Sony Group Corporation (6758) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for waiting. It is time to begin Sony ESG/Technology Briefing for Fiscal Year 2020. I am [ Kato ] from Corporate Communications. This briefing is being presented for the media participants, analysts and institutional investors, who have been informed in the past. This briefing is being streamed via Internet and can be seen on our Investor Relations site. Today, our Chairman, President, CEO, Yoshida, will first talk about Sony's contribution to society and the environment through the business operations from a long-term perspective. And following that will be Executive Deputy President, Katsumoto, talking about initiatives and approaches to technology, which is the source of value creation. Then we have Senior Executive Vice President, Kambe, who will present our activities in terms of ESG, which forms the foundation of the value creation. And then we'll have Q&A. The whole program is expected to take 90 minutes. First, we have Mr. Yoshida with his message. But first, please watch this video. [Presentation]

Hello, everyone. I am Kenichiro Yoshida. We recently announced our joint development of a satellite, incorporating our camera system with the University of Tokyo and JAXA. At Sony, we believe that conveying images of the Earth's natural beauty to people around the world reminds us that our planet Earth exists in space. Images of space can also contribute to cultivating a sense of emotion regarding how much we must cherish the Earth. And we want to share this awareness with the greater community. We are also collaborating with JAXA on the development of a bidirectional laser communication technology using the International Space Station. In this collaboration, we have succeeded in transferring high-definition images between space and Earth. As introduced in the video earlier, Sony's purpose is to fill the world with emotion through the power of creativity and technology, which defines the significance of our existence. Based on this purpose, we strive to contribute to society and the global environment in which we all exist through the businesses we operate that are centered around people and our long-term perspective. Looking further ahead, we realize that space exists beyond the confines of the Earth. The young girl who appears in our purpose statement is also looking through the space. I will now touch upon our value-creation activities stood around society and the Earth. First, I would like to introduce our environmental initiatives, which draw on the strength of our diversity. Sony Computer Science Laboratories is conducting research on synecoculture, which is an initiative that aims to address the loss of biodiversity and soil degradation caused by conventional monoculture farming practices. Synecoculture aims to allow the natural strength of ecosystems to flourish through the power of wildlife by densely populating an area with varied plant life. By introducing synecoculture, we have succeeded in cultivating desertified land that was beyond natural repair into rich vegetation within the span of 1 year. Diversity, which is the key word for synecoculture, is also one of the values that we cherish at Sony as we strive to create sustainable social value. Earlier, I stated that people are the core of all of Sony's businesses. Our 110,000 employees around the world are the people who drive our diverse businesses that support the creation of content that move people's hearts, and they also develop reality, real-time remote technologies that connect people to people and they support people through initiatives dedicated to safety, health and assurance. We will continue to contribute to society and to the environment in multifaceted ways through our diverse talent and business portfolio. Next, let me focus on how Sony is creating social value through its core sensing technology. At this year's CES in January, we showcased our initiatives in the area of mobility that utilizes the Sony's imaging and sensing technologies. The proliferation of electric cars utilizing sensing technologies will enhance passenger and vehicle safety and is expected to reduce CO2 emissions while functioning as part of the electric smart grid infrastructure. Another example of our advanced sensing technology is the world's first intelligent vision sensors incorporating AI processing functionality that we announced in May this year. These sensors can be used to analyze customer behavior in a store, providing data that can be applied for optimal allocation of products. And they can also contribute to improving the efficiency in manufacturing environments by analyzing the movement of objects and people. Also, by deploying a trained AI model within the edge device itself rather than the cloud, we believe this technology can deliver ultrafast processing speed while also contributing to reduced data transmission and energy consumption. REON POCKET, which went on sale in Japan in July, is an example of decentralized energy conservation targeting the individual as opposed to heating and cooling systems for entire buildings or spaces. REON POCKET is a product that was developed by a team of Sony employees with a strong concern for the environment and features the Sony's thermal control technologies as well as our sensor-based motion detection algorithm. The common keyword to all 3 of these examples of our sensing technologies is decentralization. At Sony, we will continue to leverage decentralized sensing in order to help alleviate the impact on the environment. Our purpose, which I mentioned earlier, is the foundation for all of the Sony Group's activities. Furthermore, the contributions we are making to society and the environment through diversity and decentralized sensing that I introduced today are just a few of the initiatives, which our diverse employees are engaged. Extending our scope beyond the Earth to space, we will continue to contribute to realizing a sustainable society and environment from a long-term perspective. Thank you.

That was Yoshida, our CEO and Chairman. Now the Executive Deputy President, Toru Katsumoto, will present.

Hello, everyone. I am Toru Katsumoto. Last year, we held Technology Day for the first time to introduce Sony's technology. Today, I will give an update on Technology Day as well as speaking on the ways that technology is contributing to the Sony Group's diverse portfolio of businesses. Technology is a key element of both Sony's purpose and its identity as a creative entertainment company with a solid foundation of technology. In addition, technology is one of Sony's 2 most important material topics that support long-term value creation along with employees. While Sony operates a diverse portfolio of businesses, people are at the center of each and every business, as we laid in Sony's corporate direction of getting closer to people. Based on this management direction, Sony is working to develop technology that will help us get closer to what motivates people, that is what motivates our creators and users. Following the digitalization of content, our technologies accumulated by the electronics and image sensor businesses have been found to be useful across all business areas, including games, pictures, music and financial services. For example, the high-definition video technology realized through TV and camera development is also utilized in game and movie content production. The Sony Group's diverse business portfolio has made it possible to connect engineers with the site of each business, accelerate the development and evolution of technology and generate true synergies in each business domain. I believe that this is a huge strength of the Sony Group that is not shared by any other company. Going forward, we plan to further enhance our topics for R&D in the areas of entertainment and finance. To that end, for example, in the area of entertainment, we have established R&D centers in places such as Culver City in the U.S., where Sony Pictures Entertainment is headquartered, in order to accelerate the collaboration between creators and engineers on the front lines of production. Approximately 10% of Sony's annual R&D expenses of JPY 500 billion is used for corporate R&D. This ratio is consistently maintained each year from the perspective of financial discipline. And the topics for R&D are managed according to priority, including new important topics. In addition, we have allocated 5% or less of corporate R&D expenses to long-term basic research topics so that we can respond flexibly to changes in trends in the medium to long term. From the perspective of employees, we are also promoting the acceleration of measures with a strong emphasis on diversity and globalization. Since last year, we have engaged in dynamic rotation of key positions between our offices in Japan and overseas. Furthermore, we established a new R&D center in India this July in order to attract talented people. In China, we opened a new facility in Shenzhen in addition to our pre-existing facility in Beijing. We have also established English as a common language at this R&D center. Therefore, English will be used as the standard language for all important meetings and minutes to ensure a system that allows immediate sharing with all team members globally. Through these R&D activities, we will aim to contribute to society and the global environment in addition to contributing to Sony's diverse businesses that I mentioned earlier. Due to the recent spread of COVID-19 around the world, there is growing awareness regarding the safety and security of people and the sustainability of the environment. Furthermore, people can no longer gather in groups, and there are limitations on producing high-quality film and music content as well as enjoying live performances and sporting events. Technology will be used as a method to solve these issues. This effort will be centered on the 3R technologies, which refers to the reality and real-time technologies that Sony has focused on until now with the added element of remote. Reality technology, which delivers the ultimate in sound and video, has been an area of expertise for Sony until today. Additionally, we are creating new value by realizing in real-time the entire process of understanding an input and then delivering it to the output side as information. I believe there will be a huge amount of value provided by realizing reality and real-time technologies remotely. Now I will introduce real examples of 3R technologies. This very presentation, in fact, is being filmed using a virtual production lab that we just launched this August. We are capturing and recording the image in 3D data of film studios as well as real locations. A composite image is faithfully reproduced on the crystal LED display in the background. When combined with live actors as well as physical props, it is possible to create images and video with reality that are indistinguishable from footage filmed in real sets or on location. In the field of sound, we have developed a technology called 360 virtual mixing environment. It allows music engineers to recreate a studio sound mixing environment at home by utilizing virtual sound technology for headphones as well as a spatial sound technology such as environment and individual optimization. With this technology, it is now possible to remotely create intended sound environments such as that used in movie theaters. This technology was used for sound mixing for the feature film Ghostbusters: Afterlife, which is scheduled to be released next year, and received high praise from the sound engineer who worked with it. Using volumetric capture technology that was shown off last year during Technology Day, we held IKIMONOGAKARI Volumetric LIVE as a live music streaming event this August. One significant evolution for this event was that everything was performed in real-time, including modeling, rendering and streaming. Having accomplished this feat of connecting everything in real-time, we are one step closer to our larger goal of transmitting space itself. In the future, we aim to make it possible to see and speak to people in remote areas while shifting perspectives in real-time and to provide a video experience that allows users to share common space and exchange ideas remotely. AI is a technology that can be applied and contribute to all of the Sony Group's business areas including Sensing, Financial Services and Entertainment. Rather than competing in the area of developing new AI algorithm themselves, Sony's R&D efforts regarding AI are primarily focused on determining which AI algorithms are the best and easiest to use depending on each area and the limitations of the time and figuring out applications for Sony's diverse businesses. At the same time, Sony has started early-stage development on autonomous intelligence and deep learning, which are the mechanisms by which AI systems learn and develop autonomously. And these new technologies have started to attract attention as next-generation AI technology. As Mr. Yoshida explained at the start of this briefing, in May, we announced an Intelligent Vision Sensor equipped with an AI processing function by enabling high-speed HAI processing and extracting only the necessary data, we can achieve results such as low power consumption, reduced communication costs and shortened delay time of data transfer. In the same month, we also announced a collaboration with Microsoft on smart camera solutions and aim to provide new customer value by developing an optimal system that combines HAI processing and cloud platforms. The Sony Group is also engaged in technology development to address a number of social issues. We have developed the fluorescent KIRAVIA Dyes, a material for fluorescent reagents used to analyze the characteristics of tissues and cells and are currently providing licenses to other suppliers and commercializing reagents. The reagents using KIRAVIA Dyes are expected to be used in research areas such as regenerative medicine and immunology utilizing flow cytometry as well as broader life sciences field. Since entering the flow cytometry business in 2010, we have commercialized various flow cytometers by applying Blu-ray Disc technology. Recently, the Vanderbilt University Medical Center in the United States used Sony's SH800 cell sorter to sort cells that -- from antibodies against the novel coronavirus and can be used as vaccines and antiviral treatments. Going forward, we will continue to contribute to society by leveraging Sony's technologies in the life sciences field such as through accelerating research in advanced medicine. Mr. Yoshida spoke of creating space entertainment. And this is another example of a contribution by Sony's technology specifically as it utilizes the technologies of imaging, sensing and communications. As another example, we jointly developed SOLISS, a compact optical communication device that enables long-distance optical communication with JAXA. SOLISS, which uses Sony's optical disk technology, underwent testing in orbit at the International Space Station and succeeded in 2-way optical communication with optical ground stations as well as in transmitting high-quality images. In order to realize a sustainable society, it is necessary to prevent inconvenient situations and to reduce inefficiency. To that end, it will be necessary to conduct sensing on various subjects on the Earth and transmit necessary information back to society at low cost, at the right time through AI processing. By using such technology as Sony's high-function, low-energy system-on-chip, AI tools and low-power wide area networks, we will work to move from the coexistence of people and people to the coexistence of people and the environment that surrounds them. Today, I spoke about technology's contribution to the Sony Group's diverse portfolio of business. The details of the specific projects that I introduced today as well as other initiatives involved in technology are published on Sony's technology site under the theme of Sony's Technology 2020. Please look forward to the further evolution of Sony as a creative entertainment company with a solid foundation in technology. Thank you for your attention.

That was Executive Deputy President, Toru Katsumoto. Going on, we will hear from Senior Executive Vice President, Shiro Kambe.

Hello, everyone. I am Shiro Kambe. At the start of this briefing, Yoshida-san talked about Sony's purpose, ways of thinking about people, planet and space based in that purpose, and finally, examples of initiatives to create value through our business at Sony. And Katsumoto-san introduced the technologies that will support this value creation. I will be explaining Sony's ESG initiatives, particularly those related to planet and environment and people and society. First is the environment. The foundation of Sony's environmental measures is formed by the Road to Zero, a long-term environmental plan for the Sony group to achieve a zero environmental footprint throughout the life cycle of its products and business activities by the year 2050. For the Road to Zero, which was established in 2010, we have backcasted from the year 2050 and set specific medium-term targets to be accomplished every 5 years. Through achieving those goals, we aim to steadily reduce our environmental impact and accomplish the zero target by 2050. Today, I will be speaking about the progress of Green Management 2020, one of our current medium-term targets, as well as Green Management 2025, the medium-term target for the next 5 years. I will also be explaining our contribution to the environment through our technology and businesses, which will be particularly focused on from this year. While Road to Zero is an initiative to reduce the environmental impact of Sony's businesses, it will be a challenge to see how technology and businesses can have a positive effect on maintaining and improving the global environment. The following are the main results as of fiscal year-end 2019 of the Green Management 2020, which is set to be accomplished by fiscal year-end 2020. Compared to our target of a 30% reduction in energy consumption per product, we have accomplished a reduction of approximately 50%. Compared to our target of a 5% reduction in greenhouse gas emissions at business sites, emissions have been reduced by 12%. We are also actively introducing renewable energy, such as using solar panels to generate electricity in-house at 8 business sites in Japan and overseas. And first, for Japan, the power generated by solar panels is self-consigned and transferred between Sony Group companies. However, we are unlikely to achieve our targeted reduction of virgin plastic use in products and our targeted reduction of water consumption at business sites. Regarding the virgin plastic use, it has been increasing in recent years due to factors such as stricter regulations on the import and export of used plastics negatively impacting the procurement of recycled plastics and an increase in the size of TVs. Taking these as issues, we will work on them as focus items in the next medium-term plan. Regarding water usage reduction, we will implement measures focusing on business sites with high usage and areas with high risk, considering that water is an unevenly distributed resource. Regarding disclosure in accordance with the TCFD recommendations, we conducted a scenario analysis for the Imaging & Sensing Solutions segment this year. Specific details are published on our Investor Relations site, so please view them there. Next, I will introduce an overview of the next medium-term goal, Green Management 2025. In GM 2025, we focused on the 4 points as shown on the slide based on the issues we identified in GM 2020. The main goals are as you can see here. While maintaining the basic structure of setting targets for each stage of the product life cycle based on these 4 perspectives, such as climate change, resources, chemical substances and biodiversity, we reevaluated some items and incorporated new points such as response to ocean plastic pollution and further introduction of renewable energy. We will also continue to raise awareness about sustainability and the environment through Sony Group's Entertainment business. The climate change targets addressed in GM 2020 were approved as Science Based Targets, a first for a Japanese company, and the long-term climate change targets set during the process of the GM 2025 formulation have been reapproved as Science Based Targets. Next, I will talk about our initiatives that contribute to the improvement of environmental issues through technologies and business. Sony has been managing the corporate venture, Capital Sony Innovation Fund, for the last 4 years with the aim of supporting open innovation in the technology areas of AI, IoT and communication. And this time, we have established the Sony Innovation Fund: Environment as a measure to cultivate new technology for the environment. This new fund will focus on supporting venture companies engaged in improving environmental issues such as climate change, resources, chemical substances and biodiversity. From a long-term view, Sony aims to achieve both a contribution to the global environment as well as a return on investment. The fund will start at an amount of JPY 1 billion. It is intended primarily for investment in start-ups and a seed to early stage, but we are considering expanding the scale in the future. We are considering investing in the field of synecoculture and human augmentation of ecosystems, which have been developed primarily by Sony Computer Science Laboratories as a potential candidate for the first round of funding for the Sony Innovation Fund: Environment. And moving forward, we will continue to search both internally and externally for technologies that help solve environmental issues as well as the ventures that hold those technologies, invest funds and support commercialization. In addition to this fund, we will continue to promote initiatives that contribute to the environment through Sony's unique technology and businesses such as the VISION-S and Intelligent Vision Sensors introduced earlier by Yoshida-san and Katsumoto-san from a long-term perspective. Next, I will introduce some of our initiatives for people and society. COVID-19 is heavily impacting Sony Group employees and their families as well as group businesses on a global scale. Despite these challenging conditions, many employees have made a great deal of effort and are working with a sense of mission to continue fulfilling our purpose of delivering KANDO to the world. We are also actively expanding activities in support of people who have been severely impacted by COVID-19 in the areas of medical, education and the creative community. The core of these support efforts is the establishment of the USD 100 million Sony Global Relief Fund for COVID-19 on April 2, 2020. As you can see on this slide, we are conducting several measures in the medical field, including donating funds, manufacturing and donating medical-use face shields and developing various technologies to support medical professionals and patients through our collaboration with M3, Inc. In the field of education, we are delivering online learning opportunities to children around the world. Finally, regarding the entertainment community, which shares the greatest connection to Sony's businesses, we are offering our support to the artists, creators and other members of this industry who have been negatively impacted by things such as the cancellation of live events and a pause in content-creation activities. We will continue to leverage our assets at Sony and engage in collaborative projects with our many partners to carry out a number of support activities going forward. Next, I will go over our initiatives regarding human rights and diversity. One of Sony's core principles is that all human beings should be treated with dignity and respect. At Sony, we believe in building a culture that makes business and employee diversity a strength. In the midst of the COVID-19 pandemic, the movement for antiracism and social justice spread all over the world after the tragic incident in the United States in May of this year was an extremely significant event for Sony, which holds diversity as a common value across the whole group. Immediately following the start of this movement, Yoshida-san and top management from group businesses such as Sony Music Group and Sony Pictures Entertainment, disseminated messages of support to Sony employees and to the larger community and town hall meetings and other platforms for employee dialogue to consider issues of human rights and social justice were held. On June 5, we established the USD 100 million Global Social Justice Fund through Sony Music in U.S. and asserted our commitment to supporting social justice and the protection of human rights in the long term. To date, this fund has been used for various purposes, including donations to organizations that are working to protect human rights and fight against racism, activities to raise awareness within Sony and related business communities and sponsoring the establishment of the Black Information Network, BIN, a radio program targeting the African-American community. There have been more tragic events in the United States recently, and we strongly feel the importance of continuing these activities in the long term. Regarding human rights, we are also addressing human rights and working environment issues along the global supply chain for the Electronics business. Sony has been a founding member of the Responsible Business Alliance since 2004 and now serves on the Board. We have established the Sony Supply Chain Code of Conduct, which applies the industry's best practice RBA code of conduct, and have a system in place to ensure compliance with the code at our manufacturing sites as well as our suppliers. However, Sony understands there are still challenges in grasping the exact situation and conditions of second- and third-tier suppliers that do not have a direct business relationship with Sony and we are working further with RBA and others to address these issues. Next, I will talk about governance. This year marks the 50th anniversary of Sony becoming the first Japanese company listed by The New York Stock Exchange. In that time, through repeated trial and error, we have worked to strengthen global management and corporate governance across the group. Due to time constraints, today, I would like to introduce only the evolution of diversity and the Board of Directors. These are the current directors. The number of directors has decreased by 1 since last year from 13 to 12 members. Of the 12 directors, 10 are outside and nonexecutive directors. And 4 of the directors are women and 4 are non-Japanese nationals. So as you can see, we have achieved further diversity of our Board of Directors. Additionally, from this year onwards, we have been disclosing a so-called skill metrics that shows the experience and expertise for each director. As you can see, Sony's Board of Directors is made up of diverse members based on their experience, expertise, gender and nationality. In the process of selecting director candidates, in addition to securing the necessary expertise in areas such as accounting and risk management, we place particular importance in experience managing global enterprises given Sony Board's role as a supervisory authority for Sony, which develops a diverse portfolio of businesses globally. Finally, I would like to present the evaluations from external evaluating organizations regarding Sony's ESG efforts. While we have received overall positive evaluations and ratings, I believe that continued efforts will be necessary. Today, I introduced some of our initiatives related to technology and ESG, which formed the foundation for Sony's value creation from a long-term perspective. There are many topics that I was not able to cover in this time, so please refer to these reports for more details. I hope to continue strengthening our dialogue with our stakeholders, including through feedback from today's briefing. Thank you very much for your kind attention.

That was Mr. Kambe, the Senior Executive Vice President. This concludes the series of presentations. Now we will open the Q&A session at 4:43. [Operator Instructions] So please wait momentarily until we resume. Thank you. [Break]

Ladies and gentlemen, we will now start the Q&A session. Today, in the first 20 minutes, we will invite questions from the members of the media. And then in the last 20 minutes, we will respond to questions from the sell-side analysts. The respondents are the Executive Deputy President in charge of R&D and Medical business, Toru Katsumoto; Senior Executive Vice President responsible for Legal, Compliance, Corporate Communications, Sustainability, External Relations, Quality Information, Security and Privacy, Shiro Kambe; and the General Manager of Environment Group, Sustainability Promotion Department, Keiko Shiga. So we will first respond to questions from the media. [Operator Instructions] Now we would like to start the Q&A session. [Operator Instructions] The first question is from Nikkei ESG.

Am I coming through?

Yes, we can hear you.

Well firstly, I have 2 questions. Firstly, Mr. Kambe, this is about ESG engagement. 2018, since Mr. Yoshida assumed his office, value creation over the long term has been your business policy. So you announced the consideration for the stakeholders with the social issues. Now long-term perspective and conversation with a broad range of stakeholders, I guess, you're referring to your stakeholders. But your large top stakeholders may not be in favor of these ideas. Therefore, the value creation to long-term perspective, how are you explaining this to the stakeholders? How do you approach the investors? How do you assess what you have done in the last 2 years, so varied response of the investors? And this next one can be answered by either Mr. Katsumoto or Mr. Kambe and this about Sony Computer Science Laboratories, this idea of synecoculture. It uses AI to make use of ecosystem to support farming and also forestry. But when can this process be commercialized? Do you have any target for this business? And together with this, the large ITs in the United States are also embarking on forestation with the use of AI. And also, do you want to link this to any initiatives for climate change and also greenhouse gases?

Thank you for those questions. I will answer the first question. Your second point will be addressed by Shiga-san. If need be, I will also make some additional comments. And as you say, you're right, it was in 2018 that our CEO, Yoshida, assumed his office as the CEO. And since then, he has been focusing on ESG and also putting emphasis to communication with the stakeholders. This briefing also, this is the third time, the third year that we're holding this briefing. And during this time, what we have been doing is to increase the number of these opportunities to present ourselves so that we can reach a lot of stakeholders. As you say, investors have different positions and different stakes. Therefore, we try to explain, but we're doing very carefully as possible and get feedback from them and effect that to our ESG activities going forward. That's important to us. More concretely, this briefing is one example. And also, we issued integrated report -- publication and also, we have IR activities to speak with investors, particularly those investors who are keen about ESG activities. We try to enhance our engagement with them. And on top of that, our approach to E and also to S, capital market is also raising interest or voice about this, particularly our initiative for short- and long-term management and long-term value creation. The fact that we are working on E and S does contribute to value cation in the long term. And I think there's increasing number of investors understanding that point. And also, speaking about stakeholders, we have customers, we have employees, we have business partners. They're interested in Sony's approach to E and S very keenly. And the feedback that we see from them are actually encouragement for us to do more. The second point on synecoculture will be addressed by Shiga-san.

Shiga speaking. Yes, to respond to the question concerning synecoculture and when will it be commercialized, the size and the multi-target, I think, were the questions. And I must -- would have to refrain answering those specific questions. But as far as the synecoculture is concerned, it's -- Sony's CSL has been working to try and find a new way of farming since 2010 and experiments have been conducted since. So it's not just because we're trying to follow other large companies are doing. We have been working on this initiative since for a long time and also this climate change to increase vegetation. By increasing vegetation, we can eliminate or ameliorate climate change through our solution in the forest. And the purpose is to maintain the biodiversity as a big thing and also sustainable farming can be well established on the strength of synecoculture.

Going to the next question. Next question? Weekly Toyo Keizai, [ Takahashi-san ], please.

Do you hear me?

Yes, we hear you. Go ahead.

I have 2 questions I'd like to ask some specifics. With regards to diversity, Sony has a very diverse portfolio. And if it's Pictures, for example, the percentage of women or percentage of African-American persons might be clear, but there may be sections where there may not be so many women being hired. Do you have -- have you identified such issues? What is your understanding of that? The other question is with regards to supply chain, the second, third tier -- second- , third-tier suppliers. There may be some issues that perhaps -- you may be aware that there are issues, but not be very clear on them. Those are my questions.

That is a question on diversity and supply chain management. The first question, let me, Kambe, will answer the question. And with regards to the diversity of engineers, Deputy Vice President will -- Katsumoto will answer. And especially with regards to the hiring of women in Sony Group, depending on the business and in various countries, we have targets so that diversity can evolve, especially with regards to gender diversity. Now Entertainment businesses, most of them are in the U.S., Sony Music, Sony Pictures or Sony Interactive Entertainment. And so there, the women in management, the percentage there is quite high. On the other hand, there are -- if there are to be issues, it would be in Electronics, for example, diversity in Japan. And again, we have set targets and we are promoting efforts. And compared to a few years ago, I think that we have made much progress. However, still, we have issues remaining. And towards resolving those issues, we are working hard.

Katsumoto speaking. Especially with regards to engineers, diversity is very important. And when meeting challenges on various technologies, we need ideas with diversity, so that using and hiring women is very important. And in the case of corporate R&D, the leadership -- within the leadership team, we have 4 global employees and 2 women and so there are various -- diverse views, which are brought forward. And I think that would broaden the base of our engineers. And going forward, we are going to promote hiring talented women. But if there is to be an issue, the engineering students all over the world, there are more male engineering students than female engineering students. So to overcome that, recently, in the sciences, that is mathematics and chemistry or -- there are excellent female students in college -- science colleges in Japan.

Now with regards to the second question, supply chain, I, Kambe, would like to answer. In our company, we have the Sony Group Code of Conduct. And there, all kinds of types of forced labor or child labor are to be prohibited. That is the basic policy of the group. And based on that policy and looking at the best practice in the industry, we refer to those standards. And for the supply chain as a whole or for suppliers, we set the Code of Conduct. And for those suppliers that have transactions with Sony, we ask for compliance. And well the primary suppliers where we have direct relationship, for those suppliers, we can have a grasp of what is going on to quite an extent. And over the past few years, we have done the assessments. And where we found some issues, there have been remedies. And also, we -- our staff visit the supplier sites and conduct audits that also takes place. However, where we don't have direct transactions, the second or third tier, because electronics is very broad, it could be that you go down to the fourth or fifth layer. And in that case, it is not easy to know what is actually going on. It's a challenge. However, for those suppliers, too, it won't just be efforts on our side, rather we have participation in the Responsible Business Alliances. And in many countries of the world, the famous manufacturers, it could be in electronics or it could also be in IT, it is an organization with the membership of those companies. So together, we try to protect human rights in the supply chain or to respect human rights in the supply chain, and we are continuing those efforts. And probably, over the long term, we have to continue to make efforts, I believe. Human rights, diversity is what we emphasize at Sony. And so we are going to continue to make our utmost efforts. Thank you very much.

I'd like to now invite the next question. From Asahi Newspaper, [ Suzuki-san ], please.

Suzuki from Asahi Newspaper. I hope you can hear me.

Yes, we can.

First question, the -- reducing the amount of plastics used in your product. So if you have a newly designed compact products, you are going to reduce the use of plastic? What is the type of product? Or do you have any specific data? How small would these products be? Can you be specific? And what are the other alternative packaging material that you are planning to use instead of plastic?

It's the packaging material that they're going to reduce in terms of plastic. This is in Green Management 2025, and we want to reduce the amount of plastics used in packaging materials. And I would like to invite Mr. Shiga to respond.

Thank you. I'm Shiga, I'd like to respond. So for the newly designed compact products, what are we talking about, that's the question. I cannot give any comments about the size in specific numbers, but there are some relative small-sized products -- electronics products. That's what we have in mind. And as for the alternative packaging material, we are considering various materials. For example, some paper-based materials instead of plastic is what we're considering. That is all. So for audio products are basically what we are talking about, yes.

Thank you. Let's move on to the next question. From Bloomberg, we have Furukawa-san.

My name is Furukawa, Bloomberg. Can you hear me?

Yes.