 2 parts, beginning with the presentation, then panel discussion. First, we'll be inviting Chief Sustainability Officer of Nissan Motor Corporation, Mr. Joji Tagawa, to explain Nissan's initiatives in the field of environment. Then we'll be inviting experts to take part in the panel discussion entitled Equality Towards a Circular Economy From Idea to Action. And without further ado, I would like to invite Mr. Tagawa. Mr. Tagawa, the floor is yours.

Thank you, everyone, for joining Nissan's Annual Sustainability Seminar. I'm Nissan's Chief Sustainability Officer, Joji Tagawa. For our third annual session, we will have 2 panel discussions, each with a different theme. The first is circular economy, and the second is DEI, diversity, equity and inclusion. Before we begin our first panel discussion on circular economy, I would like to introduce Nissan's initiatives for sustainability and our plans for the future. This year, the world has encountered numerous weather anomalies such as record-breaking high temperatures, extreme heat waves in regions never experienced before and recurring wildfires. You have all, no doubt, felt this shift and change in environment. As United Nations Secretary General, António Guterres, recently summarized on the 27th of July, the era of global warming has ended, the era of global boiling has arrived. There's going to be -- there is growing evidence to suggest that 2023 could be the hottest year for Asia, Europe and North America on record. Climate change will affect us significantly, not only through its impact on the economy, such as rising food and energy prices, but by way of effect on individual health. We live in a world that requires immediate transformative actions to steer us toward achieving a more sustainable way of life. To address this pressing crisis, we must all contribute to the solutions. As a business person living in today's world, I feel responsible for the world will leave behind to the next generation and also the generations that follow. So when I became CSO, I took on a personal mission to fulfill this responsibility. Motivated by our corporate purpose driving innovation to enrich people's lives, Nissan has been putting sustainability at the heart of everything we do to ensure a cleaner, safer and more inclusive world for all. This sustainability seminar is a part of that initiative. We want to discuss how we can achieve sustainability with experts and business leaders who are embarking on industry-leading initiatives. The panel will share knowledge and experience that will inform what we can do today and how we can plan for a more sustainable future. We accelerated our sustainability initiatives in 2018 with the Nissan Sustainability 2022 plan, a 5-year strategy that identified our targets in each aspect of ESG, environmental, social and governance. Since then, we have reduced CO2 emission from new cars by 41.2% compared to the fiscal year 2000. Expanded introduction of renewable energy, such as photovoltaic and wind power generation and increase the proportion of renewable energy consumption to 11.9% at our production plans. Since introducing the Nissan LEAF in December 2010, Nissan's global sales of electric vehicles have surpassed 1 million units. Furthermore, Nissan positions human rights as one of its most important material issues. Nissan conduct human rights assessments as part of our due diligence and when evaluating Nissan and our partners globally. In addition, Nissan has consistently strengthened our initiatives for sustainability in various fields and have made steady progress. Last year, we undertook materiality assessment for the field of ESG, identifying 21 items of materiality Nissan should prioritize and act on, particularly to tackle climate change, we are making electrification of our vehicles a top priority. In our long-term vision, Nissan Ambition 2030, we have announced that we will introduce 27 new electrified models, including 19 new EVs as we promote wider use of EVs. Nissan has partnered with -- for our energy to establish a system to recycle, we sell, we fabricate and reuse EV batteries. Currently, the batteries taken out from Nissan LEAF are reused in various scenarios such as an emergency power source for railway crossings of East Japan Railway company and power source for automated guided vehicles in factories. We were further from this circular system to greatly contribute to enhancing the use of renewable energy and reducing resource dependency. Nissan has the goal to achieve carbon neutrality across the life cycle of its products by 2050. To reach net-zero emissions, we need to think about our manufacturing processes, material resources and how vehicles are being used. As an example of reducing CO2 emissions of a product life cycle during manufacturing from January this year, we've been using low CO2 steel and green aluminum from Kobe Steel for Nissan models. With steel and aluminum taking up a significant percent of vehicles materials, the use of these materials is an effective way to reduce CO2 emissions during manufacturing. In addition, another important factor is the circular economy. Rather than procuring new resources by spending energy, we intend to increase the value of resources and expand the utilization of products. As an example of applying circular economy principles, a closed-loop recycling system for aluminum parts has been implemented in the following plants, Nissan Motor Kyushu, Smyrna in North America and Sunderland in U.K., where X-Trail, Rogue and Qashqai are produced. This system recycles aluminum scraps to create new alloy sheets for use in new vehicles. Aluminum recycling helps save more than 90% of energy needed to create a comparable amount from raw materials. By expanding the use of recycled materials, we plan to reduce the dependence on newly extracted resources and create synergy with climate measures. These initiatives are also introduced in the ESG data book 2023, which was released at the end of July. We also plan to publish Nissan's first integrated report by the end of this fiscal year. We will continue to utilize these tools with high transparency to disclose the status and results of our initiatives to our stakeholders in a timely manner. Nissan plans to announce a new midterm management plan this year. And the basis of this plan would be the new sustainability strategy Nissan is currently formulating. We believe that this new strategy is very important in realizing our long-term vision, Nissan Ambition 2030 and will be announced at an appropriate timing. This year, Nissan will celebrate our 90th anniversary since being founded in 1933. Nissan has valued its spirits. Do what others don't dare to do. We were among the first in the automotive industry to commercialize lithium-ion batteries and pioneered the era of mass-produced EVs by installing them on the Nissan LEAF. Currently, we are developing all solid-state batteries, which will be a game changer for EVs. We are also promoting cutting-edge efforts to become carbon-neutral at our production plants. However, not everything can be achieved by Nissan alone. We want to create a sustainable future together with our various partners across industries. For today's final discussion, we have gathered panelists with extensive expertise and a wealth of experience from a wide range of industries. I will also be participating as a panelist, and I cannot be more excited about our upcoming discussions. So without further ado, let us begin the conversations. Thank you.

Thank you very much, Mr. Tagawa for the presentation. I'd like to go on to the panel discussion. Let me first introduce each of the panelists one by one. Mr. Takako Sato, Circular Economy Expert, ESG Strategy Division of Ricoh; Mr. Robert Metzke, Chief Staff Innovation and Strategy, Head of Sustainability at Royal Philips; Ms. Pia Heidenmark Cook, senior adviser at Teneo; and from Nissan Motor Company, Mr. Joji Tagawa; and our moderator will be Mr. Keisuke Hanyuda, who is the Managing Director and CEO of Owls Consulting Group. I would now like to hand over to Mr. Hanyuda. Mr. Hanyuda, please.

Hello, everyone. We will now have a panel discussion on the theme, Accelerating Toward a Circular Economy from Idea to Action. I hope you enjoy. Again, to introduce myself, I am the Managing Director and CEO of Owls Consulting. My name is Hanyuda Keisuke, and I'll be serving as your emcee. I'm a business consultant, I'm also an adviser to the government. I'm also involved in NPL/NGO activities and from various positions, I'm engaged in sustainability society building. The theme today is circular economy. The society has been based on mass production, mass consumption and mass disposals so far. In the area of linear economy, there was too much load on the resource and environment, and we became concerned that we will go beyond the planetary boundary. The linear economy is a model that eats up resources. And therefore, it also undermines the potential economic growth. But actually, we knew about it. Human society knew about it. It's not something new. And yet we were unable to get rid of such habits. But with progress in digital technology, we finally are able to talk about the specifics of the new socioeconomic system, finally. And much attention is being paid to circular economy, which is the theme of today's panel discussion. We have 4 wonderful panelists who are pioneers in this area. They will give us tips on the importance of implementing circular economy. They've been frontrunners and therefore, they probably face difficulty. So those are some of the questions I wish to ask them. We have a truly heavy weighted panel. So let's ask them to once again self-introduce themselves. Could you mention your name and how you are currently involved in sustainability? So in the order that you were introduced by the emcee. Let's start from Ms. Sato of Ricoh. Please go ahead.

Good afternoon. My name is Sato from Ricoh. Thank you for your kind invitation to take part in this wonderful seminar today. I'm very grateful for the invitation. I'm with Ricoh, and I'm with ESG Strategy Division, I'm with the ESG Center. So today, I have brought with me slide about our ESG Center. So I will explain based on this slide. ESG Center is there to promote global activities throughout the Ricoh Group on a global scale. So we come up with different promotional management strategies. We also set ESG targets. We also manage the progress. And we also promote various activities of different business units. And also we disclose ESG-related information. We also gain outside assessment. And also we carry out employee training. And so we also are responsible for CSR promotion as well. Now my job is -- my title today is Circular Economy Expert. I'm an expert. So I'm responsible for promoting circular economy in that capacity. I must focus on the following: it is important that we develop environmentally friendly products. That is very important for us. So we need to identify the needs and the requirements of our customers. We also need to have advanced view of the regulatory requirement. So this can translate into promotion of competitive products. Furthermore, as far as our relationship with Nissan is concerned, they use a lot of our products and printers. Indeed, circular economy, which is the topic of the day, they're using renewable print pictures. And also with regard to sales and marketing, vehicles are essential. So Nissan EV and vehicles, we use them to sell and market our products. And as far as our scope and product activities are concerned, 40% is in relation to CO2 emission. It's important that we eliminate that. We need to make a transition to the EV. This is essential. So that in the case going forward, we'd like to work together with Nissan. Thank you very much for this opportunity.

Thank you, Ms. Sato. Next, we'd like to invite Robert. Can you state your name and also talk about your activities in relation to sustainability?

Good afternoon. It's a great pleasure and honor to be with you. My name is Robert Metzke, and I lead sustainability at Philips. I'm Senior Vice President. I have a background in Physics, and I have followed many different positions in innovation strategy in our company. Now you may know Philips is one of the leading health technology providers in the world. And the health care industry in itself is very politic and not accessible for half of main time. So as part of our purpose to improve 3.5 billion people's lives by 2030, we really believe that we can make a difference in working with the leading hospitals around the globe to meet healthcare both accessible and much more sustainable. Today, the healthcare industry is emitting more CO2 than aviation and shipping lines together. We have been the first health technology company in the world to have been adopting science-based targets for Scope 1, 2 and 3 since 2000. We operate carbon-neutrally, globally. Last year, 80% of our revenues came from circular solutions and products. That will be close to 25% by the end of 2025. So we believe very much that circularity is one of the method to also reduce the global carbon emissions and indeed operate within the planetary boundary emissions.

Next, I would like to invite Pia to take the floor. Your name, and can you talk about your activities at this moment. Pia, please?

Hello, good afternoon. Really happy to be here. My name is Pia Heidenmark Cook and I'm a senior adviser at Teneo. I used to be a Chief Sustainability Officer at IKEA and since leaving IKEA 2 years ago, I sit on the Board of Directors of companies across health care, retail, restaurants and sustainable materials across North America and Europe. And I worked with IKEA on circularity, where we tested circular hubs in all our stores, which was innovation or design center for customers to learn about circularity and how to take care of products and extend the life of products. We had take-back services, so people can take back their old furniture, and we were also testing secondhand sales, both online and in the stores, and also had, of course, a democratic design, which was an important part where we included sustainability and circularity at the beginning of the process when we design the products. And also working now at Decathlon, which is a sports retailer, where there's also a lot of take-back -- encouraging take-back of sports articles and also a lot of secondhand products being sold. So I continue to work with circularity also since leaving IKEA. Thank you.

Thank you very much. Then let us begin the panel discussion. Mr. Tagawa, you've already spoken. So I think the introduction of Mr. Tagawa is not necessary. So the first topic is why circular economy? Why is circular economy very important? I think we need to go back to this point. Why is circular economy so important? For those of you who are joining us in this discussion, you may feel that the challenge to circular economy, you might be questioning whether or not this is really important, whether or not this is really viable. I'm sure you have questions about the profitability of circular economy. Not all of you are properly convinced about the viability of circular economy. Why is this necessary? So that's what we want to start with at this panel discussion. So Pia, I'd like to begin with the question to you. Pia, you also -- in your self introduction, you mentioned that you were with IKEA until 2 years ago. And you let initiatives towards circularity develop, certainly this is what is included in the take-back offers. So you're with one of the companies that was first very aware of the importance of circularity. So you focused on circularity in the beginning. But what kind of sense of urgency and the awareness of issues do you have? But to -- to focus the circularity ahead of the others, I would appreciate your comments on this point. Thank you.

Yes. I think one of the main reasons why IKEA was early was because we set climate targets very early. And circularity is one key way of achieving your carbon goals or your climate goals. And that is especially for producing companies like IKEA being a large home furnishing retailer, where about 70% of the carbon footprint comes from the material and the production of the products. So without really reflecting on how you design, how you use the products and how you take them back and how you recycle at the end, we could not achieve our carbon goals and our climate goals. So I think that was one of the main drivers, understanding that 70% of the footprint actually came from the supply chain and the products. So that was the first reason. The second being a European or a Swedish-based company, there's been a lot of legislation in the area, I mean, even more now today, but also 5, 7 years doing more circular activities in the company. And then the third one is that a lot of our customers, and especially in Belgium and Netherlands, where we started a lot of the initiatives, there was a big demand from customers where they wanted secondhand products. They wanted to be able to return the product. One of the biggest obstacles to buying a new mattress for example, was not knowing what to do with the old one. So also from a pure commercial point of view, we could see that offering take-back services made sense. And then, of course, from a sustainability point of view, it made a lot of sense because you want to make sure that the products live as long as ever possible to reduce the footprint per product. So there were mainly 3 reasons. One was materiality understanding the importance of circularity to achieve our sustainability goals; second, legislation, existing but also coming legislation; and third, customer demand. Thank you.

That was very straightforward and very clear. I would like to ask Pia further. So you have various users for example, regulation of customer demands. Were you able to gain understanding internally, how did you gain -- how did you convince people internally? We hear from people inside the company. I'm sure they resist this plan. How did you gain and convince people inside the company? Were you able to gain understanding at a very early age, at a very early time? Thank you.

I mean, it's an ongoing journey. I mean, I haven't been in IKEA for 2 years now, but I know that they are still working on developing new circular offers and new circular solutions. And I think it's the same in every company. The sustainability is an ongoing journey when you learn, and it's about change management. And one of the key drivers in change management is, of course, education and awareness, understanding why you need to change and what the journey and the road map in that change looks like. So education awareness is key. Another key part is success. So doing initiatives, doing activities or projects and proving that they actually work. And not only the small ones, but of course, a lot of small projects so that you can kind of fail fast and fail not too costly but also bigger ones. And with time, when you see that customers want it, employees are really proud, you see that the payback is actually not so bad that you maybe thought from the beginning then you start to see that this actually makes sense to do. And then it becomes much easier to do the bigger projects that are more expensive. But I would still say that it's an ongoing journey within IKEA and within most of the companies where I work because it is a new business model. It's a new way of making money and a new way of interacting with customers. So it's -- or interacting with suppliers, if you look more at the design and product design phase. So it's not an easy, quick fix, but it is a fundamental change in looking at how we organize our business and how we do business.

I think if your leading companies need to continue to tackle change, so I'm encouraged that this is an ongoing journey even for leading companies. Then I'd like to ask Mr. Sato now. Now at Ricoh, you have already tackled [indiscernible] because one of the companies that have been very advanced in relation to various activities. And I understand there have many different stakeholders, not just investors. But what's one of the challenges that the stakeholders share? You can follow this -- the challenges [indiscernible]. What does that challenges pertaining to the economy based on your very extensive engagement with different stakeholders? What are your thoughts?

Let me focus on why circular economy. First, I have a slide about the ESG management targets for fiscal 2020. So let me talk about this. So how do we address the profitability from the circularity to circular economy? On the short term, this may seem as a cost-increasing element. Of course, over the medium to long term, this should be seen as a vast investment to gauge and to secure long-term -- profitability made to long term. So we call this as future finances. Companies need to see requirements for security as this is opportunity. So it's important that we translate this into opportunity to gain positive impact on financial performance in 3 to 10 years' time. And also, as far as our business is concerned, we are involved in B2B, meaning business to business. That is the bulk of our transaction. So when it comes to government procurement and transactions with various large companies, we need to -- we require to address sustainability and early [indiscernible]. And we find these standards that have been recorded becoming higher. So not just about economy, you also have to address society as well as ESG. So the requirements have become much more complicated these days. So unless you address these issues early on, then our chosen -- our product rather will not be chosen by customers. So yes, we're talking about opportunity so as crisis. So it's important that we take action now. That is important. That is the message we sent to our stakeholders. Now when we announced our and published our CE report because we were very rare as a company and also circular economy has become very popular only after the decarbonization, and many companies, many people in the municipalities and companies have said that they hear the term circular economy, but they don't know what to do. They receive various inquiries from various people in many different municipalities and companies. But unlike decarbonization, you have no common goal set by BCC, like you do in the field of decarbonization. So many people in this company's municipalities don't know what -- indicated that you follow, they don't know what to do. Also, this was covered by Pia-san earlier. If we persist sustainability, there's also a sense of resistance internally because there's the issue of increasing cost and its compatibility with economic rationality. So how did Ricoh pursue this? These are some of the frequent asked questions from our stakeholders. So against that backdrop, as we respond to various issues as we covered in our circular economy report, now please take a look at this. This goes back to 1994, and Ricoh established concept called Comet Circle as a concept for realizing circular economy. The circle shows partners to realize the circular economy. And the arrow show the process. And because this looks like a comet, that is how we use the term Comet Circle. So from the top circle, these are new materials that have started from the earth. You go to the upper arrow and then convey to customers as a product. We have really, the mass production MS consumption era. The finished products and which are now follow the arrow on the bottom and there are putting into the [indiscernible]. But now this time, we have a lot of leased products. So these products come back to us. So optimal processing of products that return to us is required. But should we continue -- should we really avoid recycling of products. So 30 years ago, very early on, we faced this question. We want to make sure that we could use the arrow on the top to be able to recycle the products. If they cannot be recycled as products, we should recycle them as part. If they cannot be recycled then reuse as far as they should be reused as materials. So this is a circle which we will be operating very early on.

When we take a look at the materials, we would dig deep into the conversation be it circular economy. I think you talked about the relevance of disclosure. It's important that you share and disclose this information, not just to say, yes. That is not an excuse, but it should be disclosing information to actually show that you're committed. So really says that this is a very sincere effort on your part to disclose your activities. Next, I'd like to ask Robert. Robert, earlier, you mentioned that Philips is indeed is committed to circular business. You have many products that contribute to this. 18% of the values contributed to this. You want to improve this up to 25% by 2025. So in your core business, you have various initiatives that are related to the sustainability. So what I want to ask is that you have different business units, the commitment we get -- the very intense commitment on the part of the business units at Philip so the business seems to be strongly committed to this. Now this very -- this is a question similar to the question that I earlier asked in the 2 panels. How did you convince the business units to take -- to be committed to products that lead to circular economy? How did you -- the fact that the -- it's a different business is used to incorporating with increased part -- increased rate of circular product. So how relevant a circular economy for each of the businesses, how did you convince each of the business units?

Thank you for your question. Maybe Pia and the previous panelists have already commented on the various stakeholder perspectives from a very -- in a very comprehensive way. I think if you want to help people to change the way how they do business and how they look at their responsibilities, it really starts with understanding why, right? So -- and as Pia already pointed out, the customers are changing their request. The regulators are stepping up. There's an increasing pressure to disclose things, but most fundamentally, I think it is also to understand it makes business sense and there's a logic. I would argue circularity in time it's not precondition for any successful business. Business cannot be successful if society fails and if our environmental conditions collapse. And we know that we have been digging up more than 100 gigatons of raw materials as mankind per year in the last years. And with an increasing rate and less than 10% of that is recycled. So we are running out as [indiscernible] time out on a lot of critical materials. So if you want to be successful as any business, you need to find ways to create value for your customers with less waste and less materials. And I think that is a very strong logic and in -- on that basis, we engage with our business leaders and with the strategies to say, okay, how can we achieve that? And the slide that you see on the side, I think there's a couple of building elements that we use in our circular efforts. So of course, it starts with understanding do we need material at all. What can we digitalize, how can we provide services without material? The second element is if we use materials, how can we move away from virgin materials and use recycled materials or materials that are much easier to bring in these recycling loops and there were some great examples from IKEA, from Nissan and also from Ricoh. So material choices is very important. But then also the entire design that's critical. So can you design in a modular way so that you can easily replace components, repair component, design for reparability and serviceability? That are critical elements. Think about platforms where you can swap components and maintain the frame of a huge medical scanner for instance, for many years in hospitals by changing components like cameras, detectors, upgrade softwares. And the last element of that is business models are moving away from selling equipment to really offering integrated services. And I think all of this is the core part of our strategy and it helped us to really engage with the businesses and get them along. So maybe let me summarize, I think if you want to change the behavior of business leaders and experts in your company, you need to have a very clear storyline and narrative that starts with the why you need to empower leaders -- formal and informal leaders to take action. You need to build capabilities and really train them, for instance, on ecodesign, life cycle investment and understanding the impact of the consequences and you need to embed this in processes. So in every stage gate of a product design process, you need to have targets, you need to align the incentives, you need to align the performance management cadence and that's what we have done.

Thank you very much. Indeed, you've cited 3 important keywords. It's important that if the society as a whole fails, this all cannot be successful. That's very important. This is an important keyword. If the whole society collapses, businesses cannot be successful. Now some people are convinced early on, but some people have to -- some people take a lot of time to be convinced. So be it management, you need to organize a different narrative to convince different leaders. So you're working for the society, and you're also working for the business. I think there's a compatibility between the 2. That is the impression that I have from your comment. And also I believe technology played a very important part. That is my impression. Without material, some elements can be covered with evolution of technology and digital. I guess it's the very deepfelt discussion internally. Now Robert, for the members of the audience who are taking part, they're all interested in the circular economy. They want to contribute, they want to know the products and services they can contribute to circularity. Can you say concrete examples of products and services that contribute to circularity? For example, do you have a product consolation that contribute to circularity from Philips? Can you say representative products, please?

Yes, of course. So let me just start my answer with saying circularity is not a product property. It's a system property. So you can design products in such a way that they are ready to become an element of the circular economy, but you also need the right business models, you need to reverse logistic processes, you need to work together with partners. And that is different from energy efficiency, you can design the product to be very energy-efficient. But you cannot design a product that's safe to be circular, but you can enable it to become part to circular economy. So that's important to understand. What we have done to give you concrete examples over the last couple of years, we have invested hundreds of millions to build refurbishment facilities. So we really want to preserve the value of our products. We're not breaking them down to material and just reuse the steel and the copper in the wires, but really use what we call higher R strategies. So refurbishment, remanufacturing, reuse. That is very important. That means we have trained our field service engineers to do that. We have designed our machines in a different way. We have designed completely new concepts and technologies. One example of that is, for instance, if you use these huge scanners, MR, magnetic resonance scanners for imaging in hospitals, you have seen it, they weigh many tonnes and they use thousands of liters of helium to cool the superconducting magnets. We have developed a technology that basically allows you to operate this kind of -- without additional helium. So we have reduced the entire amount of helium to 7 liters instead of 3,500 liters and close this cooling system. Helium is a very scant resource. I think that's an excellent example for ecodesign and something that reduces the amount of resources that you need, and it's a fundamental breakthrough in technology, which is much appreciated by the customers in our market. On the consumer side of things, you know that AVENT, the baby brand is part of our Philips company. So for instance, we have developed a way where the consumers can rent breast pumps rather than buying them so also enabling different business models to reuse valuable equipment rather than selling it and then losing sight of it, where they just get used a couple of times and then vanish somewhere in a cupboard. I think all these are important steps to not just design the products in a different way but also to work with the customer in a different way.

You talked about very concrete examples. There's so much that we like to learn from your company and from you. Thank you so much for sharing that example. Now I'd like to ask Mr. Tagawa. As I explained earlier, Nissan has been working to substitute materials that do not rely on newly mined resources. You have come out with various strategies. So you're talking about -- you're now doing used batteries and [indiscernible] products in [indiscernible]. So I think your activities are indeed very fast in this regard. So as Mr. Tagawa, I'd like to ask a question. I'd like to be very candid with you. I was going to ask this question to you, Mr. Tagawa actually. The Nissan's initiatives should they go beyond the customer demand vis-a-vis cars? I'm sure that the customers don't come to dealers for -- I think you tend to go beyond the customer demand. So why is it that you -- that's what I was going to ask, why would they go beyond the customer requirements and customer demand? But having listened to Pia and Robert's comments, actually, the customers are making demands these days. So my assumption has changed. I thought there's a difference in the markets of different countries. Actually, our customers are -- they say concrete demand for circular economy in the Japanese market. But -- or are you saying that you want to go ahead of the demand? Is that the case?

True, for example, say there's a buyer of a vehicle. Nissan in EMEA is recycling batteries. So let's use Nissan battery. Do they do that or Nissan's cars material is recycled? So I will pick Toyota but rather choose Nissan. I don't think so many purchasers are making choice that way. But take a look at the automotive sector or not just the automotive sector, but what are the challenges we are facing. When you manufacture a car, so many types of material is used. It's not just steel and aluminum. We use other materials, we use a lot of water. And true that in some countries, the population has saturated in some countries. But according to the current forecast, demand for cars will continue to grow and the number of owned cars and the number of vehicles sold will continue to grow. Can we continue to depend on resources in manufacturing cars, either the cost will become prohibitive or we will end up not being able to make cars. So when we face the customers right now, are they making choices by all the way thinking about the circular economy, maybe not so. But for companies that are paying attention to circular economy, they will probably be funded by institutional investors and our EMEA activities are well appreciated by the general public too. Tesla's EV. Yes, they're doing well in terms of their sales. But when we launched EVs in 2010, battery reuse -- secondary use. Nissan's battery is the highest in terms of the number of batteries that are put to reuse. So this is what we could do with Nissan's battery for reuse. It's not just onetime use, its battery. We can repurpose the battery, like the railway crossing or for disaster risk reduction or for electricity power company, maybe they can use that as a storage battery or reuse that in the grid. So if such technique is proven, a Chinese company that has just begun to sell EVs or some emerging manufacturers are not really thinking that far to recycling, but if Nissan takes the lead, maybe we can also invite new ideas. So the automotive sector has been for 100 years making cars. But now with electrification and connected cars, yes, it is a threat for us to see these new companies, new entrants. We use motors, but Nihon Densan Nidec is a Japanese company, that's #1 in the world in motors or Honda and Sony getting together that may be a threat of competition. But that would also bring about new ideas, even for circular economy. Hanyuda-san, you talked about linear economy, and we continued with that concept for the past century. But we can't survive unless we depart from linear economy or we may not be able to continue to manufacture cars unless we depart from that kind of concept. That's the sense of crisis we have. So we're not doing what we are doing just because we wanted to be appreciated by the outside organizations. But for us to survive in the automotive sector, it's a must.

That is so convincing. Of course, Nissan is the frontrunner in this area. That is why you properly face first issues such as return of both the batteries. So you need to do something in critical terms. So there's a sense of urgency in terms of your practical operation. So that is why you are here. Let me further elaborate -- ask you to elaborate. Let me ask the following question to you, Mr. Tagawa. The management team, when there are new words, the management team becomes very wary. So the decarbonization has appeared as a keyword in relation to regulations. But they don't need to fully respond to decarbonization. But now you have a new word, circular economy, that is emerging on the horizon. There might be overlaps between the 2. But the companies are struggling just with decarbonization. If they asked to address circular economy, it will be too much for them. So probably had such discussions on the management twice that sense of the management.

Circular economy. It's not just about circular economy, but in decarbonization, short-term costs is -- of course, is discussed. Robert and Pia have also mentioned that there is constantly internal debate within the company. And of course, that's a topic that's often discussed, naturally. But using what's been recycled may be cheaper than what we create a new or it becomes more accessible. And that's a proven concept in the midterm. We're going to see more of those examples like rare materials or rare metals if we're going to continue to newly extract from the reserves, it will be exploited one day, and it will be exhausted. So we have to use the rare material over and over again or else. We engage in global business all around the world. So we are constantly worried. Maybe one day, we will wake up and find that we can no longer manufacture the car. So decarbonization, circular economy. So there's no one in the top management who is negative but I'm going to spend JPY 10 billion. Return in 3 years' time will be so many percent. Of course, then we have to use a certain [indiscernible] system sign, whether we do that investment or not, but that applies for any investment project. It's not just about circularity or decarbonization. Are we going to come up with this new model? We've experienced that over and over again. It takes so many years to recover the investment for this new model. So it's upon the top management to take all those factors into consideration and make adjustments.

That is so convincing. You have really brought about change in the society based on your internal discussion within the company. So I get your sense of passion and the journey so far that comes through in your comments. Thank you so much, Mr. Tagawa. So we have already spent half of the time for [ balance of ] question. You talked about why it's important to make a transition, why circular economy is so important. So in the second half of the discussion, I would like to ask your sense of challenges in delivering circular economy, which you have experienced because you are indeed the pioneers in this area. So you could share with us your challenges and also some I guess about possibly overcoming those challenges. I would appreciate your insight into possible actions that can be taken. So let me start with Mr. Tagawa. So Mr. Tagawa. I'm going to ask this question with the hesitation because you are on the panel. There was one thing that I really wanted to ask from the beginning. Now as you pursue electrification I think circularity becomes more challenging as you pursue electrification because the number of parts you use and the use of bare metal and rare metals increase as a result of pursuit of EV. So if it's a change between EV and circularity. How do you address the challenge? On the conflict between the different goals, if it's a challenging, please tell us, how do you try to overcome these different challenges that you see?

Of course, it's difficult. No doubt about that. So EVs. The actual number of components is lower than ICE cars, internal combustion engines. As you say, rare metals or the kind of materials that have not been used in internal combustion vehicles or -- this is -- something that is produced only in limited geographical areas or material that can be refined in certain geographical areas that's becoming challenges, but we've been creating engines for 100 years. And we have the expertise for recycling of those internal combustion engines. We have ideas. We have taken stock of those ideas. So, simply we see the acceleration of electrification and EVs. So be it batteries, there was a nickel battery and then we saw the lithium EON and all solid-state battery or LFP, slightly less expensive battery is attracting attention. But the material used and the manufacturing methodologies are slightly different. So recycling or actually extraction or reuse. We haven't come up with such technology. So in that sense, extremely challenging. Yes. That's true. But with time passing, electrification is indispensable. Thinking about global warming, no one questions the truth of that. Then that means all the wisdom, not just in the automatic -- automotive sector but from other sectors will be collected for recycling and for use in EVs. One new Japanese newspaper put up an article today. For example, if the harness, 1 unit long distance harness is used for long distance, 3 kilometers. Unfortunately, it's not about Nissan, but 1 company was able to shorten that to 130th 100 meters. Unfortunately, it's not about Nissan, but through recycling or through such technological breakthrough, the amount of material use can be reduced. We want to do something like that, and we will be doing something like that. And secondary use of batteries in motors rare metals are used, but the quantity of rare metals has been reduced by 85%. Cobalt is used in batteries, but we can may be able to come up with Cobalt-free batteries and in fact, we're beginning to see the realization of such innovation. Nissan will do that. Our industry will do that and as I said, the new entrants, we will work with these new entrants. And surely, we will find a solution. It's going to be difficult. It's going to be harsh, but it's something that we need to do.

Thank you very much for that insight. Now on related note, I would ask a question to Robert. You heard Mr. Tagawa talked about issues that need to be addressed within the industry because they need to change all the way from the design phase. Robert earlier you talked about some of the initiatives you were undertaking within your company at Philips. Now with regard to Europe, eco design concept has really taken route. And the Japanese government is very interested in the eco design concept, which is being promoted by the EU. So be it product review system. You want to enhance security -- circularity from the design phase. It's important that you involve [ first ] stakeholders such as vendors. How do you create a relationship based on cooperation between different stakeholders such as vendors? In the case of Philips you are involved in the PACE platform for accelerating the circular economy, our -- you're very much involved in the launch of the PACE. So how do you involve cooperation, how do you create cooperation within the industry? Can you talk about how you build cooperation with different stakeholders? And also this is the challenge that you face as well.

Yes. Thank you very much. And maybe going back to the comments of Mr. Tagawa on innovation. I think when you look at companies, they have perfected often the way how they innovate technologies and products. But that is not good enough if we really want to advance and accelerate circularity because we need to innovate at a broader scale. I think the challenges that we see are the engine that enable and drive new innovation. -- right? But we need to innovate not just at the technology level, but we need to innovate how we deliver technology to the customers, how we provide services, how we return products, how we finance these things and this is something that you cannot do at the company level alone. That was one of the reasons why we have contributed to PACE over the last years. We are one of the founding partners so to say together with the World Economic Forum, the World Resource Institute and many other idea as part of the club. I think there are -- the Japanese government was embarked from the very beginning. -- is where the Danish and the Dutch government, for instance, there are more than 100 companies. A lot of the things that PACE has done is you find very clear action agendas around these challenges and sharing best practices. And I think that is a fantastic platform where you can learn from each other, so that you do not have to reinvent the wheel at every different company again.

Thank you very much for that.

Let me just say if you want to find out more then have a look at PACE circular. You can look it up on the Internet PACE circular. You find the action agendas and the new strategic focus and please do join. I find a very useful platform. Thank you.

Thank you very much for that. Indeed, of course, companies that lead the industry is in a very difficult position. You have to, of course, compete give competition in the marketplace because of your business. But on the other hand, I think, Robert, you have been very consistent in your markets. If the industry is failing, then your company cannot be successful in the face of the failure in the industry. So even if you're successful at this moment, you may be able to rely on the same system a few years down the road. So everybody will feel if that is the case. So it's very important that platform-related initiative is very important. And I think Japanese government should cross borders and take leadership across different borders. And that enterprise value of such companies will increase as a result. Thank you very much for that input. Now a question to Ms. Sato. Earlier you mentioned your very innovative activities pertaining to disclosure of information. When Japanese company talk about circular business, those of you on the panel today, you understand the relevance of these initiatives. You understand the potential impact on your future finance. But many business persons see these initiatives as a cost. They see this as cost. So you need to communicate to the people that this is not a cost but an opportunity. So what is, something change is when you try to convince various people that this is indeed not a cost, but opportunity, what type of materials are necessary to convince these people that this is an opportunity and not a cost? Ms. Sato, please.

Thank you. I will introduce an example of our own company. But before I do that, I would like to talk about our goals with regard to energy savings. So let me introduce this matter -- slide, please. So we have set targets. We have to make sure that we reduce -- based on the concept, we need to reduce the input. We have to make sure that the material input be reduced to [ 18% ]. So we have set a use of -- target pertaining to use of new materials. Of course, when we use new materials, we need to come up with design reuse. -- materiality this recycle. This is very important. Now against the backdrop, in 2023, our company produced A3 color multifunctional printers. And what we did was to use so-called post-consumer plastic materials for more than 50%. This is a product which we produced. I would like to show you the slide to introduce this product. Please show the slide. Yes, yes, this is it. This is the [ 8 ] refill color multifunctional printer. We have 7 different models. [indiscernible] A4 could be -- could be produced up until [indiscernible] Now as I mentioned earlier, what we do is to introduce [ about 30% ] of so-called [ POSCO’s ] semi-plastic material. And please turn to next page. We have also introduced several different functions that are environment friendly, but again, we use 50% of POSCO semi-plastic material in this product. And let me talk about some of the story behind how we were able to successfully introduce about 50% of such POSCO semi-plastic materials. Now of course, the cases are renewed new -- materials are more less expensive. When you take a look at the -- in the case of this multicolored A3 multifunction printers, using virgin materials is more expensive compared to use recycled. So if you want to introduce POSCO [indiscernible], if you introduce 5%, that's as far as you can see, because this will lead to increase in cost. So that's been the case. Yes, it is used to a certain extent. You had -- so the [ press ] of recycle plastic is higher than compared to virgin plastic. But if you set a very high target for introduction of this new type of materials, then you need a breakthrough to be able to do that. So what we wanted to do was set a higher target for introduction of POSCO semi-plastic materials. But then members of the business unit complained that this would lead to increasing cost. So it -- you have a target of 50%. This leads -- means the cost is tenfold. So therefore, the [ relevant ] business units very resistant against this target. At the end of the day, as I mentioned earlier, -- there's the ESG of trend. We address the circular economy right now that this could a positive impact for finances later down the road. So the decision to introduce this target was made top down. In 1 single printer, which is about 50% POSCO semi-plastic materials, then in terms of quality and in terms of the coloring, this means the various challenges pertaining to the functionality and the coloring. So therefore, we set up a cross-functional team. to address these challenges. We set up a cross-functional working team to address such challenges. So not only design and but we also introduced procurement, marketing and the [ circular ] related development and also ESG departments, we're all involved from the stage of engineering and development. And then address each of the challenges that emerged step by step. As I mentioned earlier, there is the issue of increasing cost. If we introduced more than 50% of the POSCO semi-plastic, you cannot say that just because we have such environment-friendly materials, we are asking to pass on the cost to the customers. We cannot do that. So we need to reduce cost of other materials. So it's one that we cut costs in other areas. So the development of POSCO semi-plastic materials, we need to make sure that they are cost competitive to other conventional technique, and we're successful in doing that. We are able to contain the cost in development costs because there were plastic materials. This was a very important success factor for this challenge. This is very meaningful and significant. Now this is one good example of this effort. Now, we were aware that [indiscernible] transactions and negotiations about such products will increase. And the fact that we had this product was very positive for various transactions. This refers to carbon footprint on the right-hand side of the chart. We used recycled materials, if you used [ Biocon ] materials, then you'll be able to reduce CO2. So therefore, compared to the previous models or the life cycle, we were able to reduce the carbon footprint by more than 27% compared to the previous products. Earlier, we talked about the eco design regulations in the EU that is now being considered. Now CFP disclosure is going to be required against the backdrop and also even in Japanese green law carbon footprint disclosure is going to be regarded, that is -- now the discussion is taking place. So in the case of multifunctional printers, this is also this issue. And from next year onwards, we need to disclose carbon footprint for this product. And also with regard to -- we felt that the [indiscernible] circular economy was not that -- was not increasing, but that is not the case. [indiscernible] increase. So I think we now have a case whereby the trend in the community and marketplace is very much consistent with what we're doing, so this is a very good example.

Thank you so much, you may -- you said that your company made a tough decision to adopt this POSCO semi-plastic materials. And in order to overcome various challenges to overcome that you did cost -- you set of cross-functional teams. So you trying to make sure that, I think [indiscernible] was very strong that you really want to address this topic. As some members of the working team, they're not just part of design and design phase, as Robert mentioned. Innovation doesn't come from engineering and innovation. It's about marketing and sales. In the case of Robert, you talked about financing. So it's important the business as a whole address these issues. So that was a very easy to understand example. Thank you so much for that. Now next question to Pia. In your company, I'm sure that you mentioned the recycling is not the answer. You frequently say that recycling is not a month -- recycling is not the answer. I really identified with your comment. I think this is very essential to circular economy. So let me ask this question to Pia. It is not a journey to reduce the circular -- it is not a journey to introduce circularity ratio. I think mass input is not the answer. If we have to create a truly sustainable society, I think you need to reduce the amount of resource input. That -- that represents a major challenge in my view. So if that is the case, it's important that you not undermine well being an economy, but at the same to make this compatible with reduction of resource input. What is necessary to make this compatible? I would appreciate your insight and advice. How can we address circularity ratio? How can we reduce -- how do we reduce material input without undermining wellbeing. Maybe we need to involve government, maybe we need to involve civic society. Can you share your advice? We should focus not just on circularity ratio. How can we reduce material input? I would appreciate your thoughts. Thank you, Pia, please.

Thank you. It's a very big and difficult question. I think this different phases in this where like Robert said, circularity is fundamentally systems thinking where we need to think about in a company's perspective, how we design products, how we interact with customers around the product and how we take care of the product afterwards. But that involves also the regulatory framework, enabling us to do this, where, for example, [indiscernible] , when we wanted to take back plastics from our logistics units, a lot plastic products sold to customers, but just from the transport we have to register as a waste company because we couldn't handle the waste in our stores if we were not registered as a waste company. And then we're bringing them up to the EU and sharing this example, they were, of course, not aware of the kind of unintended consequences of something that was a good intention from the beginning. So having the dialogue between the different stakeholders. And then, of course, with customers even if we did see across the globe, so not just in Scandinavia, but across the globe, we saw a big interest from customers. And when it came to second hand, when it came to renting and leasing. So the need for ownership is changing across the globe. People want access to the function of the product rather than having to own the product. It depends on products, of course. But overall, there's a trend. But having said that, consumers still want it to be easy, they want it at the same price. This is -- they want the same quality and then they want it sustainable. So they're not willing really to give up something or all the other good criteria just to feel like they're sustainable in doing something good. So you need to make it easy. And I think if it's for Nissan or if it's for Philips or if it's [indiscernible], you can't produce products that are worse than the old ones and then you put a green label and say this is better for the planet because they need to be better. And I think that's where the innovation and the creativity comes in. We need to really think how do we make everything that we produce and the model we are in better. And that's kind of here and now. But then, of course, I fully agree with you regarding mass production, mass consumption and mass waste. And that is a big societal systems fault that we're in, where we created the business and the economy based on the knowledge we had 200 years ago, and we're still measuring GDP in a way that fit in the old system, but not with the knowledge we have today. We are measuring profits in companies based on how -- what we do and rather than maybe a circular model where the income stream would look different. I'm not saying less but different than the model that we have today. And consumers with marketing, we're used to always having the latest in the U.S. because that's how we show that we're kind of cool and are successful. So -- there's a lot of things we can do here and now. And I think we are doing here and now through government with legislation, through companies with circular products and different activities. And with consumers testing it. But I also do think that there is something bigger where we really need PACE -- platform of PACE, but also government interaction with companies, World Economic Forum, kind of bigger forums where we start to really reflect on how do we tax things, how do we promote the activities of companies and how do we really interact with citizens and consumers. So this is kind of a bigger thing that we really need to solve with the knowledge that we have today that we didn't have 200 years ago when we started the industrial revolution.

Thank you so much. Yes, we are now working to a major system change. It's not just engineering and technology. We need philosophy. We need thinking, we need vision. Everything needs to be reflected. Everything needs to be combined in order to address these challenges that the impression. Thank you for your comment. . So all the panelists on stage, taking part in this discussion are leaders in this field. You have such wide extensive knowledge, know-how and wisdom. I really get the sense that we are indeed changing. I'm afraid my time management was poor. We are not at the end of this session. So I would invite each panelist to share with us very briefly, in several less than a minute. Can you talk about your thoughts [indiscernible] pertain to circular economy. If you have a message to the members for listening, I would appreciate that. So we'd like to have a last wrap-up coming from each of the panelists. So let's start with Sato san. Sato san would like to give us your final message. Thank you.

Thank you Robert, Pia, Mr. Tagawa and Mr. Hanyuda. I have learned and I have taken a major message from my other panelists. Now I was going to talk about something that is going to share with you towards the closing of the session. In a seminar, which is be hosted by Nissan in this manner you have heard various messages. The fact that you're able to deliver the message with a very wide audience, this is of course very important. If we are to realize the society which Pia has talked about. So this is a sense of education. It's a matter of gaining understanding and also gaining and also people identifying with these views. I think this type of forum is very important to engender such understanding. As far as we're concerned, we hope we'll be able to encourage customers to choose these type of products. It's important that we deliver such values to our customers through our products. Earlier, I introduced about our company through the presentation. ESG is about having a positive impact on financial performance. In short term, over the short term yes, this might seem as though it is element that will push up cost. But over the medium to long term, this have a positive impact on finance -- financial performance over the long term. Sol I hope that all of you will take actions now in one way or another, please take action now. Thank you once again for this opportunity.

Thank you. Robert? Final comment, your message, please, Robert.

Yes. Thank you. I would just say, it is clear that circular models are strategically important for every business, regardless in which industry are in. So you need to think about it, you need to understand that it's not just the product properties, you need to work together with partners, with your customers, with your suppliers, with regulators to drive the change. There are plenty of great examples, we need to scale them now. it's time for action. Thank you.

Thank you. Pia? Your final message, please, Pia.

Yes. Thank you. Two reflections. One, it's important that we start here and now and take action while also reflecting on that there is a need for a bigger system change. So I think my main message is not to sit and wait until we have sold everything, sold best-ever legislation, the best ever product, the best ever customer interaction. We are in the test and learn phase and then I fully agree with Robert. We also have a lot of good examples that needs to be scaled at a pace that is much faster than today. So that's one reflection. And the second one. One thing that we have come up several times today or this afternoon is this with the language. It's a new language for a lot of managers from lot of leaders, the first climate and carbon and now come circularity, biodiversity, water scarcity, human rights. I mean, ESG and diversity and inclusion that you're talking about. I think it's important to understand that this is the language of business in 2023 and will be even more so in the future. So yes, this is maybe not what we learned in university when we went to school 20, 30 years ago, but this is what the kids today are learning, and this is the language that we need to learn and be masters of. It's the language of business.

Thank you. Mr. Tagawa, your comment .

We are the host. So on behalf of the host Nissan Motor Corporation, I would like to thank Pia, Robert and Ms. Sato for joining us. Your comments were so valuable, full of cruise and Mr. Hanyuda, your comments, in between the comments of the panelists, we're very knowledge intense. Like was the case last year, I listened to the panelists. As I listen to the panelist, I was much encouraged that this planet will survive.

Thank you so much. We would now like to end the panel discussion. On the panel discussion [indiscernible] towards a circular economy from idea to action. Thank you so much for a very good message. As Mr. Tagawa mentioned, I think we were able to be very positive at the end of the session. Thank you so much for your participation. Thank you.

I'd like to thank all the panelists for their participation. Thank you very much. This conclude the Sustainability Seminar 2023 circular economy. As Mr. [indiscernible] mentioned at the beginning, [indiscernible] DEI session is available on the website of this company. Please access the website. Thank you once again for your kind participation. Good day. Thank you. Hello, ladies and gentlemen, and thank you very much for signing up to view the Nissan Sustainability Seminar 2023 Diversity, Equity and Inclusion session. I am [ Ohara ] with Global Communications Department of Nissan Motor Corporation, and I'm happy to be serving as the emcee. Today's seminar is divided into 2 parts, keynote speech and panel discussion. At the outset, Founder and Managing Director of TDC Global, Ms. Sarah Liu will deliver a keynote speech. Thereafter, we will invite experts for our panel discussion under the theme of fostering a more inclusive workplace from reactive to proactive. Now over to you, Sarah.

Thank you so much for having me to share a topic very close to my heart this morning. Firstly, I want to give a massive thank you to Nissan for having me today, but also for creating space for such an important conversation around diversity, equity and inclusion. My name is Sarah Liu, I'm the Founder and Managing Director for TDC Global. We are a diversity, equity and inclusion consulting firm. We are headquartered in Sydney, Australia but we actually operate globally, working with multinational organizations across the -- around the globe, particularly APAC region, to help them advance around diversity, equity and inclusion. So having worked across almost 18 different locations around the world, the common question we get asked by clients and partners all the time is what are some of the commonalities or differences that you're seeing with all the different work that you're doing around the region. And whilst local culture and nuances might be different, what we are seeing is an increasingly diverse workforce and companies recognition of the increased need to harness a diverse workforce. Diversity is the reality of our world and our community today. But specifically, there are 3 types of diversity dimensions that's influencing our workforce today. Gender, 50% of our population is actually female talent and in locations like Japan, where we are currently experiencing unprecedented talent labor shortage, how do we actually harness traditionally underutilized and underemployed gender segment has become one of the biggest problems for us to solve. Generational diversity is also a key one. For the first time in history, we have 4 generations, in some countries even 5 generations working together. How do we make sure we optimize the effectiveness of this multigenerational workforce is something top of mind for leaders around the world. And last but not least, is cultural diversity. As we live in an increasingly diverse world and as organizations are looking to diversify and globalize how do we attract, retain and advance culturally diverse talent is something that we absolutely need to get right. But diversity is only part of the equation. Our role as leaders leading businesses to actually cultivate an environment where diverse talent can truly thrive. Diversity is about having different representations around the table. Inclusion is when everybody around the table is invited to have a voice and equity, as everyone given equitable opportunities and the tools they need to have airtime and to speak up and to be heard and belonging is when people truly feel that they can speak up, share true thought without any repercussions. And our role as leaders is to cultivate this environment. And when we get all these components right, numerous research and studies have demonstrated the value that it delivers for businesses. There are a lot of different researchers and studies that's been conducted around the world already. But I find the study done by Deloitte in 2022 actually sums it up particularly well. It reported that organizations that have a diverse inclusive workforce are 42% more likely to innovate, and that's both pace of innovation, quantity of innovation and quality of innovation. They also found that when you have a diverse and inclusive workforce, employees are 46% more likely put in discretionary effort. And that's measured by their ability and willingness to go above and beyond what's in their job description. And what really fascinated me is also for a diverse and inclusive workforce, they are 31% faster to collaborate with each other and actually over 30% faster in their responsiveness to client problems and needs as well. The business case of getting it right is there, but sometimes they can appear to us to be just numbers on a page. So today, I want to also share with you some really practical examples of when we implement that in our workforce, the true benefit it delivers for the businesses. So in the U.S., Boston Consulting Group, BCG, actually surveyed 350 companies that were involved in the same start-up challenge. They evaluated their investment and their return on investment for each of these 350 start-ups. What they found was that for every dollar that was invested in -- a female-founded start-up returned [ $0.78 ] on each dollar. And for mail founded startups, it returned $0.31 on every dollar. What that has demonstrated is that e-mail founded businesses and diverse teams deliver 2.5x higher return on investment. And this actually goes beyond just gender. A really great example when it comes to generational diversity is the story at Virgin Atlantic. So when they tried to innovate and tried to expand their customer base to attract younger demographic, they decided to actually include young junior graduate students part of the innovation process beyond their usual engineers and product designers. And so what happened in that innovation process was that young junior graduates came up with the idea to install different call it lighting in the airplane cabin as passengers were boarding the flight -- and with such a small and cheap innovation, Virgin Atlantic actually back in 2012, actually saw an 18% sales increase the year after. We've talked about the value of getting it right. And now what is the cost of not getting it right. Not only we risk employee retention, engagement and performance, we actually compromise on shareholder value return. And what's more importantly is that it's important for business to recognize that diversity and inclusion is no longer a nice to have. It's become a community expectation, a must have when we want to meet where our community is at. And when these are translated to real stories, when we don't get it right, the impact is actually significant. The first story I want to share with you is when the automatic water tech sensor was created, black people and people of color actually couldn't use it because the sensor, the proximity sensor was not programmed to pick up dark pigments in their skin. This, our team reflects our customers, and that's such an important question for us to constantly ask ourselves. And a report done by University of Sydney, it actually worked with a company that is creating autonomous vehicles. And the company actually approved the autonomous vehicle after it did a safety testing in the U.S. and it was approved for preliminary global release. But what it did was that they took the same car into India and did safety testing. And what happened was that actually failed the testing. So imagine if our thinking does not reflect the world we live in, what are significant and sometimes dangerous risk it can create for our business and for our society. And the third story I want to share with you is when the airbag first created in the 1970s, when it actually was first created, women and children were more likely to be injured when involved in an accident compared to men. Why is that? Because the testing -- safety testing dummy was created based of the size of the average adult men without taking into consideration female body size and actually children. Does our design protects and advances everyone? It's an important question for us to solve and not only creates strong commercial return, but it actually has a direct impact to the society that we serve. Diversity has always been there. We just haven't always included them. So at this point in time, you might be asking, okay, Sarah, I'm sold. Okay. I know DEI is important, and I want to be part of that. How do I be more inclusive and what do we need to do? And the first thing we need to recognize is that the biggest influencer of inclusion is actually leaders. What leaders say and do make 70% difference in terms of how people felt whether they were included in a workforce or not. And practically, what does that look like? It looks like 4 things, and that's the 4 behavioral tips I want to leave with you today. Number one, make people feel welcomed. Actively invite for their opinion, listen to them, welcome people into your circle, make them feel safe, avoid blaming, framing mistakes as learnings and recognize your own biases. Thirdly, valued. Acknowledge and appreciate contribution, be open and transparent in your communication and decision-making. And last but not least, respected, welcome and invite diverse perspective, celebrate rather than dismiss people's differences. Make people feel welcomed safe, value and respected is the key to unlock an inclusive workforce. And with that, I hope as an organization, as a team, as a society, we can truly progress beyond reactive DEI into proactive DEI and into aspirational DEI where we can build, cultivate and sustain a true diverse, equitable and inclusive workforce. If you would like more resources, I would invite you to visit our website at tdcglobal.jp where a lot of these case studies referenced today are in the resource center. So with that, I want to thank you once again for having me today. And together, let's build best practice in diversity, equity and inclusion.

Sarah, thank you very much. We're now moving on to the panel discussion. Let me introduce the panelists. From Takeda Pharmaceutical Company Limited, we are joined by the Global Head of Diversity, Equity and Inclusion, Mr. Hayden Majajas. From TDC Global, the Founder and Managing Director, Ms. Sarah Liu. From Nissan Motor Corporation, we have Mr. Michelle Baron, in charge of global HR management and diversity, equity and inclusion. The discussion will be moderated by representative director and founder of the NPO ReBit, Mr. Yakushi Mika. All the panelists are leaders of DEI in their respective sectors. We hope to host a panel discussion that will offer clues to the audience for new ideas and discoveries. I now will hand over the back to our moderator, Yakushi san.

Hello, everyone, and thank you for the kind introduction. I am Yakushi Mika, Representative Director and Founder of NPO ReBit. Thank you for inviting you to the Nissan Sustainability Seminar 2023. I'm honored to be given this opportunity. Now the theme of this panel discussion is diversity, equity and inclusion. So let's talk about that. Fostering a more inclusive workplace from reactive to proactive is the title of the panel discussion. And under that title, I intend to have a great conversation with the panelists. I'm going to ask you each to self-introduce yourself. But let me introduce myself, first of all. Once again, I am Yakushi Mika, representative investor and Founder of NPO ReBit. LGBTQ and diversity are areas we specialized in, and we offer training to companies and education institutions like schools for recommending the inclusive society. And we're not just engaged in education and environment, but LGBTQ or developmental disorders people, we offer career support to those people and more than 9,000 people have been enrolled in our training so far. So LGBT is one area I specialize in. But today, we're going to talk about DEI in general, and I'm looking forward to this final discussion. Thank you for joining me. I so honored to be having 3 wonderful panelists. So I like to be asking you to introduce yourselves. And also, what you think about the DEI; diversity, equity and inclusion. And here after I'm going to be using the acronym, DEI. But for each of your companies, why is DEI so important? If you could comment on that as well. Now Hayden, would you like to go first, please?

Thanks, Yakushi san, and thanks, Nissan, for hosting today's event. Great to see everyone here. My name is Hayden Majajas. I am the Global Head of Diversity Equity Inclusion for Takeda Pharmaceutical. I'm based here in Tokyo. Why is DE&I so important to us? Well, this is not just about our people. This is about our patients, the communities that we serve. It's about making sure that internally, within the organization, all of our people can achieve their full potential. And when it comes to our patients, that our patients can also achieve their full health potential. So thank you again for having me today.

Thank you very much. Then Sarah, you've already delivered a great keynote speech. But can you once again introduce yourself?

Thank you so much for the encouragement and thank you so much to my esteemed panelists for joining this conversation today. So my name is Sarah Liu. I'm the Founder and Managing Director of TDC Global. We are a diverse, equity and inclusion consulting working with global organizations to help them either create and develop diversity and inclusion strategy or creating programs to actually help them embed in creating a sustainable impact from achieving DEI. And it's a topic really close to my heart and so important because like Hayden mentioned before, if we -- if our workforce doesn't actually reflect the diversity of our community. It actually has the business impact as individual impact. And as I referenced in my presentation earlier, it has a societal impact. And so it's not only one thing that we going to have a lot of benefits and value from it, there's actually risk associated with that if we don't get it right. So, absolutely important for leaders and businesses to focus on harnessing a diverse and inclusive workforce. Thank you.

Once again, thank you for reminding us the importance of diversity and Michelle. Thank you, again, to your company for hosting this wonderful event. Please introduce yourself. .

Yes, and welcome to my co-panelist to our global headquarters here in Yokohama, Japan. And thank you for joining us to have this very important discussion on DEI. And I think many of you have already touched upon why this is such an important topic. In your opening comments, Sarah, about and yours as well, Hayden about we need to reflect -- our customers need to be reflected in the work that we do. And to best do that, we need a diverse workforce that represents the same as our customers. But key when one of your comments is innovation. For us, the automotive industry is going through tremendous amounts of change. The innovation is key to success and to the future. And to really get breakthrough innovation, you need all your employees engaged and comfortable and feeling like they belong so that they're going to bring their best ideas without fear of -- that they have to withhold or hold anything back. So, It's fundamental. It's fundamental to the success of any company, not only now, and it's just going to become more in the future.

Thank you very much. Diversity and inclusion is very important in context, as you said, and it's even important for risk mitigation. So that again reminds us of the importance of DEI. Everyone talks about its importance. But it's quite difficult to really trickle down DEI into your personal behavior. So how -- do you -- how -- what triggered you to think that DEI is personally important for your personal life? Let me make a comment on the instance I found DEI as an important thing for myself. I'm a transgender. I was born as a girl. But from 17 years of age, I've been living as a boy. NPO is my full-time job. But when I graduated from University, I joined a web advertising agency. And usually, there's unofficial acceptance by a few companies. I received acceptance from the few companies, but I chose that company because the HR manager gave me a full call. And he said, "You told me you are transgender, but are you worried for working with our company because if you have any concerns about joining our company, you can call us any time and consult with us." So I realize that this is a company that places importance to each and every employee. It's important for transgenders. But that's not all the problem you face. There are other kinds of problems. So I thought that it's a workplace that's easy for employees to consult. And I was a sales person, but they were sexuality agnostics. I was just one sales person and grew as a salesperson as one member of the team. So in my formative years in my early career, that was an invaluable experience. So diversity and inclusion as a theme is important. I understand that. It's in the panel discussion, but it's something very personal to me. So that's my relations with myself and DEI. So Michelle, when was the instance you felt DEI as your personal thing or something for your team?

Yes. Well, I think everybody has experienced some point where you don't -- you feel like an outsider, right? You feel like you're not included, you react to that in different ways. I know working in the automotive industry, which is a male dominated, I've certainly had many instances of being the only female in the room. And I've experienced it in different ways, even things as casual as on Monday morning and we're at the staff meeting and it's clear everybody went golfing with the weekend and they're talking about it and joking and the boss was there, too. And of course, I wasn't there and I didn't go. And you wonder like, okay, well, now they've built some sort of comradery and network, and I'm outside of that? And how is that going to affect me in my career. And then, of course, there's also instances of where you make a comment in a meeting or a suggestion or an idea -- and nobody really quite listens to you and then you hear somebody say something really similar to it, who happens to not be a male, And it's a great idea and it gets built off of. So those -- and I think about how I feel in those moments. And I made it my kind of personal goal that I don't want to make other people feel that way. And I think it's important they're all leaders, As you said, part of -- the hardest part of DEI is the eye because the I happens every day in every interaction, it's not an HR initiative. It's not the DEI officer's job. It's happening every day, in every meeting in every interaction. And so how we actually wake up to realizing that just because for persons being particularly quiet or maybe isn't part of the friend network, how do you bring them into that conversation and get them proactive and engaging. And so that's become very personal to me to make sure we're using all of our employees and making them comfortable because we need all of them to really achieve our company goals. So yes, I'd say I'd draw upon how I felt when I was excluded, and I always remember that and try to be looking and watching and then also to have those conversations to help the rest of the leadership. Remember, it's all of our job to do this.

Thank you. So in order for the voices of all people to be reflected and for everyone to come to the table, DEI is very important. I was reminded of thank you.

Can I take your last comment and go a little bit further. Having difference around the table is great, but it's not enough. There's a big difference when we talk about inclusion in terms of having a voice having the voice is important, but it means nothing if you feel like you're not being heard. And that doesn't mean that everything you say has to be translated and implemented into an action. But having a voice is very different from feeling heard. And everything that you just said, Michelle resonates with me because this is about behaviors. It's about how we feel every day, but how we make others feel every day. And we're talking about personal stories, and I'll share one I grew up here in Japan. I've been here for a long time, it feels like. And I remember starting my career in Japan. And at that time, I was very open with my sexual orientation as a gay man in the workplace. And I think at that time, in Japan, it still wasn't so much accepted. So I accepted to truly be yourself in the workplace. But the company I was working for enabled me to and my team knew who I was. But I remember, each time we would go to client dinners for business development. One of my bosses would pull me aside and say, people are going to be interested in who you are. They're going to ask questions about your life, are you married and they'll make assumptions about you. And I'm prepared for that. That's, I think, something that happens every other day, and I'm comfortable talking about who I am. But I was warned or encouraged not to share the fact that I'm gay. That maybe our clients, our customers are not ready for that conversation. It might be a bit akin uncomfortable. So when you get that question, are you married, how about you just say no, and then move on. Rather than saying, "Actually, I'm Gay, and I have a male partner. At that time, it seemed like it was a difficult conversation for us to have. And this is psychological safety because I was getting that message literally directed to myself that it's not okay to be yourself. Now over time, that change and it continues to change, but I'd suggest actually not much has changed in the world. We don't have true psychological safety everywhere. And that comes back to the point of having a voice and being heard of very different things. But also your points around innovation as well. You can't have innovation if people don't feel like they can take a risk. And every day, I take a risk to be myself. But it also translates to work. I'm not going to feel comfortable to take a wacky idea or to you as my manager, which might lead to a cost saving or benefit for the environment if I'm getting these signals that it's not okay to take risks.

Unless you've heard, just sitting at the table isn't sufficient. It's not inclusive. And also, internal relations matter, but external relations as well, everything has to be inclusive or else it's going to be uncomfortable to work. Once again, thank you for reminding us that important point. How about you, Sara?

So hearing the stories from everyone that actually really pulled a [indiscernible] string because I just think about just the amount of stories that's out there when people don't feel they truly belong. So for me as well, I was born in Taiwan, raised in New Zealand, I studied in Japan briefly. And I started my career in Australia. And I had always been very ambitious and wanted to climb the corporate ladder very quickly. And I've actually had 7 recruiters and hiring managers telling me that. Hey, Sarah, if I was you, I would actually just manage your expectation about how far you can go. You're a Asian young female in Australia, just don't think you're going to get very far. And when you have people say that speak that over your career and your existence, it's really hard to not take that in and like internalizes shut down as a result. But I've always been very rebellious, ever since a young age. So whatever people tell me that I can't do, I'll end up doing it anyway. And I say, okay, you can say what you want to say, I actually just went and changed companies and aligned myself with organizations that actually created that space and that role for me to grow. So a really big learning for me is that diverse talent will choose an environment where they can strive. If you don't create an inclusive environment for them if you don't make them feel heard, they're going elsewhere and you were going to miss out. So it's actually, once again, it comes to so much of benefit is there, but also like why would you create those miss a opportunity for yourself? And then another key lesson, I think, my own story and hearing from everybody's story is the importance of leaders and airline ship. All of our experiences were shaped by the behavior and the language from someone else. So just think about the impact of our own behavior on others, whether they can feel included and whether they heard today, we hold the key to that. So like it's actually a really empowering thing when you think about the power that we have to influence people's sense of [belonging].

100% agreed. One of the factors that's important, diversity is great talent, choosing that as a workplace. And I think that's a very important factor. It's important for our company, but it's important for a community for even our countries. And rather than institutional regime creating that, I think it depends on each person to create such an environment. Thank you for mentioning that. So I heard your stories why DEI is important, why we realize DEI is important let's expand upon that. What are you paying attention to in terms of DEI? What's your favorite key word today? There's diverse sectors represented on the session so Nissan keyword is this in that? This is a keyword that we are paying attention to. Can you mention a few key words and -- we are running short of time, in fact, we want to continue to listen to you, but maybe brevity would be appreciated. So Michelle can you mention a few key words.

The key word is culture for us. And we are working on many elements of the culture. The real goal is to create that kind of that work environment where everybody feels they can be their greatest version of themselves and bring their greatest effort. Again, you mentioned a lot of the benefits of when you really embrace DEI. That's what it returns. And of course, it is, it's key to retention. If people ultimately don't feel like they belong. They will go somewhere else where they do feel like they belong. But we are on a journey of trying to change our culture. There's many elements of it, but the DEI is a key pillar of our culture initiatives. And so we're doing a lot in discussions like this and providing trainings, providing tools, creating awareness, how to handle those situations like you were coached very wrongly back at that moment, how do you handle that in a better way. And -- we're also trying to make people aware right, culturally, DEI is a list of these are words you say, and these are words you don't say, right, or a does or dont's list or a okay, I've done the training check, done, move on. It's that trying to change those mindsets to create that culture to make everybody realize we all own this. We all need to work together to create that work environment because ultimately, that's what we need, right, to bring the products and services to our customers, to keep our employees engaged and retained and to create value for our shareholders. So all ties into that culture and DEI being a key piece of culture. And we're really looking for everybody to have that in their mindset, all employees, all leaders. Thank you.

Culture is important, and that also matters to innovation and stakeholders. How about you Sara? Do you agree? Any comments?

Yes, 100%. And I think what I would also add and build on that is how is culture created -- is actually created by action. So I think my keyword is rather than intention, look at action. So I hear so many leaders who said, "Oh, I believe in DEI. But believe doesn't matter what's your action? And so what cultivates culture to Michelle's point is how we show up is the behavior. And so I would encourage everyone. I'm host here today and who's listening here to move beyond intention and actually ask yourself, what is the consistent action I'm bringing to my workforce by deliberately including people because human nature is that we will gravitate with people who are like us, right? So it's actually really important to be intentional in including others.

Can I just build off something Sarah said, because it's so important is many think, okay, the thing to do here is just treat everybody the same. Okay? And so that's it. And if I do that, I'm good on all these DEIs. And it's so much more than that. And that's why this isn't just a one training or list of does and dont's, it's really realizing as a leader, you've got to recognize the situation, recognize when you need to understand and learn a little bit more and take the realize those individual situations and adapt your leadership behaviors for that right situation. And so it is not a one size fits all. So when someone says, I don't have anything to worry about. I treat everybody the same. I know we're still on a journey with that person.

So if you ask me for some key words, there's so many that jump out. I'm thinking overwhelmed is a keyword because people managers get this message that I can't treat everyone the same way. Not everybody needs the same development or the same level of exposure or skill sets, understanding that we need to look at people as individuals translates to a sense of overwhelming, like when am I going to get time to do all these. But I think more enlightened leaders would see that as, well, that's the key, as you said, the key for us to performing better. But for me, I think the real key words I'd like to use are belonging. I think this is one of the biggest keywords of the moment. I keep getting asked, are we going to change the name of DE&I or our team to DEINB? And I'm like -- actually, you know what? No. Let's -- I think once we start doing things like that, people start to think the sense of we've done it now -- the name is there, so we've done it. So I'm a bit hesitant to do that. But -- the other keyword of behaviors really is key to all of this. You said before, Sarah, we, the people, we are the key -- but the way that, that key turns is able to turn the lock is purely through our behaviors. As you said, inclusion is not a checklist of policies and words. Actually, it's your behaviors every day and how you make other people feel. Though this sense of belonging is feeling valued, feeling respect, having a voice but feeling like you're heard and also a sense of psychological safety if you're consciously thinking about the behaviors that you role model every day, that already gives you a head start as to where I could focus because there is just so much research out there that proves over and over again, that the same behaviors that drive an inclusive culture, drive innovation. The simple solution here is if you truly are an organization that is aspiring to innovate and create the culture of innovation, guess what? At the same time as focusing on that, you can also drive a culture of inclusion. They work together. And to me, that comes back to the first keyword about overwhelming. Well, actually, it's not that overwhelming when you understand that the key to innovation and the key to inclusion are the same.

And if I could just build on, like it's such a good point about the overwhelm, so much of being inclusive is actually so simple, it just requires intentionality. So a lot of times we get asked by leaders and organizations, give me like your top strategies like action plan. But some of this is as simple as when you are in a circle talking, if somebody comes into the conversation, you step back actually invite them into the conversation, give them a space. It's actually when someone has been interrupted to go, hey, let's just pause a second. Do you want to repeat that comment again? It's as simple as that. So I just want to reinforce and sort of build on [indiscernible] comment that, yes, the sense of overwhelm from people and business are so strong, it doesn't have to be.

Belonging is important, as you said. But -- for that, of course, while tough leadership is important. The behavior of each and every employee is important. So in order to be inclusive, of course, there has to be the top leaders message. And recognition, but -- and also the system is important, and that has been created by each and every stakeholder or employee. And for each person to create a DEI culture, there could be various initiatives. But recently, ERG Employee Resource Group, ERGs are much talked about, and there is attention paid to ERG's. Many Japanese businesses are engaged in ERGs. And in the Western world, in the U.S. and Europe, many companies have established ERGs. And your companies probably have ERGs. Nissan of course, is promoting ERG. Can you talk about that?

Yes. This is, again, with the culture initiatives and DEI being a key part of that we're trying to inhabit and have been trying to foster that sense of belonging. So many people will come and they join a company and they're on a work team and there may be nobody on that work team who they really relate to. And so ERGs, employee resource groups, and in the Americas, we call them BSTs business synergy teams. It's the same thing. They provide an opportunity for employees to find a group of coworkers who have same interest or characteristics or beliefs that they do. And it creates an environment, right, where they can go and be psychologically safe, but it's just not to get together and talk, they really have become a valuable part of our business because they really serve three things. One, they create that inclusion that I just mentioned because they come together and work and get to know each other outside of their immediate work circle. And then -- but they also use it as an opportunity for career development. So they have speakers come in, other executives come in and give coaching and advice. So it's the sense of finding your team and then working together and giving each other career advice. Secondly, in the Americas where the BST are, they have been very heavily engaged in the community. Working with nonprofits. We actually probably have some pictures here that, I think, is me speaking to a group. We had many panels there that day. We're actually working with young African-American men who are in the community, giving career advice and helping with resume building for those who may not have someone who can relate to how you enter into the business world. Also, you see groups there, I'm addressing the BST group. So that kind of community connection and whatever is relevant for that country or region is another opportunity for these ERGs, or BSTs that really connect. And then the third is, there can be -- well, before I go to the third, there can should be a fun element too. We actually have a funny picture here of me. I'm actually in a fundraiser there. That's me. I'm in a tag and people are paying money to throw a ball. And if they hit the target, I fall into the water. And it wasn't just me that did this. It was many executives and we did it as a fundraiser to help support these ERGs to raise funds for whatever resources they needed to deliver their goals. And then lastly, the third real benefit of this is there's business value too. We had the Women's Group, the product, planning and design people have had the women's group come in and look at the interiors of the vehicles and the colors and say, we want the female perspective. How does this look? How does it feel? You talked about the color as you enter on an airline. That kind of benefit -- we -- the business, the advertising has you gone to some of these ERGs to get their perspective on advertising campaigns that they are doing. So there's many values that come back to the business. And so what's key is this is not a side activity. This is part of running our business and leaders need to support these as well. So when someone wants to engage or get involved, that needs to be supported as well. We've had them in Japan here. We've had a working parents group, we've had a women's group. We're just now formalizing them to give them the executive sponsorship and the advertising and some of the resources so they can really build and be more visible and contribute more to the company and, of course, give employees that sense of belonging.

Thank you for introducing those wonderful projects. Let me ask you for a few questions. You said it's not a side event, but it's the mainstream. But in the working time, many employees can engage in these activities. So what's kind of system that supports and allows the employees to do that, and there are themes, different themes. So what is this cross thematic linkage or inter-sector crossing, what kind of exchange or relationship is there?

Yes. Thank you for the question. So the ERGs need to be supported from the top. So the tone at the top that this is important. And it's part of the culture and that work environment we want to create. So tone at the top is very important to say, these are important. We encourage employees to join -- and then we will support when they need to go to be part of some activities. Many activities are planned during the lunch hour, and they're open to many and all to join. So -- that's a key part. So the tone at the top for supporting. And then, of course, they don't become a full-time job. It's something they do, but they're also organic. I mean they come -- the employees themselves drive this. It's not HR. HR might help to start get them established and facilitated. But they organically are put together an executive champion who can -- is there to support them to say, what do you need for resources? Are there any issues and help them work through that? So that's a key part of making them successful. And so it has been extremely successful, as you saw from some of the pictures and a great resource for employees, a great resource for the company.

The executive support these activities that makes it easy for the employees to participate. So team formation is great. And you have timekeeping system that allows for every employee to participate. And another question, after ERG was commenced, did you see any changes within the company? What were the changes that you thought were positive? What were the changes that you had wanted to see what haven't seen?

I would definitely say after their establish and the help with their kind of advertising about the activities are going on, it just gives you a sense of belonging and that there's something here at this company just beyond my day-to-day work, and I have the sense of the family and inclusion and really getting to that [ B ] and that they help raise that makes it more palpable just in the day to day. You see these are out there to join if you want to or participate if you want to. So that is absolutely a change we've seen. The drawbacks, I wouldn't say there have been that many drawbacks in the Americas where they established this over 15 years ago, I think they have 10 or 12 now. I mean there is a one that is a multi faith base where people come together and they want to share and experience and understand different face. One of the most popular is that we actually have a BST in Americas that is around the Indian population employees. And one of the most attended events is this lunch they provide with this great food and there's lines waiting to join in and we go sit together and they have some Bollywood movies playing and it's -- and they have dress and it's just fun to learn about the other cultures. So there's so many benefits to it to the company, to the employees, to society.

Thank you so much. There are so many benefits [indiscernible] what about your company? There are many belonging initiatives that are created by your employees. Please give us a few examples.

I think there are a range of initiatives that we look at. But if I continue the conversation of ERG's employee resource groups, and think about how we're talking about and approaching belonging at Takeda. One of the things that stands out to me is originally, ERGs are -- were created as affinity groups to be together with people who are like me, people who will understand maybe some of the challenges that I'm facing and have had the similar experience and perhaps might value from a voice or an opinion of somebody who's faced something together. But what we're seeing now is that idea of Affinity is going beyond our office walls or our Zoom walls. We're seeing that we're able to leverage our employee resource group to connect, in particular, with underserved patient communities. And I was speaking this week with our team in Australia, who is doing some incredible work around patient access. And this is really literally about how do we help more people get access to life-transforming treatments and medicines. But we're dealing with some fundamental societal issues such as trust or mistrust which marginalized communities often feel towards the healthcare sector that doctors have been imported. They don't understand our culture, our language. We've been there before in terms of what we've been told to do around medicine and treatment, and we don't believe that, that fits with us. Whereas, now we're being invited into, for example, First Nation communities to spend time. We have one of our senior leaders spending 6 weeks in one of the first nations communities in Australia to learn more about how we better connect, how we bridge some of these gaps around understanding of medicine mistrust or distrust of ecosystem, the health ecosystem and what is best for those communities. So for me, it's how can we turn those opportunities that we already have like our ERGs, our resource groups, how do we connect that with the sense of belonging and how we make an impact in the communities that we serve. Because truly, when our people hear these stories or a part of these initiatives, they feel -- we generally feel much a stronger sense of belonging with the organization. We feel like we're having an impact. And that's just one element of belonging, as I said before, feeling valued respected. I think part of feeling valued is knowing that the work that we do is having an impact.

Yes. I think both the examples provided by [ Aden ] and by [Michelle] actually sums up the beauty of ERG really powerfully. When we get approached by clients on, hey, like we -- what is our strategy and what are some of the advice that you can give us as we create impact with our ERGs. A couple of things we share with them are really important to keep in mind. One is stop just thinking about what would they come, but think about why would they stay. So most companies when they create ERG's precisely is about affinity shared identity, shared passion, and that's why would they come to why would they stay, which is what is the impact precisely what they are creating and needs to be impact for the immediate community and circle the employee group, yes, but business impact. external community impact. And that is the beauty and the essence of ERG when we can actually translate the affinity into impact going from internal to external. And one last comment I would add, which probably sort of ties into what could be some of the pitfalls is when companies plays overreliance on ERGs. Sometimes the company says, "Oh, great ERG. So they would like make the happen!" but that's not the case. Firstly, it requires investment, and intentional effort sponsorship from the executives, but also more importantly, is for the business leaders to be thinking about how do we support the ERGs, right? How do we invest in them? How do we come alongside of them and enable them to do the great work that we've heard just then that can be achieved through ERG.

Taking Sarah's comment Were you persuaded -- and do you have anything to add?

There is something that I'd like to say because you talked about what keeps people here. I think this is a really important element of corporate culture or a company's culture, which is actually, it's not about the good things the best things, what defines our culture is actually the worst things about us. So if we flip it around a little bit, going from this notion of what keeps people here, actually, if we start thinking about what are the worst things, like what are the things that we hear from people because inevitably, this is part of what defines our culture externally, focus on those elements, then we can answer that question and respond to what keeps me here. And actually, that's one of the questions I use quite frequently when -- in particular, when I'm talking with or working with groups of our employees around issues that we're seeing asking that question, so what keeps you here. Go talk about those things. But at the same time, that doesn't mean that we should ignore the things that need to be addressed because absolutely. As I said, those are often the most important things from a culture perspective.

Yes.

Yes, that is key that you've got to keep looking in the mirror and understanding where we are and what we can do better and the surveys and listening to the voice of the employees and having a way to collect that and really hear it is key to the success because you can't just, again, treat this like a checklist, okay, we've done these things. We have ERGs, good, done. It's ongoing and you have to keep listening.

I wish it was a check the box, like I really wish DE&I and an inclusive culture I wish it was [indiscernible] -- can you imagine how much easier this would all be? But I keep saying like somebody will find the answer, like please find the solution, the golden bullet to DE&I. We'll sell it on Amazon and make it available to everyone, but it comes back to exactly what you said before [ Michelle ] around solutions need to make sense locally. There needs to be a local nuance to them but also understanding what each individual needs. And that doesn't -- we can't possibly have 50,000 variations of how we engage but we can have more than one, one size fits all.

And I think as organizations, actually, it's so important that we have the courage to be honest. I think to your point about uncovering like why would people leave? Not just like what keeps them here, but why do they leave? And I've actually heard that the most powerful thing that you can learn by your organization is asking questions you're afraid of [getting] the answer to right? So all those hard questions because they will give you much insight, so much learning and it's so important for leaders to be aware of it and to have the courage to receive that to go, okay, now what are we going to with that? And that is when like a really powerful transformation can truly happen.

Complete agreement. [indiscernible] You said you wish DEI was just a checklist thing. And that's often frequently said by people in charge of the DEI. Diversity could be taken up by each theme. But what about inclusion or equity, you can divide them into themes. So where do you start from? And what do you need to in the next 3 years, it's pretty difficult to build an effective scheme. And also, how do you measure impact? It's a compound thing, so it's difficult to decline a yardstick. How much investment do you need to do? And then what kind of an impact can you expect -- it's difficult to see -- how would you answer to that question?

Well, for me, I think let's start with values. I think for many organizations, the entire conversation around DEI can seem completely overwhelming, where do you start? I think one of the reasons why I used the keyword belonging before is because that gives us a indication of where it might be easy [indiscernible] for us to start. Let's start with behaviors. I say that connected to values because every organization has value. So whether you are a 2-person organization or a 200,000 person organization, we all have values. I think that we can probably put companies into two schools. One would be values are written on the wall when you walk into the office. The other one is the values come to life through people's behaviors. And I think as the world evolves, we're moving more into this world of majority of people want to be in this bucket where we see the values come to life every day. So back to my easy solution, rather than looking at strand by strand or stream by stream or dimension by dimension, of diversity, equity and inclusion, start with behaviors because this is a nonthreatening way for us to have these conversations because I'll acknowledge some of the conversations we're having today around the globe are very complex. And not everybody is equipped to have those conversations. And not everybody is comfortable -- but there is one common denominator that everybody can galvanize around, and that's our company's values and how we bring those values to life through our behaviors because that's the only way value has become visible. So that's my hint to our audience and start with behaviors and behaviors have to be connected to your values.

Exactly within company value, DEI must be sitting at the core. You can't just refurbish and attach it later on. Why it's installed, but why? I think it has to be embedded in the true core of the organization and also behavior realizes that and sarah -- changing behavior is the most difficult part. Culture and penetration of the culture is very important. How can we do something so different?

Yes. So again, I wish there's a silver bullet. There isn't -- but one, it starts with intentionality, right? Nobody [indiscernible] by accident organically fell into a super inclusive leader, right? So it's so important that we start with intentionality. Building awareness and creating accountability for each other. So I think intentionality for everybody, not just [HR] department and not just DEI partners, right? A lot of [indiscernible] what we really believe is that HR and DEI are not your owners of your DEI results. They steward and they support and guide business leaders. But really, the DEI should be shared by absolutely everyone. So intentionality shared by everyone. And I think also a really important element for us to consider is to make sure that it is accountability. So leadership accountability is absolutely critical because you can't -- one be what you can measure. But also, two, is that what gets measured gets done. Right? And what doesn't get measured gets forgotten a lot of times. So I would say making sure that it's measured and making sure people are accountable, particular leaders accountable for having visible actions it's important to drive and to sustain continued and ongoing behavioral change.

And can I add to that? Because when we're talking about measurements, I think in the business world, we're focused a lot on numbers, measurements, KPIs -- but don't lose sight of the fact that oftentimes, it's how we have touched one person or their lives. That is actually the biggest, the most important KPI. Because when Michelle was talking about the ERGs at Nissan, for example, I can feel those stories we have the same examples of just one employee feeling brave to step forward and share with us a challenge they're facing. Let me be very tangible about this in a very difficult jurisdiction somewhere around the world where being LGBT is really not accepted. We had an employee step forward saying that they wanted to apply for equitable benefits for them and their partner. Now even though we may not have the right access to equitable products or insurance products in a certain jurisdiction, that doesn't mean that there isn't a solution. And we will find a solution working together with the employee. But for me, the most important thing in that conversation was the fact that the employee felt brave enough and confident of to pull someone aside and have a conversation because if we have a culture where people feel like they could never do something like that, then that shows that we're failing. So to me, that's one of the biggest KPIs is how are we having a positive impact on our people and our patients' lives.

Yes. And the tone at the top, Sarah, that you mentioned is so key. And yes, the value is on the wall, but it's the behaviors. The values are under the water, people can't see your values. They feel your behaviors. And so having that kind of tone at the top and then role modeling. And of course, it's a lot of pressure, right? I mean, everybody has moments when you aren't the best leader, you should be or the best colleague that you should be, and it's how you react to that and how you learn from it and have those discussions versus just going quiet or worse, not even realizing it wasn't a good moment in repeating it. And that's the accountability and how do we all hold each other accountable to do that. And that's sometimes having conversations that aren't so easy to have, but it starts with that. Just you talked about an employee being very brave to come forward and say, I want this benefit. We all have to be brave and help each other because this is such a complex topic with not one book or one training class you can do, and then you're done. It's an ongoing learning experience and we all have to keep learning and trying to do better. We sit here as supposed authorities or experts that we were invited here, but I'm sure every day, you think about something you could do better, you could have done that differently. And that's part of the realization of improving on that journey.

Yes, I couldn't agree more because it's so important also to create room for mistakes and be okay with it and accept our own mistakes, other people's mistakes and actually creating what we call a safe and a brave space to make mistakes because when we talk about behavioral change, change requires courage, right? And so we need to actually just be okay and be comfortable with not getting it right, but acknowledging that we have our own biases and shortcomings, but we are together on the journey.

Yes. It's really an opportunity for genuine authentic leadership when maybe you say, "Hey, I probably didn't handle that so well. What did you think? What ideas would you have for me to do differently the next time -- that's -- it's as easy as that sometimes, but you got to be brave enough and have the courage to go, yes, I probably didn't handle that very well. How could I -- what do you suggest I do differently or ask for some coaching or some mentoring.

I think that -- to me, it's -- oftentimes some of the challenges is not just someone saying, how could I have done that differently. But actually, I don't know how to respond. Yes. And that's really I'm lost in this situation. Yes, I think that's something we need to keep in mind with leaders our global leaders is that there's still no business schools around the world that are teaching leaders currently and future leaders how to deal with diversity, equity and inclusion topics and really going deep. But as shareholders, as members of communities as employees, we feel that our leaders have to have the answers. And so we put this disproportionate amount of pressure on our leaders to have the answers. And I think what it sometimes translates to is -- well, I either just make it up on the spot or I don't say anything.

Being quiet or the -- I treat everybody just exactly right? You run back to that sure. I just I don't want to get in trouble, so I'll just be quiet.

Exactly. So I think we need to have a little more understanding and support our leaders a lot more on this journey because I think I'd love that it's always this experience of a leader saying, maybe I could have done that better. Help me. But I think at the moment, we still don't have that level of constant or consistent engagement and calls for coaching. And I think in these roles in our roles, coaching is probably where we're going to have the biggest impact because it's not our small diversity teams that can do everything, actually, it's through our operating bodies, the way that we operate that really we're going to have the biggest impact.

And also becoming aware that the coach could be one of your own employees. Being encouraged and brave enough to say, "Hey, Clearly, I need to understand more, can we talk?" right? It's not their job to teach that person whatever the issue might be. But sometimes realizing coaching may become from all areas, not necessarily just a professional coach or HR or the DEI leader, coaching can come from all areas of the company.

DEI leadership. You don't have to understand everything. There are many parts that you don't understand, but that's what you need to disclose. And that actually leads to psychological safety and creation of a team based upon psychological safety. So, the diverse workplace. It's not that difficult. Good morning -- do you say good morning every day? Do you say you don't understand when you really don't understand? And you're not criticized even when you say you don't understand. So it's just little everything every day brings. When you have a little problem, I have a little problem. LGBTQ, you have impairment. You have to take care of your elderly parents. So I think that's what DEI is all about. So the DEI workplace provides psychological safety. And it's not just for a selected number of people, it's for all. So I think everything is connected. And -- sorry for going back to what you said, Hayden. KPI is important. But what's more important is changing the lack of the people. And I truly agree that resonates with me. When you look at a global perspective, is it a country or region where the diversity of the person is accepted -- it depends on the country or region. And maybe that applies to the workplace, the workplace mainly to the psychological safety of that person or the community or society at large. So workplace DEI is for that person for the team and for the society at large, would have an impact.

I think we look at diversity, equity and inclusion topics as being something that's primarily internal to an organization. And I think that's where [ Takata ] like some other companies are quite different in our approach to diversity equity and inclusion is that we have made our sustainable societal impact, a core pillar of our strategy, understanding that, well, first of all, first and foremost, our job is to serve patients across the globe. But also understanding that we are an influential voice in a health ecosystem. We deal with nurses, researchers, clinicians, doctors, clinics, hospitals insurance providers, governments, we may be a company of 50,000 people operating in 80 countries across the globe. But if we think about the health ecosystem, the number of players that we are -- stakeholders that we touch directly is in the millions and hundreds of millions. So if we can understand that we haven't been playing an influential role with the health ecosystem. Then leading with [ D&I ] is actually helpful for us in making an impact more broadly. Because as long as it's just one company, and one entity, looking at how can we change attitudes towards gender equity in Japan, we're actually not going to get there. We're more likely to be successful when we have partnered with the government. When we have partnered with NGOs and we have partnered with hospitals, healthcare providers, clinics, insurers, et cetera, and are on that same journey together. And to me, that is the most exciting thing about my role is taking that pressure, first of all, the global D&I team that we can't solve everything, but second of all, reminding ourselves, it's not just us as one organization one entity. We must partner. I think that's why things like today's session, for example, is really powerful because I know, in the next 2 weeks, we're going to catch up and we're going to talk about how are we going to change things here. And I know that we're going to have a conversation about what did you learn from your clients? And I'm -- we're going to connect the dots. And I think that's really important. So for people who are listening today and definitely the audience here, think about that ecosystem that you have access to remind yourself, it's not just you. It's about who can we partner with.

Diversity is more about reflective impact. And we think that the business world is an important sector, and there could be collaboration between the private and public sector. And that's important. And one person can change the company, one company can change the society, and I was able to see that connection. It's about time. So final words from each of you before we close the session. What was impressive? What was the key message that you wanted to truly deliver? So your final words, please? Then in this order from this side Sarah, would you like to start?

Great. So four behavioral tips to create an inclusive workplace, make people feel welcomed, safe, valued and respected. It can feel overwhelming at times, but it doesn't have to be and be intentional in your effort show up consistently. And remember that action over outweighs intention every day. So what is the action that you and I are going to take and embody every day.

And I'm just going to sound like a broken record, I'm going to say the same thing I've said seven times, which is it comes down to our behaviors. It comes down to us how we choose to interact with people every day, whether it's the language we use, the way we connect, who we include in meetings, how we follow up, who's opinion we ask for. It really does come down to our own individual behaviors because that's what truly drives the culture of inclusion. And a culture of innovation.

And building off that innovation where you both kind of went on the how, how you try to create that DEI welcoming environment. And I'll go back again to how this is so important. And this is not just a maybe fat or that's going that the world is going through right now, and it will be gone in 5 years. Now, this is this is reality. We know we need the whole workforce population engaged and contributing in order to remain competitive in whatever industries that we are in and that we need those talents to come and then feel they belong and they stay and they really develop great products and services. But yes, beyond just kind of the capitalist, if you will, view of it, is -- yes, absolutely. You saw some of the work they're doing with the -- what we call the BSTs or ERGs, these are also opportunities to connect with closer with society, of course, working with governments, and then collectively, right, we start to evolve. And it would be great that if in 10 years, we don't have this panel. There's no need for this panel because everybody is naturally doing it. That would be wonderful, and I hope that happens. But until then, I think we have to keep talking and realizing it's intentional effort and you have to keep at it.

Thank you very much. Once again, I would like to thank Nissan for hosting this wonderful panel. And including the audience, we're all connected. And we're all connected and we should collaborate to create inclusive society and companies. Thank you once again.

Thank you for such a wonderful panel discussion full of valuable insight. This is the end of this sustainability seminar 2023 DEI session. For your information, Nissan merger company, YouTube channel offered streaming of the circular economy session that focuses on sustainability. So enjoy that session as well. Once again, thank you for your attention.